Friday, January 28, 2011

Canada's Round Table on Environment & Economy push a 'move first' approach to Cap-and-Trade

The National Round Table on the Environment and the Economy (NRTEE) dropped a 165 page bombshell into Canada’s climate policy debate on Tuesday. The arm’s-length policy advisory committee painted a complex picture of Canada’s climate policy future. They didn’t say we were between a rock and a hard place, but they might as well have.

They continued their historic support of harmonization with the US on climate policy, but pointed to a difficult paradox posed by that policy track.
Canada’s distinctive emissions profile and energy-economy structure mean that matching our GHG targets with those of the U.S leads to higher carbon prices here. Alternatively, while matching carbon prices with those in the U.S. would reduce competitiveness concerns, fewer emission reductions would actually occur due to projected higher emissions growth in Canada than in the U.S. As a result, Canada would not meet its stated 2020 target. Further, the lower level of reductions could expose Canada to carbon-protectionist trade measures imposed by the United States.

That is a pretty harsh description of an extremely sticky economic situation. However, their solution to the paradox is elegant and strategically precise. Move first.

They recommend a phased approach with an early first move by Canada to establish a modest price for carbon. They argue this would send a real carbon price signal to drive new investment into clean-energy technologies and “would allow Canada to develop institutions to manage a cap-and-trade system."

We would be ready to integrate with the American system when it was implemented (Phase Two). Emissions would be reduced. And “Canadian industry would be well positioned moving into an integrated market”.

Move now. Move quickly. Institute cap-and-trade. Put a price on carbon. Be ready to integrate with the US policy and do well for our economy.

Gosh, you’d almost think prosperity could be coupled with sustainability.

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