Conference Board Report Details Risks of Carbon Tax


Monday, the Conference Board of Canada released a stunning new report detailing important risks of Canadian carbon tax policy that have not previously been sufficiently explored.

Tipping the Scales: Assessing Carbon Competitiveness and Leakage Potential for Canada’s Energy Intensive And Trade Exposed Industries(EITEI) provides glaring evidence that significant risks to the Canadian economy of carbon taxes have not been adequately thought through.

Here are some key points from the report:

  • Canada’s carbon prices are twice as high and cover four times as much of our economy as those of our trading peers, thereby increasing risk of shifting production and emissions to other countries.

  • For every unit of Canadian production like primary metals that is shifted, net global emissions could increase around three-fold with a potential carbon leakage rate around 300%.

  • Energy projects with lower GHG footprints are more at risk of carbon leakage. Paradoxically under this policy as Canadian industry become more energy efficient, the risk of carbon leakage increases.

The carbon tax costs are targeted mostly at Alberta and Newfoundland whose economies are 30% based on trade of energy intensive goods.  

  • Carbon pricing could negatively impact Canadian lives by displacing nearly 94,000 jobs and $21.1 billion from the country’s GDP.  This is around $550 per tonne of emissions shifted or reduced.

This is not just about oil and gas. 10% of the Canadian economy is directly at risk and even more if indirect impacts are considered. Canada’s productive and trade capacity could be hampered by carbon pricing, penalizing industries that are already reducing emissions and investing in efficiency.

This Conference Board of Canada report builds on previous publications warning about the impacts of carbon leakage such as The Cost of a Cleaner Future: Examining the Economic Impacts of Reducing GHG EmissionsPolicy makers have also largely ignored Navius Research Reversing Carbon Leakage In The Aluminum Sector.

Policy makers were first warned of this in 2017 by a submission to Policy Options by Michael R. Binnion, Questerre President and CEO, called Canada’s Carbon Leak Problem and in his subsequent submission We Need A Common Sense Climate Policy.  Alternative export based climate policy has also been ignored as Mr. Binnion has outlined in a submission to C2C Journal called Think Globally, Act Profitably

We can’t keep guessing about these important impacts. As the Conference Board notes this is an important social, environmental and economic issue that needs more study.

Source: Canadian Energy Network