ARCHIVED - CEPA Annual Report for Period April 2001 to March 2002

• 11.1 Economic Instruments

The Act sets out general authorities or conditions for:

• disclosure of information;
• general regulation-making provisions;
• regulations regarding cost recovery;
• use of economic instruments, namely deposit/refund systems and tradeable unit systems;
• requirements governing publication of various CEPA 1999 instruments in the Canada Gazette;
• boards of review; and
• review of the Act by Parliament every five years.

11.1 Economic Instruments

A central element of Environment Canada's environmental innovation agenda is the use of economic instruments and incentives to achieve environmental policy objectives. Over the past year, Environment Canada has worked, in some cases in collaboration with other federal departments, to explore the potential for economic instruments and incentives to help manage environmental concerns in areas such as climate change, reducing smog, and curbing releases of substances of concern. Examples of activities in 2001-02 include:

• Environment Canada began the preliminary analysis of the potential for cross-border emissions trading of air pollutants (nitrogen oxides and sulphur dioxide) in the power sector. Trading of these emissions in the United States has proven to be an efficient and cost-effective method of achieving emission reductions to address acidification and ground-level ozone air quality concerns.
• Environment Canada has also been an active participant in the work of the National Round Table on the Environment and the Economy in its Ecological Fiscal Reform project. The project has two main objectives: to conduct an in-depth exploration of the concept of ecological fiscal reform, and to focus on a few specific environmental issues with a view to developing a suite of concrete measures. Case studies under this project have considered the potential for economic instruments and incentives in the areas of conservation of agricultural landscapes, cleaner transportation, and chemical substances of concern. Based on the experience from these case studies, the Round Table has concluded that there is a role for ecological fiscal reform in Canada and that it is uniquely appropriate for the challenge of implementing sustainable development. It is now exploring the potential of economic instruments and incentives to reduce or eliminate sulphur and other contaminants in heavy fuel oil.