In addition to investment, SP will be looking at how carbon pricing can promote innovation and productivity, and how carbon pricing intersects with our trade policy and interests. Other policy briefs, on subjects ranging from Ontario’s Feed-in-Tariff program and institutional models for carbon revenue management are also being developed. Eventually, the Policy Brief format will be extended out to include other areas of interest, including sustainable communities, water, and ecosystems services.

Key Messages:

  • Pricing carbon emissions, through a cap-and-trade system or a carbon tax, plays an important role in stimulating investment in low carbon energy technologies and practices.
  • Such investment, particularly from private sources, is required for the transition to a low carbon economy in Canada, and globally.
  • Carbon pricing is a necessary, but not sufficient, condition to promote investment in a low carbon economy. Complementary policies that provide long-term price certainty and address “public good-type” market failures (like infrastructure) are also required.
  • Given the relative novelty of carbon pricing policies in Canada, more research is needed, particularly ex-post analysis, of the impact these policies will have on investment in the Canadian context.
  • The case for promoting investment in a low carbon energy system goes beyond the direct environmental benefits of doing so. Because of the global focus on the low carbon economy, it is becoming an important matter of competitive advantage.