Biden-Trudeau Climate Plan May Target Polluting Trade Rivals

Canada and the U.S. are working on joint environment plans that could include singling out countries with weaker climate laws, Prime Minister Justin Trudeau says.

The Canadian leader said in an interview with Bloomberg News that his country’s plans to deepen climate cooperation with the U.S. will include complementary policies that take “into account the emissions profiles of industrial competitors around the world.”

Some countries “are producing without having the same kinds of leadership on climate change that the U.S. is bringing into place and that we already have,” Trudeau said in the telephone interview Wednesday, one day after a bilateral meeting with U.S. President Joe Biden and key officials. “That level of transparency and accountability is something that we are concretely looking at moving forward on.”

Biden-Trudeau Climate Plan May Target Polluting Trade Rivals

Trudeau’s comment illustrates just how far the idea of penalizing high-emitting countries -- perhaps with carbon taxes on their exports -- has advanced in recent months among major economies ramping up efforts to curb pollution. Such levies could alleviate some of the competitiveness concerns, and political backlash, associated with new climate regulations and laws.

Trudeau didn’t mention specifically the idea of a carbon border levy in the interview, other than to say more details will be unveiled in the coming months, ahead of an April climate summit the White House is planning.

His trade chief, Mary Ng, said earlier this month the Canadian government is “working on” the idea, as part of broader efforts to find areas where economic goals and climate targets align. A Canadian government official said a number of measures are being looked at around the world, with carbon adjustments being just one tool.

Taxing goods from countries with weaker climate laws has won the support of U.K. Prime Minister Boris Johnson, who is expected to use his country’s Group of Seven presidency this year to win support for so-called carbon border adjustments. The European Parliament’s environment committee backed a resolution earlier this month urging the European Commission to put a price on emissions from imported products by 2023.

Biden-Trudeau Climate Plan May Target Polluting Trade Rivals

‘Competitive Disadvantage’

Biden has promised aggressive action to combat climate change and on the campaign trail signaled his support for carbon fees or quotas that would raise the price of imported goods from countries with lax climate controls.

“As the U.S. takes steps to make domestic polluters bear the full cost of their carbon pollution, the Biden administration will impose carbon adjustment fees or quotas on carbon-intensive goods from countries that are failing to meet their climate and environmental obligations,” Biden’s campaign pledged in a clean energy blueprint last year. “This will ensure that American workers and their employers are not at a competitive disadvantage and simultaneously encourage other nations to raise their climate ambitions.”

However, it isn’t clear whether a carbon levy on imports would comply with World Trade Organization rules without a similar domestic tax.

U.S. Special Presidential Envoy for Climate John Kerry and Canada’s Environment Minister Jonathan Wilkinson also spoke Wednesday about how the two countries can coordinate their efforts. Wilkinson told reporters in Ottawa after the meeting the pair spoke about carbon tariffs and there is interest in the concept, but that the priority remains on building global ambitions to fight climate change.

“After four years of moving in entirely different directions on this file with the United States, it is certainly great to be working together again,” Wilkinson said.

The Canadian minister cited Japan, India, China, Australia and Mexico as countries that should face pressure to lower their emissions.

Biden-Trudeau Climate Plan May Target Polluting Trade Rivals

For Trudeau, pushing aggressively on climate provides some defense against attacks on his country’s environmental record, which is complicated by Canada’s large oil and gas sector. Trudeau’s two-hour virtual meeting with Biden sought to soothe growing tensions over the U.S. administration’s decision to cancel a permit for a major oil pipeline over the Canada-U.S. border.

In the interview, Trudeau said Biden won’t change his mind on the Keystone XL pipeline but that Canada is focused on other energy issues with the U.S., including how the two countries can work together to build a cleaner electrical grid -- a key to meeting 2030 emissions goals, he said.

“Those issues were brought up. We spent most of our time talking however about the larger idea of energy strategy and climate change at the same time,” Trudeau said. On Keystone, “I think it’s very clear that the U.S. administration has made its decision on that, a decision that we disagree with and are disappointed by.”

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