Canada's Ecofiscal Commission determines that most of the economy would be unaffected by a carbon tax

Sectors that are both high emitters and vulnerable to trade competition repreent just 5% of Canada's GDP, making the risk of a carbon tax manageable, according to a report from Canada's Ecofiscal Commission

Sectors that are both high emitters and vulnerable to trade competition repreent just 5% of Canada's GDP, making the risk of a carbon tax manageable, according to a report from Canada's Ecofiscal Commission

Sectors that are both high emitters and vulnerable to trade competition represent just 5% of Canada's GDP, making the risk of a carbon tax manageable, according to a new report from Canada's Ecofiscal Commission.

“It’s very important to think about designing a carbon price system that takes seriously the competitiveness challenges,” said Chris Ragan, chair of the commission.

Certain high-emission sectors like oil and gas and cement could be at a competitive disadvantage if they have to pay a carbon tax, but their competitors in other countries don’t have a similar tax.

The report compared provinces and found that Alberta and Saskatchewan are most exposed to competitiveness challenges, with 18% of those provinces’ respective GDP being “more exposed” to being put at a disadvantage from a carbon tax. But just 5% of B.C.’s GDP, 2% of Ontario's GDP, and 1% of Quebec's GDP, would be vulnerable to competition.

"The first lesson that comes from this is that 70% of the economy is [low-emitting] services,” Ragan said.

“The overwhelming majority of a developed economy is services.”

Most of Canada's economy would be unaffected by a carbon tax - competitive pressures in Cdn Prov graph

The B.C. sectors that have high emissions and also face a lot of competition from global trade include cement and lime production, oil refining, aluminum smelting and natural gas.

Most of Canada's economy would be unaffected by a carbon tax - competitive pressures in BC graph

“These are ones we have to think about, but the interesting thing is that they’re all very small as a share of GDP, which means dealing with them is actually easy,” Ragan said.

Most of Canada's economy would be unaffected by a carbon tax - competitive pressures in Alberta graph

Policy makers can design short-term strategies, like temporary assistance to those sectors, to mitigate the hit from competition, Ragan said.

Alberta is expected to release tougher rules on carbon emissions soon. B.C. has had a $30 a tonne carbon tax in place since 2008, and is also working on updating its emissions policies.

https://www.biv.com/article/2015/11/most-canadian-economy-would-be-unaffected-carbon-t/

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