Creating climate plans for changing energy and economic landscapes

What is it about?

Climate change is a pressing issue, and countries like Canada and the United States are trying new approaches to tackle it. Canada uses a “carbon tax” to make polluters pay, while the U.S. gives monetary incentives to companies developing clean energy sources but without a carbon-pricing scheme in place. This raises concerns about market competitiveness and the potential “carbon leakages” or higher emissions occurring from countries with weaker environmental regulations to which companies may move their production in face of these divergent climatic policies. This study assesses the overall economic and environmental impact of Canada’s carbon tax and the U.S. Inflation Reduction Act (IRA) on industries like energy and heavy sectors across North America using a global model, projecting outcomes to 2030. It shows how these nations can get closer to their climate goals and potentially influence global trends.

Featured Image

Photo by Anastasia Zhenina on Unsplash

Photo by Anastasia Zhenina on Unsplash

Why is it important?

Canada's carbon tax and the U.S. Inflation Reduction Act aim to cut greenhouse gas emissions. Using the IMF-ENV model, the study finds these policies will help meet two-thirds of their climate goals by 2030. The economic impacts are limited and mostly affect energy-intensive industries. U.S. policies will boost energy output and lower prices, while Canada's tax will reduce fossil fuel use and increase renewable energy. Overall, the policies have minimal cross-border economic effects and contribute significantly to emission reduction targets. KEY TAKEAWAY: Global crises like climate change require a new approach to planning for the future. Updating strategies to tackle today's challenges can lead to a cleaner economy and better handling of financial risks. Both Canada and the US are cutting pollution without causing big problems for their economies. This shows that good climate policies can help the environment and support economic growth for a sustainable future. This research relates to the following Sustainable Development Goals: •SDG 13: Climate Action •SDG 7: Affordable and Clean Energy •SDG 9: Industry, Innovation, and Infrastructure •SDG 12: Responsible Consumption and Production •SDG 8: Decent Work and Economic Growth