Madam Speaker, I will be splitting my time with my hon. colleague from LaSalle—Émard—Verdun.
It is with great pride and privilege that I stand to speak today to something that is important for the future of Canada, for the future of our economy, for growing the economy, and as we say, for strengthening our middle class and those hoping to join it.
Putting a price on pollution is the most efficient way to reduce greenhouse gas emissions and reach our objectives to protect the environment, while stimulating investments in low carbon innovation and creating a sustainable, clean growth economy. The pan-Canadian approach to price inclusion will give Canadian businesses, investors, and consumers a clear predictable basis for decision-making.
Confidence that the price of pollution in Canada will continue to increase over time in a gradual and predictable manner will encourage businesses and consumers to invest in clean technology and fuel, while avoiding major disruptions. It will also encourage businesses to invest in research into low carbon technology, which will better position them to compete in a low carbon economy.
A strong, predictable and rising pollution price sends an important signal to markets, informing consumer choices and investments in infrastructure and innovation.
Some people claim that pricing pollution is not good for economic growth, but emerging evidence indicates that pricing pollution and economic growth go hand in hand. The World Bank states that “early evidence suggests that a price on pollution is not an impediment to economic growth”.
To cite just a few examples. British Columbia's direct price on carbon helped reduce greenhouse gas emissions in the province between 2008 and 2013 at the same time as the provincial economy grew faster than the rest of Canada. British Columbia's growing clean technology sector now brings in an estimated $1.7 billion in annual revenue. Similarly, in Sweden, GDP and industry have grown while its emissions have dropped under the world's highest direct price on pollution, which currently stands at 137 euros per tonne.
The Canadian industry and investors know that pollution pricing will foster innovation and create new job prospects, those jobs that we know the middle class needs and deserves. That is why more than 30 Canadian companies have come out strongly in support of a price on pollution by joining the World Bank's carbon pricing leadership coalition. It is why many leading corporations, including Suncor, Canadian Tire, and General Electric, account for an internal price on pollution in their investment decisions.
In our discussions with Canadian industry leaders since being elected, a common theme that emerged was that Canada's business leaders believed that pollution pricing was one of the most economically efficient ways to reduce emissions, to stimulate the market to make investments in clean innovation, and to be positioned to compete in the emerging low-carbon global economy.
TD Bank's chief environmental officer Karen Clarke-Whistler says her company “believes that a strong low-carbon economy is not only key to reducing carbon emissions but also makes good economic sense. We believe carbon pricing has the potential to play a huge role in building the low carbon economy”.
The impact of the pan-Canadian approach to pricing pollution in terms of costs on households and businesses will vary by province and territory, depending on differences in energy and fuel consumption and electricity generation mix across provinces and territories. It will also depend on the pollution pricing design approaches taken by individual provinces and territories, as well as the decisions made regarding how revenues from pricing pollution will be used.
An illustrative model conducted by Environment and Climate Change Canada estimates that the average increase in the annual cost of energy to households in Canada will be $290 when the backstop pollution price reaches $50 per tonne in 2022. This captures the increase in the fuel price, approximately 12¢ per litre of gasoline, and a modest reduction in the amount of energy used by the average family.
It is important, however, to recognize that these types of projected impacts do not take into account the significant gains in innovation, competitiveness, and economic growth that pricing pollution is likely and will generate. Also, in accounting for costs to households, it is important to account for the ways in which each jurisdiction chooses to use the revenues raised from pricing pollution. For example, Alberta's pollution pricing system includes rebates for low and middle-income households to offset the cost of the carbon pollution levy.
Six out of 10 Alberta households are expected to receive these rebates. The rebate amount for a household with two adults and two children is now as much as $540 per year. Alberta also provides small businesses a cut in the tax rate by one-third, from 3% to 2%. Further analysis on households, businesses, and sectors will become available as each province and territory establishes its pollution pricing systems.
At a macro level, significant economic impact analysis has been done to support the pan-Canadian plan to price pollution. According to modelling estimates produced for the federal, provincial, and territorial working group on carbon pricing mechanisms, the economic impacts of pricing pollution will be modest. The working group considered three scenarios: first, a price on pollution starting at $15 a tonne in 2018 and rising to $30 a tonne in 2030; second, a price starting at $30 a tonne in 2018 and rising to $40 a tonne in 2030; third, a price starting at $30 a tonne in 2018 and rising to $90 a tonne in 2030. These three scenarios were designed to broadly illustrate the impacts on the economy of pricing pollution at various levels of pricing rather than to reveal the impacts of a specific policy proposal. For each of these scenarios, the working group projected very modest reductions in the annual rate of GDP growth. Indeed, as the working group's report concludes, the projected impacts are so small that they fall within the range of forecast error for GDP projections.
Furthermore, the projected GDP growth reduction estimates provided to the working group are likely to over-estimate because the modelling tools used do not capture the full range of likely benefits from pricing pollution. What are the benefits? They include direct benefits from innovation, the development of new technologies, market opportunities, improved health from reduced emissions, and other benefits due to the avoided costs of climate change. For more details, please see the economic analysis of the pan-Canadian framework published by the government on December 9, 2016, which is available on the Government of Canada's website. External modelling analyses, including two studies published in 2016 by EnviroEconomics and a 2016 study by Clean Prosperity, support the conclusion of the working group on carbon pricing mechanisms that pricing pollution at levels comparable to the illustrated scenarios assessed at the 2022 federal benchmark price of $50 per tonne would not have a significant negative impact on GDP in Canada.
The impacts of a changing climate are already being felt and the costs of inaction are much bigger than the costs of addressing climate change. The national round table on the environment and the economy concluded that the costs of climate change could represent approximately $5 billion per year by 2020 in Canada and, depending on the levels of continued global emissions growth, could rise to a range of $21 billion to $43 billion per year by 2050, or even higher under more extreme scenarios. The Insurance Bureau of Canada recently cited estimates from the parliamentary budget office related to the financial costs of natural disasters driven in part by climate change. Between 1970 and 1994, the federal government paid out an average of $54 million each year from its disaster fund, adjusted to 2014 dollars. By contrast, the parliamentary budget office estimated that weather events connected to climate change over the next five years will cost the federal government $900 million annually. That is $900 million that could be spent on social programs, skills training, and education. We must address climate change.
The Government of Canada is committed to continue to work with provincial, territorial, and indigenous governments to ensure clean growth and address climate change. By acting now and acting together, we will build a better Canada for our children and our grandchildren.