NRTEE Proposes Carbon Policy To Achieve 2050 Goals

Author:Mr Richard Corley
Profession:Blake, Cassels & Graydon LLP

Copyright 2009, Blake, Cassels & Graydon


Originally published in Blakes Bulletin on

Environmental/CleanTech, June 2009

Canadian businesses need to assess their greenhouse gas

emissions and consider options for reducing such emissions in light

of the recently released NRTEE report.

On April 16, 2009, the National Round Table on the Environment

and the Economy (NRTEE) issued its Achieving 2050 proposal for a Canadian carbon

pricing policy, which includes a comprehensive and in-depth

assessment of how to most efficiently reduce greenhouse gas (GHG)

emissions in Canada. The NRTEE is an organization that was created

in 1988 to generate and promote sustainable development solutions

to advance Canada's national environmental and economic

interests simultaneously, through the development of innovative

policy research and advice.

The goals of Achieving 2050 are a carbon pricing policy that

meets the Canadian government's medium and long-term GHG

emission targets with the least economic cost, and to minimize

adverse impacts on regions, sectors, and consumers. NRTEE aims to

achieve maximum GHG emission reductions at the lowest cost through

the implementation of comprehensive and integrated approach for

developing and implementing a Canadian carbon pricing policy.

Achieving 2050 proposes a national carbon pricing policy that

would establish a unified carbon price across all emissions,

policies, and jurisdictions, and send a credible long-term price

signal sufficient to drive new investment and technology

development. NRTEE estimates that a unified carbon price across all

emissions, policies, and jurisdictions would allow for a

steady-state carbon price of C$300 per tonne of carbon dioxide

equivalents (CO2e) some time after 2030, rather than a price in

excess of C$350/tonne of CO2e that would result from a fragmented

policy. Achieving 2050 submits that a credible long-term carbon

price signal that generates confidence in the marketplace would

result in lower GHG emissions overall, compared to alternatives

which involve uncertainty about the future carbon policy and


Policy Wedges

The proposed carbon pricing policy involves three main

components or "policy wedges", as illustrated in the

figure below. The first policy wedge is a single national

cap-and-trade system, the second is complementary regulations and

technology policies, and the third is international opportunities.

The first policy wedge, which accounts for the majority of the GHG

emissions, is targeted both at "large emitters" emissions

(wedge 1A), and "rest of economy" emissions (wedge 1B)

from buildings, households, transportation, and light


The cap-and-trade system underpinning the first policy wedge is

a system whereby the government sells a fixed number of permits to

people who emit GHGs. The number of permits owned determines the

amount of GHGs that may be emitted by a person, in excess of which

such person will have to purchase offset credits under the system.

As discussed in the first part of this bulletin, unregulated

businesses and other organizations which reduce their GHG emissions

may obtain offset credits which they can sell to businesses that

wish to exceed their permitted GHG emission levels as determined by

their permits allocated from the government. Since there...

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