Craig Dias

999020919

ASSIGNMENT 2: Analysis of The Way

Forward by the Ecofiscal Commission
The Canadian Ecofiscal Commissions report The Way Forward starts off by
addressing the highly important issue of greenhouse gas emissions and their
adverse effects on the environment in terms of global warming and climate change.
It stresses that there is no ambiguity in this statement and offers evidence for the
same. The evidence provided by the author is as follows:
1. There is more than a 95% probability that human activity is responsible for
climate change. [1]
2. A survey of climate science research finds that 97% of scientific studies
supports the hypothesis that climate change is driven by human actions. [2]
These references provided by the author convincingly show the correlation between
human activities and their role in climate change.
Once this main problem is stated, the author describes the need for immediate
action in terms of release of greenhouse emissions to the atmosphere. Furthermore,
to validate this point, the author states that greenhouse gases need to be
monitored, reduced and stabilized throughout the world [3] [4]. Furthermore, the
author states that damages to the Canadian economy are estimated to rise from
around 5 billion dollars annually in 2020 to between 21 and 43 billion dollars
annually in 2050 [5]. These references effectively portray a sense of urgency on the
entire greenhouse emission reduction issue and the annual cost to Canada signify
a massive threat to Canada and makes it apparent that a change in global
greenhouse gas emission policies is in order.
Once the author establishes the greenhouse gas emissions and climate change to
be a global issue, evidence is provided on how the Canadian economy would be
affected if effective and stringent greenhouse gas emission policies are not
implemented. The author effectively describes the potential threats to Canadas
economic sectors including mining, fisheries and forestry products. In terms of total
global greenhouse emissions, the author does not provide sufficient information on
how and to what extent does Canadas greenhouse emissions contribute to this
value.
The central claim made by the author revolves around the fact that Canada is
unlikely to achieve its 2020 greenhouse gas emission target with the existing
policies. This is validated via the graphical representation of the projected emissions
via the targeted emissions for every Canadian province for 2020 [6] [7] [8] [9]. The
graph effectively shows that most of the provinces with the exception of Nova
Scotia and Newfoundland and Labrador will be unable to meet the target.
The author describes the need for new carbon policies in Canada. There is a big
emphasis placed on government and market co-ordination to develop effective
carbon policies. The author starts off by describing the different policy approaches
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that can be adopted by the Canadian government. Policy instruments such as
regulations and subsidies are examined and evidence is provided to support each of
their individual strengths and weaknesses. The author stresses on the need to
implement a carbon policy that reduces emissions at lowest cost. Carbon pricing,
according to the author is the answer to the problem as it stimulates greater
innovation than other regulatory approaches. The author, in my opinion does not
adequately describe the effect of regulations and subsidies in the market. A brief
model on these policy tools would make for a fair comparison between these tools
and the recommended carbon pricing system.
Section 2 of the report talks about the need for new carbon pricing policies. The
author states that carbon pricing has been successfully implemented in countries all
over the world and provides evidence for the same. Evidence is provided which
states that 39 national and 23 sub-national jurisdictions have put a price on
greenhouse gas emissions or have stated to do so in the future [10]. In my opinion,
use of such statistics give the reader a good insight on the popularity of the carbon
pricing system across the globe.
The author then proceeds on to state the benefits of the carbon pricing system and
discuss potential areas of improvement to the system. A potential improvement
according to the author would be to implement revenue recycling within the same
province along with carbon pricing in order to generate revenue which could be in
turn used for reduction in taxes, development of green technologies, investment in
infrastructure and other such economic benefits. Evidence is provided which states
that the possibility of generating revenue that can be used to advance economic
and environmental goals is an important part of ecofiscal policies [11] [12].
Although the author provides evidence for this claim, it would be more effective if
the report were to reference the benefits observed by provinces currently employing
the revenue recycling to further augment the benefits from using carbon pricing
policies.
The author states that carbon pricing effectively reduces greenhouse gas emissions
without negatively affecting the economy. The author provides British Columbias
carbon tax data as an example to validate this statement. British Columbias fuel
usage per capita reduced sixteen percent, while simultaneously outperforming the
rest of the country in GDP growth [13]. The author further supports the claim by
discussing the benefits of carbon pricing experienced in the European Union and the
United States without any impact on the GDP growth in each of these economies.
The use of these examples makes the authors claim believable especially since it is
not very intuitive and can easily be interpreted the other way.
Section 3 of the report, in summary, states that carbon pricing is much more
effective when implemented at the provincial level as compared to the federal level.
This is due to each province having a unique sub economy with different emission
profiles and economic structures. The author then proceeds to describe the types on
carbon pricing systems already in place in certain provinces such as British
Columbia and Quebec. In my opinion, this part of the report has a lot of graphical
representation of data which makes it easy to understand follow the content. The
use of graphical representation of trends such as change in population, GDP and
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greenhouse emissions for each province, breakdown of greenhouse emissions by
industrial sector in each province and more such representations helps the reader
develop a sophisticated insight into the industrial make up of each province along
with its emission profile.
Furthermore, the author acknowledges the fact that although the provinces have
the flexibility to design their own carbon pricing policies, there has to be an overall
coordination between all policies employed by the provinces via linkage. This would
ensure that there would be an overall carbon price preventing companies from
taking advantage of provinces with lower carbon prices to release more emissions.
This in my opinion is extremely important since a unified carbon price would mean
that the price would be determined solely by market forces and government
intervention which is signifies an ideal balance between economy and the
environment.
The federal coordination would need to gradually ramp up stringency to ensure
greenhouse emission reduction targets are met while simultaneously preventing
major shocks to the economy. The author mentions that although the federal
government would have to regulate stringency of the carbon pricing policies, the
revenue recycling would have to be decentralized and managed by individual
provinces so as to prevent flow of revenue out of the province. This is an interesting
and valid point. It makes sense to retain the revenue within a province and use it to
further improve research and development or lower taxes within the same province.
Section 4 of the report focuses on how carbon pricing policies stack up against other
policy approaches. The author effectively makes use of a model that compares GHG
emissions reduction for each policy versus the economic factors. This is my opinion
is extremely crucial as a prospective policy needs to tackle greenhouse emissions
while simultaneously keeping abatement costs as low as reasonably possible. The
model is pretty simplistic however, and would not necessarily represent how the
policies being examined would actually fare in the real world. Perhaps a better way
of comparing possible policy choices could be achieved by picking provinces where
some of these policies are in effect and then comparing them in terms of
greenhouse gas emissions and economic factors.
Section 5 of the report focuses on the various pricing tools available with the carbon
pricing system. The key examples being the cap and trade system and the carbon
tax system. The authors comparison of British Columbias carbon tax system
versus the cap and trade system being currently employed in Quebec and California
is satisfactory and gives the reader good insight into the key differences between
these tools.
The final section of the report effectively concludes the document by providing
recommendations based on the carbon pricing issues discussed throughout the
report. Overall, in my opinion, the report successfully demonstrates that a carbon
pricing is the way forward and certain tweaks/improvements to the policy such as
revenue recycling, coordination and stringency manipulation over time could help
Canada achieve its greenhouse gas emission reduction targets.

Craig Dias
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References
[1] Intergovernmental Panel on Climate Change (IPCC). (2014a). Climate change
2014: Synthesis report. Retrieved from: http://www.ipcc.ch/report/ar5/syr/
[2] Cook, J., Nuccitelli, D., Green, S. A., Richardson, M., Winkler, B., Painting, R., ...
Skuce, A. (2013). Quantifying the consensus on anthropogenic global warming in
the scientific literature. Environmental Research Letters, 8(2), 024024.
Cook, J., Nuccitelli, D., Skuce, A., Jacobs, P., Painting, R., Honeycutt, R., ... Way, R. G.
(2014). Reply to Quantifying the consensus on anthropogenic global warming in the
scientific literature: A re-analysis. Energy Policy, 73, 706-708.
[3] Hoffert, M. I., Caldeira, K., Jain, A. K., Haites, E. F., Harvey, L. D., Potter, S. D., ...
Wuebbles, D. J. (1998). Energy implications of future stabilization of atmospheric
CO2 content. Nature, 395(6705), 881-884.
[4] Peters, G. P., Andrew, R. M., Boden, T., Canadell, J. G., Ciais, P., Le Qur, C., ...
Wilson, C. (2013). The challenge to keep global warming below 2C. Nature Climate
Change, 3(1), 4-6
[5] National Round Table on the Environment and the Economy (NRTEE). (2011).
Paying the price: The economic impacts of climate change in Canada. Report 04.
Retrieved from
http://collectionscanada.gc.ca/webarchives2/20130322143132/http:/nrteetrnee.ca/wp-content/uploads/2011/09/paying-the-price.pdf
[6] Auditor General of Alberta. (2014). Report of the Auditor General of Alberta.
Retrieved from http://www.oag.ab.ca/webfiles/reports/AGJuly2014Report.pdf
[7] Environment Canada. (2014a). National inventory report. Retrieved from
http://unfccc.int/national_reports/annex_i_ghg_inventories/national_inventories_sub
missions/items/8108.php

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[8] Environment Canada. (2014b). Greenhouse gas emissions data. Retrieved from
https://www.ec.gc.ca/indicateurs-indicators/default.asp?lang=en&n=BFB1B3981#ghg4
[9] Alberta Environment. (2014). Albertas climate change strategy and regulations:
A review of the first six years of the Specified Gas Emitters Regulation. Retrieved
from http://cmcghg.com/wp-content/uploads/2014/01/J_Wheler-CMC-WorkshopSGER-Renewal-2014_01_27_v2.pdf
[10] World Bank. (2014b). Carbon pricing supporters list. Retrieved from
http://siteresources.worldbank.org/EXTSDNET/Resources/carbon-pricingsupporterslist-092114.pdf
[11] Jorgenson, D. W., Goettle, R. J., Ho, M. S., & Wilcoxen, P. J. (2013). Double
dividend: Environmental taxes and fiscal reform in the United States. MIT Press.
[12] Carbone, J., Morgenstern, R. D., Williams, R. C., III, & Burtraw, D. (2013). Deficit
reduction and carbon taxes: Budgetary, economic, and distributional impacts.
(Resources for the Future Report). Retrieved from:
http://www.weathervane.rff.org/RFF/Documents/RFF-Rptarbone.etal.CarbonTaxes.pdf
[13] Elgie, S. (2014). Just the facts: Whats behind B.C.s whopping fuel use drop?
Ottawa: Sustainable Prosperity. Retrieved from
http://www.sustainableprosperity.ca/blogpost97