EnviroEconomics.ca

There seems to be a misconception out there (see here) that Canada does not have a carbon price yet needs one badly…well, that’s not quit right. First, the Regulatory Framework will place a price on carbon through a domestic emission trading scheme starting in 2010 for 50% of Canada’s emissions. Plus, there is emission pricing in Quebec vis a carbon tax, and BC is toying with both cap and trade and an emission tax. And you can’t swing a tonne of carbon without worrying about some sort of future carbon cost. So, expectations theory in economics would argue that we have a price on carbon now that is driving technology choice to some degree.

The problem is not, therefore, that we don’t price carbon in Canada, it is that we do it badly. Policy uncertainty (Tech fund anyone?), bad policy design and well a lack of leadership all lead to decision making myopia where the expected cost of carbon is low, and technology choice today is weakly influenced. So, we have priced emissions in Canada, its just that a large double double from Tim’s has more value.