3. Alternatives to ERC trading

There are several other approaches that the Canadian government has considered, some of which have been included in the national reduction plan (7). These include:

• Encouraging voluntary reductions
  – this approach will be used in the forestry, agriculture and waste management sector. It will include provision of extension and awareness programs on the opportunities to reduce emissions in these sectors, and the provision for these sectors to trade their credits into the capped sector for financial gain.
  Uncertainties for these sectors include risk of future regulation, whether it will be “worth it” to participate in credit trading, trading rules, and whether those who have already generated credits will be rewarded or not. None of these uncertainties has been resolved yet. However the Canadian government has initiated some early action programs including one to stimulate credit trading within Canada. Specifically the government has offered to purchase ERCs from target sectors including renewable energy, waste management, agriculture and forestry (PERRL Project, Judith Hull personal Communication 2003, NRCan Purchases 1998 to 2003).
     

• Government regulated carbon tax, or emission limits
  – this provision will be used to encourage the development and sale of lower emission producing vehicles in Canada. While it is less flexible for the vehicle manufacturers, it will apply to the entire sector and will presumably benefit the consumer who has access to more fuel efficient vehicles with lower operating costs.
      

• Government subsidy/incentive plans
  – this approach may be used to encourage home owners to improve
  the energy efficiency of their homes, municipalities to improve their public transit systems and farmers to convert marginal cropland to permanent grass and/or trees or to plant shelterbelts. These programs are of benefit where there is little or no economic incentive to adopt such practices, but are limited by the government funds available for such programs.

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