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A recent report by the Canada West Foundation — entitled Patchwork Pollution Solution — provides pathways to addressing the environmental part of the equation. Specifically, it highlights how Canada’s distinct carbon pricing systems can be linked. As a first step, the report recommends the establishment of a common, Canada-wide offset market. Joining together provincial offset systems — many of which operate in isolation — would force the price convergence that is the key to a functioning national system, while creating one common market of viable size.

Expanding the bounds of the offset pool to include more sectors and projects would also increase the number of low-cost compliance options available, providing Canadian emitters with increased flexibility. These low-cost compliance options should be a welcome development for Alberta companies, for example, that are feeling the combined pinch of low oil prices and increased taxation.

The stars are aligned for a grand bargain. Premiers can strike a deal on carbon pricing that will create a coherent Canadian plan going into the United Nations Climate Change Conference in Paris this December. However, stubborn issues like wealth transfer between provinces will have to be addressed deftly. The common offset market will help to get some jurisdictions onside — specifically those that will benefit financially.

It will take a significant gesture to get provinces like Alberta and Saskatchewan to sign on — probably no less than political support for all forms of energy production (including oil sands) and transportation (including pipelines).

This kind of a deal will take guts. Let’s hope our premiers are up to the task.

National Post

Trevor McLeod is the director of the Centre for Natural Resources Policy at the Canada West Foundation in Calgary, Alberta. Anna Cameron has a masters degree in public and international affairs from the University of Ottawa. Cwf.ca