A North American Carbon Exchange

Mexico, the United States and Canada are three of the world’s most productive, diverse and interdependent economies in the world. In terms of energy systems, however, the three countries are incompletely interconnected and integrated in terms of infrastructure, reserves, operations and standards. This imposes costs, performance and security risks that affect GDP, labour and financial markets that could be mitigated through closer co-operative energy systems planning and interdependence. Future energy challenges facing the three countries, individually and collectively, are formidable. These include rising costs and increasing relative scarcity of both domestic and imported energy supplies, as well as environmental externalities associated with energy production and consumption. The three nations collectively possess a wide range of hydrocarbon reserves, underused non-renewable and renewable energy resources and untapped production and utilization technologies necessary for meeting future energy needs and mitigating the increasing impacts of climate change. Some co-operation is emerging between nations, such as the commitments from all three countries under the UN Climate Accord. Signed and announced in 2021, the commitments include 2030 targets on the path to net-zero emissions by 2050. While the adoption of global and sectoral carbon reduction goals by all three jurisdictions is positive, these commitments, supported by a tri-national carbon trading exchange, would incentivize the greater integration of North America’s energy markets through increased use of the lower carbon energy resources and technologies available in each jurisdiction. The result can be a more resilient energy sector, capable of meeting future demands for transportation, industry, heating and lighting loads that displace historically conventional energy supplies with renewable generation and alternatives that can support a future decarbonized region and world economy.