Climate Policy Tough Love? An assessment of the federal carbon price backstop

Download assessment of federal carbon price backstop here.

The federation has normalized around a level of GHG policy effort that is delivering GHG reductions now. Our analysis points to a significant downward trend in Canada’s GHG pathway that was, just a year ago, seemingly unimaginable.

With the federal announcement of a backstop carbon price, we can expect more. More GHG reductions, more innovation and more technology deployment. We can also expect more to come by focusing expectations as business and households have no choice but to believe that credible federal policy will backstop provincial action (or inaction). The impact of this is hard to gauge, but past analysis has found expectations can significantly reduce the long-term cost of decarbonization.

We have put the federal announcement into our regionally disaggregated economic and emission model, and tumbled the numbers. We compare the announcement against a reference case that includes current and developing policy within the federation, capturing the interactions of major federal and provincial initiatives.

Bottom line?

Its seems the tough love is kinda good for us, with the feds giving the federation an efficient policy dial that is scalable to future GHG ambition.

Enjoy.