Several Canadian environmental commentaries have recently noted that Congress is likely to shut down the US Environmental Protection Agency’s efforts to regulate greenhouse gases (GHGs). Gallon Letter has previously suggested that such predictions are likely to be wrong.

This week the House of Representatives passed legislation to curtail EPA’s GHG regulatory efforts but the US Senate defeated similar legislation. The result: US EPA’s GHG initiatives are likely to be able to go ahead.

Even if the US Senate is somehow persuaded to adopt legislation in this area, the White House has stated that the President will veto it.

The complexities of the US legislative process make it a little less than certain that EPA is now free to regulate GHGs but the odds are very much in that direction.

Why does this matter to Canadian industry? Two big reasons:

1) the Government of Canada has said that it will follow the US lead on GHG policies, though more recently it has been moving away from that commitment.  Reality check: if the US does regulate GHG emissions this year or next it will be quite difficult for Canada not to do something similar.  If Canada does not, it will be essentially the only major industrial country to have taken no effective action on GHG emissions.

2) US initiatives to regulate GHGs are quite likely to have implications for products imported into the US. Companies that export to the US, especially those involved in energy products, energy using products, and products with high manufacturing energy, should be following the issue closely. The US is certainly not going to let GHG regulations impact on the competitiveness of US producers, so Canadian producers can expect that one way or another they will have to comply with US GHG standards.