Tipping the Scales: Assessing Carbon Competitiveness and Leakage Potential for Canada’s EITEIs

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Title: Tipping the Scales: Assessing Carbon Competitiveness and Leakage Potential for Canada’s EITEIs

Author : Carlos A. Murillo

Publisher: Conference Board of Canada

Date: November 4th, 2019

Full Text Article

Summary:

Tipping the Scales: Assessing Carbon Competitiveness and Leakage Potential for Canada’s Energy Intensive And Trade Exposed Industries(EITEI) provides glaring evidence that significant risks to the Canadian economy of carbon taxes have not been adequately thought through.

Here are some key points from the report:

  • Canada’s carbon prices are twice as high and cover four times as much of our economy as those of our trading peers, thereby increasing risk of shifting production and emissions to other countries.

  • For every unit of Canadian production like primary metals that is shifted, net global emissions could increase around three-fold with a potential carbon leakage rate around 300%.

  • Energy projects with lower GHG footprints are more at risk of carbon leakage. Paradoxically under this policy as Canadian industry become more energy efficient, the risk of carbon leakage increases.

The carbon tax costs are targeted mostly at Alberta and Newfoundland whose economies are 30% based on trade of energy intensive goods.  

  • Carbon pricing could negatively impact Canadian lives by displacing nearly 94,000 jobs and $21.1 billion from the country’s GDP.  This is around $550 per tonne of emissions shifted or reduced.

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