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Renewable Energy

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Canada should subsidize renewable energy options such as wind and solar power in order to increase the share of renewables in Canada’s energy balance.

Introduction Canada government subsidizes a number of socially beneficial services, including health care, education and energy services. Subsidies to the energy sector mainly are for oil and gas production, however, they are not all socially beneficial[figure 1]. In fact, they have negative impact for the environment and hinder developments of environmentally friendly alternative energy options. Indeed, Canada’s implementation of the Kyoto Protocol is seriously threatened by continued government support for oil and gas production, a sector with large and rapidly …show more content…

However, it can also be problematic because it confuses an end (goods and services valued by consumers) with a means (labour)[3]. Increase in energy price will cause price distortion and result of inefficient production in the market, it tend to reduce consumers and producers’ net benefit, and it lead a higher production cost to domestic goods, which will become more costly to compete in the world market.

Policy Implication In case to shift Canada’s energy balance toward renewable energy without externalities, we need government’s actions. One possible way is to raise tax on the amount of carbon emitted to the atmosphere. If taxes are appropriately calculated, they can help raise the marginal costs of producers of non-renewable energy to equal the social and environmental costs that their activities create. Countries such as Norway, Sweden, Denmark, the United Kingdom, Finland, Switzerland and the Netherlands have already adopted carbon taxes[3]. Sweden, for example, raises US$1 billion per year from its carbon tax and approximately US$10 billion per year in energy taxes, some of which is part of a “tax shift” that goes to help develop renewable energy[3]. Paul Anderson, the CEO of a major carbon-dioxide emitting power company in US, he said “reducing greenhouse gases has become a worldwide political and social imperative… It is an imperative where American

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