Focus: Ontario lags as Quebec, California move ahead on climate deal

An agreement between several provinces and states to reduce greenhouse gas emissions and work on a regional reduction program is seeing some dramatic action this winter. It’s also seeing some dramatic inaction.

The Western Climate Initiative was an effort to attack climate change on a number of fronts through an agreement between seven states and four provinces. The goal was to cut emissions by 15 per cent from 2005 levels by 2020 through a cap-and-trade program.

California and Quebec are speeding ahead with plans and an agreement with a target date of Jan. 1. But just where Ontario, Manitoba, British Columbia, and the other U.S. states stand isn’t as clear.

The idea of the regional effort was to attack the climate issue head on. Through a co-operative approach, the thinking was that a group of provinces and states could effect change together more efficiently than if they worked individually.

In Canada, Quebec is moving aggressively in that direction. The most populous state of California is as well. The two jurisdictions have developed an agreement to link their cap-and-trade programs for greenhouse gas emissions.

The California-Quebec link would allow companies to use carbon permits issued as part of Quebec’s cap-and-trade program to comply with California’s greenhouse gas regulations.

The link would see larger volumes of emissions reductions and would strengthen the market for carbon permits, proponents say.

“Two jurisdictions are moving forward with some haste and paste,” says Elisabeth DeMarco, a partner at Norton Rose Canada LLP with significant experience in the emissions trading area.

California’s legislation comes into effect Jan. 1 and was set to have its first auction of permits on Nov. 14. A carbon permit allows for the release of one tonne of emissions. Companies get permits through the auctions as well as free allocations. They then trade them in to cover their emissions but they can also sell or trade permits under a shrinking cap. But there are some delays in California’s process.

Several lawsuits, for example, seek to challenge the eight-per-cent offsets. At the same time, there are challenges related to electricity generation regulations.

California is waiting for a report before it can go ahead with its Quebec agreement.

California has also announced its intent to link with Australia, which, in turn, is connected to efforts in the European Union.

“It’s really started to look like a pan-Asian link with Quebec,” says DeMarco.

Meanwhile, DeMarco says the other provinces — Ontario, British Columbia, and Manitoba — “are in the proceeding-carefully” mode. As for the other states — New Mexico, Arizona, Washington, Oregon, Montana, and Utah — there appears to be little action so far.

DeMarco is involved in her firm’s electricity subgroup and spends anywhere from 40 to 80 per cent of her time on related issues.

“This file is like a pendulum,” she says.

“The market has moved so rapidly in the last decade. It has been 10 years to date since we started . . . using emission reductions as a tool.”

The lack of movement outside of Quebec means little action on the file for Gray Taylor. But as co-leader of Bennett Jones LLP’s climate change and emission trading practice, Taylor keeps a finger on the pulse of activity in the environmental sphere in Canada.

Ideally, he says, Canada and the United States would have their own systems. Although there was some initial movement in that direction, neither country went ahead. Instead, some states and provinces pursued the Western Climate Initiative on their own.

“It actually looked like it could be a really useful tool,” says Taylor.

“This is all absolutely necessary stuff. You actually have to do something. From my perspective, you’ve got one state left in and then it’s got four provinces.”

He points to Alberta, which isn’t a member of the Western Climate Initiative, as an example of a province with a system he thinks is effective. That province has essentially tied its emissions program to its gross domestic product and is focusing on the big emitters.

Some movement at the federal level is also encouraging, says Taylor. But he’s critical of Ontario’s efforts. “One of the things you can see is Ontario is really doing nothing,” says Taylor. “Ontario totally should be part of it.”

Ontario maintains it’s still in the program, although it has indicated it’s taking a strategic pause in its involvement in the Western Climate Initiative.

“We’re an active participant and acting as Canadian co-chair,” says Ministry of the Environment spokeswoman Kate Jordan. “We participated in the collaboration. Last year, we did indicate that although we’re still moving ahead . . . we have to first have a balanced approach that will be effective.”

According to Jordan, the province continues to move forward with an emissions program. Work has begun on greenhouse gas reporting requirements for companies, something the government considers an important first step. About 130 facilities have submitted emissions reports for 2011.

In addition to eliminating its coal-fired plants as an electricity source, the province has also introduced a feed-in tariff system to encourage the generation of clean energy.

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