Effect of carbon pricing on the economy

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The effect of carbon pricing on the economy depends on the design, structure and implementation of the pricing system.

• Most studies suggest continued growth of the economy with a minimal negative effect on the economy in terms of GDP compared to business as usual (BAU; no carbon pricing); some suggest a positive effect

  • Many don't take into account the effect of climate change

• Not all sectors will be affected negatively or positively

• Study of environmental tax shifts in European countries indicated positive growth in GDP following the tax shifts

• One study examined the effect of a $40/tonne of CO2 on Ontario’s economy

  • Ontario’s GDP in 2030 would decrease by 0.6% compared to BAU i.e. the GDP would still grow but would be smaller (0.6 percentage point smaller) compared to GDP not subjected to carbon pricing.

gdp change vs bau ontario 2030 susprosp.png

For more information please visit: http://pricecarbonnow.org/effect-carbon-pricing-employment

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