How will carbon pricing affect employment?

Carbon pricing is expected to have a minimal impact on jobs and employment

  • Research suggests that carbon pricing does not adversely affect overall employment.
  • Carbon pricing policies do, however, change the types of jobs in the economy. Over time, carbon pricing encourages more jobs in low-carbon industries, offsetting job losses in carbon-intensive industries.
  • Research on the carbon tax in British Columbia, for example, shows both effects: It suggests that the tax may have caused a small net increase in employment, due to gains in low-carbon industries.
  • Governments can help ensure that jobs do not shift to jurisdictions with weaker climate policy by providing vulnerable sectors (i.e., those that are emissions-intensive and trade-exposed) with targeted and temporary support. The federal government’s output-based carbon pricing approach is one such example.

How governments use revenues from carbon pricing can affect impacts on employment

  • The revenue from carbon taxes need not be a tax grab.
  • Governments can use carbon pricing revenues to create specific programs to transition and retrain workers moving from emissions-intensive sectors. Alberta’s Coal Workforce Transition Program, for example, provides financial help to workers looking to find new jobs, retire, relocate, or retrain.
  • Other types of revenue recycling, such as cutting corporate income taxes, can help indirectly (e.g., by encouraging investment, which can lead to greater employment).


More Fast Facts on Carbon Pricing