New analysis confirms carbon pricing works: it will significantly reduce pollution while our economy grows

April 30, 2018 – Ottawa, Ontario

Canadians know polluting isn’t free. Severe weather due to climate change is already costing Canadians billions of dollars a year in insurance costs. Across the country, Canadians have experienced first-hand devastating wildfires, extreme flooding, severe droughts and stronger storms. Canadians overwhelmingly support action on climate change and a growing economy.

New analysis by Environment and Climate Change Canada confirms that a price on pollution across Canada will significantly reduce carbon pollution while maintaining a strong and growing economy.

Carbon pricing is key to any credible climate plan because it’s a cost-effective way to significantly reduce pollution while driving clean innovation and creating new jobs. A price on carbon works because it creates a powerful incentive to cut pollution, encouraging people and businesses to save money by making cleaner choices like better insulating their homes or upgrading to more efficient equipment. As a result, carbon pricing is a foundation of Canada’s clean growth and climate action plan.

The study found that, by 2022, a nation-wide price on carbon pollution that meets the federal standard would eliminate 80 to 90 million tonnes of greenhouse gas emissions – making a major contribution to meeting Canada’s climate target under the Paris Agreement. That’s equivalent to taking between 23 and 26 million cars off the road or closing between 20 to 23 coal plants for a year.

The study also found that GDP growth would remain strong with a nation-wide price on carbon pollution. Canada’s GDP is expected to grow by approximately two per cent a year between now and 2022 – with or without carbon pricing. This does not include the huge opportunity that clean innovation spurred by carbon pricing will have in helping Canadian companies create jobs and compete successfully in the global shift to cleaner growth – an opportunity the World Bank estimates will be worth $23 trillion globally between now and 2030.

Four out of five Canadians live in jurisdictions that are already pricing pollution today. Those four provinces – Quebec, Ontario, Alberta and British Columbia – had the strongest economic growth in the country last year. By ensuring all parts of Canada price pollution to the same standard, the federal government can help ensure we drive down our emissions and grow our economy.

Alberta, British Columbia, Ontario and Quebec have opted to reinvest the revenues from pricing in their provinces through measures like:

• targeted rebates or tax cuts to households and businesses
• clean growth investments that benefit individuals and business, such as home retrofit programs, support for businesses with clean solutions, and better public transit.

Each province and territory is responsible for designing a carbon pricing system that meets the federal standard. The federal government has been clear that revenues from pricing pollution will remain in the jurisdiction they come from. Our approach gives provinces and territories the flexibility to design their own systems, provided they meet the federal standard, and to decide how best to use the revenue from pricing pollution to support individuals and businesses in their jurisdiction and grow a clean economy.

Environment and Climate Change Canada’s analysis of carbon pricing outcomes is based on preliminary estimates. The final outcomes will be determined by how provinces and territories design their carbon pricing systems, and the choices they make about reinvesting carbon pricing revenues in the economy. The net effect of pricing pollution on households will depend on those choices.