Policy Issues for Energy-Intensive Export Industries

? Context: Ø Global action on climate change ? The situation of trade-exposed industry sectors ? The federal government?s draft plan for industry ? CAPP?s position ? Canadian emissions & Canada?s Kyoto target Simple Economic Theory of Dealing with Externalities ? Put cost on emissions Ø Carbon tax Ø Emission trading with auctioned permits ? GHG costs get reflected in the prices of energy alternatives, goods & services Ø Decisions driven by changes in relative prices ? Switching to lower emission fuels ? More energy efficient ways of producing ? More energy efficient appliances, cars, housing ? Reduced demand for energy intensive goods & services ? Anticipation of higher CO2 price drives low CO2 technology Development