When Obama's Climate Action Plan Sneezes
I asked Chris Bataille at Navius Research to use GEEM, a CGE model, to assess the impacts on both Canada and the US of the proposed US coal-fired power electricity regulations. The chart indicates the incremental impacts of just the proposed US regulations. Given the integrated nature of the two economies, we see indirect emission reductions in Canada as the US economy demands less coal imports, with income effects lowering demand for Canadian goods, notably vehicles.
Of course there are positive effects on the Canadian economy, where some sectors typically presumed to be emission intensive and trade exposed such as chemicals and petroleum products gain relative to their US competitors. In the case of chemicals, price rises in the US from carbon costs on coal fired electricity means the Canadian sector can likely expand under the proposed rule.
Canadian electricity is the big winner here, with decarbonized electricity from virtually every jurisdiction in the country showing gains from with the proposed US electricity regulations in place effects from the US drop Canadian GDP.
If you really want to dig into the logic, check out this NRTEE Parallel Paths authored primarily by @dalebuegin, with the help of Navius and myself.
