OTTAWA — Canada has no choice but to implement a national cap-and-trade system on carbon that would set uniform standards for all industries and provinces, says a government advisory panel.
The report, by the National Round Table on the Environment and the Economy, has been a year in the making and gives a detailed road map for meeting Ottawa’s greenhouse gas targets in a manner it says is the most efficient and least costly.
The report says so-called intensity targets, which the Harper government has recommended as the way forward until at least 2017, won’t work and that Canada should put in place a hard cap regime on emissions by 2015, with auctioning of carbon permits to businesses by 2020.
It also rejects the controversial carbon tax proposed by former Liberal leader Stephane Dion, and now in place in British Columbia as an interim measure, as less effective than cap-and-trade, although both involve putting a price tag on carbon.
But the strongest message from the report is that Canada needs to move now or face dire consequences — environmental, but also economic.
Round table chairman Bob Page says the U.S. under President Barack Obama is moving quickly on capping emissions and will hammer Canadian exports if Canada does not follow suit.
“It is the most serious protectionist challenge we’ve had to face,” he told a news conference Thursday.
“Now we’re going to see in place of the softwood lumber issue, we’re going to see the issue that cuts right across manufacturing in Ontario and Quebec, and natural resource products like the oil sands in Alberta and Saskatchewan … those products will be subject to a carbon intensity surcharge at the American border” unless Canada meets new American standards.
Alberta won’t like it, but the oil sands producers are likely more concerned about being shut out of the U.S. and possibly world markets, said Page, a professor of sustainable development at the University of Calgary.
Canada’s most influential business group was quick to endorse the findings.
“Price signals are an important tool for spurring business investment in new technologies and for changing consumer behaviour, but they must be applied consistently across the economy if they are to be effective,” said David Stewart-Patterson, executive vice-president of the Canadian Council of Chief Executives.
NDP environment critic Linda Duncan also called the recommendations a no brainer, saying the Harper and Alberta governments appear to be the only major players dragging their feet on quick action.
“The longer we wait, the more costly it will be,” she said.
In an email response, Environment Minister Jim Prentice’s office said the minister will review the 121-page report and take a “serious look” at the recommendations, adding that the government’s plan to reduce emissions is on track.
But Liberal critic David McGuinty says the government’s position is now to merely wait for Obama to dictate North American policy.
“We have become policy takers,” he said.
McGuinty said if the government had acted when the key elements of report’s recommendations were proposed by all the opposition parties two years ago as part of the Clean Air and Climate Change Act debate, Canada would not be behind the “eight ball” now having to play catch-up with the U.S.
The report argues it is imperative that Canada moves from the patchwork approach adopted by different provinces and Ottawa, and have a unified policy with identical standards across jurisdictions and industries.
And it says it is critical that Canadian policy be compatible with that of its largest trading partners, particularly the United States.
The cap-and-trade system is designed to put a price on pollution, but instead of taxing energy use by individuals directly, the cost is borne first by large emitters, who are expected to pass it on to consumers. Emissions permits can be traded on an open market between firms that need extra quota and those who have quota to sell.