Canada should be comfortable with Copenhagen pact

COPENHAGEN, DENMARK - As he prepared to fly to Copenhagen from a business stopover in London, Environment Minister Jim Prentice said he was "reasonably optimistic" about the prospects for an agreement at the UN conference on climate change.

"We want to see an agreement," Prentice said from London, where he was meeting senior British officials. "It's in our national interest. I think we're making important progress, though there are some tough issues at the table."

The main challenge, says Prentice, "is bridging the difference between the developed and developing nations."

That bridge will likely be a fund of $10 billion a year over three years provided by wealthy G8 and OECD countries to help developing nations reach targets for reducing greenhouse-gas emissions.

And that number is likely to be 20/20 — a 20-per-cent reduction of emissions from 2006 levels by 2020, with a longer-term goal of up to 80 per cent by 2050.

The final near-term number could be 17 per cent — the target being shopped by Barack Obama since it narrowly cleared the U.S. House of Representatives earlier this year. It's by no means clear that Obama can get a climate-change treaty through the U.S. Senate, which is why he took out an insurance policy on the opening day of the conference, when the United States announced GHGs were a health hazard and therefore subject to regulation by the Environmental Protection Agency.

Whether the number turns out to 20 per cent or 17 per cent, Prentice has a high comfort level that Canada's "alignment with the Obama targets and approach will stand us in good stead."

To be clear, Canada and the U.S. are on the same page. And as Stephen Harper has pointed out, Canada now has what it didn't have during the George W. Bush years, a partner on the environment in our common North American space, and as importantly, in our integrated economy.

When Prentice says "approach" as well as "targets," he means the cap-and-trade regime advocated by the Obama administration, where the Harper government is also aligned with the White House. Under cap and trade, companies that exceed permissible emissions levels would purchase credits from companies that surpass their goals for reduced emissions. For example, a company in the oilsands could buy credits from a forestry company — which as an industry has reduced GHG levels by 44 per cent below the Kyoto target of reducing emissions to six per cent below 1990 levels. That's right: The forestry industry has exceeded Kyoto targets by a factor of more than seven.

The main reason cap and trade works for Canada, other than allowing flexibility to industry, is that it's the only way to bring the provinces on board. Some provinces, like Quebec, have more ambitious targets; others, like Alberta, have issues in transitioning. It's the difference between hydro-electricity and the oilsands. Alberta is also wary of any "wealth transfer" to other provinces as a result of cap and trade. It's a touchy point among Alberta officials, who point out that they already send quite a bit of money to Quebec in equalization payments.

Keeping everyone in the tent of the Canadian delegation could be a challenge for Prentice during the ministerial round, and for Harper when he arrives for the leaders' summit that will close the conference. Jean Charest has been pushing for the higher emissions-reductions goal advocated by the Europeans. He'll just have to decide whether Quebec is in Europe or North America.

Prentice does not a see a treaty coming out of Copenhagen so much as "an agreement in principle" that officials could scrub and turn into a legal text next year.

Prentice says "the challenge after Copenhagen will be to continentalize on one cap-and-trade framework" for North America. It might be limited to Canada and the U.S., or in a best case might include Mexico, which will be hosting the follow-up conference next year.

Going into Copenhagen, says Prentice, "I think Canada is well positioned."

That's partly because, as in previous portfolios in Industry and Indian Affairs, Prentice has demonstrated both a mastery of files and a capacity to bring stakeholders onside.

He also has the full support of Harper, and there's nothing quite like a prime minister skating the critics into the boards.