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Canada must act alone on climate

Carbon price should be C$30/t higher than in US; emissions target to be missed if Canada copies US rules; action on climate would cost 0.1% of GDP growth

CANADA should introduce its own climate-change regulations, including a carbon cap-and-trade system, and abandon its strategy of moving in lockstep with the US, says a federally appointed advisory panel.

The recommendation will have implications for Alberta’s oil sands, where despite a near 40% drop in per-barrel emissions in the past two decades rising production will increase the total volume of greenhouse-gases (GHGs) released by developments.

The National Roundtable on Environment and the Economy (NRTEE) says Canada should proceed independently over the next decade to develop a climate-change policy without waiting to see what direction the US takes.

The minority federal government of prime minister Stephen Harper, despite criticism from the three opposition parties in the House of Commons, has insisted over the past two years that Canada could put itself at a disadvantage against its main trading partner by acting first – especially if it penalised oil-sands producers, which account for more than half of Canada’s crude exports to the US and will soon become the largest single source of foreign oil in the US market.

But the NRTEE, which advises the government on sustainable development, estimates its proposals would trim just one-tenth of a percentage point off economic growth.

“Harmonisation, where possible and when feasible, makes sense for Canada,” says NRTEE president David McLaughlin. “But in the face of persistent US uncertainty as to its own climate-policy future, Canada must look at its own options, in the right way, at the right time.”

Among the report’s four main recommendations, the panel, in calling for a cap-and-trade system, said Canada’s price for carbon should be no more than C$30 a tonne higher than in the US. Otherwise, if Canada and the US set an identical price, Canada would fall short of its goal of lowering emissions by 17% below 2005 levels by 2020, says the NRTEE.

The report said it will be more expensive for Canada to reduce emissions than the US, partly because US industrial infrastructure and coal-fired power plants are older and must be replaced sooner.

Without an independent policy, GHG emissions would be 10% above 2005 levels by 2020, creating a gap of 178m tonnes a year (t/y) between the government’s goal and projected emissions, it says. The NRTEE also urges the use of a technology fund of C$0.5bn-2.0bn ($0.5bn-2.0bn) to stimulate investment in emissions-reduction technologies.

Alberta’s government has pledged C$2bn to support development of carbon-capture facilities in the province, and awarded contracts to companies including Shell, which hopes to capture 1m t/y of carbon from one of its bitumen upgraders by 2015.

NRTEE chair Bob Page says Canada, as a sovereign state, needs to understand how it can meet its environmental responsibilities in a global context.

The Alberta-based Pembina Institute said the report shows that Canada would see strong economic growth even if it led the US in adopting a broad-based price on GHG pollution.

Emissions from the oil sands remain deeply controversial in Canada and the US, their sole foreign market. Pembina says GHGs from developments will triple in the next decade, as in situ extraction methods grow more prevalent. In situ production, which typically involves injecting steam down one pipe to ease the flow of bitumen to the surface, are more carbon-intensive than strip mining, which now accounts for the bulk of oil-sands output.

Several states, led by California, have sought to exclude fuel sourced in the oil sands from their markets. And a coalition of greens and some Congressmen have pressed the US government to reject an application from TransCanada to build a new pipeline extension from the oil sands into the US, citing the development’s carbon intensity.

But recent studies have concluded that fuel from the oil sands emits on average just 5-15% more carbon dioxide than others consumed in the US. Oil-sands supporters, including the Canadian Association of Petroleum Producers, point out that the developments account for just 5% of Canada’s total emissions and just 0.01% of the world’s.

Coal-fired power generation, both in Alberta and across the US, remains the largest sector by GHG pollution and is a more feasible target in any quest to reduce the continent’s emissions, say many analysts.

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