Speech

As delivered

Thank you Mark Adler, and good afternoon everyone!

It’s a real pleasure to be back at the Economic Club of Canada - a premier forum for discussing important issues of public policy.   It hasn’t been that long since I was here in April - in fact, Mark told me that if I show up again, I’ll have to start paying membership dues!  But it is great to be here and to make a major announcement as part of the Government of Canada’s plan to combat climate change.

You may recall when I was here in April that I presented new automobile emission standards.  This was a significant component of our domestic Climate Change plan because transportation accounts for roughly a quarter of our total greenhouse gas emissions - and passenger cars and light-duty trucks account for almost half of those transportation emissions.

As a result of that announcement, beginning with the 2011 model year, the cars and light trucks on our roads will produce less carbon dioxide - improving the quality of our air and enhancing the quality of our lives.

Today, I am pleased to announce another important building block in our Climate Change plan - designed to help us achieve our targets to reduce greenhouse gas emissions and to generate real emission reduction opportunities across the economy.

We are releasing two draft documents that lay the foundation for the development of a carbon market across Canada.  The first of these documents sets out the rules and requirements to generate offset credits - from the registration of a project to the issuance of the actual credits. Projects that could qualify for offsets span the economy, from farmers using reduced or no-till techniques to store more carbon dioxide in their fields, to wind turbines producing clean electricity using only the wind, to landfill sites that are able to turn captured methane into usable fuel.

The second document explains the verification process for eligible projects - to ensure that the reductions achieved are real.   These two documents complement the one we released last summer which provided the rules for quantifying greenhouse gas reductions under Canada’s offset system.

As part of our commitment to consultation and transparency, the documents we are releasing today are in draft form and comments are welcome during the 60-day public comment period.  We expect to publish final versions of all three documents in the fall. 

Before getting into the details of these documents, let me just quickly bring you up to date on our Government’s Climate Change Plan more broadly. 

As I mentioned when I was last here, Canada is pursuing that Plan on three fronts - domestic, continental and international.  Recently, most of the action has been on the international front.  I’ve just returned from meetings in Paris, Norway and Copenhagen, all geared to preparing the way for the COP15 meeting that will be held in Copenhagen, in December.

As you know, each year there is a conference of the countries that have ratified the United Nations Framework Convention on Climate Change.  This year, at the 15^th such conference, countries will meet with the ambitious goal of obtaining a new global agreement on climate change.  It will be a time when we turn the page on the Kyoto Protocol, look beyond 2012, and begin to shape the future. 

I can tell you, based on my discussions with Ministers and leaders from around the world, that failure to make progress in Copenhagen is simply not an option.  I say that because I don't think that any of us who are associated with this, or the countries we represent, can afford, for the sake of our children and our grandchildren, not to succeed in the battle against climate change.  The consequences are too great, the stakes too high, not to bring to that meeting our best efforts and unwavering resolve.

So this is a key moment and Copenhagen, a pivotal meeting.

I can also say, based on my meetings, that I am confident that we will succeed.  Not because it will be easy - because it won’t be.  Not because there will be any shortage of differences - because there won’t be.  But because there is a strong consensus that this is something that simply must get done.  That the time has come, the moment is now and the world must act.

While the challenges are great, the responsibility is clear.  And my commitment to you, to Canadians, and to the international community is that Canada will play a very strong and constructive role at Copenhagen.  To engage not only with words, but deeds.

We have, for example, committed to arriving at that meeting with a full suite of domestic policies  - policies that will address each major source of greenhouse gas emissions in Canada.

As you know, Canada’s Climate Change plan aims to reduce our country’s total greenhouse gas emissions by 20 per cent from 2006 levels by 2020 - and by 60-70 per cent by 2050.   These targets  are ambitious - even more ambitious than those announced to date by President Obama. 

To reach our targets, we are establishing a regulatory framework that will impose mandatory emissions reduction targets across the full spectrum of Canadian industry.

I can report to you today that our plan is on track, even as we have had to adjust to a severe economic downturn. We are also working closely with the new U.S. Administration to coordinate our efforts to fight climate change and develop clean technologies.

The offset system will be a key part of that overall commitment.  It is intended to generate real reductions in greenhouse gas emissions by providing Canadian firms and individuals with the opportunity to reduce or remove emissions from activities and sectors that will not be covered by our planned greenhouse gas regulations.  

It does so by establishing a price for carbon in Canada - something that has never been done before in this country.  And as business leaders, I don’t need to tell you what happens when you put a price on something that used to be free.  Suddenly, your CFO becomes very interested in carbon!

Clearly, firms that are covered by proposed regulations will be a big part of the demand for offset credits as they can use these credits towards their compliance obligations.   But it’s not just about big corporations or industries.  Anyone wanting to offset their emissions will be able to purchase credits - from small businesses, to individuals, to travelers.

And they can do so with the assurance that the credits they purchase represent real and verified emission reductions - the gold standard of offset credits.  This is not about creating an abstract world where “paper credits” are bought and sold like some complex financial product.  Every offset credit will represent a real and verified emission reduction, equal to the equivalent of one tonne of carbon dioxide.  

The offset system, like all elements of our Climate Change Plan, is aimed first and foremost at reducing emissions in Canada.  And we will be rigorous in ensuring that credits will only be issued for projects that actually reduce the amount of greenhouse gas emissions in this country.

Canadians, as always, are eager to do their part.  As you know, Alberta already has a carbon market, and other provinces have already taken steps to create their own.  The initiative I am announcing today will complement those efforts, not supplant or duplicate them. 

In fact, it represents an important next step.  That’s because when the Government of Canada issues offset credits, it creates a “currency”, a means of exchange, which can be traded the way commodities or stocks are traded.  And markets such as the Montreal Climate Exchange, provide a platform on which these credits can be bought and sold.

This, in turn, provides a transparent signal to markets with respect to the value of carbon.  And once companies have that signal, they can start making more informed investment decisions - decisions that will spur innovation and drive the transition to a low-carbon economy.

The documents we are releasing today, therefore, are important not only for the details they contain but for the certainty they provide.  With all three documents related to the offset system now public, Canadians can begin to plan for the future.  To proceed with confidence.  With a clear understanding of the “rules of the road.”

The offset system is a key component of the market-based approach to combating climate change that I outlined at the World Business Summit on Climate Change in Copenhagen just a few weeks ago.

I firmly believe that if we’re going to be successful in December, we need to enable the development of a more robust global marketplace for credits.  And that means expanding the carbon market beyond the European trading regime. 

We have already taken steps to establish the infrastructure needed to support an emission trading system.  For example, we are putting in place a National Registry, where firms can hold purchases of internationally recognized Clean Development Mechanism credits.  And we are developing a credit tracking system, which will keep track of the various forms of credit in circulation as they are bought and sold and used against regulatory requirements.

Today’s announcement on offsets is an important next step in the development of a domestic emissions trading system.   As we move forward with our regulations, we prepare Canada first for a continental approach and, ultimately, for a global trading system.  And I think the sooner that we arrive at that sort of robust, global regime, the better.  

As Canada, and indeed the rest of the world, travels the path to Copenhagen, we do so with a clear commitment and a strong plan.

Together with the regulatory framework we are developing for emissions trading, regulations for renewable fuel in gasoline, fuel efficiency standards and our significant commitment to alternative fuels, and our regulations on tailpipe emissions from vehicles, today’s launch of the offset system sends one more signal to the world that Canada is prepared to act on climate change.

As I mentioned a moment ago, this is a critical time - when science dictates that we reach an international agreement on climate change.  One with real, achievable targets - and all parties on board. 

I’m confident that we can get there.  That we can summon the wit and the will to join in common purpose to secure our planet’s common future. 

Today, Canada takes another significant step toward that future.