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The paper discusses energy links between Canada, the United States, and Mexico and the state of greenhouse gas (GHG) emission-reduction policies. A review of GHG reduction policies reveals fragmented approaches with political stalemates at the national level. Closely integrated North American energy markets are potentially changing in different directions. While Canada is contemplating more diversification of energy trade, the United States is increasingly relying on domestic supply of energy and will soon be a net exporter of energy. The paper argues that carbon pricing needs to be harmonized in conjunction with trade flows and elaborates on how current, fragmented carbon pricing initiatives could be turned into a more harmonized carbon pricing system. It provides arguments in support of a binding absolute emissions cap with limited safety valves and price floors in a North American emissions-trading program. It also discusses lessons learned from the EU GHG emissions-trading system and their implications for the design of North American cap-and-trade regimes. [ABSTRACT FROM AUTHOR]

In 2007-08, British Columbia implemented two significant climate policies: the first broadly based carbon tax and the first almost 100-percent 'clean' electricity standard in North America. We describe the key design characteristics of these policies and analyse them against the criteria of greenhouse gas (GHG) emissions reductions, economic efficiency, administrative feasibility, and public acceptance. We find that the clean electricity standard is estimated to reduce four to six times more emissions per year by 2020 than the carbon tax, but at an average cost per tonne of CO2 reduced that is significantly higher than the carbon tax at its current level. Interestingly, the clean electricity standard achieves higher and steadier levels of public acceptance, which might be attributed to its lack of visibility, relative to the carbon tax. [ABSTRACT FROM AUTHOR]

British Columbia's introduction in 2008 of a revenue-neutral carbon tax shift was controversial. This analysis compares changes in fuel consumption, greenhouse gas emissions, and gross domestic product (GDP) between British Columbia and the rest of Canada. It finds that in the four years since the tax was introduced, British Columbia's per capita consumption of fuels subject to the tax has declined by 19 percent compared to the rest of Canada. At the same time, its economy has kept pace with the rest of Canada. British Columbia's experience mirrors the European experience with carbon tax shifting and should inform the federal debate on climate change policy. [ABSTRACT FROM AUTHOR]

The Social Cost of Carbon (SCC) is being adopted for systematic use in cost-benefit analysis (CBA) conducted by the Government of Canada. Although there are potential efficiency gains from its application, we argue that the SCC may be inappropriate for use in CBA for three reasons. First, as currently calculated, the SCC typically excludes the potential for catastrophes and certain types of climate damages, and assumes perfect substitutability between natural and human capital. For these reasons, it is likely to be biased downwards, and as such would provide misleading advice to policy-makers. Second, the SCC is a global measure of benefits, whereas standard practice in CBA is to include only domestic costs and benefits. Accounting for costs borne outside of Canada and along only one dimension (carbon damage) risks reducing economic efficiency and confusing the users of CBA studies. Third, SCC-based decision-making is unlikely to be consistent with Canadian commitments to international partners on emissions reductions; so its adoption risks institutionalizing non-delivery of those commitments. [ABSTRACT FROM AUTHOR]