Economic realities of getting Canadian climate policy right

The Canadian Chamber of Commerce asks the question: what are the principles that will allow Canadian climate policy to cut emissions at lowest cost to economy and way of life?

Canadian climate policy must include carbon pricing

By Phil Taylor

This article was published by the Canadian Chamber of Commerce on Dec. 11, 2018.

(OTTAWA) – December 11, 2018 – The real debate happening over climate change in Canada is not whether we need to transition to a lower carbon economy, but how to get there.

“You can’t have a market-based approach to climate change without respecting the market and the input of business,” said the Honourable Perrin Beatty, President and CEO, Canadian Chamber of Commerce. “Business wants to play its part in the fight against climate change, but our public policy has to balance our climate objectives with the need to ensure Canada remains attractive to start or grow a business, and to invest. Done right, our policy framework will encourage investment in infrastructure and equipment that will lower national emissions and fund our transition. Achieving this balance will be tricky, but Canadian business is prepared to work with government to get there.”

The Chamber released a report today that focused upon a single question: what are the principles that will allow Canada’s climate policy to reduce greenhouse gas emissions at the lowest cost to our economy and way of life?

The report drew on the substantial body of research and analysis conducted by governments, academics, and think tanks over the past few years in addition to insights provided by the Chamber’s own network.

Five main themes and 13 key recommendations emerged. Chief among them were:

Getting the investment climate right

Governments should act in partnership and avoid layering regulation on top of carbon pricing without extensive analysis of how doing so will affect costs and trade-offs with other social/economic goals

Getting fossil fuels right

  • Canada must show leadership in ensuring consumption, and not only energy production, is considered in accounting for GhG emissions

Getting innovation right

  • Federal and provincial governments must support and invest in approaches that will help resource sectors create clean technologies that will reduce GhG emissions and develop

Getting trade right

  • Trade policy should allow Canada to maximize its GhG reductions through the exchange of low carbon commodities and minerals
  • We should develop an export strategy of Canadian carbon capture and storage  technology as this technology matures

Getting governance right

  • Ottawa must continue working with provinces to implement carbon pricing as the main measure to reduce GHG emissions across Canada
  • Carbon pricing cannot be a tax grab or a political bargaining chip. The revenue generated should be put towards reducing GhG emissions, either through reducing costs for small business compliance or through incenting investments in clean technologies and energy efficiency.

The report’s recommendations are intended to provide decision makers with the tools to deliver concrete policy action in each of these five areas.

“Canadian businesses of all sizes are prepared to accept carbon pricing as a cost of doing business, but remain very concerned that governments will continue to use it as a political bargaining chip instead of delivering a pricing policy that is simple and works well,” said Aaron Henry, Ph.D., Director, Natural Resources and Environmental Policy, and project lead for the report.

“The Canadian Chamber’s report offers pragmatic recommendations that reflect the complexity when climate rhetoric meets the real world impacts of delivering on that change. The Chamber also encourages all governments to look for ways to reduce the overall burden of regulation on business as opposed to simply layering on an additional burden.”

Dr. Henry also noted that “including consumption-related GhG emissions alongside those from production will help Canada immensely in meeting its Paris commitments. The middle classes in India and China will be the primary emitters in the next 20 years, and Canada’s ability to provide these countries with cleaner and more efficient energy solutions, as well as low carbon commodities, will be essential to Canada’s success in reducing global emissions.”

The Canadian Chamber of Commerce is the vital connection between business and the federal government. It helps shape public policy and decision-making to the benefit of businesses, communities and families across Canada with a network of over 450 chambers of commerce and boards of trade, representing 200,000 businesses of all sizes in all sectors of the economy and in all regions. News and information are available at or follow us on Twitter @CdnChamberofCom.

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