Canada should pass on cap and trade, for now
For the record, I do believe that anthropological global warming presents a real threat to the quality of life for human beings and the continued survival of many of earth’s species.
Even with my strong belief in global warming, it is clear to me that implementing a cap and trade system is something that the government of Canada should pass on for now.
The primary problem with a cap and trade system is that it creates volatility.
Cap and trade was implemented in Europe in 2005. Between 2005 and 2007 electricity prices in Germany rose by 25 per cent. This was largely due to a combination of speculation and electricity companies in Germany passing on the costs to consumers through increased prices.
This is hardly surprising, since in 2008 about 44 per cent of all electricity in Germany was generated through burning coal, while natural gas accounts for only ten per cent. Additionally, only four private companies own all of Germany’s transmission lines, which impacted prices.
If Germany, a country that has been actively pursuing greater usage of solar energy since the 1970s, could experience this kind of increase as a result of this new system, what would happen in an energy-producing country like Canada?
The answer is not pretty. While provinces like Ontario, Quebec and British Columbia do not rely as much on fossil fuels for their power generation and thus probably experience less financial pain, this is not the case for Alberta and Saskatchewan. Ontario is reliant on nuclear and hydroelectric power, while coal is the most widely used form of electricity production in Alberta, Saskatchewan and with the exception of Newfoundland, the Maritimes.
Before Canada considers such a system and to avoid the type of skyrocketing electricity prices seen in Germany, greater effort has to be made by our provincial and federal governments, along with the private sector, to move towards clean, reliable and cost effective forms of electricity production.
We need greater investment in clean energy production like nuclear, geothermal and very specific types of “clean” coal. Wind and solar energy are pipedreams, as they are unreliable; that is, varying too much based on wind speeds and available sunlight.
We also need more firm commitments and serious action on the part of China, who back in 2007 surpassed the U.S. as the largest producer of CO2 on the planet. Without serious commitments from developing countries any progress we make in western countries will be largely irrelevant.
As a northern nation, we also have to account for the many rural businesses and individuals that rely on the automobile and cheap energy prices as a means of survival. While the ability to transport goods across Europe is easily and affordably accomplished by rail and roads, that option does not exist for much of Canada’s north.
Any action by the federal government that would increase the cost of gasoline, diesel or natural gas has to consider the impact that would have on the price of goods and services in the north and across Canada.
Similarly, one of the biggest difficulties in passing legislation in the United States has been concerns for the well-being of farmers. The American Clean Energy and Security Act passed in Congress that requires the creation of a cap and trade scheme in the United States had to be expanded to provide assistance for farmers concerned about the act before rural congressmen would agree to support it.
The Democrats and Republicans are locked in a war over healthcare and a massive deficit with an economy in shambles. All the while there is increasing public skepticism towards global warming and midterm elections expected to kick the Democrats at least out of Congress, it is doubtful we will see any effort to resolve this issue anytime soon.
Maybe we’ll have more luck with the next president. Until then, let’s move beyond cap and trade and make real positive strides in clean energy development