Better Together? The Implications of Linking Canada-US Greenhouse Gas Policies
AbstractThe Canadian and American economies are inextricably intertwined through trade. As the two countries debate plans to curb greenhouse gas (GHG) emissions, policymakers in both countries must consider how emissions policies, such as an emissions trading system that sets economy-wide limits on GHG emissions and allows firms to trade GHG emissions permits for the right to pollute, might coexist. This paper analyzes the implications of linking elements of potential Canadian and American GHG emissions trading systems, including the scope of emissions covered by the systems, national emissions-reduction targets, emissions permit prices, and cross-border trade of emissions permits. This assessment indicates that linked allowance trade with the US would not necessarily be the best policy for Canada to pursue, as the US develops its own system. Instead, Canada should forge ahead with its own system, while minimizing the risk of getting too far out of step with the US on relative carbon prices. A policy of “go-it-alone” with similar carbon price expectations, and a targeted innovation agenda, seems to be a low-risk strategy for Canada as it develops its emissions policies.
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Bibliographic InfoArticle provided by C.D. Howe Institute in its journal C.D. Howe Institute Commentary.
Volume (Year): (2010)
Issue (Month): 307 (August)
Economic Growth and Innovation; greenhouse gas (GHG) emissions; Canada; US; emissions trading system;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F18 - International Economics - - Trade - - - Trade and Environment
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
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