There have been a number of policies proposed to reduce greenhouse gas emissions (GHG) thereby mitigating climate change. An important class of climate policies involves putting a price" on carbon, either by implementing a carbon tax or some form of tradeable permit scheme. In theory, carbon pricing is a cost effective way of resolving the externality problem, thereby improving efficiency. These policies may also generate government revenue, in the form of tax or permit revenue, and these revenues may be used to generate further efficiency gains by lowering distortionary taxes.

The report based on a year-long dialogue among top economic, business and environment leaders, also evaluates and ranks existing carbon laws and proposals across the country against these principles.

Sustainable Prosperity identified eight key principles that should guide Canada’s approach to carbon pricing:

Many Canadian policy-makers, politicians, and economists are intensely focused on developing credible, effective, and appropriate ways to protect and revitalize the Canadian economy. And environmentalists are encouraging policy-makers to recognize the current crisis as an opportunity to shift the economy on to more sustainable footing. Given the abundance of different positions, measures, and arguments in the debates surrounding potential economic stimulus instruments, there is a clear need for a consistent, logical framework to analyze and evaluate different approaches.