US, Canada Leaders Agree to Slash Methane Emissions, Increase Climate and Trade Cooperation

17 March 2016

The US and Canada are aiming to increase their cooperation on a range of climate and trade issues, leaders from both countries announced last week, including by taking steps to cut methane emissions from oil and gas sources dramatically.

The news came following a high-profile meeting between US President Barack Obama and Canadian Prime Minister Justin Trudeau in Washington – a discussion that came hot on the heels of Canada’s announcement this month that it would be moving toward adopting a nation-wide carbon pricing scheme. (See Bridges Weekly, 10 March 2016)

The meeting also comes in the first year of Trudeau’s term, and the final year of Obama’s, with the US election process already in full swing. The similarities in policy approach between the two leaders was highlighted by both sides – even amid questions that the impending leadership change in Washington could slow any planned progress in the bilateral relationship.

“We’ve got a common outlook on what our nations can achieve together,” said Obama to reporters following their discussions.

“He campaigned on a message of hope and of change,” the US President continued, referring to his Canadian counterpart. “At home, he’s governing with a commitment to inclusivity and equality. On the world stage, his country is leading on climate change and he cares deeply about development. So, from my perspective, what’s not to like?”

The Canadian premier, for his part, echoed the sentiment that climate action does not have to come at the expense of a robust economy, but can rather be a catalyst for one.

“The President and I share a common goal: We want a clean-growth economy that continues to provide good jobs and great opportunities for all of our citizens. And I’m confident that, by working together, we’ll get there sooner than we think,” said Trudeau.

Wide range of climate commitments

Following their discussions, the two sides released a “Joint Statement on Climate, Energy, and Arctic Leadership” outlining a series of areas where they have agreed to boost their cooperation both at a domestic and global level.

Among these is a commitment to slash methane emissions in their respective countries by 40-45 percent below 2012 levels by 2025 from the oil and gas sectors – a commitment Obama had already announced for the US a year ago, but is new for Canada. (See Bridges Weekly, 22 January 2015)

Canada will focus on developing regulations for both new and current oil and gas sources. The relevant US agencies are already in the process of developing regulations for new plants, and have now been directed to do so for existing ones. (See BioRes, 26 August 2015)

The two leaders have also set two other big climate action goals for the coming year. One of these involves pushing for a “carbon offset” measure to be adopted at the International Civil Aviation Organization’s (ICAO) triennial assembly, due to be held from 27 September to 7 October.

This measure, they say, would help ensure “carbon-neutral growth” from international civil aviation.

Both sides will also work toward cutting back on hydrofluorocarbon (HFC) emissions, a potent greenhouse gas with an atmospheric warming potential up to 10,000 times that of carbon dioxide. Along with taking steps domestically, including through updating their government procurement processes, the two countries will also put in place a “second phase” of aligned emissions standards for heavy-duty road vehicles, with models starting after 2018. At the international level, they are both pushing for the Montreal Protocol to adopt an HFC “phasedown amendment” this year – referring to a process that is already underway under that international agreement, which deals with reducing the production and use of ozone-depleting substances. (See Bridges Weekly, 12 November 2015)  

The joint statement also includes a section devoted specifically to the implementation of the Paris climate accord – a global, emissions-cutting agreement reached last December under the UN Framework Convention on Climate Change (UNFCCC). (See BioRes, 13 December 2015)

For example, Trudeau and Obama have agreed to complete this year “mid-century, long-term low greenhouse gas emission development strategies, pursuant to the Paris Agreement and encouraging this approach with members of the G-20.”

The two sides have also announced steps to help developing countries in their climate adaptation efforts and in putting their national contributions under the Paris accord into effect, among other commitments.

Notably, the joint statement also makes a reference to carbon markets, a politically contentious issue at the national level for both sides – but one that has also seen significant sub-national advances, including under schemes that link some Western US states with select Canadian provinces.

“Recognising the role that carbon markets can play in helping countries achieve their climate targets while also driving low-carbon innovation, both countries commit to work together to support robust implementation of the carbon markets-related provisions of the Paris Agreement,” the statement says. 

Under the carbon market-related provisions of the Paris Agreement, parties can transfer so-called mitigation outcomes through voluntary cooperative approaches to help them achieve higher ambition under their contributions. This shall, among others, ensure environmental integrity and avoid double-counting.

The two sides have therefore directed their respective governments, working together with state, provincial, or territory governments, to “explore options for ensuring the environmental integrity of transferred units” in international carbon market mechanisms, noting that this could help in the accounting efforts as countries implement their “intended nationally determined contributions” and help avoid “double-counting” of reductions.

Furthermore, given that both sides do have some emissions trading schemes that operate at the sub-national level, they intend to ask for lessons learned both relating to design and necessary complementary measures – while pledging also to increase their bilateral cooperation on the subject.

Softwood lumber talks

On trade, one question going into the meeting would be whether the two leaders would be able to announce any advances on a possible new arrangement on softwood lumber, after the previous Softwood Lumber Agreement (SLA) expired last October. (See Bridges Weekly, 15 October 2015)

The SLA had been in force from 2006, following a prolonged row between the two sides over whether Canadian lumber producers received unfair subsidies as a result of “stumpage fees” – taxes on each harvested tree on state-owned land – being artificially low. Subsequent US trade remedy investigations led to duties being imposed as a result.

Trade disputes under both the North American Free Trade Agreement (NAFTA) and the WTO were filed, with the two sides later reaching the SLA – a deal which entailed the refund of the bulk of US anti-dumping and countervailing duties, as well as border measures on Canadian softwood lumber exports. Though the deal expired last October, there is a one-year grace period in place.

Whether the US was actually interested in a renewal has been a subject of much speculation in recent months. However, the two leaders have now directed their top trade officials – US Trade Representative Michael Froman and Canadian Minister of International Trade Chrystia Freeland – to “intensively explore all options and report back within 100 days on the key features that would address this issue,” according to a White House factsheet released after the meeting.

“President Obama welcomed Prime Minister Trudeau’s interest in a new long-term agreement for softwood lumber,” the White House statement noted. Both leaders also confirmed in their remarks to the press that advances had been made, with Obama saying that the issue “will get resolved in some fashion.”

“Our teams are already making progress on it. It’s been a longstanding bilateral irritant, but hardly defines the nature of the US-Canadian relationship,” he added.

Trudeau, for his part, also acknowledged that progress had been made and that he was optimistic about a solution.

Advances on TPP?

The next steps for the Trans-Pacific Partnership (TPP) Agreement were also slated to be on the agenda. The 12-country deal – which includes both the US and Canada – was signed last month in Auckland, New Zealand. (See Bridges Weekly, 11 February 2016)

At the time, Canadian officials noted that signature did not necessarily mean endorsement, given that the government is now holding a public consultation on the trade deal. On Canada’s side, the TPP was negotiated under the previous government of Stephen Harper, of the opposing Conservative party.

“Recognising that the Trans-Pacific Partnership, which links together countries that represent nearly 40 percent of global GDP, would advance these objectives, Canada and the United States are working to complete their respective processes,” the factsheet notes.

Further details on the nature of their TPP discussions were not made clear, including on whether the new Trudeau government has solidified its position on the trade deal. As the public consultation continues in Canada, questions also remain in the US as to whether Obama will be able to push Congress to vote on the trade deal’s ratification before he leaves office in early 2017, given the ongoing election process and the heated debate over trade’s potential impacts on domestic jobs. (See Bridges Weekly, 10 March 2016)

ICTSD reporting; “US, Canada partner to cut methane, vow more collaboration on carbon markets,” CARBON PULSE, 10 March 2016.

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