Quebec is in the process of taking a bold step towards North America’s first Cap and Trade system. Bill 42, tabled recentlyis designed to bring in a mandatory Cap and Trade system to Quebec, in line with the WCI, of which Quebec is a key member along with Ontario and British Columbia and California among others. The bill aims to be passed by fall of this year ready to come into action for 2012. The Globe and Mail has the details:
“The first emission caps will be issued between 2012 and 2015, targeting only electricity-producing companies and major industries that emit more than 25,000 tonnes a year of greenhouse gases. After 2015, the second phase will target, among other sectors, transportation as well as home and commercial heating companies.”
As with all Cap and Trade systems, companies that can make reductions will be the beneficiaries as they sell their Carbon Credits to larger polluters. In effect putting a price on pollutions and benefitting those within an industry who can undercut the industry average, profiting from their competitors failures. As the number of credits is contracted over time, companies have the choice of bearing the cost, keeping up with the contraction or best of all, aiming to beat the contraction and gain financial advantage by reducing carbon emissions so as to be able to sell their carbon credits. Part of the beauty of Cap and Trade is that the internal competition between similar industries, in the electricity sector this is most evident, where cap and trade will directly feed down to customers, the designers hope that consumers will favour the cheaper which will in theory become synonymous with lower emitting companies.
Quebec’s move is not just symptomatic of state level leadership in Climate Change but also of what direction Climate Change policy in North America may be taking. Although Quebec has a carbon tax
“Quebec became the first province to create a carbon tax, collecting just under one cent per litre of fuel products from petroleum companies; the aim is to raise about 0 million a year to pay for energy-saving initiatives”
Cap and Trade through the WCI appears be gaining momentum as the favoured form, despite British Columbia’s recent election where the pro-Carbon tax incumbents stayed on. The reasons are numerous but the fundamental issues appears to be the reluctance of politicians to impose anything that would directly tax citizens from the state ( or even has the word in it), Cap and Trade will raise prices for consumers, particularly in electricity, consumers will in theory be able to choose.
The collective approach of the WCI, containing big names such as California, Ontario, Quebec and British Columbia to name a few means that throughout North America, some of the biggest regional economies will be committing to a Cap and Trade system. As far as Canada is concerned AHN news notes this will make up: “80 percent of the nation’s headcount and 75 percent of Canada’s local economy”. The figure is critical on two counts. WCI leaders have been able to show that leadership on Climate Change is possible even in the midst of a recession. Furthermore, strong leadership has kept Climate Change policy in the public domain the in the middle of a global recession.
Where does this leave the Federal Government?
Speaking to the Globe and mail, Quebec’s Environment Minister Line Beauchamp had this to say:
“We hope Quebec’s participation in this common market with Ontario, Manitoba, British Columbia will incite the federal government to co-operate with the provinces to develop a Canadian carbon market compatible with what is taking place elsewhere in the world,”
Jim Prentice, Canadian Environment Minister added his own thoughts:
“I think it is typical of the kinds of efforts that we are making with all of the provinces to harmonize…,” Mr. Prentice said. “And we’ll need to determine the extent to which it’s consistent with what’s been proposed continentally with the United States and also internationally.”
Prentice’s line is symptomatic of the Canadian Government, that of a follower not a leader in Climate Change, despite Harper favouring “intensity based reduction” it appears the clock may be running down as absolute systems as envisaged in Cap and Trade, crop up across North America, partly through the WCI but also through a US federal cap and trade as envisioned in Congressman Waxman’s bill currently trying to get through congress. What may prove harder for Harper is the manner in which Climate Change legislation has managed to stay in the limelight in some of Canada’s largest states, indicating that Canadians may be difficult to avoid it in upcoming elections and that many Canadians may not accept Canada as simply a follower when their own states have proven that leadership is possible.