Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/176978 
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 6959
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The pan-Canadian approach to carbon pricing, announced in October 2016, ensures that carbon pricing applies throughout Canada in 2018, with increasing stringency over time to reduce emissions. Canadian provinces and territories have the flexibility to either implement an explicit price-based system—with a minimum price of CAN $10 per tonne of carbon dioxide equivalent in 2018, increasing to CAN $50 per tonne by 2022—or an equivalently scaled emissions trading system. This paper discusses the rationale for, and design of, the price floor requirement; its (provincial-level) environmental, fiscal, and economic welfare impacts; monitoring issues; and (national-level) incidence. The general conclusion is that the welfare costs and implementation issues are manageable, and pricing provides significant new revenues. A challenge is that the floor price by itself appears well short of what will be needed by 2030 for Canada’s Paris Agreement pledge.
Subjects: 
carbon price
price floor
Canada
welfare impacts
incidence
effective carbon price
competitiveness impacts
JEL: 
Q54
Q58
H23
Document Type: 
Working Paper
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