The federal government is not interested in listening to its own environmental advisory board, the National Round Table on the Environment and the Economy, whose members it appointed, say opposition MPs.
"I don't know why they're not listening," said NDP environment critic Linda Duncan (Edmonton Strathcona, Alta.) last week. "It really questions the commitment that they have to these statements that they're making, that they take climate change seriously, that they take seriously their obligations to contribute to reduce greenhouse gases."
The NRTEE in its latest report released Jan. 25, and in two before that, has urged the federal government to establish a carbon pricing strategy, preferably through a cap-and-trade system. But the government says Canadians don't want a carbon tax, and cap-and-trade can only be done in lockstep with the United States.
The latest report recommends that the government build upon its current sector-by-sector regulatory approach to meet greenhouse gas emissions reduction targets by implementing a Transitional Policy Option. The four-pronged approach would include the establishment of a national cap-and-trade system. It would forge a middle way to stay in step with the United States, without lagging on Canada's own commitments by including a 'price collar' that limits a Canadian carbon price to no more than $30 a tonne more than an American carbon price. There would be limited international permits and domestic offsets to keep domestic carbon prices lower for Canadian firms, and a technology fund to stimulate investment in emission reduction technologies.
The NRTEE, an independent advisory agency made up of industry, environmental and academic players, appointed by the federal government, has been urging the government to institute carbon pricing for three years. It recommends a cap-and-trade system.
The government has maintained that it's important to harmonize its greenhouse gas emission reductions efforts with the Americans in order to keep Canadian businesses competitive.
The American government came close with a bill to implement cap-and-trade. Then the mid-term elections happened, the political climate changed, and momentum dissipated.
Nevertheless, NRTEE chair Bob Page, a former TransAlta executive, said, "If Canada desires to achieve its stated environmental goals of GHG emission reductions within a certain period, we will need to consider additional steps now, independent of U.S. actions and policy uncertainty," in a news release accompanying the group's latest report.
Canada and the United States have the same target to cut greenhouse gas emissions to 17 per cent below 2005 levels by 2020. The report shows that current federal and provincial measures will cut GHG emissions by 65 megatonnes a year by 2020, only 25 per cent of what's needed to meet that target.
Mr. Page emphasized that Canada's pledge to harmonize climate policy with the U.S. is a "sensible and realistic approach," but he said "we are looking towards conformity in purpose, not uniformity in detail."
But the government is unwilling to take some of the NRTEE's key advice.
"You listen and respect the advice. And some advice we agree with, and some we don't," Conservative MP Mark Warawa (Langley, B.C.), told The Hill Times last week.
"Bottom line: we are not going to support a carbon tax. It's not practical to forge ahead with a cap-and-trade system without the United States participating in a continental approach because it will disadvantage Canadian business," said Mr. Warawa, Parliamentary secretary to the Environment minister. "Whatever we have to do has to be done in a balanced approach where you improve the environment, but you do not kill jobs."
The last election's resounding defeat of the Liberals showed that Canadians do not want a carbon tax, he said.
But industry is not averse to a carbon pricing strategy, or even cap-and-trade, said Alex Wood, a former acting president and CEO of the NRTEE and current senior director of policy and markets at the Canadian green economy think tank, Sustainable Prosperity.
No matter how it gets there, the United States has had continued focus in the last couple years on creating policy to balance carbon and climate change. That's influenced Canadian corporations and, most significantly, the big oil and gas players, to conclude such a policy is inevitable, said Mr. Wood.
A University of British Columbia PhD student surveyed more than two dozen industry associations and petroleum, cement and forestry firms in 2009, the results of which Sustainable Prosperity recently released as a policy brief.
"They're saying: 'We believe, in a choice between regulation and a cap-and-trade system or a market-based instrument, that a market-based instrument is much more economically efficient. We would rather have that,'" said Mr. Wood.
Canadian companies want a predictable policy roadmap so they can make future investment decisions, he said.
"Of course that stands into contrast with the kind of policy the government has said it is now pursuing, which is a regulatory approach," said Mr. Wood.
That regulatory approach has meant Canada has been setting emissions standards sector by sector, and harmonizing wherever possible with the Americans. For instance, it's instituted harmonized standards for cars and light trucks, and is working on heavy trucks.
Travis Davies, a spokesperson for the Canadian Association of Petroleum Producers, said that GHG emission reduction policies must recognize the importance of Canada's unique export-based economy, technology, predictability and stability so companies can make future investment decisions, and harmonization domestically and with the U.S. to the most reasonable extent.
"I think there's really broad acceptance that carbon pricing—whatever mechanism that involves, whether it's cap-and-trade, whether it's a carbon tax, whether it's a carbon levy, or whatever—but a price signal on carbon is important not only from an investment standpoint, but from a consumer behaviour standpoint that's going to really drive Canada's emissions reductions profile," he said.
The Alberta oil sands has been operating under provincial carbon pricing since 2007. British Columbia has its own carbon tax. Quebec taxes gas-buyers at the pumps as a form of carbon pricing. But the federal government has no carbon pricing strategy.
While the NRTEE report suggests Canada proceed with cap-and-trade now, regardless of U.S. policy, "This scenario no longer reflects the reality of Canadian or U.S. climate change policy. In fact, the U.S. Congress appears to have abandoned cap and trade legislation, and is moving in a completely different direction: through the Environmental Protection Agency it is developing GHG regulations for specific sources of emissions—cars, trucks, and large industrial emitters," wrote Environment Canada spokesperson Mark Johnson in an email to The Hill Times.
"Given the need for Canada to harmonize its actions with those of the United States, the scenario examined in the Roundtable report is not particularly relevant or useful for Canadian policy," he added.
The government may feel that way now, David McLaughlin, president and CEO of the NRTEE last week told The Hill Times, and that's its right. The NRTEE provides advice only, he said.
The report features structural analysis that stands the test of time. Canada has a different energy profile than the United States, so it needs to institute a higher carbon price to achieve its targets, the NRTEE found.
"We still think it's useful, and we think it's relevant because the dynamic has changed over time; it may shift later on," said Mr. McLaughlin.
