The federal and Yukon governments have released the results of an analysis designed to estimate the potential impacts of carbon pricing on the Yukon’s economy, industry, households and greenhouse gas emissions.

But the information comes with a number of caveats, including outdated numbers and questions of data accuracy.

The analysis, led and completed by Environment and Climate Change Canada and the federal Department of Finance with input from the Yukon government, estimates that in 2019 – the year the federal carbon pricing backstop will come into effect in the Yukon – carbon pricing will reduce the GDP by about 0.08 per cent, increasing to a 0.19 per cent reduction in 2022.

However, the Yukon government completed its own analysis to assess the economic impacts of carbon pricing in the territory.

“This analysis indicated that the estimated impact on Yukon GDP is flat – any potential negative impact from the implementation of a carbon price is offset by the introduction of a rebate,” reads the companion document YG provided at a Thursday afternoon briefing on the federal impact analysis.

The federal analysis also noted that “the impacts of carbon pricing will also depend heavily on the way in which carbon pricing revenue is used.”

The Yukon government has committed to returning carbon pricing revenues to Yukoners and Yukon business in the form of a rebate, the design of which has not yet been announced.

A sector-specific impact breakdown is also outlined in the federal analysis.

In 2022, the transportation sector is predicted to see an estimated impact of 8.5 per cent or $12.3 million, from baseline GDP.

The air transport sector is estimated to see a 3.9 per cent or $4.9 million impact in 2022, while the wood and wood products sector is estimated to see an 8.5 per cent or $1.2-million impact in 2022.

The analysis estimates the impact on all other sectors, including mining, will be minimal.

“Efforts are currently being made to ensure that Yukon’s industries are not at a disadvantage when compared to industries in southern jurisdictions,” the Yukon government analysis states.

These efforts include participation in a national working group to address competitiveness risks of “emissions-intensive trade-exposed sectors, including mining.”

The federal analysis puts the average carbon pricing impact per household in the territory at about $260 in 2018.

But that’s calculated based on a $10 per tonne carbon price in the territory for the year.

The federal government has altered its plans, with the introduction of the federal carbon pricing backstop in the Yukon now set for Jan. 1, 2019 at $20 per tonne. That’s slated to rise by $10 per tonne per year to $50 per tonne in 2022.

“It’s reasonable to assume that the impact of $20 a tonne in 2019 will be approximately double those figures in the study for 2018,” Kirsten Burrows, a senior analyst at the Yukon government Climate Change Secretariat, explained to media Thursday.

But that rule can’t be accurately applied to all 2018 numbers in the analysis – like those that reflect household impacts.

In addition to the direct carbon pricing costs that Yukon households will pay when buying fossil fuels like gasoline to which a carbon price is applied, the analysis also considers the indirect costs of carbon pricing that are embedded in commodities, like groceries, that households consume.

Direct costs “can only arise from purchases within the territory,” while indirect costs can also arise from Outside, the analysis explains.

“Given that Yukon residents and businesses must import the majority of their fuel and other goods from outside the territory, many of those products already have a carbon price embedded within them if they come from one of the provinces in Canada where a carbon pricing system is already in place,” Mark Johnson, an Environment and Climate Change Canada spokesperson, explained in an follow-up email after the briefing.

“As of 2014 (the most recent year of data), about $1 billion out of $1.1 billion worth of imports from elsewhere in Canada was from the ‘big four’ provinces that already have carbon prices. These costs are already being paid by Yukon residents and businesses.”

The indirect cost portion of the carbon pricing household impact value for 2018 should not be doubled to come up with 2019 figures, media were told at yesterday’s briefing. That makes it a challenge to calculate accurate household impact figures for 2019.

Environment and Climate Change Canada was not able to provide those numbers before this afternoon’s press deadline.

Johnson was able to provide a household impact estimate for 2022, when a carbon price in the Yukon will be set at $50 per tonne.

On average, a Yukon household will pay about $760 in 2022 as a result of carbon pricing, including direct and indirect costs.

The analysis also found that carbon pricing impacts cost higher-income households more in absolute terms, as they spend more. But lower-income households tend to pay more as a share of their expenses.

The household impact of carbon pricing is also expected to be larger in remote areas than in Whitehorse.

“The modelling results presented in the federal analysis are useful in giving a sense of potential impacts,” Burrows said.

There are always limitations to modelling, and these results should be interpreted as estimates, she emphasized.

“While we have some concerns regarding the accuracy of the federal government’s data, and the data limitations for Yukon, the results are similar to what we expected.

“One thing we want to make clear in that the federal analysis does not incorporate any data reflecting the fact that Yukon government will be rebating revenues generated by carbon pricing.”

This will likely offset many of the potential impacts the analysis outlines, she said.

However, the rebate will only include those direct costs of carbon pricing in the territory.

And, as the federal analysis notes, nearly three-quarters of the estimated cost to households resulting from carbon pricing are comprised by embedded or indirect costs.

The federal analysis estimates that a carbon price will reduce emissions by 2.2 per cent from the projected business-as-usual baseline in 2019, increasing to a 5.4 per cent reduction in 2022.

“Overall, economic analysis and growing international experience indicate that carbon pricing is the most efficient measure to achieve reductions,” the analysis notes.

“Notably, these estimates also do not consider the cost of global inaction on climate change.

“The impacts of a changing climate are already being felt, and the costs of inaction are much greater than the costs of addressing climate change.”