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Nova Scotia outlines its cap-and-trade program

by Mark Sabourin
EcoLog, 3/10/2017 2:36:00 PM

Nova Scotia has sketched an outline of a proposed cap-and-trade program for greenhouse gas emissions that appears to meet federal requirements for carbon pricing, but that will confine the trading market to Nova Scotia only.

The federal government announced on October 3, 2016 that it would require a Pan-Canadian approach to carbon pricing, with a minimum price of $10 per tonne of carbon in 2018, rising in annual $10 increments to $50 per tonne in 2022. Nova Scotia endorsed the Pan-Canadian Framework on Clean Growth and Climate Change on December 9, 2016.

In a discussion paper, “Nova Scotia Cap and Trade Program Design Options”, released March 8, 2017 for public comment until March 31, 2017, Nova Scotia describes how its program would be structured.

Unlike the cap-and-trade program operating currently in Quebec and soon in Ontario, trading of emission allowances would be confined to Nova Scotia only, though Nova Scotia would reportedly consider a market spanning the Atlantic provinces if the terms were right. Quebec currently allows trading with California, and Ontario is set to join that market in 2018.

Mandatory participation in cap-and-trade would be limited to industries emitting more than 100,000 tonnes of carbon annually, the electricity sector and larger petroleum suppliers and natural gas distributors. Nova Scotia estimates that fewer than 20 companies would meet those criteria, and that the number would not be bolstered by voluntary participants, as the program would not permit it.

Verified, made-in-Nova Scotia offsets would be available for compliance. Already-developed offset protocols may be considered for adoption.

This modest program would also not be a revenue generator for Nova Scotia. Allowances would be distributed mostly at no cost. The cut in annual emissions would come from the sliding cap, which would be met in three-year compliance periods: initially 2018 to 2020, and then 2021 to 2023.

In cap-and-trade, size matters. The issue was discussed during a panel discussion on cap-and-trade organized by the Ecology Action Centre on March 9, 2017 in Halifax. Economist Elizabeth Beale, a member of Canada’s Ecofiscal Commission and the former president and CEO of Atlantic Provinces Economic Council, took part.

“There certainly could be liquidity challenges in a system with such a limited number of players,” she told EcoLog News by e-mail.

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