Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Christopher Ragan is an associate professor of economics at McGill University and chair of Canada's Ecofiscal Commission, Peter Robinson is CEO of the David Suzuki Foundation and Steve Williams is CEO of Suncor Energy. Robinson and Williams both serve on the Ecofiscal advisory board.

Debates about Canadian climate policy attract people from different perspectives and life experiences – including the three authors of this column. What views could we possibly share regarding sensible climate policy?

Heading up an environmental organization, Peter Robinson understandably emphasizes the urgent need to act decisively to reduce greenhouse-gas emissions. As an economist, Christopher Ragan has a professional habit of advocating the lowest-cost way to achieve any policy objective. And Steve Williams, as a leader of a large Canadian oil-producing company, naturally sees the need to protect the competitiveness of domestic business against rivals from jurisdictions with weaker climate policies.

Story continues below advertisement

Given these separate perspectives, one might wonder about our responses to the working paper released Thursday by the federal government, laying out many details of the Pan-Canadian Framework on Clean Growth and Climate Change.

It is well-known that the federal government favours each province and territory implementing a broad-based carbon price within its own jurisdiction. This is crucial, as research and experience show that a well-designed carbon price is the best way to shrink emissions while allowing the economy to grow.

The real news from the release is how Ottawa plans to deal with the competitiveness issue if and when the federal "backstop" takes effect – in those situations where the province or territory decides against introducing its own carbon-pricing policy.

Research by the Ecofiscal Commission shows that competitiveness is a legitimate concern for about 5 per cent of Canada's economy; in Alberta and Saskatchewan, however, roughly 18 per cent of the economy is exposed to this risk. Dealing with business competitiveness is complicated, but effective solutions exist, and a specific one is included in the federal plan.

The central idea is referred to as "output-based pricing," and when you examine the details there are really two distinct parts to the policy. The first part is that no large industrial emitter of greenhouse gases (GHGs) will be exempted from the policy. They will all face a carbon price, starting at $10 per tonne in 2018 and increasing gradually thereafter.

The second part is that those same large GHG emitters will receive credits – as in other jurisdictions, such as California – based on their level of industrial output. The emitting company will receive credits for each extra tonne of steel or cement or aluminum (or whatever) it produces. And the company will receive a more generous allotment of credits if its emissions-intensity is lower than that of its industrial peers.

The proposed combination of carbon price and output-based credit is an excellent way to reduce GHG emissions and address the business competitiveness problem at the same time, and this kind of policy will be needed until foreign jurisdictions catch up to our carbon-pricing policies.

Story continues below advertisement

For three basic reasons, we support the Pan-Canadian Framework as good climate policy.

First, the economy-wide carbon price is itself a very effective way of reducing GHG emissions, especially over time. It produces a powerful incentive for households, small businesses and large corporations to be part of the solution by switching to cleaner technologies and adopting greener practices. Reducing emissions significantly over the next few decades will be crucial for all countries, including Canada.

Second, using a broad-based carbon price ensures that market forces can be harnessed to drive innovation and generate the lowest-cost pattern of emissions reductions.

Third, on the issue of business competitiveness, the interim use of "output-based pricing" scores a direct hit. The carbon price sends a clear economic incentive for energy-intensive businesses to reduce their GHG emissions. The output-based credit generates an equally clear incentive for them to maintain or expand their production and employment. That they get more credits when being less emissions-intensive merely gives these companies extra encouragement to cut emissions. The overall package sends a clear market signal to Canadian business: Get cleaner, more efficient and even more innovative.

The three of us agree that good climate policy needs to achieve all three objectives, and that doing so is certainly possible. But it requires political determination, attention to plenty of detail and creative policy thinking. Based on what Ottawa released Thursday, we believe that Canadian carbon-pricing policy is striking the right balance.

The proposed $50 per tonne carbon tax has some provinces fuming. We break down the federal carbon tax proposal and what it means for the average Canadian. Globe and Mail Update

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the authors of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies