LANGLEY, B.C. — With targets in place for a regional cap-and-trade program, the B.C. Trucking Association is concerned about possible trickle down costs on fuel prices.

A number of jurisdictions in Canada and the U.S. have banded together to set common environmental targets under the Western Climate Initiative (WCI). Since WCI’s launch in February 2007, seven western states and four provinces have signed up, including B.C., Manitoba, Ontario and Quebec.

In September, WCI released its initial design recommendations of the cap-and-trade program, which is currently being reviewed by the 11 active members of WCI.

In such a system, participants are given emission allowances or credits for a fixed amount of emissions. If the amount is exceeded, they must either purchase credits from another participant or offset the extra emissions produced by an emissions-reducing project.

The first phase of the program is set to launch on January 1, 2012. Initially, the focus of emission capping will focus on electricity generation, combustion at industrial and commercial facilities, and industrial processes including oil and gas processing.

 The second compliance period, which according to the WCI report, is slated to begin January 1, 2015. This includes a residential, commercial and industrial fuel combustion that was previously bellow the cap threshold (25,000 metric tons); and transportation fuel from gasoline and diesel.

Not surprisingly, the BCTA is unimpressed with another possible rise in diesel prices if refineries are forced to pass increased costs on to consumers.

It’s still off on the horizon, but carbon cap and
trade systems could be the norm in Canada one day

In a letter to the B.C. Premier’s Climate Change Secretariat, Paul Landry, BCTA president and CEO, expressed concern that WCI’s draft design for its regional cap-and-trade program will ultimately punish the trucking industry yet again for its reliance on diesel fuel.

Based on fuel consumptions figures for 2007, the BCTA estimates a 33 percent cap and a projected credit cost of $30 per tonne, could mean a cap-and-trade program would put an additional 2.66 cents per liter on the price of diesel fuel. (That estimate is based only on the 2012 timeframe, so with fuel consumption rising by 2015, the cost to the industry would also escalate relatively higher, BCTA notes)

In his letter, Landry emphasized this amount is an increase of 30 to 40 percent over what the industry will already pay in carbon taxes, at $127 million to $145 million per year.

BCTA continues to advocate strongly for government-supported financial incentives and programs, funded by the carbon tax, for the purchase of fuel-efficiency technology and new-model engines.

The WCI design recommendations do however, make note of the possible impact on the transportation sector and more specifically B.C.’s carbon tax. The outline urges WCI partners to implement other policies that will reduce GHG emissions from the transportation sector and reduce demand for fuels, including vehicle standards, smart growth, low carbon fuel standards and transit options.

As well, the report insists that by 2012 the WCI members will determine a mechanism for integrating the cap-and-trade program with B.C.’s carbon tax.

Cap-and-trade concepts are growing in popularity as governments are pressured by environmental interest groups to implement various green-friendly polices.

The Chicago Climate Exchange (CCX), for example, was launched in 2003. Its model as a legally binding trading system to reduce emissions of greenhouse gases (GHGs), looks to be copied in other markets as well.

Montreal is just one jurisdiction that’s said to be interested in a cap ‘n trade market system.