Alex wood Presentation - Continental Divide? Canadian and US Views on Energy and Climate Change February 2011


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

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Alex wood Presentation - Continental Divide? Canadian and US Views on Energy and Climate Change February 2011

  1. 1. Carbon Pricing: Canadian Attitudes and the Canadian Economy February 23, 2011
  2. 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. 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. 4. Evidence of climate change Canadian BeliefsThere is Not SolidEvidence of Global Not Sure Warming 6% 14% There is Solid Evidence of Global Warming 80% Making markets work for the environment. 4
  5. 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. 6. Survey: Support for carbon pricing Cap and Trade70%60%50%40%30%20%10%0% No Cost Specified $15 Per month $50 Per month Making markets work for the environment. 6
  7. 7. Survey: Support for carbon pricing Carbon Tax60%50%40%30%20%10%0% No Cost Specified $15 Per month $50 Per month Making markets work for the environment. 7
  8. 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. 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. 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. 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. 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. 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 13