Different Challenges Require Different Approaches In US & Canadian Climate Policy

Update: Note that transportation just surpassed electricity as the top US source of carbon emissions, counter to a statement and a chart in the following article, which are based on slightly older data.

Despite being close geographic and political neighbors, the United States and Canada are facing vastly different climate challenges which are requiring vastly different approaches to climate policy.

A new report published by leading global analytics company IHS Markit has analyzed the greenhouse gas emissions profiles of both the United States and Canada, as well as the current state of their climate policies. The findings, despite the close economic, political, social, cultural, and geographical ties shared between the two countries, is that the two nations face extremely different climate issues, which in turn require different approaches in their respective climate policies. Specifically, IHS Markit concluded that climate policy efforts in the United States are primarily focused on specific sectors, whereas in Canada there is a greater emphasis placed on pricing carbon.

“How to address climate change has become a defining question of the 21st century and there has been increased policy momentum in both Canada and the United States over the past year,” said Kevin Birn, director for IHS Energy and head of the IHS Oil Sands Dialogue, which produced the report, titled The State of Canada and U.S. Climate Policy. “While the two countries maintain similar policy approaches in several areas, the reality is that each country is also starting to develop its own distinct climate policy portfolio based on the specific attributes of its economies and GHG emissions profiles. There is not a one-size-fits-all approach to reducing emissions.”

One particularly helpful example is the manner in which the makeup of the two countries’ respective power sectors differ. As has been widely covered, America’s electricity power generation is the country’s single-largest emitter of greenhouse gas emissions — specifically its electricity generation from coal — accounting for approximately 30% of the country’s emissions total.

North of the border, however, 80% of Canada’s power generation sector is already zero-emitting, thanks primarily to a high share of hydroelectric power. Thus, it is Canada’s industrial sector which accounts as the country’s highest emitter of emissions, with 44% of the country’s total.

Of additional interest to those who know their Canadian power sources, the oil sands account for 9% of the country’s emissions.

The lack of need to decarbonize the country’s electricity generating sector has forced the country to look elsewhere for reducing greenhouse gas emissions, with various models of carbon pricing now advancing across Canada. This has placed Canada at odds with the United States, however, with whom it has often attempted to align policies.

“Unilateral climate policy can add costs to domestic export-dependent firms that their competitors may not face,” said Hossein Safaei, associate director for IHS Energy. “Firms that compete globally may physically relocate or lose out to their competitors. This weighs heavily given Canada’s close trading relationship with the United States and its large oil and gas sector which competes globally and with U.S. firms for investment, labor and markets.”