Carbon Credit''s & C-Lock:Why C-Lock is Valuable:
Canadian Study Supports Benefits of Carbon Tax
Taxing carbon has long been considered by many economists to be one of the most effective tools for reducing greenhouse gas emissions. Now, a new study of its potential impact in the Canadian setting supports many of the hopes of the most optimistic advocates of a carbon tax.
The study was conducted for the David Suzuki Foundation, an advocate of sustainable ecology. It found that a carbon tax could have benefits for the economy by raising tax revenues while having minimal negative impact on economic growth. The study models several scenarios based on carbon taxes of $75 to $200 per tonne.
The study’s main findings:
A phased-in carbon price would eventually generate considerable government revenue. The study shows that setting the price to bring Canada’s greenhouse gas emissions down to a trajectory in line with recommendations made by international climate change scientists would generate government revenue of at least $50 billion per year by 2020.
If the entire revenue generated by a carbon price were used to offset
income taxes, Canadians would experience a 50 per cent average reduction in the income tax they pay.
The implementation of a well-designed revenue use policy, such as tax shifting or revenue recycling, would reduce the economic impact of a carbon price on those sectors and regions of Canada’s economy that rely heavily on carbon intensive activities.
With the introduction of a carbon price, even a fairly high one, Canada’s
economy would continue to grow rapidly. A well-designed revenue use policy can reduce the economic impact of a carbon price by as much as half, to less than one per cent of lost GDP growth by 2020.”
The main conclusions drawn by the Foundation:
The research reinforces what several recent studies have shown, that the single most effective solution to rising greenhouse gas emissions is using the market to put a price on carbon.
The federal government has the option of introducing a carbon price
that either takes the form of an emission tax, a cap-and -rade system, or a
combination of both. The overriding imperative is that government take
action.
A substantial portion of the government revenue from a carbon price should be invested in a large-scale increase in renewable energy, home energy efficiency improvements, and public transportation. This will help further reduce the advantage that the fossil fuel sector, which does not have to fully cover the cost of its carbon emissions, has over clean technologies.