The Waxman - Markey Bill - Will the US and Canada go Head to Head?

GLOBE-Net
globe-net.com
May 26, 2009

A U.S. House of Representatives committee passed the draft American Clean Energy and Security Act on May 21st (the Waxman - Markey Bill) sparking a flood of commentary and speculation on its potential impacts at home and abroad. Of particular interest to many was the potential impact on Canada’s planned climate change legislation and on the proposed national cap and trade system to reduce greenhouse gas emissions.

Canada’s Environment Minister, Jim Prentice was quoted in a Bloomberg news article as suggesting Canada likely would follow the U.S. lead in trying to stem global warming by passing legislation to limit greenhouse gases that would be similar in scope and focus to that in the U.S., including the linking of trading systems under any ’cap and trade’ system that eventually emerged from Washington.

The draft U.S. legislation, which still needs a full House of Representatives vote and consideration in the U.S. Senate, is a massive document - almost 1,000 pages long - and every page appears to have some elements that could give pause for concern to those seeking to safeguard Canadian interests, particularly to Michael Martin, Canada’s Climate Change Ambassador.

Ambassador Martin and his advisors are pouring over the draft legislation and preparing advice to Environment Minister Prentice and Prime Minister Harper for use in upcoming international discussions leading to the December U.N. meetings in Copenhagen when a new international climate change accord will be concluded - hopefully.

There has been considerable press commentary on one aspect of the draft legislation, namely the power it confers upon the U.S. President to impose on a case-by-case basis ’border adjustments’ (i.e. a tariff) on foreign manufacturers and importers to cover carbon contained in U.S.-bound products. Alberta’s oil sands have been singled out by some commentators as a potential case in point.

The issue goes far beyond the oil sands debate however, and there are many questions yet to be answered in a variety of other economic areas. As noted by Elizabeth deMarco, a member of Ontario Premier Dalton McGuinty’s Climate Change Advisory Panel, "How are we going to measure whether or not we have a comparable compliance system with the U.S.?

"Because in sections 4.12 to 4.16 in Waxman-Markey, it says very clearly the U.S. has complete authority to impose border tariff adjustments on exporters that are exporting products to the U.S. that do not have a comparable compliance system. How are we going to measure that? Based on your cap? Based on the rules of your cap and trade system? Based on GHG emissions per capita?"

The spectre of a softwood lumber type of conflict over carbon issues is not something that can be easily dismissed.

Canada’s Jim Prentice has already expressed his views about this concern. See GLOBE-Net article "Green Protectionism should be the road not taken." And despite the fact that Canada and the United States are engaged in discussions with respect to the harmonization of energy and environmental policies (Clean Energy Dialogue), the realities of American politics have always been that American interest come first when it comes to the allocation of benefits and sanctions.

This is more than evident in the draft legislation itself, within which have been buried enormous subsidies for corporations and regions that are in need of government (i.e. tax payer) largess to finance the development and deployment of emission reducing technologies or to acquire offsets that would soften or delay their transition to a lower carbon future. Already there are efforts underway in many sectors of American industry to find the loopholes, potential subsidies and other provisions of the legislation that can be used to advantage.

As for the harmonization of environmental policies, it is only logical that we do so; the border does not separate the environment, only those who can and will do something to harm or protect it. But there will be no free ride involved; American interests will always be the foremost consideration of U.S. law makers and the ’integration’ of Canada’s climate change strategy with that of the U.S. will not change that fundamental fact.

The key point to note is that we are still in the early days of the debate. The U.S. Bill has several more stops to make before it reaches the White House. But one message is coming through loud and clear: America is back in the climate game.

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