UN Conference on Climate Change

December 2, 2013

Recently, countries around the world, including Canada, met in Poland at the UN conference on climate change to continue negociations toward a new global treaty to reduce greenhouse gas emissions (GHGs).

Canada’s position is that any new treaty should include all major GHG emitters. The Kyoto Protocol, a previous treaty which Canada withdrew from, did not include major emitters like the United States, China or India.

The federal government has committed to reduce GHG emissions by 17% below 2005 levels by 2020. In order to meet this objective, we are implementing a sector-by-sector regulatory plan to reduce these emissions.

We have already taken action to reduce emissions in the transportation sector, the largest source of GHG emissions in Canada, accounting for 25% of total emissions. The new passenger car and light truck efficiency standards are expected to reduce fuel consumption by 50 per cent by 2025.

The government has also introduced tough regulations to reduce emissions in Canada’s coal sector, becoming one of the first major economies to ban the construction of traditional coal-fired electricity generation units.

However, more action needs to be taken and the government is expected to introduce regulations to reduce emissions in the oil and gas sector.

Ideally, whatever form the plans to reduce emissions take – whether in the form of regulation or carbon pricing – it is important that these plans not distort the marketplace. In other words, internalizing the pricing of carbon in our economy should be done in a way that is consistent across economic sectors. In the interest of national unity, it should also be consistent across the regions of the country.

However, in practise, costly distortions in the marketplace do occur. The new wind farm projects in Wellington-Halton Hills, a result of the province’s Green Energy Act, are a very visible example of the market distortions that can take place.

Internalizing the pricing of carbon in our economy in a way that is consistent across economic sectors, rather than distorting the marketplace through subsidies, should be the goal when reducing GHG emissions.

As the world works toward a new global treaty to reduce GHG emissions, governments in Canada should keep this in mind as they roll out GHG reduction plans for the rest of the Canadian economy.

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