chris_ragan

Climate change and climate science is pretty tough stuff -- so we shouldn't be surprised if we learn that many Canadians haven't mastered it. But like many other complex policy issues, I think governments and groups like Ecofiscal need to do a better job at explaining why the environment matters, what costs we are now experiencing, and why price-based policies are such a good way to reduce the environmental damage.

Carbon pricing, especially at higher prices and in many countries, will gradually reduce the global demand for oil. It will also enhance the development of cleaner technologies -- which will also provide substitutes that will reduce the demand for oil. So as carbon prices rise, more FF firms will naturally choose to "keep it in the ground" -- this will be a natural response to the changing economic environment. But other approaches to BLOCK the development of oil -- such as preventing pipelines -- will be HIGHER COST ways to reduce emissions. On this point, read this great article by U of Calgary's Trevor Tombe: http://www.macleans.ca/economy/economicanalysis/blocking-pipelines-is-a-costly-way-to-lower-emissions/

We are economists, NOT climate scientists. We take as our STARTING point the overwhelming consensus among the world's scientists that climate change is real, costly, and deserving of a policy response. For any government that has indicated a desire to reduce GHG emissions, we can help identify the lowest-cost way of doing so -- CARBON PRICING!

Great question -- and pretty geeky. Our report on complementary policies discusses this. There are many market failures where some other policies can be used to enhance the effectiveness of the carbon price. Incomplete information about efficiency of appliances; principal-agent issues wrt building standards; uncertainty about performance for EVs. See more at: https://ecofiscal.ca/reports/supporting-carbon-pricing-complementary-policies/

Governments can use the revenues to reduce existing taxes, or to issue cash rebates to households. The first option is used by BC; the second option is used by Alberta. Both help to build the political durability of the policies -- and they are also good ECONOMIC ways to recycle carbon revenues.