Emissions trading on the rise, November 25

The Star
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The World Bank has released a survey on carbon trading around the world, and the results are astonishing. They are also provocative because they bear on the Liberal leadership race.

According to the survey, buying and selling of emission credits in the first nine months of this year (worth $24.6 billion) were double what they were in all of last year. That's a big leap in trading.

Trading systems allow companies in countries that have imposed emission caps to buy credits when their emissions exceed regulated limits. This allows them to stay within their caps and avoid penalties. Being able to sell credits acts as an incentive for companies to reduce emissions below regulated limits.

The volume of trading has surprised even the head of the International Emissions Trading Association.

"The market," says president and chief executive Andrei Marcu, "is ... catalyzing green investments at a more rapid pace than we expected."

It signals that carbon trading has become a powerful force in reducing greenhouse gas emissions. The best news of all is that 12.6 per cent of global reductions resulted from lowering emission levels of new projects in China.

To place these figures in perspective, Chinese reductions over nine months equal the total annual emissions from generating electricity in Canada (130 megatonnes), and almost equal to the annual emissions from transportation (145 megatonnes).

The fear in the West has been that as China and India industrialize, they'll build factories and power stations that will boost emissions so high they will cancel reductions in the West.

The final statistic of interest to Canadians is that European and Japanese governments supplied 20 per cent of the money that went into reducing emissions from new projects.

And so to the leadership race. Stéphane Dion is the only candidate who specifically mentions the need to invest in emission reductions in China and India. He would re-establish a Climate Fund that, among other things, would purchase "green international credits." What he doesn't say is that he would need such purchases to fulfill his commitment of meeting Canada's Kyoto target by 2012. The cost of his entire environmental program would be $10 billion over the next six years, he says.

Bob Rae would contribute enough to "green projects in developing nations" to meet former prime minister Lester Pearson's goal of increasing foreign aid to 0.7 per cent of Canada's gross domestic product. He doesn't say how much this would cost.

Michael Ignatieff says a government run by him could not meet Canada's Kyoto target, because it would cost billions of dollars to buy emission credits from other countries. He would, however, "contribute to credible emission reduction projects, particularly in developing countries." In other words, he would spend considerably less in China and India than would Dion.

Gerard Kennedy doesn't mention foreign spending.

The World Bank report is particularly acerbic about Canada. It notes that "Canadian buyers are still conspicuous by their absence (from the trading system)."

As for the rest of the world, it says "public buyers (governments) are likely to become more prominent in the market in the coming year or two."

It should be embarrassing to Canadians to be singled out as missing in action. Emerging Asian nations have now overtaken North America as the foremost emitters of greenhouse gases.

If for no other reason, it's in Canada's best interest to be seriously engaged in helping them cut emissions.