A recent decision in California may have gone unnoticed in Canada but could significantly affect this country’s climate change and agricultural policy, says a carbon market expert.
The state announced Oct. 20 that it would initiate a cap and trade system beginning in 2013. California hopes the system will reduce its carbon emissions to 1990 levels by 2020.
James Tansey, chief executive officer of Offsetters, a carbon management company in Vancouver, said the Canadian media should have paid more attention to California’s decision because British Columbia, Quebec, Ontario and Manitoba may follow the state’s lead on climate change.
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” The cap and trade system that California approved represents the most significant advance in climate policy in the U.S. and Canada in decades,” said Tansey, who is also a business school professor at the University of British Columbia.
As the seventh largest economy in the world, California’s decision to implement a cap and trade system will create the second largest carbon market in the world.
However, the market could soon become larger because B.C., Ontario, Quebec and Manitoba are partners with California in the Western Climate Initiative (WCI).
Each jurisdiction in the WCI has made a commitment to take action on climate change, which means each province could pass cap and trade legislation similar to the new rules in California.
“We (Manitoba), as a full partner, can come into the program at any time,” said Neil Cunningham, director of climate change and environmental protection with Manitoba Conservation.
“We don’t have climate change legislation in place … but what the WCI does, it creates model legislation and model rules that we would adopt as a province.”
Tansey said Ontario and Quebec seem to be moving forward on their commitments to WCI but B.C. appears less enthusiastic.
“The success of the provincial Liberals in the recent election and the rise of the NDP … bode well for Ontario’s involvement in the cap and trade system,” Tansey wrote in a blog on the Offsetters’ website.
The Manitoba government has consulted the public and industry on the topic, Cunningham said. In its next step, the province will review the consultations and make the appropriate decisions.
Tansey said the four provinces would make the federal government’s position on climate change irrelevant if they decided to follow California’s lead because most of Canada’s emissions would be under a cap and trade system.
As part of California’s trading scheme, greenhouse gas emitters could buy carbon credits from offset projects in agriculture or forestry.
As a result, farmers in provinces that adopted a similar system could sell offset credits to emitters in California.
Agricultural offsets could include manure digesters, using and managing crop residue, replanting trees on marginal land and adopting enhanced efficiency fertilizers.
Tansey said California will set a floor price for carbon emissions next year at $10 per tonne, but prices will be based on what the market will bear.
He estimated that the price of carbon credits will rise to more than $20 per tonne by 2020.
