Photo: Quebec takes next step towards a cap-and-trade system

By Dale Marshall, Climate Change Policy Analyst

Today the Quebec government tabled the regulations for its cap-and-trade system, a system developed through the Western Climate Initiative (WCI), an assembly of 11 Canadian provinces and U.S. states. The launch will be January 1, 2012. However, the first year will involve only the reporting of greenhouse gas emissions and carbon trading. Legal obligations for industries and enforcement by the government won't begin until January 2013. Industries still face the same emission reduction targets for 2020.

The tabling of regulations is a step forward, and it's hard to blame Quebec for not joining a system that doesn't exist, but the legal delay does raise concerns. First, it gives industry groups that oppose action on climate change an extra year to kill or weaken the system. Yes, even in Quebec, where the business community generally favours action on climate change, there has been some intense opposition from some industrial lobbyists over the past few weeks. I can only imagine what that lobbying will look like in California or New Mexico or even British Columbia.

The other concern is that the system as developed so far is overly complicated and potentially riddled with loopholes. A straightforward system would be easier to understand and communicate but, more importantly, would have greater environmental integrity. Such a system would cover all the major economic sectors, not give any pollution permits for free (i.e., they would all be auctioned so polluters pay for all their pollution), and would severely limit or restrict the use of offsets that necessarily weaken the outcome.

The system as proposed gives away the vast majority of pollution permits for free and has so many "flexibility mechanisms"—measures often advocated by business lobbyists that make the system weaker and less transparent—that it would be difficult to list them all in a blog, much less explain them. Suffice it to say that the potential loopholes put into question whether the cap-and-trade system will deliver the emission reductions in reality or just on paper.

Quebec officials at the briefing assured everyone that the WCI cap-and-trade system is designed to get the desired result: lower carbon emissions and less climate change. And certainly this is a step forward for climate action in Quebec, Canada and North America.

But it will be up to Premier Jean Charest and other premiers and governors to close the loopholes and not cave in to the special interests from large industrial polluters. Because not only do these regulations play an important role in determining Quebec's success at reducing greenhouse gas emissions, with powerful partners like the State of California, the eighth largest economy in the world, it could also form the blueprint for North America's response to global warming.

July 7, 2011

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