It would be hard to count the number of times our present federal government has insisted that Canada's approach to climate change policy must be "harmonized" or "aligned" with the United States. Yet, despite all the political obstacles to taking serious action to reduce carbon emissions in the U.S., the Obama administration is moving ahead. Canada, meanwhile, appears determined to sit firmly on its hands.
In January, the U.S. Environmental Protection Agency (EPA) will begin regulating greenhouse gases (GHGs) from large industrial facilities such as power plants and oil refineries under the Clean Air Act. It's a modest start, but an important step forward nonetheless.
The requirements will phase in over time, starting in January 2011 with new facilities and expansions that face requirements for other air pollutants, and then applying to all large new facilities and expansions from July onward. Under the regulations, firms must obtain a permit before construction begins, demonstrating that their proposed project is applying the 'best available control technology,' commonly referred to as BACT. This standard is determined by the permitting authority (typically at the state level) on a case-by-case basis, taking into account costs and feasibility. That means new industrial facilities in the U.S. are about to get significantly more energy-efficient while producing fewer GHG emissions. The same can't be said for Canada, where carbon pollution is growing much more rapidly than south of the border and the atmosphere is still largely a free dumping ground for polluters.
Further regulatory tools are available to the EPA under the Clean Air Act if they choose to continue moving forward on GHGs, including (potentially) the establishment of a cap-and-trade system. The pending requirements as well as these potential next steps are discussed in our new briefing paper, "Tackling emissions from industry."
Canada can't afford to sit this one out
While the EPA's imminent move is only a first step in tackling industrial emissions, it's one Canada has yet to take. After shelving numerous plans to address rapidly growing GHG pollution, Canada still has no federal regulations — not even draft ones — for the big industrial emitters that make up more than half of our national emissions — although the federal government has all the power it needs to enact these under the Canadian Environmental Protection Act. By sitting this one out, despite all our talk of policy "harmonization," we may not have any such rules for years to come.
Without new regulations, Canada's industrial GHGs are projected to continue growing, driven more than anything else by new oilsands operations (precisely the sort of projects the EPA's requirements would address). As Environment Canada warned this year, "Petroleum extraction from the oilsands...will put a strong upward pressure on emissions, particularly considering that the oil and gas industry contributed almost 40 per cent of Canada's total emission increase between 1990 and 2008."
There is an urgent need to rein in these emissions.
Importing uncertainty, increasing pollution
Simply following the Americans' lead doesn't come without its risks, however. The EPA's actions — despite being quite conservative — could be stalled by litigation or by an increasingly "laissez-faire" Congress. These hazards further strengthen the case that Canada should finally move ahead with its own approach. Canadian investors need to make decisions with clarity and policy certainty. These decisions should be based on Canada's urgent need to transform our energy system, not on the drama of American courtrooms or the whims of Congress. Many credible analyses agree that Canada should act without delay or risk falling further behind and putting even the government's own emissions reduction goals out of reach.
With the EPA's step forward a month from now, the Government of Canada has lost its last pretext for inaction.
No more excuses — it's time for Canada to get to work.
Update: Excellent Toronto Star op-ed on the new U.S. emissions rules argues that Canada could boost competitiveness while addressing climate change — and without waiting for or harmonizing with the U.S.