The core of this policy would establish a pricing mechanism for emissions, either through an emission tax, a cap-and-trade system or a combination of the two. To provide policy certainty and a level of predictability, the price signal must be communicated clearly, with an expectation that the price of emissions would escalate over a scheduled time period. Attaining deep GHG emission reduction targets will have a minor effect on the long-term growth prospects for the economy. It will, however, cause some economic dislocation and impact, particularly in certain regions of Canada and sectors of our economy. Over the long term these are manageable with the right mix of policy instruments and by adopting a phased, realistic, but sustained implementation approach.

The NRTEE's research and analysis supports a plan that addresses GHGs and air pollutants together in an integrated approach. Important health benefits to Canadians can be realized by doing so. As energy-related emissions of GHGs and air pollutants share many common sources, there appears to be value in designing and implementing concurrently integrated reduction policies and actions.

Finally, it is imperative to note that our research, the conclusions that we draw from it, and the advice that we putting forward for consideration, are based on what we know today, using known policy mechanisms, the best available modelling, and the knowledge base of many experts in the field of climate change mitigation and related disciplines. The state of knowledge on this issue in general, and many of the specific aspects considered in this Advisory Report, is rapidly advancing. Therefore, as policies to address climate change, and emission reductions specifically, are designed and implemented, there will need to be a mechanism put in place that will track the state of the knowledge to ensure that the policies and approaches continue to be appropriate. These adaptive management practices should be built into the design of the policies and approaches Canada adopts, not only to track the effectiveness of our domestic policies, but to also monitor the policies of the international community, and the scientific evidence that will continue to come to light on this issue over time.

Recommendations

Based on the research and analysis contained in this report and supporting documentation, the NRTEE makes the following recommendations to the federal government:

GHG Emissions

• Implement a strong, clear, consistent and certain GHG emission price signal across the entire Canadian economy as soon as possible in order to successfully shift Canada to a lower GHG emissions pathway, achieve the targeted reductions for 2020 and 2050, avoid higher emission prices that a delay would entail and reduce cumulative emissions released to the atmosphere.
  
• Institute a market-based policy that takes the form of an emission tax or a cap-and-trade system or a combination of the two.
  
• Develop complementary regulatory policies, in conjunction with the emission price signal, to address sectors of the Canadian economy that do not respond effectively to such a price signal or where market failures exist. Complementary policies should also provide support for research, development and demonstration of technologies, as well as strategic investments in infrastructure.
  
• Establish a Canada-wide plan, in the earliest possible time frame, that leads to better coordination of complementary federal, provincial and territorial GHG emission reduction policies aimed at common or shared targets, time frames and actions.
  
• Apply GHG emission reduction policies that incorporate adaptive management practices and have built-in monitoring and assessment mechanisms to allow for regular reviews to ensure efficiency and effectiveness. This approach will ensure that progress is monitored, compliance issues are addressed, and policies are adjusted to match the required level of abatement effort, and will minimize and mitigate unanticipated adverse outcomes.

Air Pollutants

• Address GHG emission and air pollutant reductions concurrently to ensure maximum health benefits to Canadians and greater economic certainty for industry, by designing and implementing co-pollutant reduction policies in an integrated manner.

For Both GHG and Air Pollutants

• Implement, immediately, the development and design of market-based policy instruments, plus complementary policies, for Canadian environmental objectives, economic circumstances and technology needs, following broad consultation with industry, environmental and other stakeholders, experts, and all other levels of government, drawing upon international, national, regional and local knowledge and experiences.

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