Canada must put a price tag on carbon emissions and then develop a carbon tax system to target emitters, a new federal report recommends.
The report was released Monday by an independent advisory panel commissioned by the federal government to study ways Canada can make major, long-term cuts to the country's greenhouse gas emissions.
The report, which comes after more than a year of research, concludes that the only way to make truly deep cuts, in keeping with the current government's plan to reduce emissions by about 65 per cent from 2006 levels by 2050, is to start charging for carbon as soon as possible.
"As long as there is free carbon, and carbon can be emitted freely, it will be extremely challenging to achieve any significant reductions," said Glen Murray, chair of the advisory panel, which is known as the National Round Table on Environment and the Economy.
"Right now greenhouse gases are emitted for free. There's no cost," Murray added, speaking at a press conference in Ottawa. "If something's free, then lots of people will do it."
The advisory panel, whose findings are not binding, has not recommended what the specific price of carbon should be or when the price should be implemented, although members suggest changes must be made as soon as possible, possibly within the next year.
Once a price is established, the panel recommends that Canada adopt a carbon tax and/or a cap-and-trade system based on that price.
A carbon tax would tax industries or consumers who produce carbon emissions. A cap-and-trade system would establish a limit on the amount of emissions an industry can produce, and any industries that exceed their limit could buy credits from those who don't.
Harper, Dion opposed to carbon tax
Prime Minister Stephen Harper has flatly opposed the idea of a carbon tax in the past, while Liberal Leader St?phane Dion has also spoken out against it. Both have expressed concerns about the economic impact that such a tax would have on Canada's industry.
But Murray said he is optimistic that Harper, Dion and the Canadian government can be convinced when they see there is no feasible other way to achieve Canada's targets.
"It's time to move the discussion forward because there isn't a realistic case that we have seen yet where we can achieve reductions without a price [on carbon]," Murray said.
He said the development of a carbon tax or cap-and-trade system must include industry officials, environmentalists and representatives from all regions of the country.
Representatives from all sectors were already involved in the creation of the panel's report, he said, noting that 65 groups were consulted and extensive economic modelling was done.
'Significant' impact on Ontario, Alberta
Murray suggested government officials are starting to come around in support of carbon pricing. Discussions are already ongoing in Quebec.
"You'll now quietly hear people talking very seriously about cap and trade systems," he said. "Our job [as an advisory panel] is to push government, not just the governing party, but Parliament and Canadians."
He noted that the costs of a carbon tax or cap-and-trade system could particularly be "significant" on Alberta's oil producers and Ontario's manufacturing sector.
But he stressed that in the development of any new policy, there would be investments in green technologies that would ultimately benefit both provinces significantly.
He said any policy would have to be created to ensure all regions are treated fairly, and that Canada's industry as a whole doesn't suddenly find itself on an "unlevel playing field" with the rest of the world.
GDP wouldn't be seriously affected
David McLaughlin, CEO of the advisory panel, said the report has concluded that Canada can feasibly reach its 2050 target of a 65 per cent emissions reduction, and that reaching this target will not be detrimental to the Canadian economy as a whole.
Canada has enough green technology in place to meet the goals, although the development of more technology would be encouraged, according to the panel's findings.
"Our findings suggest in the long run the overall effect on Canada's gross domestic product will not be significant, amounting to the equivalent of approximately one to two years of lost growth of GDP between now and 2050," McLaughlin said at the press conference with Murray.
Both Murray and McLaughlin fielded numerous questions from reporters about why their report does not work with Canada's obligations under the international Kyoto Protocol, which calls for Canada to reduce its greenhouse gas emissions by six per cent from 1990 levels by 2012.
The report instead works with the targets the Conservative government set in April 2007, which call for Canada's overall emissions to be cut by about 65 per cent by 2050 and 20 per cent cut by 2020. All cuts are based on 2006 levels, which means Canada will not meet its Kyoto goals.
But McLaughlin said the panel wanted to work with goals that were feasible, and long-term so that Canada would have time to make necessary changes.
Kyoto's targets are too focused on the short-term, McLaughlin said.