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

Carbon Pricing, Innovation, and Productivity

The policy brief examines the evidence base on how carbon pricing promotes innovation, and how that innovation in turn can promote productivity. Productivity, of course, is the Holy Grail of Canadian competitiveness. And so Canada’s ability to innovate and to become more productive goes a long way to define our future prosperity. The take-away for policy makers, as Martin makes clear, is that carbon pricing needs to be brought into any policy discussion on productivity in Canada.

Carbon Pricing, Investment, and the Low Carbon Economy

In addition to investment, SP will be looking at how carbon pricing can promote innovation and productivity, and how carbon pricing intersects with our trade policy and interests. Other policy briefs, on subjects ranging from Ontario’s Feed-in-Tariff program and institutional models for carbon revenue management are also being developed. Eventually, the Policy Brief format will be extended out to include other areas of interest, including sustainable communities, water, and ecosystems services.

Key Messages:

Public Investment in Low-Carbon Technologies and Infrastructure

Operating Assumptions and Principles

In particular, the paper focuses on identifying and describing operating assumptions and principles needed to inform decisions about how to effectively allocate public resources in facilitating this transition.

The paper is divided into three sections:

1. The Low-Carbon Investment Context in Canada

2. Operating Assumptions

3. Principles

The Low Carbon Investment Gap

There has been, for some time, a large degree of consensus over the fact that the best long-term policy to reduce the greenhouse gas emissions causing climate change, at the least overall cost to the economy, is one that would place a price on those emissions. Globally, "green" public spending has exploded and a "low carbon investment gap" has opened up, and the absence of a national Canadian carbon policy is becoming a competitive disadvantage for Canada. This document examines how public investment incents action, and looks at the different financing options available.

Pricing Electricity for Sustainability

This paper examines how more consistent prices across electricity markets would lead to significant economic, environmental and social gains. It provides an overview of provincial electricity markets regulation, institutions and key indicators (price levels, production and transmission capacity, production, emissions) and briefly describes a few international trends in electricity sector integration (Nordic countries, EU, the 2007 Australian National Electricity Market). It will discuss important barriers to change and how they might be addressed.

Eight Principles for Pricing Carbon

The report based on a year-long dialogue among top economic, business and environment leaders, also evaluates and ranks existing carbon laws and proposals across the country against these principles.

Sustainable Prosperity identified eight key principles that should guide Canada’s approach to carbon pricing:

"Hybrid" Carbon Pricing

About the Author

Robert Joshi has eight years experience in the energy industry at the policy interconnection between energy, the environment and economics. Previous work experience includes economic modeling and regional analysis with the Bank of Canada, royalty forecasting and oil sands project analysis with the Alberta Department of Energy and strategic planning and regulatory analysis with EPCOR Utilities.

A Simple Approach for Bettering the Environment and the Economy

Restructuring the Federal Fuel Excise Tax

This report, by Jack Mintz and Nancy Olewiler, provides the rationale for this revenue-neutral tax proposal, and discusses how such environmental taxation can be useful in improving the overall tax structure to achieve cost-effective environmental protection. In short, converting the existing tax on vehicle fuels into a broader, environmentally based fuel tax, and using the revenues to reduce other taxes, could contribute to both a better environment and economy.


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.