Consistency needed with carbon pricing
Study comparing carbon prices finds Alberta’s will be highest in Canada by 2020
reductions by province, says the study. Comparable pricing, regardless of what system each province uses to achieve it, also offers provincial flexibility while realizing the economic efficiencies of having a relatively uniform carbon price across Canada.
The study’s five authors found that factoring in how much of the economy is covered by the price signal matters a great deal, and that emissions trading credits also must be considered for a true province-to-province comparison.
“The obvious point here is that you can’t just look at price to compare things,” Ragan said in an interview. “At a minimum you’ve got to think about price and coverage.”
B.C. was the first province to impose a carbon tax back in 2008, but because 30 per cent of the provincial economy isn’t exposed to B.C.’s current $30-per-tonne tax, the effective tax rate is more like $21 per tonne, says the study. Alberta’s new, broader carbon tax will eclipse it by 2020, coming in at $23.40.
“B.C. likes to think of itself as the most stringent policy because they’ve got the higher price,” said Ragan.
“They have a higher price but actually don’t have the most stringent policy because they have relatively low coverage.”
Quebec’s existing cap-and-trade carbon market covers 85 per cent of the provincial economy, making it the most comprehensive in Canada.
Quebec, like Ontario, is part of the Western Climate Initiative which includes the state of California in a carbon permit trading market. Quebec’s current marginal price of about $16.40 per tonne makes its carbon cost appear much smaller than B.C.’s, but after factoring in coverage rates and the impact of imported emissions permits, the commission found that by 2020 Quebec’s effective price will be $18.08 per tonne.
Alberta, meanwhile, will see its rising carbon tax cover 78 per cent of the province’s economy by 2020, leaving it with the highest effective carbon price per tonne in the country.