I. INTRODUCTION II. BACKGROUND OF FEDERAL CAP-AND-TRADE POLICIES WITHIN UNITED STATES AND CANADA A. United States Federal Policy and Cap-and-Trade B. Canadian Federal Policy and Cap-and-Trade III. CANADIAN OIL SANDS ARE CRITICAL COMPONENT TO CONTINENTAL CAP-AND-TRADE DEBATE A. Oil Sands Production is Expensive and Creates High Emissions B. Alberta Developed Unique Climate Change Strategy IV. REGIONAL FRAMEWORKS AND FACILITATING INSTITUTIONS PROMOTE NORTH AMERICAN CLIMATE CHANGE COOPERATION A. Regional Alliances Between Canadian and American Jurisdictions Serve as Focal Points for Trans-Boundary Cooperation B. Important Facilitating Institutions for Continental Cap-and Trade Already in Place V. ENERGY AND ENVIRONMENTAL DISCUSSIONS BETWEEN THE UNITED STATES AND CANADA PROMOTE COOPERATION BUT BARRIERS TO AGREEMENT PERSIST A. Canada and the United States Agreed to Clean Energy Dialogue B. The United States has a Strong Interest in Carbon Capture and Sequestration Technology Because of High Emissions From Coal Consumption C. Canada's Intensity-Based Emissions Proposal may be Incompatible with United States' Hard Cap System D. Regional Agreements Will Impact Federal Cap-and-Trade Policies within the United States and Canada, but These Initiatives May Languish VI. ALBERTA INCREASINGLY ISOLATED WITHIN CONTINENTAL CAP-AND-TRADE DEBATE A. Alberta's Favorable Response to Clean Energy Dialogue B. Oil Sands Heavily Impacted by American Low Carbon Fuel Standards C. Proposal for Securing Alberta's Cooperation VII. ADDITIONAL CONSIDERATIONS A. Mexico Could be Important North American Cap-and-Trade Partner B. Continental Cap-and-Trade Considered in Light of North American Free Trade Agreement C. North American Cap-and-Trade System Must Consider Problems of E. U. Emissions Reduction Scheme VIII. CONCLUSION
Canada and the United States share an energy relationship that is unsurpassed by any other two countries in the world. More oil, natural gas, and electricity are imported into the United States from Canada than from any other country. (1) As the largest energy consumer in the world, (2) the United States is an invaluable customer of Canadian energy production. Because of the size and importance of this relationship, Canada's energy and environmental policies can have a tremendous economic impact on the United States and vice versa. Specifically, these two countries face similar challenges in reducing greenhouse gas emissions while maintaining their critical energy relationship. As the U.S. and Canadian federal governments consider implementing domestic cap-and-trade programs for carbon dioxide emissions, each country's proposals reveal the high degree of interdependence characterizing this North American relationship. While some linkage between these two countries' eventual cap-and-trade systems is inevitable, the United States and Canada should actively negotiate a continental cap-and-trade system for carbon emissions.
If carefully crafted, this system would preserve North American energy security while promoting the development of carbon-reducing technologies. Such a comprehensive framework would also maintain the vital economic relationship between Canada and the United States by sustaining energy production and innovation. Additionally, continental cooperation would avoid potential international trade disputes that could threaten the strong ties between these two countries. Though not the primary focus of this paper, Mexico may also be a willing partner to such an agreement, likely strengthening the continental cap-and-trade framework even further. While there …