Wednesday, May 31, 2006

Canada and Emissions Trading

Canada's Environment Minister Rona Ambrose is considering a system of emissions trading with the EU and possibly the U.S. as part of our "made in Canada" approach to cutting greenhouse gases. From this morning's Globe:

OTTAWA and QUEBEC--Canadian companies could end up buying greenhouse gas credits on the European carbon market as part of the Conservative government's made-in-Canada plan for the environment, says Environment Minister Rona Ambrose.

However, it is not clear whether companies would be forced to take part in such a system.

Speaking after Question Period, Ms. Ambrose said her government is looking at several options, including using the trading market established in the European Union in which companies in some sectors are legally required to reduce their greenhouse gas emissions and, if they exceed their targets, can sell the credits to firms that have not. She also said a similar arrangement with the United States could be considered.

I am not entirely sure how I feel about the whole notion of trading in carbon emissions. On the one hand, if you bring in a legally mandated emissions cap, one strategy for a particular industrial sector (or nation) might be to let 'er rip and essentially pay for the right to pollute (buy purchasing credits from those who have done a better job cutting back), which seems highly immoral.

On the other hand, the desired result is that companies innovate so as to cut their own output, and make a ton of money selling credits to those who have failed. In this way, the Capitalist system is harnessed and directed towards confronting the global warming problem. You give entrepreneurss a chance to make money at it, and you get buy in, in other words.

Which is a nice theory. I have read that the European Emissions Market works, in that trading is done and money made. As for the broader result, who knows? They seem to be doing a slightly better job reaching their Kyoto targets than we are.

In any case, I can't see how you could make this work if the caps and reduction targets set for the various industrial sectors were not mandatory.


Lord Kitchener's Own said...

Funny how trading emmissions suddenly makes sense! LINK

[Ambrose] also said her government's opposition to the trading of emissions credits should come as no surprise to Canadians.

"There's pretty wide consensus now from environmental groups and from industry that that's something that isn't an advantage to Canada and to the environment," she said.

"That is something that will not happen under a Conservative government. The prime minister has been clear about that."

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