Canada: The (Carbon) Price Is Right: Canadian Chamber Of Commerce Releases Report Backing Revenue Neutral Carbon Pricing In Conjunction With Reduced Regulatory Burdens On Canadia

Last Updated: January 9 2019
Article by Canadian ERA Perspectives and Selina Lee-Andersen

As the rhetoric on carbon pricing between the federal government and certain provinces ramps up, the Canadian Chamber of Commerce (the Chamber) released a report in December 2018 underscoring the importance of meaningful climate change action guided by public policy committed to reducing greenhouse gas (GHG) emissions in Canada at the lowest cost to the economy. In its thoughtful and comprehensive report, A Competitiveness Transition: How smarter climate policy can help Canada lead the way to a low carbon economy (the Report), the Chamber reiterates its support for carbon pricing, while calling on the government to take steps to reduce the overall regulatory burden on Canadian businesses and to return the revenues from the carbon taxes to help them lower their carbon emissions and energy costs. In particular, the Chamber sets out thirteen recommendations to reduce GHG emissions in Canada at the lowest cost to the economy. The Chamber, which has supported carbon pricing since 2011, asserts that the transition to a lower carbon society will hinge on investment not only in low carbon technologies, but also on investment to support the sustainable growth of labour and capital. In order to facilitate investment, carbon pricing needs to be revenue neutral and part of a coherent strategy to deal with climate change, which is supported by a clear regulatory system which limits the duplication of federal and provincial regulations.   

The Chamber puts forward a holistic approach supported by a revenue neutral carbon price, where the revenue generated is returned to businesses to help them invest in innovation and technologies to reduce their carbon emissions and energy costs. The Report focuses on a single question: what are the general principles that should guide public policy in order to reduce greenhouse gas emissions in Canada at the lowest cost to our economy and way of life?  The Chamber's recommendations include the following:

  1. Continuing negotiations with provincial governments to implement carbon pricing as the main measure to reduce GHG emissions across Canada.
  2. Consider allowing alternatives for carbon pricing in Northern Canada given the high costs faced by northern economies.
  3. Federal and provincial governments should continue to pursue separate policies for emissions intensive, trade exposed industries, as well as work on assessing carbon leakage and the competitiveness impacts of climate policies.
  4. Governments should avoid layering regulation on top of carbon pricing without extensive analysis of how it will affect the cost of the measure and trade-offs with other social and economic goals.
  5. Revenues from carbon pricing systems should be used to reduce the costs of climate policies to businesses and households through tax rebates or programs aimed at incentivizing investments in energy efficiency and other climate technologies. Programs to help small and medium-sized businesses understand their GHG emissions and to invest in new technologies should be a priority.
  6. Federal and provincial/territorial governments should collaborate to identify areas to reduce government-imposed costs on businesses, such as streamlining regulatory processes and harmonizing requirements.
  7. Work with provinces/territories to provide clarity on key government policy and reforms that are increasingly affecting the resource sector.
  8. Provincial and federal governments should continue to support clean technologies for the resource sector that will reduce GHG emissions of essential energy inputs and develop an export strategy of Canadian carbon capture and storage as it matures.
  9. The federal government should consider all real GHG reductions, regardless of whether they are domestic or international.
  10. The federal government should help Canadian producers develop a clear export strategy to ensure our low carbon commodities can reach global markets as part of the GHG reduction strategy.
  11. Trade policy should be developed to allow Canada to maximize its abatement opportunities through the exchange of low carbon commodities in other jurisdictions that will lower GHG and climate financing.
  12. Canada must take a leadership role on ensuring that consumption, not only energy production, is considered in accounting for GHG emissions.
  13. The federal government should consider establishing an advisory body to provide economic analysis of proposals and ongoing consultations with stakeholders on how to update Canada's Nationally Determined Contribution and coordinate national action on climate change mitigation.

The Report notes that 60% cent of Canadians have identified climate change as a leading threat to national security and goes on to highlight that once we turn down the volume of rhetoric, it is apparent that a consensus exists amongst Canadians that meaningful climate change action is required. While there is consensus that we need to change the way in which we make and consume goods and services, there is significant disagreement on how Canadians and Canadian businesses will make those changes. The Report concludes that public policy will need to take a holistic view of the interaction of policies with the economy, society, and technological innovation. The Chamber recognizes that while there are alternatives to fossil fuels that are available and cost competitive, there are sectors where alternatives to fossil fuels are not yet viable. As a result, the Chamber supports a strategy that allows Canada to recognize the economic value of its fossil fuels industry and ensure that Canada's oil and gas sector uses leading technology (such as carbon capture and storage) to reduce GHG emissions from this sector. Acknowledging the challenges to achieving low cost GHG abatement – including the composition of Canada's economy, its geography and climate, and the structure of its cities – the Chamber emphasizes that innovation will be key in driving Canada's productivity and ensuring a dynamic environment for both capital and labour.

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