Canada’s government is proposing a new measure to help the fight against climate change. Canada is planning to use an industry-specific cap and trade system or a modified carbon pricing system that sets a ceiling for the emissions allowed for companies to release.
The goal of the government is to limit the country’s greenhouse gasses to almost 40% by 2030 compared to 2005 levels.
There are two options to curb emissions, contained in a discussion paper Environment Minister Steven Guilbeault will publish Monday, July 18th. With the proposals, Liberals are also making an effort to meet their promise made in last year’s elections to implement an oil and gas emissions cap.
“We simply cannot ignore the fact that the oil and gas sector is Canada’s biggest emitter,” said Mr Guilbeault in April during a House of Commons committee meeting.
The first proposal is for a new cap-and-trade system on the oil and gas sector in isolation. The total emissions allowed would be divided into individual allowances which will be allocated to specific companies mainly through an auction.
The funds raised from the auction would go towards programs that help the sector cut emissions – similar to other cap and trade systems around the world.
The second option calls for a modification of the industrial carbon price already applied to the oil and gas sector, possibly by hiking the price itself if needed.
The cap expected to be proposed would be close to the one proposed in the new national Emissions Reduction Plan in March – 110 million tonnes. That represents a 46% cut from 2019 levels.
What would follow next is an input on the options that will be accepted until Sept. 21. Guilbeault targets to unveil the final plan early in 2023.
So far, industry leaders are not opposed to a cap, but they insist it must be realistic and based on consultations about what is feasible. The industry will not accept anything that would drive production cuts and job losses.
A cap and trade system should be implemented in countries around the world like Canada to limit the emissions released by all industries. They should also be rigid and high enough to actually make it really hard and pricey for companies to keep emitting in the short, medium, and long term.