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Trump’s deconstruction of Obama climate policy has major implications for Canada

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Once again, the regulatory landscape involving climate change has shifted under the feet of both the United States and Canada, as President Donald Trump has finally fulfilled his pledge to unwind Barack Obama’s climate change policies.

Signing an Executive Order (EO) titled “Promoting Energy Independence and Economic Growth,” Trump commenced the unravelling of a significant part of his predecessor’s climate legacy, introducing a headwind to Canadian competitiveness.

The EO involves multiple actions touching on numerous Obama EOs and other regulatory actions. The most visible, and most seized upon by opponents of Trump’s policy, is his order to the EPA to review the agency’s “Clean Power Plan,” a group of three EPA rules intended to lead to the elimination of coal-power generation in the U.S.

This is indeed a big deal (although it’s also likely to be slower in having an impact than other elements of Trump’s climate EO) and will almost certainly go straight to the courts for litigation, as the rules derive from EPA’s authority to implement long-entrenched regulations such as the Clean Air Act, which the agencies are legally required to implement.

But other elements of Trump’s climate EO can be unilaterally imposed by the executive branch of the U.S. government, and will likely face far less pushback from courts.

For example, the Trump EO calls for re-calculating something called the “Social Cost of Carbon.” This is an estimate of the future damages of emitting greenhouse gas emissions today. If this value is lower than that used by the EPA under Obama, new cost-benefit calculations could lead to the re-evaluation and possible repeal of a number of regulations currently on the books. Another element of the EO orders the heads of agencies to review all rules, regulations or similar measures that may hinder that development of American energy resources.

But what’s most interesting is that Trump’s EO confirms that the U.S., at least federally, is not going to pursue a greenhouse gas reduction agenda for at least four years, and even if Trump were to lose the next election to a climate-activist democrat, it would be more years before his successor could re-instate aggressive greenhouse gas controls. And that has major implications for Canada, because Canada is pursuing exactly such actions, with new carbon taxes and regulations coming on the books at a record pace.

These actions, by design, are going to make the costs of goods and services, manufacturing and mining, etc. more expensive in Canada without any comparable action being taken federally in the U.S. Add on possible U.S. tax reform and broader deregulation, and the U.S. starts to look a lot more competitive than Canada.

Prudent Canadian governments would do well to re-examine the climate policy pathway Canada has taken in light of the movement of that 320 million-person trading partner to our south. If nothing else, tapping on the brakes of our current rush to carbon pricing and regulations might save Canadians from a world of economic hurt.


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