Carbon Pricing Is A Win Both Economically and Ecologically: Canada’s Ecofiscal Commission

Carbon pricing will be a good for Alberta, and it might actually help the oilpatch by pushing firms to be more efficient and cleaner in their production, says Chris Ragan, chairman of Canada’s Ecofiscal Commission.

“As the world starts to increasingly value low-carbon emissions and cleaner production of all kinds, then that will actually serve Alberta energy firms very well,” he told the Bulletin.

In November 2014, after more than two years in development, agroup of Canada’s leading economists, backed by an advisory board of high-profile leaders in business, the environmental advocacy sector and across the political spectrum, unveiled a new initiative to address the country’s economic and environmental challenges — a commission to help governments develop strong policies towards putting a price tag on greenhouse gas (GHG) emissions and pollution.

“There are lots of costs we are already paying, and so one reason I think everybody should care about this is that environmental damage is costly and it is costing us out-of-pocket now,” Ragan said. “Sometimes those costs are hidden and not headline costs, but they are there, they’re real and they are substantial.

“I think industry, maybe, appreciates this point more than ordinary people: Markets work best when prices reflect all the costs that are relevant. If we are not pricing pollution, then our costs are out of whack and the markets are generating the wrong signals. Most people in industry appreciate the information sent by price signals, and the information is wrong when all these important costs are not factored.”

On March 11 in Edmonton, the commission will partner with the Canada West Foundation to present Aligning Aspirations: An Ecofiscal Approach to the GHG Challenge, with speakers including Steve MacDonald, chief advisor to the premier on energy and climate change, Andrew Leach, associate professor in the University of Alberta School of Business, and Leon Zupan, chief operating officer for liquids pipelines at Enbridge Inc.

“My guess is there will be between 100 and 125 people [in attendance],” Ragan said. “There have been people from government, the energy sector and business more generally, and academia, all invited.”

Diana McQueen, provincial minister of Environment and Sustainable Resource Development, will offer closing remarks at the afternoon event. According to Ragan, as the province prepares to re-examine its current carbon pricing policy, the Specified Gas Emitters Regulation, which has been in place since July 2007, his group wanted to hold the upcoming event in advance of potential changes to the government’s current carbon pricing policy.

“We are just trying to have a discussion and help participate in this discussion in Alberta about what carbon pricing could look like. The nice thing is that we have some interesting examples in Canada. We could talk about the B.C. system and how well it is designed and how well it has worked. We could talk about the Quebec system, how well it is designed and how well it works. Both of those are quite different models than what Alberta currently has.”

Alberta’s current system does not provide real disincentives when it comes to pollution, Ragan told the DOB, and his group believes that by earning more revenue on carbon pricing, the government could actually tax less income and profits from the fruits of innovation, enabling a healthier environment and a better economy.

“Our mandate for the next five years is to be exploring environmental and economic policy in Canada — things we call ‘ecofiscal policies.’ We are looking through a very particular lens at a very particular type of policy, which is basically a policy that involves pricing pollution, and using the revenues to recycle back into the economy to generate further economic benefits.”

Ragan added: “We recognize there are other approaches to environmental policy, and in fact direct regulations of various kinds are quite useful for some problems, but we are looking for those situations where pricing of pollution would probably be the most efficient way to address the problem, and we are going to focus on those problems.”

Ecofiscal Commission founders took great strides to ensure not only politically neutrality, but also trans-partisanship, the chairman noted. For example, sitting on the advisory board is former Liberal Party prime minister Paul Martin, former Reform Party leader Preston Manning, as well as Steve Williams, the president and chief executive officer of Suncor Energy Inc., and Peter Robinson, CEO of the David Suzuki Foundation.

“We will advocate the use of a general principle, and the general principle is that pricing pollution is a good idea, and recycling those revenues back into the economy is a good idea, and we should be looking for occasions to do that,” Ragan said, adding that over the next five years his group would produce a series of reports for the benefit of policy makers, such as Smart Practical Possible: Canadian Options for Greater Economic and Environmental Prosperity.

“My prediction is that when the [carbon pricing] discussion starts happening in Alberta, Saskatchewan and probably in Newfoundland, the obstacle will be people saying, ‘You can’t have carbon pricing unless you are going to effectively shutdown the oilpatch.’ I just think that is so completely false.”

For more information on the commission and the upcoming event in Edmonton, visit