SCOTT SIMPSON, Vancouver Sun, July 30, 2010
But a government official says cap-and-trade program, carbon tax will be mutually exclusive
British Columbia industries will face two sets of environmental regulations for their greenhouse gas emissions.
At a conference call on Thursday by the Environment Ministry's Climate Action Secretariat, a government official said B.C.'s major industries will still pay carbon taxes after the 2012 introduction of a cap-and-trade program regulating their smokestack emissions.
Cap-and-trade regulations will apply to emissions from stationary assets such as smelters and gas processing plants, while the carbon tax would apply to transportation fuel such as diesel for large mining trucks.
Secretariat chief negotiator Tim Lesiuk said the taxes would be mutually exclusive.
"There have been repeated commitments from the government that we won't double-regulate emitters," Lesiuk said.
"Cap-and-trade would only cover up to one-third of B.C.'s emissions. We will put those emissions under the cap and trade and not have them under the carbon tax.
"The other two-thirds of the emissions in B.C. would remain under the carbon tax -- the transportation, residential and commercial.
"We are also working with the federal government under our agreement in principle to ensure that there isn't a double regulation between the provincial government and the federal government."
The secretariat promised two weeks ago that it would be releasing a pair of discussion papers on the new regulations, but it was announced during the conference call that the release will be delayed until mid-September.
However a number of details about the structure of the new program were discussed.
B.C. is introducing the regulations as part of its commitment to the Western Climate Initiative, a group of 11 North American provinces and states that have agreed to form a single association in support of greenhouse gas reductions -- employing tactics such as the establishment of a carbon credit trading hub.
Lesiuk said the trading hub will be open to the public.
That means speculators such as U.S. investment houses, hedge funds and commodity traders will be able to trade in credits representing individual tonnes of emission -including the use of financial products such as futures contracts and derivatives.
Lesiuk said the B.C. Securities Commission would be involved in development of the new trading product -- which could potentially drive up the price industries would have to pay if they want to ramp up production (and increase their own emissions tonnage).
One participant in the call, carbon market analyst Alyden Donnelly, suggested in a subsequent interview that if the carbon tax and cap-and-trade systems are successful in driving down emission levels, the government will see its carbon-related revenues drop.
That would have a negative impact on revenue to the province, since the carbon tax in particular was designed to be revenue neutral.
If revenues from the carbon tax drop, there's no mechanism other than a tax increase to make up the shortfall, Donnelly said.
Several jurisdictions in Europe, where carbon trading schemes are well advanced, are already experiencing shortfalls of this nature, she added.
Conference call participants were also warned by a representative from the single largest participant in the Western Climate Initiative that it may be forced by the state's voters to pull out of the scheme.
Energy industry lobbyists and an anti-tax group in California are circulating a petition to stop the state from imposing any limits on carbon dioxide emissions on the premise that the U.S. economic recession makes climate-focused laws unaffordable.
ssimpson@vancouversun.com
