What are your thoughts on emission trading?

This past week saw the other shoe drop on the capping and trading of greenhouse gas emissions.

It began last summer when Ontario announced its request to join the Western Climate Initiative (WCI).  As we heard at that time, the WCI is a collaboration by Arizona, California, New Mexico, Oregon and Washington to address climate change. More recently, Utah, British Columbia, Manitoba, Montana and Quebec have signed on as well. Companies that need to increase their greenhouse gas emissions, or cannot meet a government-set cap, must buy emission credits – like carbon dioxide – from those who emit less.

My concern is the McGuinty government will now spend years negotiating and talking about how to set this up – with little action or, for example, adaptation of technology like carbon dioxide capture and sequestration. Government has known about the greenhouse effect since 1952.

To date I have found emissions trading very difficult and complex to explain to people. I get a blank stare when I say to people that Ontario has signed cap-and-trade for carbon dioxide with Utah to deal with climate change. First, people around here have never heard "Utah" and "climate change" in the same sentence. Secondly, they indicate to me that that makes about as much sense as Ontario signing cap-and-trade with Arizona. Then I explain to them that Mr. McGuinty also signed with Arizona.

We've got a lot of work to do on this one.

We have heard rumblings, south of the border, of controversial cap-and-trade legislation initiated by Democrats Henry Waxman and Edward Markey. I assume this is partly in support of Obama's clean-coal initiative. However, we may see protectionist policies take hold.

Federal Environment Minister Jim Prentice recently commented with respect to possible U.S. trade sanctions on imports from countries with higher levels of greenhouse gas emissions – like China, India; perhaps Western Canada. This would be, as he said, a “prescription for disaster.” Trade protectionism under the guise of environmental protectionism. Again, that’s a debate better left between Ottawa and Washington, not Ontario and Utah.

We know fossil fuels, natural gas, coal, oil - that produce carbon dioxide - also provide 77 per cent of Canada’s energy. That’s why Canada has become one of the best places in the world for investment and development.

With this McGuinty ‘green shift’ we must ensure that cap-and-trade does not become cap-and-tax. We must ensure that it does not become a ‘green tax’ or a mechanism to put jurisdictions and companies in Ontario - and in North America, for that matter - at a competitive disadvantage with countries like India and China. I feel that it's not necessary for Mr. McGuinty to try and out-Obama Obama on the cap-and-trade front.

Now, there is historical precedent to the cap-and-trade-like systems rendering successful results in North America. The concept is similar to the emissions trading process agreed to by Ronald Reagan and Brian Mulroney when they successfully addressed sulphur dioxide and acid rain.
Having said that, I do have additional concerns.

Who will keep an eye on the buying and selling of emission credits and the potential for speculation? How lucrative will this be for credit brokers?

This government has to let people in Ontario know how much all this will cost – for home, heating oil, gasoline and diesel, electricity…