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Tax or trading for Canadian carbon?

Canadians are set to slap the first price tag on their greenhouse gas emissions, thanks to some very different initiatives in the works.

Reuters reported Friday that the long-awaited Montreal Climate Exchange will open on May 30, buying and selling voluntary emissions reductions in the same fashion as the Chicago Climate Exchange, its US partner.

Meanwhile, the Canadian government had a few days earlier put out the details of its plan for mandatory emissions reductions, which had likewise been in the works for over a year (a good summary is here; registration required). They’re proposing to cut absolute emissions 20% from 2006 levels by 2020 (for those scoring at home, 20% down from 2005 levels would be 0% below 1990 levels, compared to the standard-bearing EU’s 20% cut from 1990 levels).

But absolute emissions isn’t what they’ll limit – they’re talking about regulating emissions intensity, or the amount of emissions per unit of production, from 2010. That could make it tough to integrate into a global climate deal, since the EU caps absolute emissions and all three US presidential candidates want to do the same. Interestingly, the plan also mandates carbon capture and storage for oil sands, a carbon-intensive economic lynchpin of the country.

Besides the voluntary market, local measures could already be in play when and if these limits come down. British Columbia is leading the way with what is to be the first carbon tax implemented outside of Europe. Although the tax hasn’t been looking very popular and faces the same too-much-is-never-enough criticism that the EU climate bill came in for, liberal leader Stephane Dion now says he’d like the national strategy to be a carbon tax – or something. Anything. “We can talk about what the best model for putting a price on carbon across Canada might be –– but the fact is we need to JUST DO IT. That is what this provincial government has done, and that is what a Liberal government will do,” Dion said in a speech in Vancouver.

Conservatives, who will be defending their control in the next election, countered with praise for the Montreal market. And while other provinces remain skeptical of the carbon tax, B.C. and Manitoba are considering joining western US states in a new cap-and-trade system – so a regulatory patchwork looks likely. As in the US recently, though, the question is no longer whether the Canadian government should intervene to raise fossil fuel costs, but how.

Anna Barnett

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