Experts agree that a policy that puts a price on emissions broadly across the economy must be at the heart of any government's greenhouse gas (GHG) reduction plan. The two main policies that do this are a cap-and-trade system or carbon tax, and they're both referred to as "carbon pricing" policies. In either case, the most effective carbon price will be one that covers at least 80% of Canada's emissions and minimizes loopholes, giveaways, and special treatment.
For more background and analysis on carbon pricing options for Canada, download the publications featured here.
Key Questions for a Canadian Cap-and-Trade System
A cap-and-trade system puts a mandatory limit (or "cap") on some portion of national emissions, and allows firms to buy and sell rights to emit within the cap. This effectively puts a price on emissions because firms have to buy extra emission rights if they want to emit more than they're allowed under the cap.
The higher the "carbon price", the stronger the incentive to switch from high-emission options to low-emission options. That's why one of the first questions to ask when evaluating a national cap-and-trade proposal is: Will the carbon price be high enough to adequately reduce Canada's emissions?
Download: English Report
Note: This paper was published as Chapter 13 in Canada: The State of the Federation, 2009.
Fact Sheet: A Closer Look at Costs
In Canada, the debate about how to cut GHG pollution often invokes questions of costs. Communities worry about what will happen to their industries or their jobs if the government takes tough action on global warming.
Tackling climate change means changing the way we produce and consume energy, and any change of that magnitude carries some cost. But it also creates new opportunities. And there’s a clear message from economists studying climate change: action is cheaper than the alternative.
Download our "A Closer Look at Costs" fact sheet to learn about the latest research on the economic impacts and opportunities of reducing GHG emissions and adapting to climate change.
Economic Modelling Study for Canadian GHG Targets
With strong policies, Canada can meet a 2°C target in 2020 and have a strong, growing economy, a quality of life higher than Canadians enjoy today, and continued steady job creation across the country.Climate Leadership, Economic Prosperity is the first Canadian study of its kind to show how reducing GHG emissions would affect employment and gross domestic product at the regional level. It also provides a comprehensive outline of policies that would enable Canada to meet both the federal government's current emissions target for 2020, and a more ambitious target derived from scientific analysis of the emission reductions needed to limit average global warming to 2°C.
Loopholes in the Proposed Federal GHG Offset System
The Pembina Institute's analysis of the federal government's proposed GHG offset system uncovered a series of loopholes that could allow Canada's actual emissions to exceed regulated targets by millions of tonnes.
"Just as lax financial accounting rules create fictional profits, lax emissions accounting rules create fictional emission reductions."
Key Elements of an Effective Provincial Cap-and-Trade System
The Government of Ontario has committed to implement a cap-and-trade system as part of the Western Climate Initiative. In response to the government's December 2008 discussion paper on cap-and-trade, the Pembina Institute joined with the David Suzuki Foundation and WWF-Canada to outline the key components of a strong, effective and fair provincial cap-and-trade system.
Making a Cap-and-Trade System Work in BC
Far from "Turning the Corner": the Federal Plan to Regulate Industrial GHG Emissions
Pembina's analysis of the federal government's "Turning the Corner" plan to regulate industrial GHG emissions found a series of fundamental weaknesses — notably, delayed emission reductions, minimal obligations for oilsands companies, double counting, and a failure of policies to add up to the government's emissions target for 2020.
Emissions Rising: Analysis of Alberta's GHG Regulations
Our analysis of Alberta's GHG regulations after their first full year of operation highlights the failure of "intensity" targets to deliver reductions in actual emissions when industrial production continues to increase. Environment Canada data shows that Alberta's emissions rose by nearly 6% during the same year in which the province's regulations took effect.
"The government's claim to emissions reductions fails to provide the whole story. The fact is that Alberta's system is not working and is fundamentally flawed."
Download: Media Release & Backgrounder
Framework for Assessing Carbon Pricing Policies
This report outlines a 10-point framework for assessing carbon pricing policies — including both cap-and-trade and carbon tax options — and applies this framework to evaluate the carbon pricing policies advocated by the five main federal parties leading up to the 2008 election.
Backgrounder: Carbon Pricing
This backgrounder explains why the key factors affecting the environmental and economic effects of a carbon price are the level of the price, the sectors to which it applies, and what any revenues are used for. The effects of carbon pricing depend much less on the choice between a carbon tax or cap-and-trade system.
Poll: National Support for BC's Carbon Tax
A national poll conducted in May 2008 found that more than 70% of respondents considered the introduction of British Columbia's carbon tax "a positive step." The poll also showed Canadians' preference for spending revenues from a carbon tax on renewable energy and energy efficiency.
"British Columbia's carbon tax demonstrates the type of leadership that Canadians want to see from other provinces and the federal government."