On Climate Policy: Canada & the United States Take Different Approaches to Similar Greenhouse Gas Reduction Goals, IHS Markit...
August 23 2016 - 10:00AM
Business Wire
Differences in makeup of their economies, politics and sources
of emissions lead to varying approaches to greenhouse gas
reduction
Despite their close economic, social and cultural ties, Canada
and the United States face different challenges to reducing
greenhouse gas (GHG) emissions and are employing different
approaches in their respective climate policies, according to a new
report by IHS Markit (Nasdaq: INFO), a world leader in critical
information, analytics and solutions.
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Comparison of U.S. and Canadian 2014 GHG
emissions and contributions of economic sectors to national
emissions. (Photo: Business Wire)
While the two countries have chosen similar GHG reduction goals,
differences in the nature of their economies and emissions sources
are reflected in their climate policies. Policy efforts in the
United States are primarily focused on specific sectors, whereas in
Canada more effort is now being placed on pricing carbon.
The report, titled The State of Canada and U.S. Climate Policy,
was produced by the IHS Oil Sands Dialogue. It reviews the GHG
emissions profiles of both countries and the state of their current
climate policies.
“How to address climate change has become a defining question of
the 21st century and there has been increased policy momentum in
both Canada and the United States over the past year,” said Kevin
Birn, director for IHS Energy and head of the IHS Oil Sands
Dialogue. “While the two countries maintain similar policy
approaches in several areas, the reality is that each country is
also starting to develop its own distinct climate policy portfolio
based on the specific attributes of its economies and GHG emissions
profiles. There is not a one-size-fits-all approach to reducing
emissions.”
Differences in the makeup of the countries’ respective power
sectors are a primary example of where their approaches
diverge.
U.S. electric power generation—particularly from coal—is the
country’s single largest GHG emitter, accounting for 30 percent of
U.S. total emissions. Access to abundant and affordable shale gas
(which emits half the amount of GHG compared to coal) and the
declining cost of renewables provide the United States with a
relatively low-cost opportunity to reduce power sector, and thus
national, emissions.
In contrast, about 80 percent of Canada’s power generation
sector is already zero-emitting, mainly due to the high share of
hydroelectric power. The industrial sector is Canada’s single
largest emitter, representing 44 percent of total emissions. This
sector includes oil and gas production and refining which account
for 25 percent of Canada’s total emissions.
The Canadian oil sands, which have been the subject of
heightened interest due to their relatively higher GHG intensity
compared to some other crude types, represent 9 percent of the
country’s emissions. However, the government of Alberta has
instituted a cap on emissions—limiting future GHG emissions growth
from the oil sands.
In absence of an emissions-intensive power sector, Canada is
looking elsewhere to reduce GHG emissions, the report says. Various
models of carbon pricing are advancing across Canada. The federal
government has announced its intention to implement a harmonized
pan-Canadian price for carbon by the end of this year. Separately,
various carbon-pricing mechanisms at the provincial level could
cover up to two-thirds of Canada’s total emissions in 2017, the
report says.
The move towards carbon pricing provides a unique set of
challenges for Canada, which historically has sought to align its
policies closely with the United States (its largest trading
partner) over concerns that unilateral action could hinder
industrial competiveness, the report says.
This contrasts with regulation focused on electrical power
generation, for instance, which is more insulated from
competitiveness concerns because of technical and economic
limitations to large-scale power transmission.
“Unilateral climate policy can add costs to domestic
export-dependent firms that their competitors may not face,” said
Hossein Safaei, associate director for IHS Energy. “Firms that
compete globally may physically relocate or lose out to their
competitors. This weighs heavily given Canada’s close trading
relationship with the United States and its large oil and gas
sector which competes globally and with U.S. firms for investment,
labor and markets.”
IHS Oil Sands Dialogue Research is available at
www.ihs.com/oilsandsdialogue.
About IHS Markit
(www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical
information, analytics and solutions for the major industries and
markets that drive economies worldwide. The company delivers
next-generation information, analytics and solutions to customers
in business, finance and government, improving their operational
efficiency and providing deep insights that lead to well-informed,
confident decisions. IHS Markit has more than 50,000 key business
and government customers, including more than 85 percent of the
Fortune Global 500 and the world’s leading financial institutions.
Headquartered in London, IHS Markit is committed to sustainable,
profitable growth.
IHS Markit is a registered trademark of IHS Markit Ltd. All
other company and product names may be trademarks of their
respective owners © 2016 IHS Markit Ltd. All rights reserved.
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IHS MarkitJeff Marn, +1
202-463-8213jeff.marn@ihsmarkit.comorPress Team, +1
303-305-8021press@ihs.com
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