Evidence of meeting #163 for Environment and Sustainable Development in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was households.
A video is available from Parliament.
Liberal
Mike Bossio Liberal Hastings—Lennox and Addington, ON
Based on your models, has the OBPS been shown to be an effective measure in incentivizing businesses to reduce their GHG emissions so that they receive credits instead of having to buy and pay for them?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We haven't looked at the effectiveness of the OBPS. We have looked only at the revenues that it will generate. We have not pronounced on or carefully looked at whether it is an effective, or even a cost-effective, way of reducing greenhouse gases.
Liberal
Mike Bossio Liberal Hastings—Lennox and Addington, ON
Finally, whether the revenues continue to increase or not, 90% of those revenues are still going to come back to residents within the province in which those revenues were collected. As was discussed earlier, this is what we hope for. As we grow, emissions are reduced, so the revenues generated from those emissions are going to flatline and then reduce as well.
This is a good a thing. The intent behind this system in the first place is to incentivize those changes in behaviour and to invest in innovation in order to reduce GHG emissions.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Our assumption is that 90% of the revenues will continue to be returned to households, and 90% of our declining pie will be smaller, obviously.
Liberal
The Chair Liberal John Aldag
Now we're going to go over to Mr. Stetski. He will have the last round of questions, and he has three minutes.
Mr. Stetski, it's over to you.
NDP
Wayne Stetski NDP Kootenay—Columbia, BC
I think you've answered it, but people I talk to always have two questions. One is whether there is evidence that having a price on carbon will reduce GHG emissions. I think you've answered that, but I'd like you to speak to it again.
Second, as the price goes up.... I'll use a simple model. If somebody is paying $100 now because of the carbon tax and they're getting $110 back, if they ended up paying $200, do they potentially get a rebate that is the equivalent, so that they might get $220 back? Is there some sort of a magic number on the price of carbon, such that it starts to negatively impact even those 80% of families along the way?
Those are the two questions.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
On the second part, because of the mathematical link between the revenues generated and the rebate, I cannot see very many scenarios where individuals would be worse off. There would be very few scenarios in which that would be the case. It would occur if there were no exports, for all intents and purposes. In that case, the exports part would not be generating any revenues. Given that households would receive 90%, they would pay on a net basis.
I'm sorry; what was the first part of your question again?
NDP
Wayne Stetski NDP Kootenay—Columbia, BC
It was on evidence showing that having a price on carbon does actually reduce GHGs, from your perspective.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, there is evidence that a price on carbon does reduce greenhouse gases. The debate—and I'm not the one who will settle that debate—is whether it's too high a price to pay to reduce greenhouse gases or whether it's acceptable. It's up to people such as you to determine that. However, there is evidence to show that if you put a price on greenhouse gas emissions, all other things being equal, emissions will tend to go down.
The issue is whether you have to put a low price or a very high price. It is not always an immediate response. It involves capital expenditures, and people have fixed assets that they replace, so the time lag to respond to that signal can be long, but it does, indeed, reduce greenhouse gas emissions.
NDP
Wayne Stetski NDP Kootenay—Columbia, BC
And as long as 90% of it is being returned, if the price doubles, there is still net benefit to the majority of families in Canada if they're under this particular pricing scheme.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, but at such a level, there would start to be disruptive impacts for some industries, those that are carbon-intensive. The higher you go on that price, the more disruptive it becomes.
Liberal
The Chair Liberal John Aldag
Great. That concludes our session with you.
Thank you so much, both of you, for being here. I know you have another team member who has joined us today. Thank you for being here and for the very important work you do on behalf of Canadians.
With that, we're going to suspend for a couple of minutes and move into a closed session for some business.
[Proceedings continue in camera]