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Achieving 2050: A Carbon Pricing Policy for Canada (Advisory Report)

Achieving 2050: A Carbon Pricing Policy for Canada (Advisory Report)

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National Round Table on the Environment and the Economy (2009 Report)

Establishing a price on carbon is one of the most powerful mechanisms available to reduce greenhouse gas emissions that cause climate change. Carbon pricing motivates businesses and individuals to reduce carbon emissions by providing incentives to invest in renewable energy and low-emission technologies and by making it more expensive to use damaging alternatives.

Achieving 2050, recommends a unified carbon pricing policy for Canada—a policy aimed at meeting one clear objective: achieving the greatest amount of carbon emission reductions, at the least economic cost. The report sets out a comprehensive road map for establishing a national cap-and-trade system in a phased manner, with adequate transition for industry and consumers. It lists guiding principles for a Canadian carbon pricing policy. The NRT’s carbon pricing roadmap is reasonable and realistic to meet Canada’s emission reduction targets.
National Round Table on the Environment and the Economy (2009 Report)

Establishing a price on carbon is one of the most powerful mechanisms available to reduce greenhouse gas emissions that cause climate change. Carbon pricing motivates businesses and individuals to reduce carbon emissions by providing incentives to invest in renewable energy and low-emission technologies and by making it more expensive to use damaging alternatives.

Achieving 2050, recommends a unified carbon pricing policy for Canada—a policy aimed at meeting one clear objective: achieving the greatest amount of carbon emission reductions, at the least economic cost. The report sets out a comprehensive road map for establishing a national cap-and-trade system in a phased manner, with adequate transition for industry and consumers. It lists guiding principles for a Canadian carbon pricing policy. The NRT’s carbon pricing roadmap is reasonable and realistic to meet Canada’s emission reduction targets.

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04/19/2014

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Our primary policy design focus is on seeking cost-effective emissions reductions. Any carbon

pricing policy will have some unavoidable adverse impacts on the economy and society generally,

but on certain segments more particularly. Our secondary challenge has then been to consider how

we can address some of these impacts where they are of particular concern, while preserving our

broad-based focus on achieving the deep emission reductions. The current economic downturn does

not exacerbate these impacts as they occur over the medium and longer term—in fact, the need for

timely action on emissions reductions remains undiminished. Policy design must nevertheless address

adverse impacts of the policy in terms of how it performs against the following evaluation criteria:

—the preferred policy would distribute the costs and financial

benefits equitably (as best as possible) among energy producers, households, other industry,

and government. The burden of compliance costs can be expected to fall not only on those

undertaking abatement efforts, but also on consumers. Closely allied are disproportionate

impacts on certain trade-exposed sectors. Ultimately the question is, what are the design

options that minimize income effects on disproportionately impacted groups?

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A measure of consumer satisfaction related to consumption and leisure time, but not including benefits related to stabilizing climate or

reducing CO

2 emissions

NATIONALROUND TABLEON THEENVIRONMENTAND THEECONOMY

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—the preferred carbon pricing policy should be broadly acceptable to the
public, governments, industry, and other stakeholders. A broadly based level of acceptability
will enhance the ability of governments to proceed with the carbon pricing policy and
maintain its durability of application over the long-term vision that climate mitigation
requires. These concerns specifically involve short-run income impacts on emitters related to
stranded assets7

and increased costs. Thus, competitiveness and affordability impacts feed

into this criterion.

—thegovernment’s ability to implement a significant new
policy such as this, which will affect all provinces and territories, virtually all sectors of the
economy, and most households in some fashion or another over time, will be tested. This is
particularly acute given the current fragmented nature of climate policies across jurisdictions
that will require harmonization, and the diffuse and overlapping responsibility across
government departments charged with aspects of climate policy that will require integration.
The need for transparent processes and institutions to manage the implementation of the
carbon pricing policy over the long term is vital.

7

A stranded asset is an asset whose market value is less than its book value because it has become obsolete before the completion of

its depreciation schedule.

CARBON PRICING POLICY

ESSENTIAL DESIGN ELEMENTS

CHAPTER THREE

A SINGLE NATIONAL

CAP-AND-TRADE SYSTEM

IS NECESSARY TO UNIFY

CARBON PRICES ACROSS

ALL EMISSIONS, SECTORS,

ANDJURISDICTIONS.

CHAPTER THREE

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