Canada | How the climate plan makes progress - but still falls short

Raising Canada’s federal carbon levy to C$170/tonne by 2030 will make solid progress but fall short on the country’s ambitious new pledge to cut emissions 40%-45% by decade’s end. Even so, our analysis shows higher carbon prices will hurt the economy, particularly carbon-intensive sectors and regions.

What you will learn:

• Using our new Canada Provincial Territorial Model along with climate levers in our Global Economic Model, we find that higher carbon prices will cut national energy emissions 25%, or 136 mega-tonnes, below our baseline by 2030.
• Carbon-intensive regions will likely suffer worse. By 2030, GDP could drop 8% below baseline in Alberta and by around 3% in both Saskatchewan and Newfoundland mainly due to sharply curtailed oil output as global demand falls.
• Our modelling focusses on the emissions implications from reduced fossil fuel use, but it strongly suggests that a much higher carbon price and enriched complementary measures are needed now to achieve Canada’s ambitious 2030 emission reduction target.