This policy paper was developed as part of Smart Prosperity’s contribution to the Energy Futures Policy Collaborative hosted by the Energy Futures Lab.

Tax policies can be critical measures to help support cleaner economic growth, innovation and create jobs that align with net-zero emissions objectives. They address two distinct market failures when it comes to clean innovation: knowledge spillovers, wherein no one company can fully capture the benefits from their innovations, and negative externalities from pollution, which are the negative impacts that occur externally and impose costs on society without being seen on the books of emitters.

Achieving Canada’s aggressive growth targets for agri-food exports, concurrent with making progress on the government’s ambitions for a 30% reduction in methane emissions by 2030, net-zero emissions by 2050, and overall improvements in environmental quality indicators and food security means that more food will need to be produced with a smaller environmental footprint. While this is a tall order it is not impossible. Done right, it can unlock significant opportunity and create new value.