My exploration through the carbon world, which has turned into an hour-long film Carbon Hunters, took me from Mumbai to Washington, DC, from Manila to London, and a few places in between. It slowly dawned on me that this isn’t a crazy fad — it’s a multi-billion-dollar industry.
One of the revelatory moments happened right here in B.C., in Clayoquot Sound.
I was on the tiny island that is the home of Shawn Atleo, national chief of the Assembly of First Nations. As the grey sky emptied on the rain forest, Atleo told me something few people know.
A few years ago an oil company — energy companies have been some of the earliest players in the carbon credit game — approached him. They wanted the Ahousat First Nation to set aside a vast track of forestry.
The idea was this: The oil company was producing a huge carbon footprint in AlbertaÂ’s tar sands. The company wanted to be able to say it was preserving a rainforest, therefore sequestering carbon in trees, thus offsetting its carbon footprint and doing its bit to combat global warming.
Atleo refused the deal. But it was a first hint of the big business that carbon trading would become.
We got an even bigger sign that carbon trading is emerging as one of the major businesses of the 21st Century. CaliforniaÂ’s Air Resources Board, which regards carbon and other greenhouse gases as a pollutant causing global warming, unveiled a carbon cap-and-trade program. ItÂ’s the first in the United States.
It will set carbon dioxide emission caps on more than 600 refineries, utilities and other greenhouse gas emitters. Polluters who donÂ’t reduce their greenhouse gases will have to buy carbon credits, a trade that California expects to be worth between $2 billion to $4 billion a year in the state alone.
This has major implications for Canada and British Columbia. For one thing, B.C. is part of the Western Climate Initiative with California (as well as three other provinces and four western states). CaliforniaÂ’s cap-and-trade program will be integrated into that agency, which means that B.C. and other provinces will also be drawn into the California carbon credit trade, both as sellers and buyers of carbon credits.
But thatÂ’s just the start.
California’s cap-and-trade plan is regarded as the blueprint for a national cap-and-trade plan that U.S. President Barack Obama hopes to get through Congress next year. If that happens — and the odds are high it will — that will mean carbon trading will become a crucial part of all future U.S.-Canada trade relations.
For B.C. and CanadaÂ’s energy-intensive resource sectors, that poses the likelihood they will have to start buying credits, to offset their carbon footprints, to enter the U.S. market. Under the draft regulations, for example, California will regulate the carbon footprints of electricity importers.
What this means is B.C. and Canadian negotiators better start moving fast to define Canadian-sourced carbon credits.
Will CanadaÂ’s carbon credits include trees grown to sequester carbon? Can green power from run-of-river power projects create carbon credits? Or the carbon saved in trees by protecting CanadaÂ’s boreal forest?
If Canada doesnÂ’t identify a supply of home-grown carbon credits, the U.S. will force it to buy those credits from others. That will mean billions of dollars leaving the country. In short, weÂ’re likely to be soon facing a carbon tariff.
For Canadians, this is a bigger challenge than the softwood lumber wars. ItÂ’s as complex as the free trade deal. Probably even bigger, actually.
Richard Sandor, who runs the Chicago Climate Exchange and is seen as the “father of carbon trading,” predicts the global carbon credit market will soon be in the trillions of dollars annually. Bigger than gold or oil.
If heÂ’s right, letÂ’s hope the Canadian and provincial governments have their crack negotiators on this file in Washington and the United Nations, where cap-and-trade will be defined. If not, what many predict will be the Carbon Century could be very, very expensive for Canadians and their economy.