With
the goal of reducing greenhouse gas emissions
(GHGs) in the province by 33 per cent by
2020, British Columbia has set some of the
most ambitious greenhouse gas reduction
targets in the world. B.C.’s position as
a partner in the Western Climate Initiative
(WCI) will play a significant role in achieving
this goal.
The WCI is the largest
climate collaborative in North America,
representing approximately 73 per cent of
the Canadian economy and 20 per cent of
the U.S. economy, as well as 50 per cent
of all greenhouse gas emissions in Canada.
It was created in February 2007 by the governors
of Arizona, California, New Mexico, Oregon
and Washington with the long-term commitment
to significantly reduce regional greenhouse
gases and fight climate change. In April
2007, British Columbia was the first Canadian
province to join. Since that time, Ontario,
Quebec and Manitoba in Canada, and Utah
and Montana in the United States have become
partners as well.
The 11 WCI partners
share a commitment to identifying, evaluating
and implementing collective and cooperative
ways to address climate change through a
regional reduction of greenhouse gases and,
as part of this commitment, are currently
working to design and implement an international,
comprehensive regional cap-and-trade program.
A cap and trade program sets a clear, mandatory,
enforceable limit on greenhouse gas emissions
and then allows the market to identify the
most cost-effective ways to achieve the
limit. The state or provincial government
sets an absolute aggregate limit (or “cap”)
on greenhouse gas emissions from a sector
or multiple sectors. Tradable emissions
“allowances,” or permits, are then distributed
in an amount that equals the total emissions
permitted by the cap. These allowances can
be distributed by auction and/or be allocated
at no cost. Partner governments will specify
which entities must surrender allowances
to cover their emissions.
At the end of September,
the WCI released a proposed design for a
market-based cap and trade program aimed
at reducing the greenhouse gases that contribute
to global warming.
This program is a central
component of a comprehensive regional effort
to reduce greenhouse gas emissions by 15
per cent below 2005 levels by 2020. When
implemented, the new, multi-sector program
would be the most comprehensive carbon-reduction
strategy designed to date. It would cover
nearly 90 per cent of the region’s emissions,
including those from electricity, industry,
transportation and commercial facilities.
Based on extensive study
of existing programs, economic analysis
and extensive stakeholder consultation,
the cap and trade design is intended to
lower the cost of achieving emission reductions
while mitigating the economic impact on
consumers and businesses. The low-carbon
economy the cap and trade program will encourage
is expected to produce a variety of tangible
gains throughout the region. The program
would slash climate-changing greenhouse
gases, spur growth in new green technologies
and help build a strong clean-energy economy.
All of the WCI partner
economies will need clean energy technologies
and verifiable carbon offsets. British Columbia
is well positioned to provide these solutions
to our partners, attracting new investment
and jobs to communities across the province
in the process.
The proposed design
balances principles adopted by the WCI partner
jurisdictions to maximize total benefits
throughout the region, including reducing
greenhouse gas emissions, diversifying energy
sources, and advancing economic, environmental
and public health objectives by also reducing
other harmful pollutants.
The WCI cap and trade
program will cover emissions of the six
main greenhouse gases from the following
sectors of the economy:
Electricity generation,
including imported electricity
Industrial and commercial fossil fuel combustion
Industrial process emissions
Gas and diesel consumption for transportation,
as well as residential, commercial, and
industrial fossil fuel uses not otherwise
covered
Covered entities will
be required to surrender enough allowances
to cover emissions that occur within each
three-year “compliance period.”
The recommendation is
for the first phase of the cap and trade
program to begin on Jan. 1, 2012, covering
emissions from electricity, including imported
electricity, industrial combustion at large
sources, and industrial process emissions
for which measurement methods exist. The
second phase would begin in 2015, when the
program expands to include transportation
fuels and residential, commercial and industrial
fuels. In fact, as the proposal includes
residential, commercial and transportation
emissions, the WCI has explicitly recognized
British Columbia’s carbon emissions tax
as a comparable approach, better facilitating
B.C.’s participation.
By including features
such as allowance banking and offsets, the
design recommendations support a strong
and balanced cap and trade program that
takes advantage of the economic opportunities
from taking early action on climate change.
A limited number of
allowances will be available to entities
covered by the program. It is important
to note that emissions allowances are not
considered property rights. Rather, they
are permits that authorize firms to emit
a specified amount of greenhouse gases.
Companies covered by
the rules will be able to purchase allowances
at auction, buy and sell them on secondary
markets, or bank them for future use.
In certain cases companies also will be
able to purchase a limited number of offset
credits that reflect reduced carbon emissions
elsewhere. They may also be able to purchase
allowances from other comparable cap and
trade programs approved in the future.
In crafting its cap
and trade program, the WCI Partners carefully
assessed the designs and performance of
programs such as the U.S. Environmental
Protection Agency’s Acid Rain program and
the European Union’s Emission Trading Scheme.
The design recommendations take into account
lessons learned from existing programs and
reflect the diversity of the WCI Partner
economies, including energy production and
consumption patterns.
For more on what British Columbia is doing
to fight climate change, visit www.LiveSmartBC.ca.
For more information on the WCI and the
proposed design for the comprehensive regional
cap and trade program, visit www.westernclimateinitiative.org.
