Canada should be developing its own greenhouse gas (GHG) emission strategy rather than waiting for the U.S. to finalize its own, according to a report by the C.D. Howe Institute released Thursday.
The report said harmonizing emission reduction targets with the U.S. might seem like a good way to reduce the costs associated with GHG reductions. However, starting any carbon trading program at the same time as the U.S. could lead to higher costs for Canadian companies down the road because Canada’s emissions are rising faster than in the U.S. and costs for emission reductions in the oil and gas sector are high.
Similar emission permit prices from a common market in North America may lower the economic costs of emission reductions in Canada, but would also result in large financial outflows to the U.S. The report also noted even if Canada wants to link its carbon market with our neighbors down south, the U.S. has not indicated a guarantee that it would do so.
The report’s authors, Dave Sawyer and Carolyn Fischer, said, “Our assessment indicates that linked allowance trade with the U.S. would not necessarily be the best policy for Canada to pursue as the U.S. develops its own system. Instead, Canada should forge ahead with its own system, while minimizing the risk of getting too far out of step with the U.S. on relative carbon prices.”
By starting first, Canada can get a head start in research and development and become leaders in new technologies in emissions reduction, allowing Canadian companies to keep investment and funds in the country.
Earlier this year, Canada pledged to the United Nations that it would reduce its greenhouse gas emissions by 17% from 2005 levels by 2020, the same target as the U.S. The reductions are far less than the goal set by the European Union, which said it wants to reduce emissions by 20% from 1990 levels by 2020.