I'd like to thank the committee for the invitation to appear today. I'm Isabelle Turcotte, senior analyst at the Pembina Institute. We're a national non-partisan think tank that advocates for effective and strong policies to support Canada's clean energy transition, and we've been doing for over 30 years.
My comments will be limited to part 5 of the bill today. Canada has an unfortunate history of not respecting its promises on climate. We pulled out of Kyoto and we're on track to missing our Copenhagen target. We made another promise in Paris and collaboratively, over a year coming back from Paris, we developed a new plan to keep this promise. This plan was qualified by Canada's commissioner of the environment and sustainable development as, “likely one of the best plans we’ve seen to date”.
This is great news for Canadians who, according to a recent poll, want to see credible action on climate change. Indeed this poll showed half of Canadians would only consider voting for a party committed to fighting climate change. Ninety-one per cent of Canadians believe we have a moral responsibility to do so for future generations.
Let's be clear about what our options are. There are three policy options to reduce carbon pollution. These are, number one, putting a price on carbon that results in market-based emissions reductions due to a price signal. Number two is to regulate specific actions that result in emissions reductions, for example, the new federal methane regulations. Number three is financial support and subsidies for innovation or deployment of emissions reductions technology. For example, there's the low carbon economy fund, which will help provinces leverage investments in clean growth. Canada's climate plan combines all three options.
According to the economist and Nobel prize laureate Joseph Stiglitz, a well-designed carbon price is an essential part of any strategy to reduce emissions in an efficient way.
Here are four reasons to price carbon pollution.
Number one, it is the lowest-cost pathway. As was discussed by my colleague from the Ecofiscal Commission, carbon pricing not only involves lower costs than other policy approaches, but the GDP cost is low in absolute terms. Number two, it lets industry chose its own path. Number three, it offers stability and predictability. Carbon price gives that consistent signal to promote the investments we need today to create that competitive low-carbon economy of tomorrow. Number four, it ensures transparency and fairness. Carbon pricing reflects the polluter pays principle and contributes to distributing costs and benefits equitably, avoiding disproportionate burdens on vulnerable groups through revenue recycling. As was discussed earlier, only 10% to 12% of carbon pricing revenues are needed to address equity concerns for the bottom 40% of households.
A price on carbon is becoming the norm around the world, and from an economic competitiveness standpoint Canada cannot be left behind. Luckily, in 2017 pricing carbon pollution became mainstream economic policy in Canada. Pricing systems are now in place in the four largest provinces. The same poll I mentioned earlier found that 78% of Canadians support putting a price on carbon.
Here's what we know about the impact of carbon pricing in these provinces. In 2017, Quebec, Ontario, Alberta, and B.C. were the four best-performing provinces in terms of GDP. The data soundly refutes the misconception that a carbon price hurts economic competitiveness and growth. In B.C., the carbon tax generated a net benefit for taxpayers and reduced taxes on employment, investment, and economic growth. B.C.'s carbon tax did not disproportionately affect low-income households. In fact, the opposite is true, it was progressive.
The federal government is now moving forward to ensure that carbon pricing is applied across Canada and we support this. According to the federal government, a pan-Canadian price on carbon would cut carbon pollution by 80 to 90 million tonnes by 2022. Our own analysis at Pembina, using our energy policy simulator, which is Canada's first free open source tool, shows that even larger reductions are possible. To put this 80 to 90 million tonnes into perspective, Canada needs to reduce its emissions by about 215 million tonnes by 2030. This cannot be achieved without carbon pricing.
As we sit in this room, Canadian diplomats are finishing another day of negotiations at the Bonn Intersessional, representing Canada, collaborating in good faith to implement the Paris Agreement. Pricing carbon is one of the most direct ways the Canadian government can support its own diplomats in doing the very difficult but important work of convincing the rest of the world that we are capable of following through on our climate commitments.
Thank you.