The National Round Table on the Environment and the Economy (NRTEE) released the third paper in its Climate Prosperity series last month, titled Parallel Paths: Canada-US Climate Policy Choices.
The report focuses on the important relationship that Canada has with the US and how it affects domestic climate change policy. However, even with significant social and economic integration, the countries boast unique energy economies and greenhouse gas emissions profiles that inform policy design. With the Canadian government’s assertions that it will harmonize climate-related policies with those of the US comes NRTEE’s recommendation of how to harmonize while minimizing ramifications to Canadian society and industry over our American counterparts.
NRTEE differentiates between short- and long-term goals for Canada in its coordination with US climate change policy, allowing phases of implementation to maximize opportunities to adapt to US progress. In the short term, under the umbrella of a Transitional Policy Option NRTEE recommends:
- establishing contingent carbon pricing limiting the Canadian carbon price to no more than $30/tonne CO2e higher than the US price;
- implementing a national cap-and-trade system including permit auctioning and revenue recycling;
- limiting international permits and domestic offsets; and
- establishing a technology fund to keep Canadian carbon price relatively low and aligned with the US, and to stimulate investment in emissions reduction technologies.
These goals would facilitate the longer term recommendation of an integrated North American climate market. Of course, this is based on the expectation that the US will eventually implement its own domestic cap-and-trade system which it is willing to link with a Canadian scheme.
NRTEE operates as an arm’s-length government agency and its two-year Climate Prosperity program works to evaluate climate change-related economic risks and opportunities for Canada. The initiative’s previous two reports benchmarked Canada’s competitiveness in a low-carbon global future and measured the scale of change that the country is expected to face due to climate change.