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Business council urges slowdown on carbon trading

| Sourced From Vancouversun |

Many of British Columbia’s biggest export sectors will find themselves at a significant competitive disadvantage if the B.C. Liberals stick to “aggressive” climate policy goals, the Business Council of British Columbia is warning.

The government’s plan to cut industrial greenhouse gas emissions by 33 per cent “cannot be achieved unless the government is prepared to countenance a dramatic scaling back of production and employment in several of B.C.’s biggest export industries,” the council says.

B.C. is a North American leader in greenhouse gas emission reduction policy, along with California, with a 2012 target for implementing a cap and trade system that will put a lid on industrial emissions and create tradable credits for those industries that cut back.

BCBC executive vice-president Jock Finlayson in a letter to Environment Minister Murray Coell and Minister of State for Climate Action John Yap says B.C.’s plan raises questions “as to whether policy-makers have a sufficient understanding of the economic implications.”

The council worries that B.C. will be less competitive relative to its biggest trading markets — such as Washington state — if climate policies advance too quickly.

The letter was submitted in response to consultation papers on carbon emissions trading and cap and trade regulations released several weeks ago by the province as part of its plan to join California and a dozen other states and provinces in the Western Climate Initiative.

“With B.C. being an early adopter and out front, it’s the right thing to do, but when you are the only person out there you start to create a competitive imbalance that ultimately undermines the whole proposition,” council president Greg D’Avignon said in a phone interview.

“It has to do with what’s right for the environment in a smart and pragmatic way.”

BCBC suggests it’s time for the Liberals to “pause and re-set” their climate policies — noting that “the world has not unfolded” with as much vigour on emission policies as the government envisaged when it set out on this course in 2007.

For example, no one in 2007 anticipated the huge potential for expansion of B.C.’s natural gas resources — and the potential role that natural gas could play as a lower-carbon-emission replacement for coal-fired electricity generation in Ontario and the U.S.

Nor has B.C. considered the risk to its own industries from rivals in jurisdictions such as Alberta that are not participating with B.C. and California in the Western Climate Initiative — and could enjoy a competitive advantage over those under tighter emission restraints.

D’Avignon noted that even among member states and provinces of the initiative, not all plan to implement trading systems by 2012.

“Let’s make sure we are doing the best job we possibly can on climate change policy to make sure we are making large gains on reducing greenhouse gases but do it in a smart way given the construct that has happened in the marketplace today.”

The continent’s first voluntary exchange, in Chicago, closed last month due to lack of investor interest — causing some critics to wonder if a government-supported and regulated trading market could suffer the same fate.

Not all observers share the business council’s concern.

Matt Horne, B.C. energy solutions program director for Pembina Institute, supports B.C.’s plan, but believes B.C. must be more, not less, aggressive.

The province envisions the cap and trade system as an alternative to the carbon tax which is now imposed on consumers -on the prices of fossil fuels such as gasoline and natural gas -but Pembina says in its submission that both the tax and the cap and trade system should apply against industry for three years as a strong incentive to taking action.

That way, the government can avoid a scenario where companies opt for whichever system is cheapest — possibly at the expense of emission targets — and defeat the intent of the government’s programs, Pembina suggests.

Companies could get rebates to cover any doubling of their costs under the new system, Pembina adds.

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