Should Revenue Neutral carbon tax Replace Cap and Trade in Ontario

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The next election in Ontario may feature a debate between two different models of carbon pricing:

The Ontario Liberals under Kathleen Wynne with a cap and trade system linked to Quebec and California, and Patrick Brown’s Progressive Conservatives proposing a revenue neutral carbon tax. PC Party members participating in their policy process voted 87.5% to “dismantle cap and trade, withdraw from the Western Climate Initiative (WCI), and to return 100% of revenues from Trudeau’s federal carbon pricing benchmark to taxpayers.”

The federal carbon pricing benchmark is the carbon tax regime proposed by the federal government as a minimum standard for all provinces across the country, with a carbon tax starting at $10 per year in 2018 and rising to $50 in 2022.

“…a carbon tax in line with the federal benchmark would reduce Ontario greenhouse gas emissions twice as much as cap and trade by 2022…”

Canadians for Clean Prosperity has long favoured a revenue neutral carbon tax as the best way to meet Canada’s climate goals while strengthening our economy, but we know that there are those who favour cap and trade, so we wanted to have an independent evaluation of what would happen under a carbon tax that followed the federal benchmark. We commissioned EnviroEconomics to do a study for us, which showed that a carbon tax in line with the federal benchmark would reduce Ontario greenhouse gas emissions twice as much as cap and trade by 2022, cutting emissions by 11 megatonnes instead of 5. I wrote on this in an op-ed in Maclean’s asking “What if Ontario scrapped cap and trade for a carbon tax?

While the price under a carbon tax would be higher than under cap and trade, the government can ensure that households and businesses are not hurt financially by passing on all carbon revenues as tax cuts or rebates. With a $50 per tonne carbon price – about 10 cents on a litre of gas – Ontario could send every Ontarian $400 to $500 per year to offset increased costs.

We will watch to see what option the Ontario PC platform proposes, but it is a hopeful sign that the next Ontario election may be fought not over whether to fight climate change but how to fight it.

Read the op-ed on Maclean’s

2017 Clean Prosperity Summit

We also wanted to report on our successful second annual Clean Prosperity Summit held last week in Ottawa. Over 300 people came out to our event with Ted Halstead, CEO of the Climate Leadership Council, and a great group participated in the discussion the next day at the summit. We were honoured to have former Republican Congressman Bob Inglis as our keynote speaker at lunch. It was great to hear about the progress in favour of market based approaches to climate policy in both Canada and the United States.