A Cap-and-Trade roadmap for Canada : lessons learned from international experiences

Abstract

In the pursuit of reducing greenhouse gas (GHG) emissions through climate action planning policymakers have been establishing carbon pricing (Yamin, 2012). Through partnership with the Western Climate Initiative (WCI) the provinces of British Columbia (BC), Manitoba, Ontario, and Quebec initially agreed to align their climate action plans under a common framework (Western Climate Initiative, 2010). The WCI outlines a cap-and-trade system as the main form of carbon pricing, which will need to continue to operate in conjunction with existing carbon taxation (World Bank Group, 2016). In contrast to carbon taxes, cap-and-trade requires wider policy design considerations in order to be effective. The experiences of international implementations are analyzed through a scoping review methodology. The scoping study of policy design on environmental performance is then contrasted to existing narratives surrounding cap-and-trade policies. Recommendations are outlined, including avoiding the drawbacks of other cap-and-trade implementations, including cost pass-through, and encouraging research on successful hybridization of instruments.