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Comments on Ontario’s cap and trade plan are due in three weeks, on July 24. However, the policy context has changed dramatically since Ontario’s discussion paper was drafted, and is continuing to mutate quickly. Canada has done so little for so long that our climate policy has laid us wide open to the serious protectionist provisions in the 1500 page US House of Representatives Bill HR 2454, the American Clean Energy Security Act. That likely means that Canadian rules must match American ones. As climate laggards, Canadian exporters will face substantial tariff barriers to their access to US markets if our rules aren’t found to be consistent with those in the US.
Now that the 2008 US senate election fight is finally over, with Senator Franken confirmed, Obama has 60 Democratic seats and a better chance of getting something like ACES through the Senate. The Senate starts its hearings on the Bill on July 7, in the hope of adopting something by the fall. In the expected bitter Senate fight, protectionism seems more likely to increase than to decrease.
Faced with this reality, our federal government has finally abandoned its Alberta-based insistence on intensity-based targets, and promised real carbon caps.
Meanwhile, Ontario’s important auto industry will come under further environmental pressure. This week, EPA granted California a Clean Air Act waiver for controlling greenhouse gas emissions from motor vehicles, reversing the former Administration’s denial.  This allows California to put stricter greenhouse gas emissions limits on vehicles from now til 2012, and again after 2016. 15 other states may follow, as they already adopt California vehicle standards. Here is EPA’s web page on the waiver: http://www.epa.gov/OMS/climate/ca-waiver.htm. For the Pew Center analysis of the decision, see http://www.pewclimate.org/what_s_being_done/in_the_states/vehicle_ghg_standard.cfm.

Any decisions that Ontario makes will therefore be dominated by what is happening in the US, and may well have to be amended repeatedly as the US policy takes shape.

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