Does carbon pricing reduce greenhouse gas emissions?

Economists agree that prices — including carbon prices — affect behaviour, especially over time

• Carbon pricing leads to smaller, more modest behaviour change in the short term.
• Over time, it leads to larger changes (e.g. people buying new appliances, businesses invest in new equipment) and more opportunities to innovate.
• Carbon pricing will help spark innovation over the long term, giving people more and increasingly inexpensive options to change their behaviour and reduce their emissions.

Carbon pricing has successfully reduced GHG emissions in Canada

• British Columbia implemented Canada’s first carbon tax in 2008.
  • BC’s emissions would be 5 – 15% higher without the tax.
  • BC’s carbon tax improved fuel efficiency; the province’s vehicle fleet is 4% more efficient than it would be without the tax.
  • BC’s carbon tax reduced per-capita demand for gasoline; by 2011, demand would have been 7% – 17% higher without the tax.

Carbon pricing has successfully reduced GHG emissions internationally

• The US has two separate cap-and-trade systems that are reducing emissions.
• The UK is on track to fully phase out coal; its carbon tax is cited as the primary driver of this phase-out.
• The European Union’s Emissions Trading System, since its inception, is responsible for between one third and one half of the region’s emissions reductions.
• Sweden has the world’s highest carbon tax; ten years after bringing it in (2001), emissions were as much as 25% lower than they would otherwise be.

 

More Fast Facts on Carbon Pricing