Carbon Pricing Policies in North America: Past, Present, and Future

The global carbon market is growing rapidly and is valued at over $126 B USD (World Bank 2009) - a tripling over the last few years. Carbon markets are established by government's choosing to place a price on carbon or greenhouse gas emissions through regulatory mechanisms known as emissions trading systems. This involves setting reduction targets, or 'caps' for those sectors who emit greenhouse gases (GHGs) over a certain environmentally- relevant threshold, and then allowing companies within those sectors flexible ways of meeting their caps through purchasing and selling government-issued permits (the number of which are equal to the capped emissions). The permits, eqaul to their capped amount, must be remiited to the regulating authority at the end of every compliance period.. The overall cap on an economy's greenhouse gas (GHG) emissions cannot go above a certain amount and is always accounted for - the trading that goes on within the overall cap allows companies to find lower cost ways of complying with the required GHG reductions, controlling costs across the whole economy.

Many jurisdictions, particularly in North America, are also considering allowing Carbon Offsets in an emissions trading system. Offsets are GHG emission reductions undertaken by companies outside of the capped sectors (ie, actions taken voluntarily by those who do not have regulated targets, like the agriculture or forestry sector).Regulated companies can offset their emissions by purchasing these offset credits from others who have reduced their GHG emissions or have sequestered soil carbon, through Offset Projects. In this way, the price signal for the 'new constraint on carbon' can be extended across larger segments of the economy, enabling mitigation actions from a broader set of stakeholders.

In North America, several pre-compliance and early action markets have been in play in the mid part of this decade. Valuable lessons have been learned. Further, several regional initiatives are moving forward, despite the collapse of federal carbon pricing policy actions in both Canada and the U.S. The presentation will focus on the state of play of these regional initiatives, including Alberta, Saskatchewan, British Columbia, Ontario and Quebec (the latter 3 being part of the Western Climate Initiative) in Canada, as well as the Western Climate Initiative state actions, Regional Greenhouse Gas Initiative actions and other regional initiatives.