Title: Reversing Carbon Leakage In The Aluminum Sector Author: Mikela Hein, Jotham Peters Publisher: Navius Research Date: March, 2019 Full Text Article Summary: Canada has competitive advantages in its sectors when it comes to greenhouse gas and CO2 emissions. When Canada’s production is displaced due to policy, domestic greenhouse gas emissions decrease while global
Carbon Leakage & Carbon Pricing
Carbon leakage is what happens when government carbon policy causes emissions to be displaced to another jurisdiction.
If Canada puts a price on carbon, it could reduce emissions and provide taxes that could be reinvested into innovative new technologies that could replace the lost energy and grow the economy. This would leave Canada with a “double dividend” of reduced emissions and economic improvement.
But if instead other nations respond to reductions in Canadian production of natural gas by producing more themselves, then our jobs and prosperity could leak over the border while global emissions increase, especially if the extra emissions are more carbon intensive in other countries, leaving us in a “green paradox.”
If we agree that Canada should be a global leader and do more than its share on climate change we need to think globally. Canadians are the best in the world in many areas and enjoy comparative advantages in carbon that can help the planet.
So what’s going to happen? Will Canada reap a “double dividend,” suffer with a “green paradox,” or will we land somewhere in between?