The Conference Board of Canada is adding to an ever expanding literature that argues Canada won’t be able to meet its climate change commitment of a 30% reduction in greenhouse gas emissions by 2030 by simply implementing a national price on carbon pollution.
Released on September 6, The Cost of a Cleaner Future, published in conjunction with the Canadian Academy of Engineering, indicates that the country will have to invest trillions of dollars on clean energy infrastructure (between $1.5 trillion and $3.4 trillion) in addition to its soon-to-be implemented national carbon price if Canada hopes to come to close to its climate targets.
“Simply pricing carbon and moving away from fossil fuels are insufficient measures to achieve deep GHG emission reductions. And while technology and innovation will play a role in the long term, it can’t get us to the 2030 target given the relatively short window available to develop and adopt these solutions,” Louis Thériault, VP of industry strategy and public policy at the Conference Board, said in a statement. “Given that the required investment will be in the trillions of dollars, policy makers need to communicate to Canadians the scale of how this transformation will impact everyday lives.”
The Conference Board first brought its analysis to light at an industry event in Ottawa in April. Then speaking about early conclusions from the report, Craig Alexander, senior VP and chief economist, noted the gravity of the challenge that lies ahead for Canada.
An $80 per tonne carbon price by 2025 will lead to 41 Mt in emissions reductions, but that’s a long way off from the 219 Mt needed for Canada to its 30% reduction by 2030, he said. (Canadian Green Tech has more from Alexander’s presentation HERE.)
One of the key findings from a Cleaner Future is carbon pricing won’t have a big impact on the Canadian economy and on emissions reduction. For the latter, a $200 per tonne carbon price in 2025 will result in 1.5 Mt in reductions outside of the power generation sector. In terms of the effect on consumer spending, an $80 per tonne price would see an annual increase of approximately $2,000 per household.
Generally, the impact of a carbon price on the overall economy will be minimal because revenues generated from the emissions tax would be recycled back into the Canadian economy through tax cuts and higher government spending and investments.
The Trottier Energy Futures Project has developed several technical pathways for Canada to reduce its emissions. The most stringent is a 60% reduction by 2050 and it will require $3.4 trillion in new investments by 2050 or approximately $100 billion each year. This represents about half of all current non-residential business investment in the country with more than half of that amount being in the power generation sector to electrify Canada’s economy.
The Conference Board’s report is similar to others that have been published in recent months, arguing that carbon pricing alone is an insufficient mechanism for Canada to meet its climate commitments. Canada’s Ecofiscal Commission released such a report in June. (For more on that report, read Canadian Green Tech’s take HERE.)