Could carbon be the next softwood lumber?
We here in the Interior of British Columbia know only too well the measures that those south of the 49th parallel will go to get us to conduct our business their way. We have a softwood lumber agreement that no one really likes, but we accepted because not having one would be even more unpalatable and costly.
Even though the world is immersed in how to deal with the economic crisis, one of the biggest emerging markets in the world is carbon. Or, more aptly, carbon credits. Even though here in British Columbia we have a carbon tax, the cap-and-trade system is generally becoming more accepted around the world. Under cap-and-trade system, we will put a cap on the amount of greenhouse gas emissions allowed. Companies who produce less than what they are allowed, can then trade (or sell) their carbon credits to companies exceeding their limit. Sound innocuous enough.
However, Aldyen Donnelly, president of WDA Consulting Inc. and the Greenhouse Emissions Management Consortium in Vancouver, says U.S. laws regarding a cap-and-trade will have far-reaching implications in Canada. According to Donnelly, negotiations are now underway to establish North American quotas. There’s that magic word for us who have been through the softwood wars – quotas.
If Canadian carbon quotas are linked to the U.S. quotas, guess who loses? Not the Americans.
“The U.S. Democrats’ cap-and-trade rule-making intentions are outlined, in detail, in two bills that passed second reading (with the support of Obama, McCain and Clinton) in the U.S. Senate in Nov. 2007, in the “Dingell-Boucher” draft climate change bill that was tabled in the U.S. House on Oct. 8, 2008, and in a couple of new U.S. laws that came into full effect in Sept. 2007 and Jan. 2008,” writes Donnelly. “These bills, in combination, leave little about the U.S. cap-and-trade system design to the imagination. They combine to establish unilateral U.S. Congressional authority to veto the level at which Canada’s initial and future national carbon quota caps are set, and require Congress to remove U.S. approval of or dictate changes to Canada’s quota levels any time it is in the U.S.’s economic interest to do so.”
Sound familiar. It sure does. Donnelly adds that Canadian companies exporting to the U.S. will have to remit detailed operating information to the U.S. government or face carbon tariffs.
Now is it starting to sound familiar? Sure does.
“The day after the U.S. cap-and-trade regime is operational, Canadians will have to buy U.S. quota to cover all of our carbon-based exports, even if they are substantially less carbon-intensive than the U.S. comparables,” says Donnelly.
Getting even more familiar, isn’t it?
Don’t get me wrong, some sort of cap-and-trade system is not only inevitable, it’s necessary as we attempt to deal with our greenhouse gas emissions. However, giving up our sovereignty shouldn’t be a byproduct.
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