Mexico, Canada move on cap and trade

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Momentum towards emissions trading is increasing in Mexico and Canada, as the US’s nearest neighbours heed similar moves next door under the Obama administration.

Mexico is in talks with its major emitters in the oil, power, cement, metals, chemicals and textiles industries about capping emissions and participation in a trading scheme, Bloomberg reports. These include the state-owned energy giants Petroleos Mexicanos and the Comision Federal de Electricidad.

The director of environmental issues in the foreign ministry says a cap and trade scheme is currently being designed. Rodolfo Godinez says the government wants to see caps in place as soon as possible to take advantage of green growth opportunities.

Mexico is one of the top five emitters among those nations classed as non-industrialised under UN climate change convention. As such, it faces no mandatory emissions reduction target under the Kyoto Protocol. Like other more advanced developing nations including China and India, however, it is under pressure to commit to firmer action from 2013 in any new treaty to follow Kyoto.

Mexico has already set a goal to cut emissions by 50 per cent below 2000 levels by 2050. South Korea and South Africa are in a similar position. The Koreans are exploring capping and trading emissions while South Africa has set a goal to halt the growth in its emissions by 2020-25.

Canada’s climate change policy has chopped and changed over the last three years under the Conservative Harper government. However, the election of the pro-climate Democrat Barack Obama in the US appears to have re-focused the government on climate policy action.

The Harper government was quick to talk up the idea of a single US-Canadian carbon market under a joint cap and trade scheme when Obama was elected. But the US has shunned that proposal and Canada will now go it alone, according to reports by Point Carbon quoting the chief executive of Canadian firm Carbon Capital Management, Erick Willis.

Willis says the government intends to build a cap and trade scheme around an existing target to cut emissions by 20 per cent below 2006 levels by 2020. The scheme would come into force in 2012 but an offsets programme would be available from 2010 to ease the burden of transition for emitters, Willis said. Canada’s emissions have risen steeply this decade and such a target would still leave emissions above 1990 levels, the Kyoto base year.

Mexico and Canada are major trading partners with the US and talk of carbon tariff penalties from some within the Obama administration is likely to be one of the factors motivating the current moves in Ottawa and Mexico City.

As a December deadline for a new UN climate treaty fast approaches, all eyes are on the US and what emissions reductions commitments it will offer. This is key to breaking a stalemate between developed and developing nations that has prevented a new post-Kyoto treaty from emerging over the past three years.