Higher prices will affect each segment of the economy differently, depending on the intensity of production and consumption emissions. A few sectors will likely experience above-average declines in output.
Overall, the federal government’s carbon pricing policy will shift the composition of the Canadian economy. For example, industries such as mining and transportation will contribute less while the utilities sector will contribute more.
The challenge, then, is to close the gap. While imposing higher carbon prices can help, finding ways to facilitate large-scale funding for technology may have the greatest potential impact over the long run, partly because these technologies can lower emissions while creating considerable economic upside opportunities.
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