NRTEE: Carbon pricing for Canada

By ,

The National Round Table on the Environment and the Economy (NRTEE) has published its latest report, “Achieving 2050: A Carbon Pricing Policy for Canada”. Its principal recommendation: a unified carbon pricing policy for Canada to achieve “the greatest amount of carbon emission reductions, at the least economic cost”, as opposed to “the current, fragmented patchwork of federal, provincial, territorial, and regional policies.”

Here are the four main components of the proposed carbon pricing policy:

  • the implementation of an economy-wide cap-and-trade system
  • the adoption of complementary regulations and technology policies
  • participation in international emissions markets through trading and credit purchases
  • a climate governance strategy to implement and adapt the carbon pricing policy over time to establish collaborative institutions and coordinating processes to implement and adapt the carbon pricing policy over time.

    Interestingly, the NRTEE report seems to reject the notion that Canada must choose between the two principal carbon pricing instruments: carbon taxes and cap-and-trade systems:

    This consideration has important implications for the policy instrument the NRTEE is recommending based on our research. It implies that the carbon pricing policy must include design elements that enable costs to be contained (thus including features of a tax) and allow emissions to be driven down to levels consistent with the stated emission reduction targets (thus including features of cap-and-trade).

    The approach also presents the advantage of forcing not just large emitters to shoulder the burden of reducing carbon emissions, but the broader economy as well, including the building and transportation sectors.