Opinion: A higher carbon price could get us to Paris on its own, at much less cost to the economy

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Time and again, economists remind us that by far the most economical way to reduce our greenhouse emissions is to put a price on carbon. as The Economists Nicholas Rivers and Randall Wigley written, “Analysis has consistently shown that if policymakers aiming to meet climate targets are looking for the most efficient, least distorted way to target emissions growth, all emissions regulations except one are There is nothing better than giving up: a direct, revenue-neutral carbon tax.”

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And, time and again, governments say they agree with them. “Worldwide, businesses, governments and experts agree that carbon pricing is the cheapest and most efficient way to reduce carbon pollution,” the federal government said. 2018 background paper, “Putting a value on carbon pollution is widely recognized as the most efficient means of driving innovation as well as reducing greenhouse gas emissions,” it said. again in 2020,

And yet this clear foundational belief is not reflected in the policies he has actually followed. As I mentioned earlier, under this government two-thirds of our projected 2030 emissions reductions would have been achieved by measures other than carbon pricing – three quarters, if including cuts by previous governments. Two main federal policy statements since the Trudeau government came to power – 2016′s Pan-Canadian Framework on Clean Development and Climate Change and 2020′s healthy environment and healthy economy List dozens of other programs and policies, both federal and provincial, aimed at regulating a dizzying range of specific activities in specific sectors of the economy.

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This is a bit of a puzzle. The government acknowledges that these measures are less efficient and more expensive than carbon pricing – yet rely on them for two to three times as much as actual and planned emissions reductions. Perhaps it could be prompted to take a different route if it is better understood how much these alternative policies are costing us all.

Yet, while estimates have been made of the “marginal cost of exemption” of individual measures, no systematic audit has been conducted—certainly none made public.


the cost of non-pricing of carbon

Selected non-price approach to reduce

greenhouse gas emissions

Estimated Cost Range

per ton CO2

reduction in emissions

program

ethanol subsidy

$400 to $3,300

clean fuel standard

$145 to $1,000

electric vehicle

subsidy

$350 to $640

energy efficiency

programs

$310 to $375

vehicle fuel

efficiency standard

$60 to $387

coal phaseout

(Alberta)*

$63 to $120

federal carbon price

(2021-2030)

$40 to $170

social cost of carbon

(2021-2030)**

$64 to $78

methane gas

rules

$13 to $25

afforestation

$1 to $12

*Health care savings not counting.

**Base case, 3% discount rate.

Research by Andrew Coyne / Source: US Government; Environment and Climate Change Canada; Columbia University; Goldman Sachs; environmental economics; RBC Economics; University of Calgary; Ecological Financial Commission; Journal of Economic…

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