As the largest emitter, the power industry has the opportunity to be at the forefront of efforts to reduce emissions and to limit climate change to between 1.5°C and 2°C of global warming, the goal of the Paris Agreement set in December 2015

 Richard Mattison , chief executive officer of Trucost, part of S&P Global.
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Today’s Headlines

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Main Headlines:

Alberta’s Renewable Electricity Program: Purchase Options For Businesses

Not a day goes by without a corporation making news by committing to use renewable electricity. Many Fortune 500 companies have worldwide renewable electricity targets as part of their corporate sustainability plans. There are several ways an Alberta business can acquire renewable energy.

What you need to know

  • Businesses in Alberta can acquire renewable electricity through existing green power options from retailers, buying electricity directly from a renewable generator or purchasing its own renewable electricity project.
  • The simplest way for a business owner to buy renewable electricity is to use off-the-shelf green or renewable power options that retailers currently offer in Alberta.
  • Businesses can acquire renewable electricity in Alberta directly from a renewable generator through a Power Purchase Agreement.
  • A business owner can choose to have their own project to generate renewable electricity on a small scale using Alberta’s micro-generation rules or on a larger utility scale.

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World News

Carbon Taxes Do Not Harm Jobs or Economic Growth

Results from two recent analyses suggest that implementing a carbon tax has no discernible detrimental effects on employment and GDP growth.

conomists broadly agree that placing a price on carbon, whether through a cap-and-trade program or a tax, is a key element of an economically efficient suite of policies to reduce greenhouse gas emissions. In the current US Congress, numerous bills propose the establishment of national carbon tax systems, along with a few that push for cap-and-trade programs. These bills reflect a growing consensus that action is needed at the national level to curb carbon pollution in the United States and that a carbon tax is the most straightforward way to do that. The bills also reflect the existing consensus among economists, as typified by the more than 3,500 economists (including us) who signed the Climate Leadership Council’s statement published in the Wall Street Journal last year, which calls for a carbon tax as “the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary.”

However, a major stumbling block to pricing carbon pollution is concern over the macroeconomic impacts of the policy. The Trump administration’s retreat from national climate policy reflects a belief that ambitious climate action could have detrimental consequences for economic growth and employment. While initiating a process to withdraw the United States from the global Paris Agreement, for example, the president claimed that the cost to the economy would be “close to $3 trillion in lost GDP and 6.5 million industrial jobs.”

How should we assess the economic costs of a carbon tax? Until recently, most analyses have been based on large-scale computable general equilibrium models. One of these models, the Goulder-Hafstead E3 model, is the engine behind one of Resources for the Future’s digital data tools, the Carbon Pricing Calculator. Today, we have enough experience with carbon tax systems around the world to carry out statistical analyses of existing carbon taxes: with the first carbon tax implemented in 1990, we can draw from up to three decades of data. 

Directly examining the empirical evidence has two virtues. First, estimating the real-world effects of carbon taxes on GDP, employment, and emissions reductions speaks directly to concerns that carbon taxes kill jobs. Second, the empirical estimates provide a check on the calibrated theoretical models.

In two recent papers, we carry out an analysis of the 31 countries that comprise the European Union–wide emissions trading system (EU-ETS). While all of these countries price a portion of their emissions through this cap-and-trade system, 15 of the countries also impose a carbon tax, mostly on emissions not covered by the EU-ETS. By limiting our analysis to countries that are part of the EU-ETS, we can identify the incremental impact of carbon taxes on economic output, employment, and emissions by leveraging the variation in carbon tax systems within this group of nations.

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