British Columbia today signed onto a regional agreement with five western U.S. states to cut its greenhouse-gas emissions using a cap-and-trade system.
The memorandum of understanding among Oregon, California, Arizona, New Mexico, Washington, and now B.C. is here in PDF form (it’s actually a PDF of a what appears to be a scan of a fax, which is a strange way to present a government document, suggesting this was done in a hurry). The key promises are:
- Setting an overall regional goal, by August of this year, to reduce emissions from the states and province involved collectively, consistent with state-by-state goals. B.C. has promised to cut its emissions to 10 per cent below 1990 levels by 2020 (the Kyoto Accord calls for cutting them to 6 per cent below 1990 levels by 2008), so B.C.’s goals are, overall, less ambitious than Kyoto but a lot more ambitious than any other part of Canada’s.
- Developing, by August 2008, some sort of cap-and-trade system for achieving the overall regional emissions-reduction goal.
- Setting up a registry to enable tracking, management and crediting for entities that reduce greenhouse-gas emissions.
This is a very big deal, with subnational jurisdictions simply sidelining their national governments to do an international deal in an area where the Canadian and U.S. governments have simply refused to move.
If you believe that emissions-trading markets are the best system we have available for rewarding greenhouse-gas cuts and punishing profligacy (as I do, with some reservations and openness to persuasion otherwise), a wider market can only be a good thing, for the same reason that free trade and efficient capital markets are. It offers would-be emissions-cutters access to more capital to fund their improvements and gives them access to more expertise. It should increase the value of the credits created by cutters (increasing the punishment for laggards).
Also, in the interests of the planet, it lets carbon-credit investors across all the jurisdictions involved access to the lowest-hanging fruit — the quickest and cheapest options for reducing emissions, which are what we’re all trying to find.
Of course, the low-hanging fruit doesn’t last forever, and if these cap-and-trade markets “take,” jurisdictions that don’t join early will find they’ve harmed their own interests, exactly as if they’d decided not to let companies within their boundaries sell shares on an exchange, while other states and provinces steamed ahead.
Ontario has mused about joining the WRCA, too; consider the pressure cranked up.