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Uncle Sam says keep your carbon…more on the risks of inaction

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With all the talk of energy security, I would expect that many in the oil patch discounted talk of limited energy imports to the US based on carbon content. After all, is not Canada a good friend with stable long-term energy supply prospects? Seems though this is not the case (see here), with the US now passing into law a carbon performance standard for all fuel consumed by US government operations, which are large,

… the provision covers new contracts for all government operations, including the military and the postal service, which together operate thousands of vehicles and are considered the No. 1 and No. 2 vehicle fuel users in the country.

And since oil sands emissions are higher than conventional sources there could be real and significant trade barriers to Alberta’s synthetic gold. Of course this all needs to shake out and be tested, but one can see the writing on the wall. Even if Canada does not take domestic action, our exports could be facing trade barriers internationally in large and important markets. Recall that France was pushing to erect border taxes on imports from countries without carbon policies just last year.

So while Canada and Canadians continue to cite increasing export costs and lost international market share as the reason for domestic inaction, it seems that the trade barriers are much more of a threat,

“Canada’s oil sands will face large-market risk unless the Canadian government, or the Alberta government, take this challenge seriously,”

All this says that the risks of inaction are greater than just avoiding domestic costs over the long-term or higher cumulative emissions. It means the outcome most cited as the reason for inaction, that of reduced international competitiveness, could occur regardless of our domestic carbon policy. While sticking one’s head in the (oil) sand is an effective strategy to avoid reality, there is a chance you will be eaten.

Written by Dave Sawyer

January 16th, 2008 at 2:59 pm