The case for pricing carbon

Ontario’s environment commissioner makes the case for carbon pricing.

Some jurisdictions are responding to this existential threat by pricing carbon pollution. Australia has implemented a carbon pricing program that charges companies the equivalent of $24 for every tonne of CO2 they emit and intends to link this program with the European Union Emissions Trading System. Japan implemented a carbon tax in April 2012, and China has created seven different pilot carbon pricing programs with a view to rolling out the best Annual Greenhouse Gas Progress Report 2012 model nationally by 2015. In North America, several provincial and state governments are taking steps to enact domestic carbon pricing policies. California and Quebec have put a legislated cap on carbon emissions and will require large emitters to comply through the purchase and trade of carbon allowances starting in 2013. 

British Columbia has re-afrmed its commitment to a carbon tax program that has earned international recognition as an effective model for climate action. As evidence that smart climate action does not hurt economic performance, in the four years since B.C.’s carbon tax took effect (2008–2011), the province’s economic growth (as measured in gross domestic product) has outpaced the rest of Canada, and personal and corporate income tax rates have been reduced to among the lowest in the country. At the same time, per capita fossil fuel consumption in B.C. has dropped substantially – declining 16.4 per cent more than the rest of Canada – and hybrid vehicle adoption has been twice the national average.

While it may be premature to make a direct correlation between the carbon price and these trends, they are nonetheless consistent with experiences in other jurisdictions that have had a carbon price in place for over a decade (e.g., United Kingdom, Germany and Sweden). These benets have also been recognized by the Canadian Council of Chief Executives, which has argued that a “price signal is the most powerful incentive for both industry and consumers to conserve energy and enhance efciency. Coupled with the appropriate overall policy framework, carbon pricing can lead to innovation and new technologies that have positive outcomes for consumers and position Canadian rms to be suppliers of less carbon-intensive products and services.”

The commissioner formally recommends that the Ontario government “conduct an analysis of the environmental, social and economic impacts of alternative carbon pricing mechanisms and release it to the public for discussion.” The ministry responds as follows.

Ontario has been clear that we are not developing a carbon tax. Emissions trading is an alternative carbon pricing approach. Ontario is developing a greenhouse gas reduction proposal which includes working with our Western Climate Initiative partners and stakeholders to develop a regional emissions trading program.

Looking for more?

Get the Best of Maclean's sent straight to your inbox. Sign up for news, commentary and analysis.