Canada emissions trade seen worth C$12 bln: CIBC, March 14

Reuters
http://www.planetark.com/dailynewsstory.cfm?newsid=40845&newsdate=14-Mar-2007

A Canadian interprovincial emissions market, seen as part of a wider plan to curb greenhouse gas emissions, could be worth as much as C$12 billion ($10.3 billion) a year, CIBC World Markets said on Tuesday.

Emissions trading, which allows entities to buy and sell rights to produce greenhouse gases, takes place on a mandatory basis in Europe, while the Chicago Climate Exchange operates a voluntary U.S. emissions trading market.

The Canadian government has said it will unveil regulations before the end of the month aimed at curbing industrial greenhouse gas emissions.

"It remains to be seen how a cap and trade system would be implemented in Canada -- or how much of that C$12 billion in emissions credits would be traded across provincial borders," CIBC chief economist Jeffrey Rubin said in a research note.

Rubin said that current emissions are skewed heavily to the western provinces of Alberta and Saskatchewan, due to the booming oil and gas industries, as well as to their high proportion of coal-fired electricity generation.

Those provinces, along with New Brunswick, are seen as heavy buyers of credits, while Quebec and Manitoba, which rely heavily on cleaner hydroelectric power, would likely be sellers.

"With an already-skewed distribution of greenhouse gas emissions looking to become even more unbalanced in coming years, it's easy to envision a healthy interprovincial trade in carbon permits," said Rubin.

He based the C$12 billion figure on a minimum price of C$30 per ton of emissions and 2004 figures showing 410 megatonnes of annual carbon-equivalent emissions from industrial and commercial sources.

Greenhouse gas emissions are a hot-button issue for Canada's minority Conservative government, which could face an election in coming months.

The Toronto Stock Exchange plans to compete with the Montreal Exchange over a domestic emissions market.

Montreal owns a majority stake in the Montreal Climate Exchange, which is not yet operational, as it awaits government plans.