In addressing climate change, a solid consensus has emerged on the importance of placing a price on emitted carbon, whether through a tax or cap-and-trade system. Our work focuses on designing a carbon pricing policy and market models that are pragmatic and workable.

Top Policy Research Priorities
  • Design of Carbon Pricing Systems
  • Carbon Pricing and Low-Carbon Technology
  • Impacts and Effectiveness of Carbon Pricing
  • Carbon Pricing Governance, Revenues Management and Interjurisdictional Issues
  • Carbon Pricing, Innovation & Productivity

Bringing Canada Back in Line

How a Carbon Price Can Help Reduce Canada's Emissions

It is now widely accepted that greenhouse gas emissions are causing climate change and a rise in average global temperatures. Federally, the Government of Canada has committed to addressing climate change and GHG emissions. At the same time, our efforts to reduce greenhouse gas emissions still leave a large gap between what we have been able to achieve and what we have committed internationally to doing.

Designing Carbon Policy

We know that appropriate economic incentives are essential for realizing most breakthrough innovations and that the absence of a meaningful price on carbon across Canada is a major impediment to low carbon innovation, technology deployment and behavioural change. But what are the economic and social implications pricing carbon? How does policy affect innovation, particularly in fossil fuel sectors?

Shadow Carbon Pricing in the Canadian Energy Sector

Many Canadian companies, especially in the energy sector, are using a shadow carbon price in their current decision-making processes. A shadow carbon price is the expected future price of carbon, reflecting the expected market price or regulatory cost, or the cost of reducing or offsetting carbon emissions. Sustainable Prosperity surveyed ten companies in the energy sector, and found that all ten are using a shadow carbon price; seven formally, three informally. The shadow carbon price is informing project evaluation, and strategic and business planning.

Carbon Exposed or Carbon Advantaged? Thinking About Competitiveness in Carbon-Constrained Markets

Traditionally, competitiveness in the context of carbon pricing is narrowly construed as the impacts on emission-intensive and trade-exposed (EITE) sectors including iron and steel, basic chemicals, lime and cement. But competitiveness affects the entire economy, and with an understanding of both its positive and negative impacts, policy-makers can make better carbon mitigation policy choices. With Ontario’s largely service and manufacturing-sector based economy, limiting competitiveness analysis to only EITE’s would miss 85% of its economy.

Barriers to Energy Efficiency Projects and the Uptake of Green Revolving Funds in Canadian Universities

Senior university administrators of fifteen universities of varying size, located throughout Canada, were interviewed. Universities on the whole indicated ‘Access to Capital’ as the leading barrier to implementing energy efficiency projects. Though respondents agree, on average, that revolving funds are an effective method to address capital funding constraints, only 4 of the 83 universities in Canada are known to be currently implementing revolving funds.

British Columbia's Carbon Tax Shift

The evidence from the past four years shows that BC sales of fuels subject to the tax have been dropping – in fact, the average British Columbian’s consumption of them has dropped 15.1% since 2008, while the rest of Canada’s per capita sales have increased by 1.3%. Over the same period, economic growth per capita has been consistent with growth in the rest of Canada. So far, the tax seems to have had a positive environmental impact without harming the economy.

The Likely Effect of Carbon Pricing on Energy Consumption in Canada

New research from the University of Alberta shows that price elasticities of demand, which reflect responsiveness of energy consumed to changes in price, have evolved in recent years. Energy consumers have become less sensitive to changes in the price of energy products. Understanding the reasons behind these trends and variations is crucial for predicting the success of a policy aimed at reducing emissions by adjusting the price of carbon. This Background Report presents the new elasticity figures, and discusses their implications for energy policy-makers.

The United Kingdom Climate Policy: Lessons for Canada

In contrast, Canada has a comparatively weak level of commitment to international and national climate change action. This Brief explores the reasons for these two countries’ divergent climate change policy approaches, with a focus on national-level action in Canada, and examines the lessons Canadian policy-makers can draw from their UK counterparts.

Key Messages:

Domestic Content Requirements for Renewable Energy Manufacturing

But, at least in the short-run, domestic content requirements are likely to increase the cost of renewable energy generating equipment, and therefore also the developer’s cost of generating renewable energy. Depending on the type of renewable energy support policy with which the domestic content requirement is linked, this may have the effect of increasing consumers’ electricity prices, or reducing the number of renewable energy facilities built.


Low Carbon Economy

Low Carbon Economy

About the Project

The goal of this project is to shed light on the relationship between economic activity and the environment by exploring the linkages between changes in our natural capital and our measures of productivity generally, and through the construction of an environmentally adjusted measure of productivity specifically.

While it is now commonly accepted that economic activity and the state of our environment are linked, many economic measures still fail to incorporate the environment – both the things we draw from it and the pollution we release into it. By developing and calculating measures of productivity that include natural capital, Canada may be able to better understand these linkages. This, in turn, may lead to the identification of strategies that can help Canada become more efficient and innovative in the use and protection of natural capital, and thus more productive and more prosperous.

Using the forestry sector as a case study, this project aims to construct an environmentally adjusted measure of multifactor productivity. In doing so, we aim to add another layer of understanding to the environmental and economic performance of this sector. The proposed measure will have relevance to the Canadian economy as a whole.