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Musing on Biden win & climate: Net zero & Paris priority 1. The Obama era electricity regulations & fuel economy standards are reprised. These move fast given current regulatory enablers, past design. A carbon tax on energy GHGs with a border carbon adjustment (BCA) gets done.
Existing renewable energy policies, notably tax credits, will double down. Biofuel support will also continue because farmers. The National Labs will get recapitalized and innovation kick started. Elements of Green New Deal start to emerge.
From Ctax revenue, household rebates will be large & uniform with little revenue for business. The only question is how much revenue will be earmarked for the Green New Deal. A tension between rebates to households & energy transition subsidies will result in some compromise.
To protect competitiveness, US exporters get carbon rebates while imports are taxed. The US does the heavy lifting on BCA design, publishing a tariff schedule that is reasonable, WTO compliant. Still, protectionism runs deep, accommodations for Canada not assured.
Notably, Canada's output based pricing for trade exposed large emitters, which does not fully price GHGs like a carbon tax, will likely not be considered equivalent to US policy. Border tariffs are a risk for cement, steel, chemicals and the like.
Keystone dies. Carbon policy drops US oil demand, hitting CDN oil. Pressure to apply carbon tariffs to CDN oil to address US oil sands neurosis adds uncertainty. Persistent low oil prices, US oil production dying adds pressure to curb CDN imports. Ugly scenario for CDN oil.
Expect a surge in US demand for CDN cleaner energy. CDN nat gas fortunes diverge from oil with more gas demand as US ELEC decarbonizes. Upward pressure on NA gas price due to shale demise. CND ELEC, biofuel & hydrogen do well. Chemicals. Not a total doomsday scenario for Alberta
Clearly, a need to rethink and realign Canadian clean energy and climate policy as the US carbon landscape changes, and changes fast. But first, Pennsylvania needs to count faster...
