The National Roundtable on the Environment and Economy, a government-appointed panel, has advocated that Ottawa act unilaterally to impose emission rules on industry without waiting to see the environmental policy that will be taken by the United States.

Regulation now, the Panel argued, would ultimately enhance Canada's economic competitiveness by avoiding more expensive actions later. Recommendations of the Panel included the introduction of a national cap-and-trade system that would set a price on carbon by auctioning permits for GHG emissions and allowing industry to buy and sell those permits and other credits. A cap-and-trade system has been endorsed by the opposition Liberals as well, but was rejected by Canadian Environment Minister Peter Kent in a speech just days after the Panel released its report.

The Obama administration has announced plans to have the Environmental Protection Agency impose new emissions regulations on industry, but will face a tough challenge enacting the legislation from both Republicans and conservative Democrats in Congress. Both Canada and the United States have committed to reducing greenhouse gas (GHG) emissions by consistent levels. Canada's reduction target is 17 per cent below 2005 levels in the next decade.

Minister Kent maintained that the federal government will regulate industrial emitters, which includes the oil industry, and expects to unveil its plans, "later this year." The Minister also noted, "[w]e're not waiting for the Americans. We're working steadily forward but this isn't a linear process."

A few days later Minister Kent warned that tougher regulations would have to be adopted by both the federal government and the provinces to reduce GHG emissions if Canada is going to meet its 2020 target. Currently, the actions taken by Ottawa and the provinces will achieve only a quarter of the reductions necessary to meet Canada's emission reduction targets. He reiterated that Ottawa is developing "performance standards" for all major emitters, and that he expects those regulations to be introduced later this year.

David Collyer, president of the Canadian Association of Petroleum Producers, expressed concern that the industry had not been consulted about the planned regulations. Collyer also cautioned the competitiveness of Canadian industry could be hurt if the government gets ahead of the United States.

Major GHG emitters in Alberta are already subject to extensive provincial regulation under the Climate Change and Emissions Management Act. Should federal regulations be introduced in the near future, as the Environment Minister seems convinced they will, this will add a further layer to the compliance obligations of those entities. The precise scope and severity of any federal regulations is unclear at this time, but we will continue to monitor the situation as it unfolds.

Stay tuned.