January / February 2008
Report recommends taxpayers pay for pollution
The latest question to arise from the challenge of managing Canada’s greenhouse gas emissions is who should pay for pollution and how? According to a report conducted by a task force set up by the governments of Alberta and Canada, taxpayers should help foot the bill for dealing with greenhouse gas (GHG) emissions. “Federal and Provincial governments should allocate $2 billion in new public funding to leverage the billions of dollars of industry investment in the first carbon capture and storage (CCS) projects,” states the report, entitled Canada's Fossil Energy Future: The Way Forward on Carbon Capture and Storage.
For its part, industry will undertake a significant amount of investment risk by building and operating the first CCS projects. According to the report, its efforts should be complemented by a public investment in this critical technology and infrastructure. The report came on the heels of two independent studies that both concluded an economy-wide price on greenhouse gas pollution was an effective way to tackle climate change. The first study, Getting to 2050: Canada’s Transition to a Low-emission Future by the National Round Table on the Environment and the Economy (NRTEE), concludes that Canada can achieve deep GHG reductions by 2050 but only by putting a price on carbon emissions throughout the entire Canadian economy.
The central recommendation of the report is to establish an economy-wide price signal for carbon emissions as soon as possible. The NRTEE research shows that the most effective and efficient policy that would result in deep GHG emission reductions is a market-based policy, such as an emissions tax, a cap-and-trade system or a combination of the two. In order to achieve the deep emission reduction target, this policy would need to be complemented by other sector-specific regulatory measures to force emission reductions from those parts of the economy that do not respond to a price signal.
Document highlights of the second study, Use Green Taxes and Market Instruments to Reduce Greenhouse Gas Emissions by the Conference Board of Canada, concludes tax measures, coupled with market forces, will be key to the fight against climate change and the ability of Canadian firms to adjust. As a complement to green taxes, a cap-and-trade system should be implemented, combining regulation with market forces via emissions trading. Even though these reports were produced separately they all come up with the same conclusion – the cost associated with pollution will inevitably be shared by both consumers and industries.
For its part, industry will undertake a significant amount of investment risk by building and operating the first CCS projects. According to the report, its efforts should be complemented by a public investment in this critical technology and infrastructure. The report came on the heels of two independent studies that both concluded an economy-wide price on greenhouse gas pollution was an effective way to tackle climate change. The first study, Getting to 2050: Canada’s Transition to a Low-emission Future by the National Round Table on the Environment and the Economy (NRTEE), concludes that Canada can achieve deep GHG reductions by 2050 but only by putting a price on carbon emissions throughout the entire Canadian economy.
The central recommendation of the report is to establish an economy-wide price signal for carbon emissions as soon as possible. The NRTEE research shows that the most effective and efficient policy that would result in deep GHG emission reductions is a market-based policy, such as an emissions tax, a cap-and-trade system or a combination of the two. In order to achieve the deep emission reduction target, this policy would need to be complemented by other sector-specific regulatory measures to force emission reductions from those parts of the economy that do not respond to a price signal.
Document highlights of the second study, Use Green Taxes and Market Instruments to Reduce Greenhouse Gas Emissions by the Conference Board of Canada, concludes tax measures, coupled with market forces, will be key to the fight against climate change and the ability of Canadian firms to adjust. As a complement to green taxes, a cap-and-trade system should be implemented, combining regulation with market forces via emissions trading. Even though these reports were produced separately they all come up with the same conclusion – the cost associated with pollution will inevitably be shared by both consumers and industries.
Morena Zanotto
