Both Canadian and US federal governments are currently considering climate-change laws, but legislation in both countries is neither comprehensive nor certain to pass. In the absence of adequate federal programs, states and provinces have stepped in with their own initiatives. Not surprisingly, federal, state, and provincial governments hold different views about the specifics of measures to control greenhouse gases (GHGs), even when they agree on the broad objective. Many jurisdictions, such as California and British Columbia, prefer stricter regulations than those currently laid out in federal proposals. Moreover, while proposed federal legislation has so far centered around cap-and-trade strategies focused on overall emissions, provincial and state legislation tends to supplement these market strategies with industry performance standards and programs targeted to local circumstances-and these are already being implemented in some states and provinces. Indeed, provincial and state governments have quickly become leading players in climate policy.
The accompanying table summarizes initiatives proposed or underway in each NAFTA country, leading off with relevant federal legislation and progressing to provincial or state legislation, listed in alphabetical order. The table details major legislation only, excluding building and appliance standards. Some US states are not covered in this edition. Regional initiatives between US states and Canadian provinces are reserved for last. This table is part of a broader Institute project on the interaction between federal and state climate initiatives and their ramifications for trade policy. As this is a work in progress, please send comments, corrections, and suggestions to Meera Fickling.
Three major North American regional initiatives envisage mechanisms for implementation: the Regional Greenhouse Gas Initiative (RGGI), the Midwest Greenhouse Gas Accord (Midwest Accord), and the Western Climate Initiative (WCI), all of which are cap-and-trade systems. Of the three, the WCI and the RGGI are the best developed, and the RGGI is the only framework that has already begun auctioning emissions credits. Whereas the WCI is eventually intended to cover the entire economy, however, the RGGI currently covers only utilities.
Of the provincial legislation currently in place in Canada, Alberta's baseline-and-credit system most resembles Canada's federal Turning the Corner plan, with a modest cap, availability of emissions offsets, and a technology fund to which firms can contribute at a rate of C$15 per ton CO2e. Ontario and Manitoba have led the way on clean electricity, phasing out coal-fired generation plants and proposing an east-west power grid for green energy. In order to meet one of the strictest emissions targets in Canada, British Columbia has implemented a carbon tax of C$20 per ton CO2e in 2010. Saskatchewan has also put forward a net-zero requirement for new and replacement electrical plants.1 Four provinces-British Columbia, Ontario, Quebec, and Manitoba-have looked past national borders to join seven US states in the WCI.
Thirty US states, including the District of Columbia, have adopted renewable portfolio standards. Although the renewable energy requirement is the most common measure catalogued in our study, measures differ widely across the continent. The most obvious area of divergence is the target percentage of renewable energy to be achieved by a certain date; standards range from Texas's target of 5 percent by 2015 to California's target of 33 percent by 2020. California has also implemented a low carbon fuel standard (LCFS) that reduces the average carbon intensity of passenger vehicle fuels by 10 percent between 2010 and 2020. Ontario, British Columbia, and the RGGI region have committed to adopting the standard.
While states and provinces have led the way on climate change in the northern two countries, it is the federal government in Mexico that has been more proactive on the climate front, eliminating old buses and trucks, increasing wind-power capacity, and planting 250 million trees. State action in Mexico to date has not been on the same scale as subfederal action in the other two North American countries, although the federal government is beginning to work with several states to develop climate action plans.
1. "Net-zero" means that all GHG emissions must be offset elsewhere by the firm.