Carbon Pricing vs. Low-Carbon Procurement

There is a social cost to carbon (SCC) emissions.  The SCC is a measure of the monetary cost needed to combat the impacts of climate change in our communities calculated by national and regional governments.  It includes economic costs related to managing health-related effects from heat waves, providing flood and other storm relief efforts, fighting additional forest fires and combatting increases in insect-borne diseases to plants and animals.  The SCC is the cost we all bear collectively at the community level for climate change and is expressed as the dollar value of the total damages from emitting one metric ton of carbon into the atmosphere. The current estimate of the SCC in Canada is roughly $40 per metric ton. A carbon price (often called a carbon tax) helps recognize the SCC and damage caused by emissions by adding a cost on carbon-related activities.   

Both a carbon price and low-carbon procurement help to mitigate the damage caused by greenhouse gas (carbon) emissions but do so in different ways. In jurisdictions where carbon pricing has been mandated, product manufacturers and service providers are incentivized to innovate and reduce carbon emissions and therefore reduce the carbon taxes paid.

By conducting low-carbon procurement, purchasers can increase the demand for low-carbon products in the marketplace, regardless of whether the jurisdiction has placed a price on carbon.