Global warming: A tangled web

Carbon credits, cap-and-trade systems, carbon taxes…

On May 30, Luc Bertrand, the outgoing CEO of the Montréal Exchange, announced the opening of this country’s first regulated environmental market, the Montréal Climate Exchange. For fans of planet earth, this is a good thing — tradable carbon credits will be an important part of so-called cap-and-trade systems, one of the key ways governments hope to fight global warming.

Under these schemes, big polluters are limited to a set amount of carbon they can emit as their share of an industrywide cap. Organizations that can’t keep themselves under their share of the cap will have to buy carbon credits from other industry players, which tilts the overall playing field toward the non-emitters.

Three days after the opening of the Montréal Climate Exchange, the premiers of Quebec and Ontario unveiled plans to implement a joint cap-and-trade scheme. Their announcement came just weeks after Liberal party leader Stéphane Dion said he may make a carbon tax — the other big climate-change policy currently being touted by governments — a key plank in his next election platform. And that came only months after British Columbia announced its own consumer-based carbon tax on virtually all fossil fuels.

Is this country about to implement a web of various provincial, interprovincial and federal cap-and-trade schemes and carbon taxes that will be typically Canadian, i.e., unwieldy and unmanageable? “It seems clear we’re going to get provincial and interprovincial deals along with federal ones,” says environmental lawyer Anne-Marie Sheahan, a partner with McCarthy Tétrault. “A lot of thinking will have to go into how we harmonize these so that we don’t commit double jeopardy in terms of carbon reduction costs and taxation.”