OTTAWA
,
Nov. 27
/CNW Telbec/ - Canada's energy-intensive industries could be adversely affected by border tariffs if Canadian climate change policies are seen as less demanding than the eventual U.S. legislation, according to a Conference Board of
Canada
report issued today.
"U.S. climate change legislation is unlikely to pass in 2010, and the prospects for a global climate breakthrough in
Copenhagen
next month are dim," said Gary Hufbauer, co-author of U.S. Climate Legislation Implications and Prospects: Challenges for
Canada
, published by the Conference Board's International Trade and Investment Centre. The publication provides a perspective from a U.S. expert on the implications of proposed legislation for
Canada
.
"We now have an idea of the future direction of U.S. policy, especially now that
President Obama
has announced that he is going to offer fixed targets for U.S. emission cuts in
Copenhagen
," said Hufbauer. "The mechanisms envisaged in future U.S. federal and state legislation would affect numerous Canadian industries, and pose challenges to Alberta's oil sands."
Elements of the emerging U.S. legislation that would have repercussions for
Canada
include:
- a highly complex emissions cap-and-trade system with many industries
given "free allowances";
- punitive measures against U.S. trading partners that do not undertake
similar climate action;
- renewable energy standards for electricity generation that could
exclude Canadian hydro power (though Environmental Protection Agency
emissions caps for electricity generators could encourage increased
hydro exports);
- temporary prohibition against states running their own cap-and-trade
programs-this could affect Canadian provinces that are members of the
Western Climate Initiative;
- low-carbon fuel standards at the state level - most prominently in
California - that could negatively affect Canada's oil sands
projects; and
- rebates extended to US firms in excess of their emission abatement
costs that could lower the price of US goods relative to Canadian
ones.
China
- not
Canada
- is likely the intended target of punitive border measures. But if the proposed legislation eventually passes, and if
Canada
does not adopt similar measures, Canada's energy-intensive industries could face carbon tariffs at the U.S. border.
In this circumstance, a number of Canadian industries might have to buy emissions permits at the U.S. border if
Canada
is seen to have climate policies that are less stringent than the
United States
. The most important in terms of trade value are: paper, petrochemicals, plastic materials, iron and steel, aluminum, and other non-ferrous metals. The report notes that some of the proposed US measures could be challenged under World Trade Organization rules.
The Canadian government announced last week that it will delay its own climate policy until the shape of US and global agreements become clearer.
Gary Hufbauer is the
Reginald Jones
Senior Fellow at Washington's Peterson Institute for International Economics, and co-author Jisun Kim is a research assistant at the institute. The Conference Board's International Trade and Investment Centre is intended to help Canadian leaders better understand what global economic dynamics - such as global and regional supply chains, domestic barriers to trade, US policies, or tighter border security - could mean for public policies and business strategies.
For further information: Brent Dowdall, Media Relations, Tel.: (613) 526-3090 ext. 448, E-mail: [email protected]
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