Canadian provinces eye carbon-trading plan

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VANCOUVER, British Columbia (Reuters) - Many of Canada provinces are pursuing a carbon-trading plan to fight climate change, saying on Tuesday it was inevitable the country would adopt a such system, even if the current federal government is cool to the idea. British Columbia, Ontario, Quebec and Manitoba have been discussing adopting carbon trading, or emissions credit trading, in conjunction with the Western Climate Initiative (WCI) in the United States, an idea championed by California Gov. Arnold Schwarzenegger.

By Allan Dowd

VANCOUVER, British Columbia (Reuters) - Many of Canada provinces are pursuing a carbon-trading plan to fight climate change, saying on Tuesday it was inevitable the country would adopt a such system, even if the current federal government is cool to the idea.

British Columbia, Ontario, Quebec and Manitoba have been discussing adopting carbon trading, or emissions credit trading, in conjunction with the Western Climate Initiative (WCI) in the United States, an idea championed by California Gov. Arnold Schwarzenegger.

"Eventually in North America there is going to be a cap and trade system, and we think it is about time we start thinking about what that will be and how it can operate," Quebec Premier Jean Charest told reporters.

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Provincial leaders met this week in Vancouver, focusing Tuesday on global warming and how Canada can adapt to the impact of climate change that is already being felt -- illustrated by retreating ice cover in the Arctic and insect infestations in the country's huge western forests..

Carbon-trading markets are seen as the most business-friendly way to squeeze out cuts in emissions. They allow major polluters to pay others to cut greenhouse gas output on their behalf, so they can meet emission caps.

Supporters, including environmental groups, say it is the most cost effective way to reduce emissions and provides economic incentives to develop environmentally friendly technology.

Charest is pushing for the actual trading market to be hosted at the Montreal Exchange.

The Conservative federal government has promised to set up a domestic emissions trading system, but has opposed placing binding caps on emitters, saying that could hurt the economy.

Supports of carbon trading say mandatory caps are needed for the market to establish pricing.

"We need to go there. If we can't count on the federal government to embark us on that particular destination then we'll see what we can do among ourselves," Ontario Premier Dalton McGuinty said.

Not all provinces agree, however.

Alberta, the center of Canada's oil and gas industry, has told the other provinces it is not interested and warned that forcing it to cut carbon emissions too quickly would harm the entire national economy

Newfoundland & Labrador Premier Danny Williams said that while he likes the carbon trading idea he wants administrative issues resolved before he will commit to joining.

"Europe went through the same exercise and found out from an administrative perspective there are some difficulties," told reporters, without elaborating.

(Editing by Rob Wilson)