Global warming: Province against province?
A get-tough strategy to combat global warming could produce multibillion-dollar transfers from coal-fired provinces like Alberta and Saskatchewan to provinces like Quebec and Manitoba that rely on hydroelectric power, says a new study from CIBC World Markets. Jeffrey Rubin, chief economist with CIBC World Markets, said he expects Canada will have to adopt an effective emissions credit market that includes strict limits on carbon dioxide emissions and large fines for companies that exceed those limits. Rubin said yesterday that governments in Ottawa and Alberta are pursuing a minimalist policy that will actually lead to significantly higher greenhouse gas emissions. Eventually, he said, Canada will have to get tougher, prodded by a growing movement in the US to combat global warming. “There is more than enough at stake to get all the premiers' attention,” Rubin wrote. “The carbon wars promise to be anything but regionally neutral.” He said a Canadian-based cap-and-trade credit system would entail “very significant transfers” between oil- and coal-rich Alberta and Saskatchewan and provinces that rely less on fossil fuels. Alberta recently imposed new limits on greenhouse gas emissions based on so-called intensity targets. The government said it would fine companies that exceed their limits $15 for every tonne of additional CO2, a figure the former Liberal government and the current Conservative government have also embraced. But environmentalists complain that the $15-a-tonne penalty is simply too small to induce companies to invest in efforts to reduce emissions, and Rubin agrees, seeing $30 per tonne as the minimum level necessary to induce changes.
Alberta and Saskatchewan currently account for 40% of Canada greenhouse gas emissions, and represented 60% of the growth in those emissions between 1990 and 2004. While critics have focused on Alberta's oil sands as a potential source of major increases in greenhouse gas emissions, Rubin said the current interprovincial breakdown has as much to do with how the provinces generate their electricity. Those that rely heavily on coal would be major purchasers of emission credits under a cap-and-trade system, while those that depend on hydro and nuclear could be sellers of credits. Alberta gets 74% of its electricity from coal - the worst emitter of greenhouse gases among fossil fuels - while Saskatchewan relies on coal for 63% of its power, and Nova Scotia, 60%. On the other end of the spectrum, Manitoba generates 98% of its power from hydroelectric, Quebec 95% and Newfoundland 95%. And each of those provinces are planning major hydro expansions. Ontario has the greatest mix of sources, relying on nuclear for 49% of its electricity generation, hydro for 25%, coal for 18%, and natural gas for 7%. Rubin said Ontario would likely be a net seller of credits under a cap-and-trade system, particularly if it proceeds with plans to shutter its coal-fired plants.
(Globe and Mail 070314)
Whee! My native land of Manitoba could make out fairly well with the emissions credit market scheme. Alberta - time to start thinking about electrons.