Trading off political acceptability and economic efficiency: Policy options for reducing Canada’s electricity and transportation emissions

This study used the energy-economy model CIMS to assess policy options for achieving Canada’s 2030 emissions reduction commitment under the Paris agreement, with a focus on electricity and transportation sector reductions. The results found that existing and promised policies will likely be far from sufficient to achieve the Paris target. Two alternative approaches to close the gap to achieving the target were explored: one relying solely on emissions pricing and one relying primarily on flexible regulations. While emissions pricing is generally regarded as the most economically efficient way to reduce emissions, the results found that an emissions price on the order of $200/tCO2 would likely be required to achieve the Paris target, which would likely be very difficult politically to implement. The proposed flexible regulations approach offers an alternative that may be somewhat less economically efficient but may have a better chance of being implemented and thus achieving the target.