January 7, 2008 / 7:00 PM / in 10 years

Canada needs carbon tax quickly - gov't panel

OTTAWA (Reuters) - The Conservative government needs to quickly impose a price on carbon to stand any chance of meeting its own targets for cutting emissions of greenhouse gases, an official panel said on Monday.

The finding is unlikely to please Prime Minister Stephen Harper, who opposes the idea of a carbon tax on the grounds it could damage the economy.

The National Round Table on the Environment and the Economy said Ottawa had the choice of bringing in either a carbon tax or a cap-and-trade system to limit emissions by industry.

Ottawa, which has abandoned its commitments under the Kyoto climate change protocol, last year announced it planned to cut emissions by up to 65 percent from 2006 levels by 2050 and asked the round table to probe how best to achieve this.

“Market-based policies that put a price on carbon to send an economy-wide signal on emissions are the most effective way to achieve deep, long-term greenhouse gas emissions reductions of the scale being considered,” round table Chairman Glen Murray told a news conference.

“An early and clear price signal is needed to influence the investment decisions by industry in the technology and innovation required to achieve deep reductions.”

A carbon tax would penalize the burning of fossil fuels such as oil and gas and could target industry or consumers.

The round table -- which did not say what it thought a price on carbon should be -- said the cost to Canada’s economy would only be between one and two years of “lost growth” of gross domestic product between 2008 and 2050.

“This is the time to move the discussion ahead. There is a huge sense of urgency,” Murray said.

Green groups quickly applauded the report and urged quick action from Harper. Most environmentalists dismiss Ottawa’s climate change plan as grossly insufficient.

Part of the challenge for Harper is that a carbon tax would most likely have the most impact on the energy-rich western province of Alberta, which also happens to be the bedrock of Conservative support.

Environment Minister John Baird said in a statement that the government would consider the round table’s recommendations, but did not mention the idea of a carbon tax.

The first stage of the government’s plan entails cutting the intensity of emissions by enterprises and then reducing overall emissions by 20 percent from 2006 levels by 2020. Harper says details of the plan will be released soon.

Canada also insists that the fight against global warming will only work if all big emitters, including China and India, accept binding targets. Neither country committed to firm cuts in the first stage of Kyoto.

Canada has a Kyoto target to cut emissions by 6 percent below 1990 levels by 2012. The country’s emissions are now more than 30 percent above those levels.

Reporting by David Ljunggren; Editing by Peter Galloway

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