A focus on energy innovation, not regulation, is key to success for carbon-related problems

June 8, 2011, Ottawa, ON - The current state of carbon policy is a messy tangle of energy, economic, environmental, and security problems that span North America and interact through the North American Free Trade Agreement (NAFTA). Good carbon policies can benefit the economic and strategic interests of all three NAFTA countries, while bad ones can aggravate conflicts, undermine trade relations, thwart economic development, and weaken national security.

In the Commentary released today by the Macdonald-Laurier Institute, Carbon Policy: The Right – and Wrong – Ways to Use NAFTA, Dr. Lewis Perelman responds to the carbon policy proposed by Jeffrey Schott and Meera Fickling of the Peterson Institute for International Economics, an influential Washington think tank. They proposed using the NAFTA framework to impose a carbon-eliminating regulatory scheme across North America in the style of the failed and now expiring Kyoto Protocol. This scheme would conflict with the goals of free trade, economic recovery, and energy security, and it would inflame political conflict. According to Dr. Perelman, the Schott and Fickling proposal is the wrong way to use NAFTA.

Brian Lee Crowley, Managing Director of the Macdonald-Laurier Institute, notes that "Many Canadians are unaware that proposals are being floated in Washington to use the institutions of NAFTA to impose on us carbon policies that are ill-suited to our circumstances and have been overtaken by events. Dr Perelman's paper offers a much more positive approach to continental collaboration on carbon."

What we need is an integrated, long-term strategy to promote innovation and technological breakthroughs in energy generation rather than the tried and failed approach of carbon emission regulations, says Dr. Perelman. NAFTA makes extending participation in national energy innovation programs to the other NAFTA partners not only appropriate, but beneficial. He describes an "open innovation" model incorporating Canada, the US and Mexico that could facilitate these technical solutions more quickly, with less conflict and at lower cost than the old failed approaches.

Dr. Perelman concludes "Canada, the United States, and Mexico can do more to resolve the carbon policy mess together than they can alone. But a focus on innovation, not regulation, will be the key to success."

Dr. Lewis J. Perelman is a policy and management consultant in Washington, DC. In the past he worked on federal solar and renewable energy programs at two US national laboratories. He also has been a fellow of the Homeland Security Institute and the Homeland Security Policy Institute.

Read the Commentary:
Carbon Policy: The Right – and Wrong – Ways to Use NAFTA