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BC outlines plans for cap-and-trade

British Columbia is among the few jurisdictions in the world pressing ahead with both a carbon tax and a cap-and-trade system. The province recently released several "consultation papers" that explain how these strategies are intended to interact.

The Carbon Pricing Policy Backgrounder addresses the question: "Why does British Columbia use a carbon tax to incent emission reductions?"

Establishing a price on carbon in B.C. through the carbon tax provides a clear incentive to reduce the use of fossil fuels and limit carbon emissions – as well as promoting the use of lower carbon content fuels and energy efficiency in households and businesses. Energy efficiency gains have the added benefit of long term cost savings for energy users. Cumulatively, this will help B.C. shift to a low-carbon economy. Pricing carbon will stimulate new economic growth and development in markets such as bioenergy and green technology products and services, and also provide new job opportunities for British Columbians.

The carbon tax has the advantage of providing an incentive to reduce carbon emissions without favouring any one way of doing so. Businesses and individuals can reduce the amount they pay in carbon tax – even down to zero – by reducing fuel consumption, increasing fuel efficiency, using cleaner fuels and/or adopting new technologies.

A few pages later, the backgrounder addresses the question: "Why implement a cap and trade system in British Columbia in addition to a carbon tax?"

Like a carbon tax, a cap and trade system provides an incentive to reduce carbon emissions without favouring any one way of doing so, leaving it up to industries and business to find the best and most cost effective ways to reduce carbon emissions. The cap and trade system however, would apply to activities in the B.C. economy that are not currently subject to the carbon tax – such as non-fossil fuel combustion or process emissions from industry. These industrial process emissions comprise almost one third of B.C.'s emissions inventory. A cap and trade system would be the main policy tool to drive emission reductions in these industrial sectors. The cap and trade system can be designed to ensure that carbon emission targets for specific sectors are met. Also, due to the fact that the market dictates the carbon price, it ensures efficient carbon price discovery. Furthermore, by creating a carbon market across a diverse set of emission sources with the potential to link to other regional or global carbon markets, a cap and trade system provides a wider range of emission reduction opportunities and economic opportunities than would be available solely under a provincial carbon tax.

British Columbia has committed in legislation to reduce the province's greenhouse gas emissions by at least 33 per cent below 2007 levels by 2020.

B.C.'s carbon tax was passed in 2008. It was launched at a price of $10 per tonne, and will rise annually until reaching $30 per tonne in 2012.

B.C. joined the Western Climate Initiative (WCI) in 2007. The WCI is a group of seven U.S. states and four Canadian provinces that are jointly developing a regional cap and trade system. Beginning in early 2012, all B.C. facilities emitting more than 25,000 tonnes of carbon dioxide equivalent per year will be subject to a cap. B.C.'s plans for implementing cap and trade are outlined here.

The backgrounder also states:

The most expensive option to address the impacts from climate change is to do nothing and deal with the consequences. Numerous examples from independent modeling in North America, Europe and by the United Nations Intergovernmental Panel on Climate Change indicate that the costs attri-buted to impacts from climate change – such as sea level rise, agricultural crop losses, higher energy costs, health and health related costs – drastically outweigh the costs of mitigating impacts from cli-mate change by putting a price on carbon. As a result, British Columbia is taking proactive mea-sures within the province and actively promoting climate mitigation policies and initiatives abroad.

Monte Paulsen reports on carbon shift for The Tyee.

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