Ecological Fiscal Reform (EFR) and Energy

Fiscal policy is one of the most powerful means at the government’s disposal to influence outcomes in the economy. The appropriate signals from governments to industry and consumers encourage the optimal allocation of resources to achieve environmental and economic policy objectives at a lower cost.

The goal of the program was to demonstrate how the government could use fiscal policy as a strategic tool to achieve environmental and economic objectives simultaneously. Through a series of case studies and consultations, the Round Table examined how taxation policy could broaden the array of available Canadian energy options by enabling competitive production and use of less carbon-intensive fuels, processes and technologies.

The NRTEE’s research and analysis suggests that market-based instruments that use a mix of economic incentives can be more effective in the long run than measures typically used in the past by governments – laws and regulations. EFR is an example of a successful economic instruments and market-based approach to stimulate a more innovative economy.

The Round Table recommends a constructive and effective approach with a combination of broad-based and targeted measures, including subsidies, tradable permits, credits, user fees and taxes, to encourage reductions in the long-term of greenhouse gases (GHG) and the promotion of key energy technologies.

Economic Instruments for Long-term Reductions in Energy-based Carbon Emissions – State of the Debate report, released in August 2005, synthesizes the major conclusions of the two year multistakholder process and includes a set of recommendations aimed at helping the country take a leadership position in the innovation of technologies that will lay the foundations of a sustainable energy future, in Canada and around the world.