Thursday, July 16, 2009

Global Governance

The political reality is simple. Canada in general and Alberta in particular will be hit hard by the US Climate Change legislation, should this pass the US Senate. There are two reasons for this. First, Canada has already said it will fall in line with the broad provisions of the US Bill, especially as they relate to the cap and trade regime. Second, the US Bill will permit the US to charge tariffs at the border for goods arriving in the US from jurisdictions which do not meet the same standards as their own for carbon mitigation. We can read this last provision as a border tax on Alberta’s oil sands products as well as other products, such as lumber.

The US Climate Change bill and its cap and trade scheme will make food, energy and transportation more expensive. Some estimates suggest that the additional costs will be considerable – up to $2500 per year per household. In addition, renewable energy implications of already made Canadian decisions will add to these costs – energy poverty in Canada is set to increase.

Whether or not the US Climate Change bill passes congress is secondary. The political issue here is whether or not we wish our economic strategy to be largely determined by another country or by means of multilateral agreements.

Al Gore, in speeches this last week in both London and Australia, has emphasized that the political response needed to combat the perceived threat of climate change requires a form of global governance. Stephen Harper, speaking after the G8 summit, also said that there would need to be “some kind of global governance”. Plans are already made within the UN for global governance initiatives, including global carbon taxes and taxes of air and road transpiration that would be standardized around the world.

More significantly, multinational blocks of countries – the EU for one – are beginning to operate as single governments representing a number of states. EU law, for example, on a variety of issues supersedes national law. The World Trade Organization rules, binding on members, are also a form of global governance. What we are likely to see is that such forms of global governance will have ceded to them substantial powers to react to climate change policy frameworks agreed by national leaders.

One reason for going global is that national electorates are becoming increasingly skeptical about global warming and the policies being pursued in its name. In Europe, for example, the number of electors now supportive of global warming mitigation policies has fallen from 30% to 18% in just twelve months. A second is that there is growing evidence, based on measurements and emerging science, that the climate change models on which a great many of the climate change fears are based are flawed. A third is that national governments cannot manage the competing vested interests involved in policy formulation and find it easier to cede authority to multinational agencies, organizations and governments.

Canada needs to define its own agenda and determine its own laws and taxes. It needs to do so in the context of its own economic interests, acting with full awareness of the actions of other nations. Canada needs a clear view of the potential economic value of environmental remediation of the land, water and air resulting from oil sands extraction – there are substantial economic benefits to be had from leading the world in the effective management of the combined effect of oil sands mining. Canada also needs to be clear about its policy and strategy for the arctic – a battle ground for global governance.

The next two to five years will be a testing time for national governments as they come to terms with the post-Kyoto period. There are strong voices favouring global governance. We need to be careful to manage these voices and mute them.

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