Cross-border carbon trading

Here's an example of a cap-and-trade system tentatively exploring cross-border expansion - how timely.

The United States has agreed to work with Canada and Mexico to develop a North American carbon market that would allow Canadian emitters to meet some portion of their targets through purchasing credits in the vast NAFTA marketplace.

The agreement by leaders from the three countries could help keep down compliance costs for Canadian emitters, while expanding the market for renewable energy companies and others that create carbon credits with projects in Canada. "This is the first time the three North American leaders have been together and have started to flesh out the elements of a continental approach to this," Environment Minister Jim Prentice said in a telephone interview.

A declaration signed by Prime Minister Stephen Harper, U.S. President Barack Obama and Mexican President Felipe Calderon in Guadalajara on the weekend committed the three governments to work together on climate-change issues, including co-operating on the construction of their emissions-trading systems.

This reminds me that Europe has had a cross-border carbon market for some time, so Thomas Crocker's argument that carbon taxes are better suited to the global nature of the problem is looking increasingly weak.