Study
| EST. READ TIME 2 MIN.Federal government’s emission-reduction plan will cost Canadian workers $6,700 annually by 2030—while failing to meet government’s emission-reduction target
Economic Impact and GHG Effects of the Federal Government's Emissions Reduction Plan through 2030
- The federal government has set a GHG emissions reduction target of at least 40% below 2005 levels by 2030, equivalent to 38.5% below 2022 levels.
- This report examines proposed policies aimed at achieving these goals and evaluates their potential impact, aiming to address the gap left by the federal government’s lack of efforts in this matter.
- The paper uses a peer-reviewed macroeconomic model to assess the federal government’s Emissions Reduction Plan (ERP), including carbon pricing, Clean Fuel Regulations, and other regulatory measures such as EV mandates.
- It is estimated that the ERP will reduce Canada’s GHG emissions by about 26.5% between 2019 and 2030, reaching approximately 57% of the government’s 2030 target, leaving a substantial gap.
- The implementation of the ERP is expected to significantly dampen economic growth, with a projected 6.2% reduction in Canada’s economy (i.e., real GDP) compared to the base case by 2030.
- Income per worker, adjusted for inflation, is forecasted to stagnate during the 2020s and decrease by 1.5% by 2030 compared to 2022 levels.
- The ERP costs $6,700 per worker annually by 2030, which is more than five times the cost per worker compared to the carbon tax alone.
- Overall, while the federal ERP will contribute to reducing GHG emissions, it falls short of meeting the 2026 or 2030 targets and imposes significant economic burdens on Canadian households. Additionally, due to the high marginal cost of many regulatory measures, the ERP plan is costlier than it needs to be for what it will accomplish.
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Ross McKitrick
Professor of Economics, University of Guelph
Ross R. McKitrick is a Professor of Economics at the University of Guelph and a Senior Fellow of the Fraser Institute. Heis the author of Economic Analysis of Environmental Policy published by the University of Toronto Press in 2010. He has been actively studying climate change, climate policy and environmental economics since the mid-1990s. He built and published one of the first national-scale Computable General Equilibrium models for analysing the effect of carbon taxes on the Canadian economy in the 1990s. His academic publications have appeared in many top journals including the Journal of the Royal Statistical Society, Proceedings of the National Academy of Science, Journal of Geophysical Research, Climate Dynamics, Journal of Environmental Economics and Management, The Canadian Journal of Economics, Canadian Public Policy, Energy Economics, Journal of Forecasting, Climatic Change, Climate Change Economics and Environmental Economics and Policy Studies. He has also written policy analyses for numerous Canadian and international think tanks. Professor McKitrick appears frequently in Canadian and international media and is a regular contributor to the Financial Post Comment page. In addition to his economics research his background in applied statistics has led him to collaborative work across a wide range of topics in the physical sciences including paleoclimate reconstruction, malaria transmission, surface temperature measurement and climate model evaluation. Professor McKitrick has made many invited academic presentations around the world, and has testified before the US Congress and committees of the Canadian House of Commons and Senate. Professor McKitrick is widely-cited in Canada and around the world as an expert on global warming and environmental policy issues. He has been interviewed by Time, The New York Times, The Wall Street Journal, The National Post, The Globe and Mail, the CBC, BBC, ITV, Fox News, Bloomberg, Global TV, CTV, and others. His research has been discussed in such places as Nature, Science, The Economist, the MIT Technology Review, The National Post, The Globe and Mail and in a front page article in the The Wall Street Journal (Feb 14 2005).… Read more Read Less…
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