In-depth


Image credit: Office of Governor Edmund G. Brown Jr.

Emissions trading gets new member in North America

John Dyer
02 October 2017 | updated 02 October 2017

The emissions trading system between California and Quebec has a new member, but the deal has its critics in the Canadian province of Ontario. California wants to work with other U.S. states to achieve the Paris climate targets.

Boston. The Canadian province of Ontario has joined California and Quebec’s carbon cap-and-trade programme, creating a massive market in North America to help reduce greenhouse gases that cause climate change.

Trudeau supports cap-and-trade

“Climate change, if left unchecked, will profoundly disrupt the economies of the world and cause untold human suffering,” said California Governor Jerry Brown, a Democrat, during a meeting on September 22 in Quebec City with provincial leaders. 

“There’s a lot of money on the other side and that’s the status quo. We’re the insurgent forces transforming. That’s where it’s at.”

The Golden State launched its cap-and-trade programme in 2012. Quebec joined three years ago.

“We believe in concerted and coherent actions with our partners as well as in cooperation to face the challenges posed by this global challenge,” said Quebec Premier Philippe Couillard, a member of Canadian Prime Minister Justin Trudeau’s Liberal Party. 

Global problem needs global solutions

Ontario will officially join in January 2018.

"Climate change is a global problem that requires global solutions,” said Ontario Premier Kathleen Wynne, also a Liberal Party member. 

“Now more than ever, we need to work together with our partners around the world and at home to show how our collaboration can lead to results in this international fight.”

Trudeu supports the effort, but his Conservative predecessor opposed it. Former Prime Minister Stephen Harper hailed from Calgary, a city that has flourished due to the oil industry in Alberta.

Greener companies rewarded

Like the European Union’s Emissions Trading System, the market compels businesses to obtain permits to emit carbon past regulated limits. Businesses that emit less carbon can sell their permits to more polluting enterprises, creating a price point that rewards greener players in the market.

California and the two Canadian provinces are slated to hold auctions four times annually. The last one in August raised $640 million. In California, that money helped pay for the state’s San Diego-to-San Francisco high-speed rail project. 

Programme extended to 2030

The Golden State aims to cut emissions by 40 per cent compared to 1990 levels in the next 13 years. Ontario and Quebec have similar targets.

Earlier this month, before the programme was set to expire, Brown and California lawmakers extended it to 2030. The sixth largest economy in the world if it were an independent country, the state emits around 1 per cent of global carbon emissions, according to government figures.

Conservatives want to pull out

But the deal has its critics. Ontario’s Progressive Conservative leader Patrick Brown, a member of the opposition in the province, said he would pull Ontario out of the deal if his party wins in June 2018 elections. 

Due to its enormous size – its population of almost 40 million is larger than all of Canada – Californians will be buying and selling most of the permits, he said.

“It does nothing to protect the environment,” he said. “All it does is ship hundreds of millions of dollars into the California economy. We shouldn’t be subsidizing the wealthy in Beverly Hills, especially while families here at home are working harder, paying more, and getting less.”

Brown leading U.S. climate efforts

The international deal was the high point of a busy week for Governor Brown, who was travelling the U.S. recently to tout his state’s environmental achievements.

Brown is a leader in a 15-state group, including New York, Virginia and Washington State, which is working to promote the goals of the Paris climate accord. They recently issued a report that claimed they were cutting emissions by as much as 29 per cent compared to 2005 in the next eight years.

In Quebec, Brown said he and his Canadian colleagues needed to act or else Beijing would lead the world on matters of sustainability.

“Whatever anyone else does and whatever Mr. Trump does in Washington, China is on the move with a carbon market,” he said.