Canada faces huge price tag for reducing carbon emissions by 20 percent

113.5 gallons of gasoline produces 1 metric ton of carbon dioxide. A C$100 a metric ton tax is the equivalent of an 88.1 Canadian cent per gallon tax. The proposed US policy would force an even greater reduction in Canada's carbon emissions and thus an even greater increase in taxes. That works out to be a 22 percent increase in the cost of Canadian gas, which is currently selling for $3.41 US. Given a US price of $2.04, a 73 US cent increase would increase prices by 36%.

A C$200 a metric ton tax would of course double all this, but note that even this won't come close to producing the 65% cut in emissions desired by 2050. The WSJ has this:

Canada needs a carbon price of C$100 a metric ton to help meet national emissions goals by 2020, a policy group said Thursday, as it set out recommendations for unifying Canada's fragmented environmental rules.

The high carbon price - well above the federal government's $20 estimate - is essential to meet Canada's target of slicing a fifth of 2006 greenhouse-gas levels by 2020, the National Round Table on the Environment and the Economy said in a report.

Prices would be capped at C$200 a ton in 2025 to relieve the cost pressure on participating industries, bringing in other measures to meet the 2050 goal of a 65% cut in emissions.

Existing provincial policies should be harmonized with a Canada-wide cap-and-trade system by 2015, the report said, which would set a fixed emissions limit allowing participating facilities to buy and sell emissions credits as needed.

These emissions credits, initially handed out for free, would be fully auctioned off by 2020, raising C$18 billion that would primarily be used to boost clean-technology development. Part of the revenue would also go toward cutting corporate and personal taxes.

Canada's federal government has chosen to target emissions intensity - the ratio of greenhouse gases to gross domestic product - instead of an overall limit, saying that adhering to stricter rules would devastate the economy. But U.S. moves to toughen up domestic climate-change policy may force the Canadian government's hand, said NRTEE chairman Bob Page. . . . .

The proposed cap-and-trade system could shave up to 2% off Canada's projected growth for 2020, and up to 6% off estimated growth for 2050, according to the report. . . .

Waxman proposes a 20 percent cut in carbon dioxide from 2005 levels by 2020, an even larger reduction than that proposed for Canada. He promises a 83 percent reduction by 2050.