CALGARY — A sweeping climate change bill currently winding its way through U.S. Congress could mean higher costs for Canadian manufacturers that sell their goods south of the border.
The Clean Energy and Security Act — which is also called the Waxman-Markey bill after the congressmen who sponsored it — could slap a tariff, or “border adjustment” on imported goods that have a larger carbon footprint than those made within the United States.
“Although it’s climate change and green energy legislation, if you look carefully at it, it’s really trade legislation to a great degree,” said Adam Chamberlain, head of law firm Borden Ladner Gervais’ climate change practice.
Waxman-Markey passed the House of Representatives last month, and will likely be voted on in the Senate later this summer.
It has drawn a lot of concern in Alberta’s oilpatch because of a provision that would limit the use of more carbon-intensive fuel sources, like the oilsands.
But manufacturers elsewhere in Canada are eyeing what limitations — and potential opportunities — the legislation could hold in store.
There are a lot of unknowns surrounding the border adjustment provision, namely how such a tariff would be calculated.
“The devil’s in the details and we don’t know yet,” Chamberlain said.
For example, he said an Ontario company manufacturing a widget might draw its electricity from coal, nuclear and hydro-electric sources.
“The same widget produced in British Columbia, for instance, would probably have a very different carbon footprint because that electricity is largely from hydroelectric,” Chamberlain said.
“While you can say ’Well, it takes this many kilowatt hours of electricity to produce the widget,’ you then have to look at the electricity and the supply mix for that electricity, determine what the carbon footprint is for each kilowatt hour that went into the making of that.”
Canadian companies that make items related to green energy — like parts for wind turbines, for instance — could stand to benefit from Waxman-Markey, which encourages adding more renewables into the U.S. energy diet.
“I would expect companies with niche products that are used in these sectors to be able to benefit very much from this,” Chamberlain said.
“I think the key is looking for the opportunities and exploiting them. And that is going to involve watching what this legislation does and respond to it as it develops.”