This week the provincial cabinet is expected to meet to discuss British Columbia’s future role in the Western Climate Initiative, the initiative developed by 11 provinces and U.S. states to set up a carbon cap-and-trade system to mitigate climate change.
Premier Christy Clark is at a crossroads: Do we as a province continue advancing as a green economy leader, using our leadership role in the WCI and growing partnership with California? Or do we take a step back and watch?
The key decision for the cabinet -and one the California government is watching closely -is whether we maintain our role in carbon trading in the largest system outside of Europe. At the start of 2012, the WCI’s capand-trade program -which allows the trade of carbon within the WCI -will begin.
Cap and trade gives companies that reduce greenhouse gas emissions a chance to sell those carbon savings to others not meeting their carbon footprint reduction targets. The cost of buying carbon offsets or allowances will encourage all businesses to reduce their carbon footprints over time.
B.C.’s new Premier Clark is rightfully reviewing cap and trade, to ensure it is in the province’s economic interest. There are some facts that one would hope will convince our new premier to reaffirm the province’s support of cap and trade.
B.C. forestry companies, first nations and businesses have been leaders in the carbon economy. To date, carbon offsets created in forests or by technological advancements that reduce carbon emissions are worth more than $1 billion in future trades. Since energyhungry California will be a net buyer of carbon offsets, we will be able to sell our carbon offsets beyond our borders, a lucrative export for B.C. and a boost to our rural economy.
B.C. took the lead the in cap and trade by creating the Pacific Carbon Trust, building a range of innovative offset protocols and carbon offset procurement processes. This has created a unique cluster of companies with world-class expertise in carbon measurement, management and finance that offer high-paying jobs and is an exportable service.
B.C.’s International Finance Centre believes simple changes to the provincial tax system can attract more talent and investment here to make B.C. a centre of the carbon market. The province’s $94-million endowment of the Pacific Institute for Climate Solutions ensures B.C.’s research universities are at the cutting edge of research into the carbon market and climate change policies.
With B.C.’s leadership in the WCI we stand alongside California, the eighth largest economy in the world, as a serious player in the carbon economy. It’s a unique position among Canadian provinces. Stepping back from WCI would also reduce our bargaining power just as we need to negotiate with California on crucial areas such as capital financing, definitions of clean energy and transmission lines for our multi-billion-dollar investments in new clean energy sources.
Finally, cap and trade in carbon isn’t going away. While carbon trading is not currently the top of the government agenda in Washington, D.C. -and may not be in Ottawa -it is being aggressively pursued by the European Union. The EU is expected to partner with California in the WCI capand-trade program. It means WCI members such as B.C. could find yet another market for made-in-B.C. carbon offsets and allowances. China is also launching its own cap and trade systems.
For the last decade, B.C. has invested a great deal of public and political capital in taking a leadership role in the emerging clean energy economy. It’s been for a simple reason -in a lowcarbon future we have unique advantages offered by our geography.
The Site C Dam, run-of-the-river hydro projects, biomass and geothermal power plants all offer clean energy sources that fit into a world where low-carbon energy will be a preferred energy source. To capitalize on the green advantage, British Columbians need to stay at the cutting edge of research, development and shaping the future of clean-energy and carbon markets.
Our front-row seat in the WCI lets us do that. We should not give it up.
James Tansey is the executive director of the ISIS Research Institute at the University of British Columbia’s Sauder School of Business.
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