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Environment Minister John Baird quickly dismissed the idea of a national carbon tax as a "Liberal idea," saying he had already addressed the concerns raised in the report by introducing a new federal green plan that sets a price on carbon emissions. From a financial point of view, federal Finance Minister Jim Flaherty has already gone on the record to say he's not in fa- vour of provinces taking patchwork action of any kind, instead preferring a national approach to cutting emissions linked to global warming. So what kind of approach should be taken? And who will pay for it? Some say Canada might take the same path as the U.S. in pushing for a system of emission permit credits and the trading of those credits to reduce carbon outflow. Is it simply a matter of time before Canada is pulled into the orbit of a North Ameri- can cap-and-trade system (the trading of emission allowances where the total allowance is strictly limited or "capped")? One thing is for sure: it's a complicated and complex area of law that's heating up, say experts. "It has really taken on a life of its own," says Bradley B. Grant, a partner at Stikeman Elliott LLP's Calgary office whose practice focuses on commercial ar- rangements, primarily in the petroleum and natural gas and power sectors. He says the issues of carbon taxes and trading show how much environmental issues are driving business these days. "You've got a number of lawyers and industry par- ticipants elsewhere trying to get up to the curve on greenhouse gas emissions and nobody really knows what they're getting up the curve on yet," he says. "There are not too many files where lawyers are sitting down billing this stuff yet, but everybody, I think, recognizes that it's going to be very important going forward." Environmental lawyer Diane Saxe recently said on her blog about the introduction of the carbon tax: "It is basic econom- ics and good common sense: to discourage something, make it more expensive. And vice versa. So why does Canada put heavy taxes on things we do want (like employment) and no taxes on things we don't want (like pollution)?" Harold Anderson, an associate at Stikeman Elliott, says a car- bon tax is a tough sell because it's hard to know where to set the price. "The issue with that is if you set the price too high, it discourages industry and it discourages consumption which affects the economy, for instance, in this case in B.C." he says. "But if they set the tax too low, it does not encourage people to conserve or to cut their greenhouse gases." Grant says a carbon tax looks like a simpler solution on pa- per, "in the sense that you just throw a tax on there and there's no need to create this new market. But you've got to pick the right number or you're going to drive the wrong behaviours," he says. "The only way to really get to that right number is to let the market decide and if you go that route, you really have to have an open-market system." Cap-and-trade systems are all over the place, with B.C. and Manitoba signing on to the Western Climate Initiative, a re- www. C ANADIAN mag.com APRIL 2008 51