Canada focuses on carbon pricing while US focuses on emissions
How Canada and the United States are charting different paths to similar GHG reduction goals
By R.P. Stastny
Aug. 24, 2016, 7:46 a.m.
While Canada has historically sought to align its GHG policies with the United States, the differences in the nature of their economies and carbon emissions sources have resulted in different strategies to achieve similar goals.
In Canada, policy efforts are focused on carbon pricing whereas U.S. efforts focus on reducing carbon emissions in specific sectors, says a new report titled The State of Canada and U.S. Climate Policy by information and analytics consultancy IHS Markit.
Power generation in the U.S., which is primarily coal-fired, accounts for 30 per cent of total U.S. emissions, so switching to abundant natural gas-fired power generation is a low-hanging-fruit opportunity to reducing GHG emissions by almost a half.
For Canada, matching a sector approach when 80 percent of the country’s power generation is already zero-emissions emitting because of its reliance on hydroelectric power isn’t an option.
Canada’s largest carbon emitter is its industrial sector, which represents 44 per cent of total emissions. Oil and gas production and refining accounts for 25 percent of total emissions and the oilsands represents just nine per cent of the country’s total. A sector approach to climate policy could hinder international competitiveness, IHS says.
“Unilateral climate policy can add costs to domestic export-dependent firms that their competitors may not face,” said Hossein Safaei, associate director for IHS Energy.
“This weighs heavily given Canada’s close trading relationship with the United States and its large oil and gas sector, which competes globally and with U.S. firms for investment, labour and markets.”
In the absence of an emissions-intensive power sector, Canada is looking at various models of carbon pricing. The federal government has announced its intention to implement a harmonized pan-Canadian price for carbon by the end of this year.
Various carbon-pricing mechanisms at the provincial level could cover up to two-thirds of Canada’s total emissions in 2017. And in Alberta, part its emission strategy involves limiting GHG emissions growth from its relatively carbon-intensive oilsands production.