A new report reveals how "NAFTA 2.0" could deal lock in fossil fuels and deliver a brutal blow to efforts to rein in greenhouse gas emissions.
The publication from the Council of Canadians, Sierra Club U.S., and Greenpeace Mexico—NAFTA 2.0: For People Or Polluters? (pdf)—comes as the U.S. is reportedly hoping to reach a deal with Canada and Mexico in the next three weeks. But the groups' report warns that a "NAFTA renegotiation that fails to address climate change would be a costly exercise in climate denial."
"NAFTA was written to support corporate polluters, not climate-impacted communities. The deal must be fundamentally rewritten to benefit the working families hit hardest by the fossil fuel economy," said Ben Beachy, report author and director of Sierra Club's A Living Economy program. "Instead, Trump's climate-denying agenda for NAFTA 2.0 would give corporations a new, backdoor way to block climate protections while letting them offshore more jobs and pollution."
Given the corporate input into the original deal, it is unsurprising "that NAFTA includes a host of provisions that support the profits of fossil fuel corporations at the expense of climate progress," the report states.
Among the climate problems in the deal are the "proportionality rule" that forces Canada to make available for export to the U.S. the same percentage of oil and gas as it has in the past three years; the fact that it facilitates Mexico's dependence on fossil fuels; the inclusion of the regulation-thwarting, corporate-friendly "investor-state dispute settlement" (ISDS); and that it allows corporations to just outsource emissions and pollution onto another country with less stringent regulations. "The deal protects corporations that cross borders, but doesn’t require cross-border protection for workers and the environment," as the report puts it.
Outlining how the proportionality rule is a barrier to climate progress, the report explains:
Canada must make available for export to the U.S. three quarters of its oil production and over half of its natural gas. Not only that. Ottawa also must not alter the proportion of tar sands oil in its export mix, nor the fraction of exports from hydraulically fractured (fracked) oil and natural gas. This means that although tar sands oil is one of the most carbon-intensive and locally damaging fuels on the planet and fracked gas can be a worse emitter of greenhouse gases (GHGs) than coal, Canada is not allowed to phase them out faster than conventional oil and gas.
The report also points out:
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NAFTA's proportionality rule offers a guarantee to the Wall Street firms that finance cross-border tar sands oil pipelines: If they invest in a costly pipeline project, they can rest assured that the government of Canada will not do anything to interrupt the flow of tar sands oil. That guarantee sits in a legally-binding, multi-decade trade pact that is more difficult to change than federal law.
"For Canada's transition to a clean energy economy to begin, this polluter-friendly rule must end," said report co-author Dr. Gordon Laxer, a political economist and founding director of the Parkland Institute at the University of Alberta in Canada.
Instead of ditching the rule, however, NAFTA 2.0 could also bind Mexico to it, and would pose a further barrier to Canada's climate goals, as it would make it churn out 1,500 metric megatons more climate pollution by 2050 than without the rule.
Another problem the report details is that even now,
With NAFTA in effect, the U.S. Department of Energy is required to forego an analysis of whether natural gas exports to Mexico are in the public interest, which means that gas corporations have a permanent green light to expand gas pipelines from the U.S. to Mexico.
"NAFTA's existing protections for oil and gas corporations are exacerbating Mexico's dependence on fossil fuels, crowding out wind and solar power, and encouraging fracking," said Dr. Alejandro Álvarez Béjar, report co-author and economics professor at the National Autonomous University of Mexico. "But proposals for NAFTA 2.0 could make matters even worse by locking in the deregulation of oil and gas in Mexico, creating long-lasting barriers to climate progress."
While the current deal benefited from the input of corporations fueling the climate crisis, the report concludes: "Their input should be replaced with the grounded realities of people from the parched fields of Oaxaca to the scorched forests of British Columbia to the flooded streets of Houston. The ongoing negotiations urgently need this dose of climate reality if they are to produce a new, people-centered trade agreement that supports a just transition to a clean energy economy."
As Beachy argued, "We cannot shift to a clean energy future if a corporate trade deal tethers us to the fossil fuel past."