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Exhaust billows from a car tailpipe (David Paul Morris/2008 Getty Images)
Exhaust billows from a car tailpipe (David Paul Morris/2008 Getty Images)

Prospects for cap-and-trade system waning Add to ...

The one bright spot for Canadian environmentalists in Tuesday's U.S. midterm elections was the defeat of Proposition 23, the California proposal that would have suspended that state's emissions-reduction law until unemployment rates fell sharply.

With the Republicans taking over the U.S. House of Representatives in Washington, and strong support across the country for right-wing candidates, the prospect of any new environmental legislation at the federal level in the United States is all but dead.

Still, the California vote may signal a shift in focus to the states and provinces, if there is to be any kind of emissions-trading mechanism established across North America.

The vote to kill Proposition 23 is "the sole bit of good news emanating from the U.S. from the point of view of the environmental constituency," said Alexander Wood, senior director of Sustainable Prosperity, a green-energy think tank based in Ottawa.

Mr. Wood said the campaign to defeat the proposition will likely become a model of how to fight for environmental causes, because it managed to garner huge financial support from companies running green businesses. It is clear the deep pockets of that new economy were able to defeat the resources of the oil companies that backed Proposition 23, he said.

Over all, it showed how key it is to "identify the economic constituencies that will win [from a pro-environment issue]and get them to start making their presence felt both politically and economically," he said.

Danielle Droitsch, director of U.S. policy for the Calgary-based Pembina Institute, said the success of the Republicans will likely slow any moves by the Obama administration to create a "cap-and-trade" market for carbon emissions, or to introduce other climate change legislation. That will clearly have an impact on Canada, she said. "Because Canada has a follow-the-U.S. policy … we will likely see at least a two-year delay for any kind of legislation in Canada."

That could worsen Canada's already dim reputation on the climate change front internationally, she said.

Ideally, the Conservative government should now shift to a "made in Canada" approach that will get the country started on a road to a serious climate change policy, Ms. Droitsch said, and then adapt to "whatever the U.S. does, whenever the U.S. does it."

States and provinces will likely be more inclined to go it alone and create their own climate-change or emission-trading rules, she said, as they see little action at the federal level in either country. Clearly, that is the intention in California.

The defeat of Proposition 23 could help boost the momentum behind the Western Climate Initiative, a cap-and-trade market that includes California, six other American states, as well as Ontario, Quebec, British Columbia and Manitoba. The group has said it will launch a cap-and-trade system in 2012.

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