Climate change plan for Canada : tax policy and the reduction of greenhouse gas emissions

Climate change is now recognized as a serious area of environmental concern for all nations. In 1997, the Kyoto Protocol was adopted. The Kyoto Protocol requires 37 industrialized nations to achieve GHG emissions reduction by 2012. The federal government created the Climate Change Plan for Canada in 2002 to establish parameters for fulfilling Canada\u27s obligations to reduce GHG emissions) pursuant to the Kyoto Protocol. This thesis seeks to explore the effectiveness of the various environmental policy tools found in the Climate Change Plan for Canada in enabling Canada to meet its prescribed GHG emissions reduction targets. Through an examination of various environmental policy tools currently utilized in Canada and throughout the world, the effectiveness of the initiatives found in the Climate Change Plan for Canada can be predicted. In this writer\u27s opinion, the most effective policy tools for enabling Canada to fulfill its GHG emissions reduction targets are emissions trading and taxation. However, as the means in which emissions trading is to be implemented in Canada has yet to be determined, I argue that the most effective policy tool is environmental taxation. There is a greater trend in Canada, and internationally, to make use of economic instruments, including environmental taxes, for environmental protection measures. From the standpoint of environmental policy, environmental or eco-taxes may be attractive for several reasons. Firstly, eco-taxes can promote efficiency gains through reallocation of pollution abatement costs and through performance incentives. Secondly, eco-taxes provide innovation incentives. Thirdly, eco-taxes should be less vulnerable to regulatory capture compared to cornmand-and-control regulations. Fourthly, eco-taxes can also generate substantial revenues that can be recycled for environmental improvement investments. Beginning with a brief history of international environmental recognition in the area of GHG emissions, and utilizing a law and economics and taxation theory framework, an analysis is provided to demonstrate that environmental taxation is the most effective tool for enabling Canada to meet its GHG emissions reduction targets as outlined in the Kyoto Protocol