Thank you, Mr. Chairman and members of the panel.
My name is Amy Taylor, and I'm a program director with the Pembina Institute. The Pembina Institute is pleased to have the opportunity to appear before you today, and I appreciate you accommodating my lack of presence in Ottawa in allowing me to join you via video conference.
I'm here to take the opportunity to recommend that the Government of Canada establish a price for greenhouse gas emissions of at least $30 per tonne of emissions in 2009 and at least $50 per tonne of emissions by the year 2020. This price should be applied broadly in the Canadian economy through either a tax or a cap and trade system, or some combination of the two.
The revenue raised from a tax or auctioning of permits at least initially should be directed mainly to achieve further reductions in greenhouse gas emissions. Some revenue should also be used to offset disproportionate impacts on low-income Canadians.
In early 2007, a report of the world's most authoritative climate science body, the Intergovernmental Panel on Climate Change, concluded that the warming of the climate system is unequivocal. It is mainly due to human activities. A second IPCC report projected catastrophic consequences if GHG emissions are allowed to continue unchecked, while a third report concluded that deep reductions in greenhouse gas emissions are technically feasible, affordable, and urgent.
As a developed country with one of the highest per capita greenhouse gas emission rates in the world, Canada must be a leader in reducing greenhouse gas emissions, both quickly and deeply. Pembina believes that to play a responsible part in the global effort to prevent dangerous climate change, the Government of Canada must put a price on carbon. Fiscal instruments and market-based mechanisms such as taxes and emissions trading help meet environmental objectives at the lowest overall cost to the economy. They provide flexibility and create economic incentives to change consumer and industry behaviour and choices.
The government could choose to put a price on carbon through either a cap and trade system, a carbon tax, or some combination of these two. From an environmental perspective, the most appealing feature of a cap and trade system is that it can provide certainty of the environmental outcome it will produce. The system starts by placing a limit on greenhouse gas emissions, and companies are forced to deliver those reductions, whether through improved performance on-site, by purchasing credits, or by purchasing credits in the market.
A carbon tax cannot offer certainty about the volume of reductions it will achieve, but unlike a cap and trade system, a carbon price or a carbon tax does provide price certainty. A carbon tax of $30 per tonne, for example, would create a strong economic incentive for companies to undertake emission reductions that cost less than $30 per tonne, because by doing so, they avoid paying the tax. If a carbon tax is stringent enough, it can in fact deliver greenhouse gas reductions just as effectively as a cap and trade system.
Whatever the policy mechanism, there is growing support for carbon pricing in Canada. The Province of Quebec recently introduced a carbon tax on energy producers, distributors, and refiners. As of July 2007, heavy industry in Alberta is subject to a greenhouse gas regulation that allows companies to meet their targets by paying a $15-per-tonne fee. The federal government has also announced plans for a regulation on heavy industry nationwide that would take effect in 2010, again with a $15-per-tonne compliance option.
A well-designed carbon pricing scheme would offer a number of benefits to Canadians. These benefits include producing significant, sustained greenhouse gas emission reductions to help protect Canadians from dangerous climate change and to fulfill Canada's international treaty obligations; creating a competitive advantage for clean industrial production, with associated job and export potential; raising substantial revenue that could be used to fund further emission reductions, protect vulnerable Canadians, and potentially reduce existing taxes; and finally, improving our air quality and reducing risk to human health.
Thank you very much for your time and consideration.