The Fraser Institute, web image
VANCOUVER — A new study suggests Canada’s plan to raise the industrial carbon price to $170 per tonne by 2030 could result in fewer jobs and lower incomes for workers, with the impact expected to be more pronounced in energy-producing provinces such as Alberta.
The report, published by the Fraser Institute, estimates the increase would lead to 50,000 fewer jobs being created nationwide and reduce annual incomes by about $1,160 per worker.
Researchers say the higher carbon price would also shrink Canada’s economy by 1.3 per cent compared with a scenario where the industrial carbon price remains at 2025 levels.
In Alberta, where the current industrial carbon price is $95 per tonne, the study projects workers could see annual income reductions of about $1,730 and the creation of roughly 10,000 fewer jobs.
The federal government has set a schedule to increase the industrial carbon price to $170 per tonne by the end of the decade as part of its emissions reduction strategy.
Study co-author Ross McKitrick says the findings highlight what he describes as the economic costs of the policy, adding Canadians are not fully aware of the potential impact.
The report also suggests returns on capital, including dividends and investment income, would decline more sharply than wages, which could lead to reduced business investment over time.
Co-author Elmira Aliakbari says policymakers should consider the broader economic effects when evaluating future carbon pricing increases.
The study is based on modelling conducted through the institute’s macroeconomic research centre and focuses on projected impacts if the federal carbon pricing plan proceeds as scheduled.
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