Canada lags most of its peers in the G7 industrialized nations in putting in place a system to control emissions and faces potential trade reprisals if it fails to take action, environmental groups say.
As world leaders prepare to convene in Copenhagen, Denmark next month to hammer out new targets to control greenhouse gases, Canada still has no draft legislation to introduce a so-called cap-and-trade system, with Environment Minister Jim Prentice earlier this month saying plans were on hold.
"We are clearly being singled out as a problem," said Dale Marshall, a policy analyst with the David Suzuki Foundation, a non-profit environmental group. "The fact we don't even have a draft erodes our credibility."
Under a cap-and-trade system, companies that exceed their pollution targets are forced to buy credits, while greener businesses can earn credits that can then be sold to others. The system has been in place in the European Union since 2005, and U.S. President Barack Obama announced in June this year that the U.S. would also adopt similar measures.
It's the prospect of the U.S. using cap-and-trade that has some worried. In a report earlier this year, an environmental advisory panel to the government warned Canada could face potentially punishing reprisals from its largest trading partner.
Legislation before the U.S. Congress contains clauses that may penalize companies not adopting such measures.
"If the U.S. moves forward and Canada does not have a comparable system, that leaves countries that are not taking action open to carbon tariffs," Marshall said.
There is a cost to maintaining Canada’s current fragmented approach to carbon pricing policies in the form of reduced growth and higher carbon prices over time, the advisory report said.
Liberal leader Michael Ignatieff weighed into the debate yesterday, saying he favours a cap-and-trade system.
The Canadian system must be equitable across all regions of the country, he said in a speech.
“It must not penalize those who have already taken the lead. It must cover all of Canada’s industries, with no exceptions."
Some Canadian provinces, including Quebec and Ontario, have already said they will move ahead to establish a cap-and-trade system. Experts say, however, that a fragmented regional system will not work and may only penalize those greener provinces.
Many blame the problem on the country's biggest polluter, Alberta, and its oil-dependent economy.
"We just don't want to address oil sands emissions," Marshall said, echoing concerns of other other environmental experts.
According to research, the introduction of a cap-and-trade system would only have a marginal affect on gross domestic product growth overall. The advisory body report found growth would be between 1% and 3% lower than current forecasts in 2020 and 3% to 5% lower in 2050.
Jobs in the country would probably grow by 11% in the period even if the system were introduced, the Suzuki Foundation said in a separate report.
The report does not specify how Alberta and Saskatchewan would be affected, however, even taking into account the costs GDP per capita would still be higher than the national average in Alberta and close to it in Saskatchewan.
