The primary objective of carbon pricing is to reduce greenhouse gas emissions. But the price is only half the story. Carbon pricing can generate substantial revenue for provincial governments. How this revenue is recycled back into the economy can affect both economic and environmental objectives. Provinces need to choose wisely their portfolio of revenue recycling options.
Research & Reports
While a $30 carbon price in Canadian provinces would impose small costs on households, fairness concerns can be successfully addressed through revenue recycling. As a result, fairness concerns should not be an obstacle to implementing carbon pricing.
In Canada, only a small number of industries, representing a small share of our economy, would face competitiveness concerns resulting from comparatively higher carbon prices. However, lowering carbon emissions and keeping businesses competitive require addressing these challenges. Provincial governments can do so effectively with targeted, transparent, and temporary policy measures.
Traffic congestion costs Canadians. Pricing congestion is the missing piece of our urban mobility puzzle. Canada should begin exploring congestion pricing policies now with urban pilot projects supported by all levels of government.
Drawing on the Ecofiscal Commission’s April 2015 report, The Way Forward, this brief outlines four fundamental principles of good cap-and-trade design. It offers a practical roadmap and specific recommendations to Ontario as the province moves toward developing its policy.
The question is not “if” we need to accelerate greenhouse gas emissions reduction, but rather “how” do we do it in the most practical and cost-effective way. This report outlines a clear way forward—through provincial carbon pricing.
**Winner of the 2016 Doug Purvis Memorial Award**