Problems plague Canada's emissions trading plans

Thu May 8, 2008 6:54pm EDT
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By Michael Szabo

COLOGNE, Germany (Reuters) - Just as Canada is set to launch a domestic carbon emissions trading scheme in a bid to curb its rising greenhouse gas emissions, a number of issues have surfaced, casting doubt on the country's plans.

Some Canadian provinces have introduced provincial carbon taxes or have opted to join a prospective U.S.-based trading scheme, and threaten to throw Canada's federal emissions trading plans into disarray, Judith Hull, director of trading regimes for Environment Canada, told a carbon markets conference in Germany on Thursday.

"We're going to have a real challenge meshing the federal system with provincial actions," Hull said.

The provinces of British Columbia, Manitoba and Quebec join seven U.S. states in the Western Climate Initiative, a regional cap-and-trade scheme launched as a result of a lack of legislative progress made on fighting climate change by the respective federal governments.

Cap-and-trade involves setting a cap on industrial emissions, then distributing carbon credits to the participants. If they pollute above their carbon quota, participants must then determine whether it's cheaper to buy credits in the open market or to invest in cutting their own emissions.

The Canadian government, echoing the European Union's own $50 billion emissions trading scheme, wants to include all heavy industry in the program, which accounts for half of Canada's total carbon emissions.


Canada ratified the United Nations' Kyoto Protocol under the Liberal government, which ruled from Canada from 1993 to 2006.   Continued...