So we have to be very careful, and that's why the government will determine which are good and appropriate for Canada.
Is there any mention of the CDMs in Bill C-377? No, it's missing. How much is missing? It seems that everything is missing from Bill C-377, and that's what the witnesses have said. There is nothing there.
Access to CDM mechanisms under the Turning the Corner plan, credits for compliance, will be limited to 10% of each firm's total target.
A number of U.S. states are currently considering implementing regulatory regimes with emissions trading to reduce emissions for greenhouse gases. The Western Regional Climate Action Initiative intends to establish an emissions trading system for greenhouse gas emissions from industry in five western U.S. states. Starting in 2009, the Regional Greenhouse Gas Initiative will implement a regional emissions trading system in nine northeast and mid-Atlantic states that covers carbon dioxide emissions from power plants in the region. Several other greenhouse gas emissions trading initiatives have been proposed at the state and federal levels in the United States.
Canada will actively work with U.S. partners to explore opportunities for linking Canada's emissions trading with regulatory-based emissions trading systems at the regional and state level, and with any that may be established at the federal level. Canada will also actively explore cooperation on emissions trading with Mexico. Bill C-377, again, is silent on all of this.
The government will monitor, under the Turning the Corner plan, the development of an international carbon market. As this market becomes more fully developed and robust, and emissions monitoring, verification, and reporting systems evolve further, the government will consider full linkages that could allow a broader range of international credits to become eligible for compliance with Canada's regulatory system in place. An essential condition is that any international credits used towards compliance with Canadian regulations represent real and verified emission reductions—again, the importance of having a plan that is working, in which you can verify the reductions in greenhouse gases. Do we see that in Bill C-377? No, we don't.
I wish I could share what good there is in Bill C-377, but it's missing all the fundamentals of a plan that will achieve reductions in greenhouse gas emissions. We don't see that, but we do in Canada's Turning the Corner plan, which is already taking action.
There needs to be credit for early action, and that's what we see in the Turning the Corner plan that Canada now has. Firms in a number of sectors have made efforts over the last decade to reduce emissions, and we applaud those. There would be a one-time allocation of credits to those firms covered by the proposed regulations that took verified action to reduce their greenhouse gas emissions between 1992 and 2006. A maximum of 15 megatonnes would be allocated, with no more than 5 megatonnes to be used in any one year.
Firms would be invited to make a one-time application where they would submit evidence of changes in processes or facility improvements they undertook that resulted in incremental greenhouse gas emission reductions in the specified timeframe. There would be eligibility criteria to determine which emission reduction activities would be considered, and evidence of emission reductions would be audited.
Once all applications were received, the reserve would be allocated to all qualifying applicants on a pro rata basis. The maximum allocation for emission reductions would be one credit for one tonne of carbon dioxide equivalent reduction. If the total tonnage of the emission reduction applied for were to exceed the 15 megatonnes, the credits would be distributed to individual firms in proportion to their contribution to the total emission reduction achieved.
So there is recognition for early action. Is it important that we do that? I think so. The government has recognized the importance of recognizing early action. Do we see any mention anywhere in Bill C-377 of giving credit for early action? No, you don't. Why not?
Under the Turning the Corner plan, the availability of different compliance mechanisms will provide industry with the access to emission reduction opportunities it needs to meet the regulatory obligations at a reasonable cost and will support the development of a functioning emissions trading market system. That said, the government recognizes there may be concern about the level of market liquidity in the trading system, both at the start of the system and over time. The government will carefully monitor the evolution of the emissions trading system and other aspects of the compliance mechanisms in order to determine any modifications that might be required. It has to be a system that works, and we're committed to that. And I'm happy, again, that the Liberals supported that plan.
The emission reduction targets for a given air pollutant will specify a maximum level of that pollutant that can be emitted from a given sector in a given year. These targets will represent national reductions from the 2006 emission levels for each pollutant.
Fixed emission caps will be set for the following air pollutants: nitrogen oxides, sulphur oxides, VOCs, and particulate matter. Fixed emission caps for certain other air pollutants from specific sectors, such as benzene from natural gas production and processing, refineries, and iron and steel, and mercury from electricity generation and base metal smelting, will also be set. As more information becomes available and regulatory development is undertaken, the government will consider whether the regulations for specific sectors should include targets for other air pollutants not already identified—for example, benzene from the oil sands.
Do we see any mention of that in Bill C-377? No. One would ask why not. Why is Bill C-377 void of all these important components?
I'll continue. Sectoral emission caps will be set for each air pollutant of concern in a given sector. Whether a cap is set for a specific pollutant in a given sector will depend on whether the pollutant is emitted in significant quantities from facilities in that sector. In some cases, caps will not be proposed for an air pollutant in a sector if the measures to reduce another air pollutant will significantly reduce emissions in the first. How the sectoral caps will be allocated among the facilities will be determined during the process of developing the detailed regulations. The targets will come into effect as early as possible, between 2012 and—