VANCOUVER — Canadian demand for carbon credits will continue to outstrip supply, making links to an international trading system key, a clean power conference was told Monday.
Robert Page, chairman of the national roundtable on environment and economy, said Canada needs to be open to a possible North American carbon market which is a possibility under the U.S. system now being proposed by the Obama administration.
“Canada will not move until they see the Obama plan passed and implemented,” Page said at the Independent Power Producers Association of B.C. conference on Monday
He also said access to international markets will be a “safety valve for cost containment.”
Page also predicted the Canadian market will be a hybrid cap and trade system, with some international trading restrictions.
“Once (Canada) sees the U.S. legislation it will move quickly,” Page said.
However, he noted that there will still be a lot of red tape trying to work out a system that will co-ordinate carbon markets operating in many provinces.
Issues to consider range from registration of credits to verification and certification.
Page said he thinks there will be a North American cap and trade system by 2012 but that it will only be a partial system.
“Carbon market trading in Canada is still a damsel in distress,” Page said.
Europe is the only area of the world with a full carbon market, with trading currently at about 15 euros – or $20 per tonne of CO2.
The U.S. system is currently pending house and senate approval.
Scott MacDonald, chief executive of B.C.-based Pacific Carbon Trust, agreed supply of carbon offsets in Canada is a concern.
“It will be pivotal to see what the federal government does next,” he said.
Srikanth Venugopal, director of environmental risk at TransCanada Corp. (TSX:TRP), said the uncertainty around compliance and regulation is an issue for companies such as his.
He urged the provinces and federal government to develop a single greenhouse gas reporting system to cut administration and other costs for carbon trading.
“Companies can’t wait for certainty and TransCanada isn’t,” Venugopal said, adding that his company is working ahead to plan for an official carbon market in Canada.
James Tansay, a professor at the Sauder School of Business at the University of British Columbia and president of Offsetters, a climate change consultancy, said the current “voluntary offset market Is thriving today with about 80 companies participating so far.
Tansey said companies see big benefits from offsets that include “brand exposure” and limiting risk.
However, he agreed red tape has been a problem in the European system and needs to be diminished in Canada.
He said many companies are still confused about the different ways to reduce emissions from taxes to cap and trade, and how they will be impacted.