On October 25th, the IFD-FSI was delighted to host the Chair of Canada’s Ecofiscal Commission, the vibrant and affable Prof. Christopher Ragan. The lunchtime talk focused on Investing in an Ecofiscal Policy World: The Impacts and Opportunities of Putting a Price on Carbon.
Chris Ragan reminded the audience of the meaning of carbon pricing (whether a tax on carbon emissions or a cap-and-trade system) and referred to Ecofiscal’s preference for carbon pricing that allows emitters to choose their own approach to reducing carbon emissions, rather than regulations on specific technologies or sectors.
Mr. Ragan emphasized the two serious challenges that must be addressed by a successful carbon pricing scheme: household fairness and business competitiveness.
- Mr. Ragan explained the importance of setting policy that would lead to a reduction of carbon emissions without burdening segments of society that would be harmed by increasing costs on basic necessities, such as heating and groceries. He suggested that it was important to “recycle” a portion of revenues collected by governments through carbon pricing in the form of rebates or tax exemptions for low income families.
- On a national scale, Mr. Ragan underlined the need to address possible migration of carbon intensive business activity to jurisdictions without, or with lower, carbon pricing. However, Mr. Ragan aspires to a global carbon pricing, that would mitigate such a risk.
On the impact of carbon pricing on investments, Mr. Ragan put it simply: carbon pricing will reduce profitability for all high-carbon things and increase profitability for all low-carbon things. Since carbon pricing will build this into the cost of business, greenhouse gas emissions will be screened in all investment portfolios, not just those aiming to be socially responsible.