Alberta frets over U.S. climate change tariff bill

Renata D'Aliesio
Calgary Herald
August 13, 2009

CALGARY — The Alberta government is worried about a provision in a U.S.
climate change bill that would grant the president the power to slap tariffs on imports that have a carbon footprint larger than American-made goods.

In a recent interview with the Calgary Herald, Premier Ed Stelmach said the province is keeping close watch on the Clean Energy and Security Act, also known as the Waxman-Markey bill.

The proposed legislation was narrowly passed in June by the U.S. House of Representatives but it hasn't received full airing in the Senate.

"The thing that really bothers me . . . is that they're giving the president, presently the way it's written, executive powers of imposing administrative taxes, border adjustment taxes," Stelmach said.

"That is of great concern because we don't know under what conditions those taxes can be applied and on what goods or services."

Alberta's chief envoy in Washington, Gary Mar, said the Waxman-Markey bill is at the top of his priority list.

His office, along with prominent consultants hired by the province, has been lobbying U.S. politicians to moderate some of the "sharper edges" of the Waxman-Markey bill.

The United States is Canada's largest trading partner and Alberta's biggest customer.

"Alberta's standard of living depends much upon our ability to export, and the majority of those exports, by and large, are energy exports," Mar said. "So anything that has a potential to stop our oil or natural gas from crossing the border should be of great concern to Albertans."

Mar said it's difficult to predict what the Senate will do with the divisive legislation. It could pass the Waxman-Markey bill as is, make key changes, or the Senate could introduce an entirely different climate change package when it reconvenes in September.

The legislation could also be put off — and not dealt with until after an important UN climate change conference in December — due to heated debates over health care reform that have erupted in the United States, Mar noted.

If the bill passes unchanged and is signed into law, the U.S. would commit to trimming greenhouse gas emissions 17 per cent from the 2005 level by 2020 and 83 per cent by 2050. Ottawa's most recent targets are to reduce emissions 20 per cent below 2006's mark by 2020 and 60 to 70 per cent by 2050.

Federal Environment Minister Jim Prentice said Ottawa wants to harmonize its climate change polices with the United States, therefore reducing the threat of carbon tariffs on imports.

"At the end of the day, we're confident that Canada will have a commensurate environmental regime, and so those border adjustments won't penalize Canada," Prentice said in Calgary.

Rick Hyndman, the Canadian Association of Petroleum Producers' senior climate change policy adviser, agrees with Prentice's take on the proposed tariffs, which wouldn't come into effect until 2020.

"One is always concerned about protectionist sentiments," he said. "But the idea that Canada in 2020 would not be in the same treaty as the United States or that we wouldn't have policies . . . comparable to the United States strikes me as highly unlikely."

While Alberta's oilsands have been a lightning rod for environmentalists on both sides of the border, University of Alberta economist Andrew Leach suspects the development won't face the wrath of carbon tariffs.

Leach noted the Waxman-Markey bill doesn't target a country's carbon footprint, but instead focuses on a commercial sector's overall greenhouse gas impact, comparing its performance to the same industry in the United States.

"The U.S. doesn't have a competing oil sector," Leach said. "Canadian oil production isn't displacing domestic U.S. production."

Prentice has pledged to meet with all of the country's premiers before the UN climate conference. He has already met with Stelmach on the issue about five times and said they plan to meet again soon.

Meanwhile the Pembina Institute, an environmental think-tank, took aim Thursday at Ottawa's greenhouse gas offset program, saying the proposed system will "lead to a massive overstatement of emission cuts." (link)

The Alberta-based organization said there are at least six key loopholes in the scheme that grant credits for greenhouse gas reductions that would've occurred anyway. The system, Pembina argues, also allows for double counting of emission cuts.

"If these loopholes are not closed, Canada's actual emissions are likely to miss the targets in the government's upcoming regulations for Canadian industry by millions of tonnes," the think-tank said in a statement.

The Pembina Institute compared the currently proposed system to "lax financial accounting rules" that create fictional profits. The report also found the majority of offsets in Alberta's burgeoning system are coming from projects that would have likely occurred on their own.

rdaliesio@theherald.canwest.com

Accounting Loopholes in Government Proposal Risk a Massive Overstatement of Emission Cuts
Pembina Institute releases analysis of Environment Canada's draft offset system, 13-Aug-2009