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A pump jack works in front of a wind farm in the background in southwestern Ontario, July, 2012. The head of the International Energy Agency has called on Canada to put a price on carbon to better reflect the true cost of energy.

Randall Moore/The Globe and Mail

Pressure is increasing on the federal government to put a price on carbon emissions, something it has proposed but not yet implemented.

The latest salvo comes from the International Energy Agency, whose executive director Maria van der Hoeven told a Toronto audience Monday that pricing carbon is one of the key elements to ensure that what people pay for energy reflects its true costs. That must be done if the world is to move toward a sustainable energy future, she said.

The IEA is an agency formed by the biggest industrialized nations to analyze energy data and co-ordinate energy policy. In recent years it has strongly supported a shift to renewables, but without abandoning existing fossil fuels.

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In an interview after her speech, Ms. van der Hoeven said that "the decision has to be made" by governments around the world to put a price on carbon. The IEA has no preferred means of carbon pricing, she said, but it is up to each country, group of countries, or region to decide on the best approach.

The agency has, however, recommended the elimination of all fossil-fuel subsidies, to level the playing field for renewables.

In Europe, where a carbon trading system is well-entrenched, the price of carbon is much too low, Ms. van der Hoeven said, so it is not enough to prompt a rapid enough shift to renewables. In general, "the price has to be high enough to be effective … and you have to do it for a long time, not for [just] one year," she said.

British Columbia is the only jurisdiction in Canada that has implemented a carbon tax, although Alberta has rules that are essentially a form of "cap and trade" pricing.

Many environmental groups have called for some form of carbon pricing across the country, and a report earlier this year from the University of Calgary's School of Public Policy said the government should set a price on pollution and carbon-dioxide emissions.

Ms. van der Hoeven said that while there has been considerable progress in implementing renewable technologies, such as hydro power, biomass, wind energy and solar, there needs to be more effort put into clean coal, carbon capture and storage, and biofuels for transportation.

In Canada, because of the widespread use of hydro power, as much as 75 per cent of electricity could be generated by renewables by 2050, she said. A key area for investment in this country is the transmission grid, which needs widespread upgrading, she added.

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The IEA is enthusiastic about natural gas as a transition technology, substituting it for coal as other renewables are developed further. Its abundance – particularly from unconventional sources – means natural gas can also contribute to energy security, Ms. van der Hoeven said.

Still, there is legitimate concerns over environmental and social impacts of technologies such as fracking, and industry must do far more to win public confidence, she said.

Ms. van der Hoeven, who is on her way to tour the oil sands, said the development of projects there "are a very important part of the security of supply, not only to Canada but also to the United States." However, the country must also develop renewable energy at the same time, and ensure that the oil sands land is fully reclaimed after the oil is extracted, she said.

A former politician in the Netherlands, Ms. van der Hoeven said she understands why Canada and its provinces have not yet come up with a broadly based national energy policy. "I come from Europe and I know how difficult it is to organize [things like that]."

But a national approach on regulation and standardization would be valuable, she said, noting the tendency in Canada to build north-south energy grids rather than east-west ones between provinces.

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