- Canada’s Ecofiscal Commission finds that carbon pricing policies around the world are reducing emissions, while supporting strong economies.
Ottawa, April 4, 2018—Canada’s Ecofiscal Commission today released a new report, Clearing the Air: How carbon pricing helps Canada fight climate change.
We need a better conversation, based on facts. And the fact is, carbon pricing works.
Carbon pricing in Canada has gained prominence in the last few months. Despite growing support for carbon pricing in new polling, and consensus amongst economists that carbon pricing is the least-costly way to reduce greenhouse gas emissions, the public debate is heating up.
Debate around policy is necessary and healthy. But too often, the public conversation around carbon pricing seems to be based on misunderstanding rather than evidence.
To clear the air, the Ecofiscal Commission has put together a primer on how carbon pricing works.
The report unpacks the evidence. It shows how putting a price on carbon in British Columbia, California and the United Kingdom has reduced emissions while maintaining prosperous economies. It explains how carbon pricing changes the behaviour of citizens and businesses over time by giving them flexibility and choice. And it presents new polling data showing the broad support in Canada for action on climate and carbon pricing in particular.
The Commission recommends that governments should continue to move forward with increasingly stringent carbon pricing policies. They should evaluate the performance of these policies over time and make adjustments as required. And they should endeavour to better communicate the realities of carbon pricing to help all Canadians understand the basics of why carbon pricing works.
The report is also available as a digital essay, complete with:
The digital essay and report are available at ecofiscal.ca/carbon-pricing-works.
Evidence that carbon pricing works while supporting strong economies
- British Columbia
- Implemented in 2008, BC’s carbon tax was the first in North America
- The tax is currently set at $35 per tonne and will rise by $5 a year until 2021
- Economic analysis shows that annual GHG emissions in BC would be between 5% and 15% higher if it had not put its carbon tax in place.
- Economic analysis suggests the carbon tax had only a very small impact on the BC economy. Since 2008, British Columbia’s economy has outperformed the rest of Canada.
- California implemented a cap-and-trade program in 2012
- Emissions are falling in California and will fall faster as the program ramps up
- California is projected to reduce its GHG emissions to 1990 levels by 2020
- There is no indication that the cap-and-trade system has hindered economic growth in California.
- Since the 2008 global economic crisis, California’s economy has consistently outperformed the rest of the American economy, a trend that continued after 2012, when the cap-and-trade system was implemented.
- The UK uses a hybrid system combining a carbon tax with a cap-and-trade system
- UK industries pay over £20 per tonne for GHG emissions
- Emissions in the UK have fallen sharply over the last several years, particularly in the electricity sector, with carbon pricing being a key driver of this shift.
- 75% of Canadians say action on climate change should be a high priority
- 60% want government to take more action to combat climate change, including 46% in Alberta
- 84% think a transition to a low-carbon economy is generally a good goal for Canada
- 42% of Canadians are familiar or very familiar with carbon pricing. This hasn’t changed much in three years.
- 78% think carbon pricing is an acceptable, good or very good idea. Those that think it is a good or very good idea is 46% (up from 40% 3 years ago).
- Majorities in Quebec, Ontario and BC do not know that there is a carbon price in their province
- Majorities in those provinces planning to have a carbon price do not know that this is the plan
- Abacus Data polling data
- Webinar on the polling data by Bruce Anderson, Abacus Data
“Despite the polarized conversations happening across Canada today, the evidence shows that carbon pricing works to reduce emissions and support strong economies. Good policy decisions rely on a careful evaluation of facts and evidence. Governments and analysts should do a better job helping Canadians understand carbon pricing and the evidence that it works.”
Chair, Canada’s Ecofiscal Commission
Economist and Director, Max Bell School of Public Policy, McGill University
“The Ecofiscal Commission report shows that carbon pricing reduces emissions, using evidence from the experiences in British Columbia, California and the UK. Carbon pricing incentivizes us all—citizens and businesses—to change the way we do things when the price is right.”
Executive Director, Canada’s Ecofiscal Commission
“The latest report from the Ecofiscal Commission unpacks how carbon pricing works and is working around the world today. Businesses have a critical role to play in accelerating the transition to the low-carbon economy, not only to help fight climate change, but also to mitigate their own risks.”
Chief Environment Officer, TD Bank Group
Adviser, Canada’s Ecofiscal Commission
- Chris Ragan, Chair, Ecofiscal Commission and economics professor at McGill University
- Dale Beugin, Executive Director, Ecofiscal Commission
- Bruce Anderson, Chairman, Abacus Data
- David Coletto, CEO, Abacus Data
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