Montreal, November 12, 2015 – As we approach the start of the 21st United Nations Climate Conference in Paris, the MEI is publishing today a voluminous Research Paper on the economic aspects of the fight against climate change.
Based on official sources like the IPCC, the UN, and the International Energy Agency, the Paper presents, in an accessible manner, the basics of this issue. It stays away from emotional and moralizing language, so that public policy choices can be based on the most relevant facts. “We stuck to the facts and to actual results,” says Youri Chassin, Economist and Research Director at the MEI. “Our contribution is focused on the analysis of public policies and on the available choices for dealing with the reality of climate change.”
None of which prevents the authors from criticizing certain policies, all while highlighting the relevance of other measures.
Certain tools have already been deployed by governments, including the carbon tax in British Columbia and the carbon market in Quebec. This last is a relatively effective approach in theory, as the authors point out, because it decentralizes decision-making. The government determines the maximum level of allowable emissions, but does not decide who will emit what. It is the companies subject to the carbon market that carry out this arbitrage as a function of their own various costs and benefits.
The passage from theory to practice nonetheless runs into numerous obstacles, including the fact that existing fuel taxes already amount to nearly $22 billion a year in Canada. As for subsidies to the production of renewable energy, or subsidies toward the purchase of electric passenger vehicles, these are among the most expensive—and so least efficient—ways of reducing GHG emissions.
“Often, opinion leaders speak passionately about our moral responsibility, but forget certain facts. Activist groups and lobbyists sing the praises of certain solutions, but are silent about the costs. Instead, we must examine the concrete results of such and such a policy, and calculate the costs as well as the benefits,” says Guillaume Tremblay, Economist at the MEI and co-author of the publication.
The Paper contains 43 graphs and tables, constructed from a wide variety of documentary sources. A bibliography also allows interested readers to pursue their own research.
“Whatever the result of the Paris Conference, the ensuing public conversation will have to rest on a good understanding of the facts and the available data. We therefore wanted to publish an exhaustive, in-depth study based on sources recognized as global references. Our research seeks to shine a light on some essential elements that are too often absent from the discussion,” emphasizes Michel Kelly-Gagnon, President and CEO of the MEI.
“The importance of the fight against climate change is unquestionable, but the catastrophist attitude that serves to justify draconian solutions with no regard for economic impacts is a hindrance to a rational dialogue,” concludes Youri Chassin.
The Research Paper entitled Practical Guide to the Economics of Climate Change: The Paris Conference and Its Aftermath was prepared by Youri Chassin, Economist and Research Director at the MEI, and Guillaume Tremblay, Economist at the MEI. This publication is available on our website.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
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