Carbon pricing is an attempt to reduce greenhouse gas pollution by charging polluters money when their carbon dioxide emissions exceed a set amount. Carbon pricing makes using dirty fuels more expensive. Utilities, businesses and individuals reduce consumption and increase energy efficiency and save money. Carbon pricing also makes alternative energy more cost-competitive.
There are two ways economists suggest that this can be implemented. A carbon tax levies a government set price per ton on the production, distribution or use of fossil fuels based on how much carbon their burning emits. In a cap-and-trade system, the government puts a limit, or cap, on the overall level of carbon pollution from industry and reduces that cap year after year. Pollution quotas are then created and distributed through an auction. This creates an incentive to reduce emissions and be able to sell rather than purchase pollution quotas. Under this system the market determines the price of quotas.
This is already being done around the world. Finland was the first in 1990; now 42 countries and 22 subnational jurisdictions are pricing carbon. Canada has a national carbon tax plan. Ontario has chosen cap and trade as part of its broader environmental policies. Polls suggest that business leaders and the general population support some system to put a price on pollution. Most economists support these plans.
Now an Ontario election has been called and this is one of the issues:
The Liberal Party (now in power) says this is a vital plan to help move toward a greener Ontario
The Progressive Conservative Party (leading in the polls) claims it is a carbon tax and that he would repeal it if he came to power
The NDP (New Democratic Party) supports the cap and trade legislation, but would ensure that 25% of the revenue went directly to individuals in need
The Green Party feels that the cap and trade system in Ontario should be replaced by a carbon tax that then is 100% given back to the people of Ontario
Briefly explain carbon pricing in your own words.
Why do most people, businesses and economists support some form of carbon pricing?
As you read or watch election news, does this seem to be a big issue in voter’s minds?
Which political party’s plan on carbon pricing seems to make the most sense to you – and why?
Would you change your mind about voting for a party depending on their environmental policy promises?