Canada to introduce carbon tax, with a potential boom for the Canadian economy
Canada Prime Minister, Justin Trudeau, has announced the implementation of a carbon-tax staring from 2019. This initiative is in line with its campaign pledge made in 2015. Canada, part of the Paris Agreement, committed to reducing its carbon pollution by 30% below 2005 levels by 2030. Before the introduction of the carbon tax, however, its measure to reduce emissions were judged as highly insufficient, set to reach only a 4% reduction of carbon pollution levels below 2005 by 2030.
As a consequence of the introduction of the carbon tax in the whole country, energy price will rise.
Gasoline, for example, will reach an 8% price increase in 2022. The price of coal, instead, would more than double. Canada, however, already makes an extensive use of renewable energies, supplying around 60% of its needs in energy from hydroelectric generation. Only 20-25% of its energy comes from fossil fuels, so the energy sector would not be the most affected by the new measures. It is, in fact, the industrial sector which is responsible for about 40% of Canada carbon pollution.
The Government understood that covering the costs caused by climate change is much more expensive, mostly considering health and property damages costs caused by extreme weather events.
As stated in an article on the Guardian, it is estimated that, since, taxed money will be distributed to the province that generated them and 90% of revenues will be given back to taxpayers by means of rebates, the increased energy cost will be more than offset by the rebates for 70% of Canadian households.
Studies say this approach can boost the economy since disposable income increases.
A few Canadian provinces in the past already adopted carbon pricing systems and the government realized that they were among the top performers in GDP.