How a Carbon Price Can Help Reduce Canada's Emissions

It is now widely accepted that greenhouse gas emissions are causing climate change and a rise in average global temperatures. Federally, the Government of Canada has committed to addressing climate change and GHG emissions. At the same time, our efforts to reduce greenhouse gas emissions still leave a large gap between what we have been able to achieve and what we have committed internationally to doing.

A large– and growing – gap exists between Canadian ambition and performance on climate change.

Given the size of the challenge in reducing GHG emissions, policies that place a price on GHG emissions will be critical to ensuring Canada transitions to a low-carbon economy. Pricing carbon emissions is a necessary, but not sufficient, condition to addressing climate change. Such instruments, as the Sustainable Prosperity research summarized in this note shows, have proven among the most effective and efficient of instruments in addressing climate change.

This issue summary brings together the body of evidence and analysis Sustainable Prosperity has developed on carbon pricing, to answer some of the key questions about how a carbon price could work, such as:

  • What’s the difference between a carbon tax and carbon emissions trading system?
  • Can other policies create a carbon price?
  • What is Canada’s experience with carbon pricing?
  • What is the international experience with carbon pricing?
  • Does a carbon price lead to greenhouse gas emissions reductions?
  • How will a carbon price impact consumers, and will it be fair?
  • How will a carbon price impact Canadian firms’ competitiveness?
  • What do carbon-emitting industries think about a carbon price?

Our findings show that carbon pricing is no longer an unknown – real-world experience, economic analysis and insider opinions show that now is the time to price carbon.

If we are serious about filling our emissions gap, carbon pricing needs to be part of the discussion. Without it, the gap is likely to grow.