Alberta Oilsands and the Cap-and-Trade System

What is Cap –and-Trade System and its impact on the Alberta Oilsands Companies

Cap-and-Trade system is a name given to an environmental initiative to reduce greenhouse gases. Essentially, all industries would be given limits on the amount of greenhouse gases that it could release. The Alberta Oilsands companies in particular would be monitored closely under the Cap-and-Trade system. It is well known, at least publicly believed, that the Alberta Oil Sands companies are big emitters of greenhouse gases. Al gore has shown in his video that greenhouse gases pose a significant threat to the planet and unless we are aggressive in reducing our levels we will continue to face harsher environmental impacts. The Cap-and-trade system would fine Alberta Oilsands companies who exceed the caps placed on them by imposing heavy fines. These fees would actually go from the Alberta Oilsands companies who exceeded their limits to those under the limits. In effect this would benefit the companies who are good to the environment and reward them for reducing greenhouse gases.

US Barack Obama and the Cap-and-Trade System

In the US, President Barrack Obama has set environmental goals to lower greenhouse gases to 1990 levels by 2020. The Cap-and-Trade system will be a tool used to achieve this goal. In Canada, Prime Minister Harper has set a similar goal of 3 percent less than 1990 levels by 2020. The Conservative Government and the Obama administration has set very similar goals in using the Cap-and-Trade system to and other tools to aggressively reduce the impact from green house gases. The Conservative Government commented on the timing of Canada in implementing this strategy now that the Bush administration is gone and US Barack Obama is now the President. It would have been wrong timing to have released Canada’s plans if the US was also not in favour of the Cap-and-Trade system or at least supporting our mutual goals of reducing greenhouse gas emissions.

Kyoto Accord is now the Cap-and-Trade System

The Kyoto Accord, an International Treaty to reduce greenhouse gases, was previously agreed upon by the Liberal Government. The Kyoto Accord differs from the Cap-and-Trade system and was eliminated under the Harper government. Though many countries still adopt the Kyoto Accord as their goal to reduce greenhouse gases, both the US and Canada have went their own ways and are currently looking at the Cap-and-Trade system to achieve the similar goal. Under the Kyoto Accord, each country would reduce greenhouse gases and their neighbours would be expected to do a similar reduction. By reducing greenhouse gases, a country would earn pollution credits. It is possible for the neighbouring country to buy pollution credits from their neighbours who are doing more to reduce greenhouse gases. In the end, the country that is emitting less greenhouse gases will be rewarded and the world will benefit from reduced emissions under the Kyoto Accord. However, as you can predict, all neighbouring countries need to buy into the system for it to work effectively. The Cap-and-Trade system will also have a similar trading mechanism but it is expected that both the US and Canada to play by the rules and reduce greenhouse gases.