Canada should not tie its climate policy so closely to the United States' if it wants to protect economic competitiveness and ensure emission reductions, according to a new report from a panel appointed by the Canadian government.

Because Canada has faster-growing emissions than the United States and a different fuel mix, its stated goal of a 17 percent reduction in emissions below 2005 levels by 2020 will be more expensive than similar planned cuts in the United States, the report from the National Round Table on the Environment and the Economy says.

For that reason, the study says, the Canadian government should act now on putting a cap-and-trade system in place, along with a new technology fund, regardless of the actions of its southern neighbor. Early action will ensure the country meets targets without any economic difficulty, the group said. Without a price on carbon, Canada will reduce emissions 10 percent by 2020, rather than the desired 20 percent.

Researchers said a carbon price in Canada should be higher than that of the United States because of Canada's tougher economic challenge in reducing greenhouse gases, but should not rise more than $30 a ton of carbon dioxide equivalent above any potential U.S. price to ensure competitiveness. Such a price would slow economic growth by a manageable one-tenth of a percentage point, says the report, titled "Parallel Paths: Canada-U.S. Climate Policy Choices."

"In this way, we get ahead of the curve, but carefully so, ensuring economic impacts on Canada are manageable and sustained environmental progress toward achieving our 2020 target occurs," the assessment says.

The report comes as prospects for a climate bill appear dead in the United States. U.S. EPA is moving forward with plans to regulate greenhouse gases by requiring new and modified facilities to obtain emission permits. A Canadian bill that would have capped the country's emissions stalled in Parliament last year.

Environment Canada says follow U.S. lead

In the meantime, many environmentalists are targeting a proposed TransCanada pipeline called Keystone XL that would double U.S. imports of oil from Canada's oil sands, where oil production is more carbon-intensive than that of traditional oil. The U.S. State Department has yet to make a decision on approval of the pipeline.

The National Round Table report cites the growth of emissions in the oil sands, along with the country's dependence on hydropower, as reasons why reducing greenhouse gases in Canada will be more expensive per ton of carbon dioxide. The United States has the cheaper option of switching aging coal-fired power plants to natural gas, the group said.

The oil-sands industry argues it is being unfairly targeted, since Canada constitutes 2 percent of global greenhouse gas emissions and the oil sands constitute a fraction of that number (ClimateWire, Dec. 16, 2010).

Environment Canada, an arm of the national government, said in a statement that the report's focus on a cap-and-trade system was "outdated, and no longer relevant." With the U.S. moving away from an emission cap, Canada should also take a regulatory approach, the department said. Last year, Environment Canada announced new greenhouse gas rules for cars and light trucks to parallel U.S regulations, as well as plans to phase out most coal-fired power plants in the next 15 years.

"The government of Canada will continue to implement its plan of addressing emissions on a sector-by-sector approach," the statement said. "Aligning to the U.S. is key to achieving the emissions reductions we need without putting the economic recovery at risk."