Wednesday, July 6, 2016

Now is the Time for Carbon Pricing in Canada

The low price of oil make this an ideal time to put a price on carbon. Putting a price on carbon is one of the most powerful and far reaching actions Canada (and other governments) can take to reduce emissions is to enact national carbon pricing. In fact this was listed at the top of policy recommendations by the Sustainable Canada Dialogues report. Carbon pricing incentivizes competitiveness by making operations more efficient and more lean management and practices.

In a Wall Street Journal post last year, economist Margaret Walls argued that low oil prices make this an ideal time to implement carbon pricing. "[A] carbon tax might help to avert some capital investment decisions that would lock in higher emissions," she said.

We already have working examples of carbon pricing schemes in Canada. There are/were three such programs in North America: The Regional Greenhouse Gas Initiative (RGGI), the Midwestern Greenhouse Gas Reduction Accord (the Midwestern Accord has been inactive since March 2010) and the Western Climate Initiative (WCI).

The WCI is a multi-sector, market-based emissions reduction program. It started in 2007 with a group of five American states (Arizona, California, New Mexico, Oregon, and Washington). Shortly after being formed the Canadian province of British Columbia joined, followed my Manitoba, Quebec and Ontario. By 2011 California was the only US state left in the WCI alongside four Canadian provinces. 

In 2015 Ontario formally joined Quebec in a cap-and-trade carbon pricing scheme and in 2016 we have seen the beginning of a pan-Canadian carbon pricing agreement.

Even the oil rich provincial government of Alberta has introduced a carbon pricing scheme that will take effect at the start of 2017. The money raised is expected to be almost ten billion over five years. This money will be used to help finance the growth of renewables in the province.

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