The most cost-effective way for Canada to meet its 2030 Paris Agreement targets would be for it to quadruple its carbon tax to CA$210 a tonne, according to a recent report from the Ecofiscal Commission.
The report from the independent think-tank acknowledges the potential unpopularity of such a move, but argues that it would be the best way to address climate change without unduly harming the economy.
The report also outlines some alternative options for meeting the Paris targets. These include potential subsidies and regulations, but the report goes on to warn that such measures would be more expensive.
Ecofiscal Commission chair Chris Ragan says that while regulations and subsides are more politically palatable since they hide costs, a carbon tax hike is the most effective and least costly approach. “It’s crazy to use high-cost policies if you know that lower cost policies are available,” he said. “Why would we do that?”
The report also argues that carbon tax revenues should be offset by personal or corporate income tax cuts, instead of the current model of redistributing revenues through direct household rebates.
Under the Paris Agreement, Canada has pledged to cut emissions to 30% below 2005 levels by 2030. Prime Minister Justin Trudeau also spoke about making Canada carbon neutral by 2050 during the recent election campaign. His Liberal government, however, has not yet explained how this will be achieved. All the latest projections show Canada falling well short of its targets under the current climate plan.