(OTTAWA) The economic cost of greenhouse gas (GHG) emissions is nearly five times higher than previously thought, federal Environment Minister Steven Guilbault said Wednesday.
The minister told attendees at a climate change conference in Ottawa that the government has used updated scientific and economic models to revise its methodology for estimating the cost of climate change to Canadians.
The new figures have been in the works for months, but they follow a recent report by the Parliamentary Budget Officer on the economic costs of carbon pricing. The report does not specifically compare the price of carbon to the price of climate change.
Photo by Sean Kilpatrick, Press of Canada
Union Environment Minister Steven Guilfeld
“The social cost of carbon emissions shows that each ton of greenhouse gases comes at a high cost to the economy,” Guilfeld said at the Net Zero Leadership Summit.
The social cost of carbon estimates the financial impact of each ton of emissions on everything from food production to human health, disaster repair bills and property values.
The idea is that increased emissions contribute more to global warming, and each increase in global average temperature can increase the number and intensity of extreme weather events.
Seven years ago, an analysis estimated that the cost would be around $54 per ton in 2020. Guilfeld said the refurbished model is actually closer to $247.
This year it is even higher, at $261 per ton of emissions, and in 2030 it will reach $294.
“Pause for a moment to understand what this means,” Gielfeldt said.
Every ton of carbon we reduce this year saves society $261 overall, and we’re talking millions of tons of megaton reduction here.
Steven Guilbeault, Federal Environment Minister
Between 2005 – which Canada uses as a baseline for its 2030 emissions targets – and 2021, Canada eliminated 62 million tonnes of greenhouse gas emissions. Based on the new social cost of carbon, this equates to savings of almost 10 billion.
However, this figure does not include the estimate for disposal of this 62 million tonnes. The price of carbon in 2021 is $40 per ton and will rise to $170 per ton in 2030.
Last year, a federal analysis of regulations aimed at reducing emissions from gasoline and diesel indicated the policy would cost about $151 a ton.
In 2017, Canada’s Ecofiscal Commission estimated the cost of the Quebec subsidy for electric vehicles at about $355 per tonne. Most provinces and the federal government now have some form of electric vehicle subsidy.
By 2030, Canada wants to emit at least an additional 231 million tonnes. This would save 68 billion in emissions, but there are no direct comparisons to illustrate the cost of such a target.
Canada has implemented dozens of other policies aimed at achieving this goal, including phasing out coal-fired electricity, building renewable electricity, banning the sale of gasoline-powered cars, and limiting emissions from the oil and gas industry.
A recent analysis of carbon pricing by the Parliamentary Budget Officer indicates that government climate rebates are more than the direct cost of carbon pricing for most households, but when economies of scale such as reduced incomes or job losses are taken into account, many households may be short on cash. 2030 than without carbon pricing.
Guilbeault and others have criticized the report for failing to make clear that climate change is contributing to job losses and lower incomes.
The Social Cost of Carbon analysis is done in collaboration with the U.S. Environmental Protection Agency, which released its draft values last year but is reviewing them before releasing a final version. Canada released its final figures on Wednesday.
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