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‘Carbon pricing works,’ Canadian economists say as national debate heats up

A group of prominent Canadian economists have endorsed carbon pricing as a “powerful tool” to reduce greenhouse gas emissions as conservative politicians from across the country ratchet up criticism of federal and provincial climate policies.

In a report released on Tuesday, Ecofiscal Commission argued there is clear evidence that a carbon tax or cap-and-trade system is the most cost-effective way to reduce greenhouse gas emissions that cause climate change.

“Well-designed policies that put a price on carbon can reduce GHG emissions and can do so in a way that doesn’t undermine our economic prosperity,” the Ecofiscal Commission report concluded. “Carbon pricing works.”

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Read more: Carbon tax revenue could go straight to Ontario residents: McKenna

The report was prepared by six economists associated with Ecofiscal, a think tank based at McGill University that has the backing of luminaries such as former Reform Party leader Preston Manning and Suncor Energy Corp. chief executive Steve Williams.

The Ecofiscal economists said carbon pricing policies in British Columbia, California and Britain have proved to be effective. In each of those cases, emissions have either fallen or are lower than they would otherwise be, while economic growth has matched competing jurisdictions that have no carbon tax, they concluded.

“The evidence is pretty strong given we have both empirical evidence from those jurisdictions and lots of economic theory that suggests the same,” Dale Beugin , Ecofiscal’s research director, said in an interview.

“Over time, there is still very strong reason to believe that carbon pricing is going to reduce GHG emissions and is going to do it in the lowest-cost way.”

The report comes as the national debate over carbon taxes is heating up.

The Liberal government has introduced its carbon pricing legislation as part of its budget omnibus bill. The levy will kick in at $20 a tonne of emissions next January and climb to $50 in 2022. However, the federal “backstop” will only apply in provinces that refuse to adopt their own carbon pricing plan – either a tax or cap-and-trade – or do not meet a federal standard.

Saskatchewan opposes the use of a broad-based carbon tax, and Premier Scott Moe tweeted this week that “a carbon tax does not reduce carbon emissions,” but does “export jobs and investment out of Canada to other countries.” Alberta’s United Conservative Party leader Jason Kenney vows to scrap the province’s carbon tax if he wins government in 2019.

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With a spring election looming in Ontario, Progressive Conservative Party Leader Doug Ford has pledged to kill the province’s cap-and-trade program, which sets a price on carbon emissions, and to oppose any federal effort to impose its carbon levy. Mr. Ford has not said what policies – if any – he would adopt to reduce GHG emissions.

Environment Minister Catherine McKenna argues carbon pricing is among the most economically efficient ways of reducing emissions, though the government is also layering on a host of regulations and subsidies to complement the tax.

In Toronto on Wednesday, Ms. McKenna said Ottawa would impose a carbon tax in Ontario if necessary, and could return the resulting revenue directly to households and businesses.

Mr. Ford said a Conservative government would fight such a federal plan to “all the way to the Supreme Court.”

In an interview, federal Conservative Party MP Ed Fast said the Liberal government’s planned carbon tax will have to rise far higher than $50 a tonne if it is going to encourage people to use less oil and gas. And he argued Canada cannot afford to impose higher energy costs that would come with carbon taxes.

He said Canada needs to remain competitive with the United States, where President Donald Trump is rolling back his predecessor’s climate regulations and has cut corporate taxes. “We’re not going to take our cue from the American president but we are also not going to lose sight of our competitiveness,” he said.

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He argued governments should focus on supporting the development and adoption low-carbon technology as a way of reducing greenhouse gas domestically and around the globe.

With files from The Canadian Press

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