How should a Canadian Government set a price for carbon? By legislation, such as a carbon tax? Or by a market based system, such as cap-and-trade ?
In the 2008 Federal Election a majority of Canadians rejected a carbon tax proposed by the Liberal Party. After this defeat, Jim Prentice, then the Federal Minister of Environment, announced that a carbon market was an important building block in the Conservative Government’s climate change plan.
The market was based on a a cap-and-trade system. The system would limit emissions of greenhouse gases but emitters would be able exceed the limits by purchasing offset credits to compensate for their excess emissions. These rules were never finalized and the proposal was effectively dropped.
In October 2010 Prentice resigned from the Government and joined the CIBC. His departure was never explained.
This weekend the Alberta Progressive Conservative Party elected Prentice as leader. He will be the Premier of Alberta until 2016. As premier he will be in a position to collaborate with other provincial premiers in the formulation of a plan to reduce GHG emissions.
Last month those premiers re-affirmed their commitment to a clean energy strategy as a priority for Canada. They approved a Communiqué for the 2014 meeting of the Council of the Federation that stated in its conclusion:
“Premiers agreed on the importance of being aware of the various emission reduction initiatives, ranging from Cap and Trade systems to carbon pricing and innovations, such as clean coal and other technologies. They agreed to take stock of such climate change initiatives and the economic opportunity of global action to address climate change at each of their future summer meetings. In spring 2015, Quebec will host a summit on climate change to which all Premiers will be invited to participate.”
Prentice could convince Alberta voters that regulation of emissions from the tar sands is necessary as a part of a national clean energy strategy. If so Prime Minister Harper could improve his government’s record on climate change by re-introducing a cap-and- trade system.
He could justify the delay by referring to the recessionary climate at the beginning of this decade. And, most importantly, he knows that he will continue to enjoy the support of Western voters.
A surprising development, but don’t dismiss it as highly improbable.
For more information on setting a price on carbon go to the Carbon Forum 2014.