Price emissions or risk economic fallout: report

Last Updated: Wednesday, June 27, 2007 | 10:26 AM ET

CBC News

Unless Canada acts immediately to put a price tag on greenhouse gas emissions, the government risks causing "serious economic dislocation," an Environment Canada-sponsored report warned Wednesday.

In order to avoid the economic fallout, the report by the National Round Table on the Environment and the Economy recommends that Ottawa begin clearly mapping out the costs of emissions.

If companies and consumers have enough advance notice about the financial incentives for reducing emissions, they can make appropriate environmental and investment decisions, the paper says.

"If the government neglects to clearly communicate the [greenhouse gas] price schedule well in advance, it risks causing serious economic dislocation…because society's capital stocks will not be well prepared," the report warns.

"In essence, inadequate and delayed communication by the government of a [greenhouse gas] 'price' could lead to substantial long-term economic costs."

Showing the trajectory of the emissions costs and letting industry prepare for Ottawa's environmental rules and penalties would reduce the chance of provinces making bad investments, the report argues.

Conversely, having to fix those potentially poor, multibillion-dollar decisions would severely damage the economy, it says.

'Act strongly now'

The main message, NRTEE spokesman Glen Murray told CBC News, is that early action is rewarded.

"Act strongly now [and] you're going to really not suffer economically, but if you don't do that, the risk of the damage to the economy of not acting with some [emissions] pricing system of some sort is very real," he said Wednesday.

"You have to have enough advance warning, years of lead time so the industry can adjust and retool."

The NRTEE, which released the report on Wednesday, suggests that the "substantial long-term economic costs" can be manageable, but urges Ottawa to move quickly. By its calculations, the round table said the economy might stand to lose only the equivalent of half a year's economic growth by 2050 provided that Canada heeds its advice.

Aim to cut emissions by 60% by 2050

The NRTEE report projected the potential economic damage of the government acting slowly, quickly or doing nothing at all.

It was commissioned by Environment Minister John Baird, who had asked the round table to advise him on how to realize the Conservative government's target of cutting greenhouse gas emissions by at least 60 per cent by 2050.

If the government is to reach that target, the round table says the price per tonne of emissions would have to rise to well over $250 by 2040, but analysts had figured the price of emissions would settle at $30 to $50, according to a Globe and Mail report.