Academic journal article Canadian Journal of Regional Science

Regional Incidence of the Costs of Greenhouse policy/L'incidence Regionale Des Couts D'une Politique Concernant Les Gaz a Effet De Serre

Academic journal article Canadian Journal of Regional Science

Regional Incidence of the Costs of Greenhouse policy/L'incidence Regionale Des Couts D'une Politique Concernant Les Gaz a Effet De Serre

Article excerpt

Abstracts

A regional CGE model of Canada is developed to estimate the effect on aggregate welfare and the welfare of individual provinces of achieving Canada's Kyoto target using alternative climate policies. We consider a domestic carbon tax, international permit trading, as well as the Liberal federal government's 2005 Project Green. Project Green (PG) includes a mix of tradable permits, covenants, sectoral exemptions as well as a heavy reliance on voluntary and targeted measures. The plan is similar in many respects to the Climate Change Plan (CCP) released in 2002.

Our regional CGE model of Canada relates greenhouse gas emissions to intermediate and final use of fuels as well as fugitive emissions related to oil and gas extraction. Interprovincial and international trade flows and endogenous labour supply decisions are also included. We include in the model features that allow us to represent key policy elements of Project Green, like the expansion of renewable electricity capacity.

Our findings indicate that Project Green will have a limited effect in terms of domestic emissions reductions. Moreover, an international permit scheme achieves a greater reduction in domestic emissions with similar aggregate welfare effects as achieved under Project Green. We would argue that the provincial distribution of burdens is at least as fair under the international permit scheme as under Project Green.

Resumes

<< L'incidence regionale des couts d'une politique concernant les gaz a effet de serre >>. Un modele regional CGE du Canada est elabore afin d'evaluer l'effet sur le bien-etre global et le bien-etre des provinces individuelles de l'atteinte des cibles de Kyoto pour le Canada en utilisant des politiques concernant le climat alternatives. Nous avons pris en consideration une taxe domestique sur le carbone, le commerce international de permis, ainsi que le Projet vert du gouvernement federal liberal de 2005 (PV). Le Projet vert inclut une combinaison d'un commerce de permis, des ententes, des exemptions sectorielles ainsi qu'une emphase importante sur des mesures volontaristes et ciblees. Le plan possede plusieurs similarites avec le Plan pour le changement climatique rendu public en 2002.

Notre modele regional CGE du Canada fait le lien entre les emissions de gaz a effet de serre aux usages intermediaires et finaux des fuels ainsi qu'aux emissions fugitives reliees a l'extraction du gaz naturel et le petrole. Les flux commerciaux interprovinciaux et internationaux et des decisions endogenes concernant l'offre de main d'oeuvre sont egalement pris en consideration. Nous avons inclus dans le modele des caracteristiques qui nous a permis de representer des composantes cle de la politique du Projet vert, telle que l'expansion de la capacite de production de l'electricite renouvelable.

Nos resultats suggerent que le Projet vert aurait eu un effet limite en termes de reduction des emissions domestiques. De plus, un plan international concernant des permis pourrait atteindre une plus grande reduction dans les emissions domestiques avec des effets globaux en termes de bien-etre semblables a ceux qui auraient pu etre atteintes sous le Projet vert. Notre raisonnement suggere que la repartition des couts entre les provinces est au moins aussi equitable sous un plan international de permis que sous le Projet vert.

Introduction

With the signing of the Kyoto Protocol in 1997, Canada agreed to reduce its greenhouse gas (GHG) emissions to 6 % below 1990 levels. Since then, a number of climate change plans have been produced by the federal government. Action Plan 2000 was followed by the federal government's Climate Change Plan (CCP) in 2002 and then by Project Green (PG) in 2005. (1) Although not identical, the key elements of the federal government's strategy for tackling GHG emissions are similar across plans: a system of tradeable domestic permits, a heavy reliance on voluntary actions, targeted measures and subsidies, limited use of the polluter-pays principle and only a limited role for international permit purchases. …

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