Alex Wood, Senior Director, Policy and Markets, Sustainable Prosperity

1. Carbon Pricing: Canadian Attitudes and
the Canadian Economy
February 23, 2011

2. Who We Are
• Sustainable Prosperity is a national think tank
and network – based at the University of
Ottawa - made up of business, environment,
policy and academic leaders
• We harness leading-edge thinking to develop
and promote innovation in policy and
markets, in the pursuit of a stronger and
greener Canadian economy
Making markets work for the environment. 2

3. Outline of Presentation
• Canadian attitudes:
– Canadian overwhelmingly believe climate change is a
serious issue
– Canadians believe all governments need to be involved in
solutions, in particular federal gov’t
– Canadians believe that use of carbon pricing is a key part
of necessary policy framework
• Economic evidence of positive role of carbon pricing is
growing:
– SP’s program on low carbon economy has highlighted
relationship between investment, innovation, etc.
Making markets work for the environment. 3

4. Evidence of climate change
Canadian Beliefs
There is Not Solid
Evidence of Global Not Sure
Warming 6%
14%
There is Solid
Evidence of Global
Warming
80%
Making markets work for the environment. 4

5. Survey: Role of federal government on
climate change
70%
60%
50%
40%
30%
20%
10%
0%
A Great Deal of
Responsibility Some Responsibility
No Responsibility
Not Sure/Refused
Making markets work for the environment. 5

6. Survey: Support for carbon pricing
Cap and Trade
70%
60%
50%
40%
30%
20%
10%
0%
No Cost Specified $15 Per month $50 Per month
Making markets work for the environment. 6

7. Survey: Support for carbon pricing
Carbon Tax
60%
50%
40%
30%
20%
10%
0%
No Cost Specified $15 Per month $50 Per month
Making markets work for the environment. 7

8. Policy Brief on Business Preferences on
Carbon Pricing
• Recent SP policy brief
summarized survey of
Canadian businesses and
business associations
• Survey, carried out by UBC
PhD, found very strong
support for carbon pricing
policy
• Motivation was risk
management and desire for
policy certainty
8

9. SP and carbon pricing
• Exploring carbon pricing as vehicle for
transitioning to low carbon economy is major
part of SP’s current mandate
• Work focuses on building economic case for
carbon pricing, based on understanding of
economic instruments as most cost-effective
way to achieve environmental objectives.
• Also exploring positive relationship b/w
carbon pricing and key economic policy issues
Making markets work for the environment. 9

10. Carbon pricing and investment
• Investment in low-carbon
economy is becoming
matter of global
competitive advantage
• Carbon pricing policies can
stimulate such investment,
particularly from private
sector sources
• Complementary policies
that provide long term
certainty and address
“public goods” also
required.
10

11. Carbon pricing, innovation, and productivity
• Canada’s poor innovation
and productivity records are
major challenge to our
prosperity
• Pricing carbon can help
drive innovation (in tech or
business models) that
promotes resource
efficiency and productivity
• Carbon pricing - as policy
tool – should be considered
as part of any discussion of
Canadian productivity
11

12. Carbon pricing and fiscal sustainability
• Canadian governments at all
levels are facing serious
fiscal challenges
• At same time, addressing
climate change remains
pressing policy imperative
• A carbon pricing policy can
help Canada on both fronts,
by raising revenues that can
be used to (i) address
climate change and (ii)
provide new fiscal space to
address long-term fiscal
policy challenges
12

13. Implicit carbon prices
• Canadians already pay
“implicit” carbon tax, through
other taxes applied to fossil
fuels
• These implicit taxes – imposed
for other reasons – tend not to
reflect carbon intensity of the
energy source. Coal is clearest
example.
• There is scope for considering
aligning Canada’s relatively
low implicit carbon taxes with
climate objectives without
imposing undue
competitiveness burden
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