Federal government about to release its proposals for promised national carbon pricing system as California debates radical changes to its cap-and-trade program

In advance of a consultation paper by the federal government, expected to be released in the week of May 15, the Pembina Institute released a Backgrounder report , Putting a price on carbon pollution across Canada . The Pembina report  outlines the current federal and provincial carbon pricing policies in Canada, and makes recommendations for the national benchmark plan promised by 2018. Recommendations  include that any benchmark should at least  provide guidance on treatment of Export Import Trade Exposed sectors and be designed to minimize carbon leakage and competitiveness impacts; and stipulate that cap-and-trade systems must have a cap decline rate in line with a 30% reduction below 2005 levels by 2030. Pembina places emphasis on the need for a 2020 carbon pricing review, as well as frequent carbon pricing and climate policy reviews to ensure that Canada meets its obligations under the Paris Agreement.

A briefer paper on carbon pricing, also released in May, also summarizes the existing provincial carbon pricing plans – but from a right-wing point of view. From the Fraser Institute:   Poor Implementation undermines Carbon Tax efficiency in Canada  .

Also on the topic of carbon pricing, Pembina posted a blog  on May 11 “Time for Premier Brad Wall to focus on carbon price implementation” , in which Nathalie Chalifour, a Professor of Law at University of Ottawa, explains her opinion that the federal government is within its constitutional authority to impose a carbon pricing mechanism on the provinces, despite Saskatchewan Premier Brad Wall`s recently stated opinion to the contrary.

Meanwhile, as reported in the National Observer (May 4) , “California tables new cap-and-trade plan that jumps ahead of Quebec and Ontario” . Quebec and California  have a linked carbon credit market that expires at the end of 2020, and Ontario`s cap and trade plan is schedule to link to the California−Quebec system in 2018.  Continued partnership with California  will demand that those provinces raise their minimum price per tonne of carbon and abolish offsets, among other changes outlined in the  bill currently before the California state Senate . For a full discussion of the proposed legislation, read “California is about to revolutionize climate policy … again” (May 3) in Vox.  Author David Roberts states: ” The changes that SB 775 proposes for the state’s carbon trading program are dramatic — and, to my eyes, amazingly thoughtful. I know some environmental groups have reservations (on which more later), but in my opinion, if it passes in anything close to its current form, it will represent the most important advance in carbon-pricing policy in the US in a decade. Maybe ever.”

Reaction from Canada, California as Trump attacks Obama fuel emissions standards

solar-power-1020194_1920The rest of the world is driving towards new technologies, but U.S. state governments are rolling back EV incentives   and  on March 15,  Donald Trump took the U.S. a further  step away from reducing  transportation emissions.  Following pressure from U.S. auto companies, and in the name of creating American jobs and reviving American manufacturing,  the White House announced that the EPA and the National Highway Traffic Safety Administration (NHTSA) will re-open the evaluation of the  Corporate Average Fuel Economy (CAFE) and greenhouse gas emissions (GHG) standards for light-duty vehicles manufactured in 2022- 2025 .  Never mind that the EPA, in the waning days of the Obama presidency in January 2017, had already issued its official  Determination  to leave the standards in place, stating that they  “are projected to reduce oil consumption by 50 billion gallons and to save U.S. consumers nearly $92 billion in fuel cost over the lifetime of MY2022-2025 vehicles”, with minimal employment impacts.  The New York Times   compiles some of the U.S. reaction to the announcement, quoting Harvard’s Robert Stavins, who states that rolling back the Obama-level regulations would make it  impossible for the United States to meet its obligations under the Paris Agreement.   A sample of  U.S. concerns appear in:   “Trump Fuel economy rollback would kill jobs and cost each car-buyer $1650 per year “ by Joe Romm in  Think Progress ; DeSmog BlogTrump Takes Aim at Fuel Efficiency Requirements, Prompting Concern US Automakers Will Lag on Innovation”   ; and the Detroit Free Press,  reporting on a lead-up Trump speech in Ypsilanti, Michigan ,  “Trump visit puts UAW politics in crosshairs”  http://www.freep.com/story/money/business/2017/03/14/trump-visit-puts-uaw-politics-crosshairs/99165906/    (March 14). The Detroit Free Press  states that autoworkers were bused in to the Trump event by their employers, with Fiat Chrysler and General Motors offering their workers a day’s pay as well.  No immediate reaction to the announcement came from the United Autoworkers union, although  the DFP article states: “UAW President Dennis Williams has repeatedly said he disagrees with Trump on health care, immigration, the environment and most other major issues. But Williams supports Trump’s desire to renegotiate the North American Free Trade Agreement (NAFTA) …..”

In Canada, where Unifor represents autoworkers,  president Jerry Dias spoke out  in “ Auto workers union takes aim at Trump’s examination of fuel standards ” in the Globe and Mail (March 16), and in a CTV News report . He  states that “ he would fight any attempt to roll back environmentally friendly regulations in the auto industry following Trump’s announcement”. Canada’s Minister of Environment and Climate Change was in Washington on March 15th,  meeting with EPA head Scott Pruitt, but her reaction was guarded and diplomatic,  as reported in “As Trump eyes reprieve for gas guzzlers, Canada looks to China  ”  in the National Observer and in “Trump targets fuel-efficiency standards” in the Globe and Mail  (March 16).  Traditionally, Canadian  fuel emissions standards have been harmonized with the U.S. , as a result of the strongly integrated auto industry.  For example, at the end of February, Canada released  its proposed regulations for heavy-duty vehicles, and according to the International Council on Clean Transportation, Canada continued to follow the  U.S. model.  Similarly,  Ontario announced a Memorandum of Understanding on auto manufacturing with the state of  Michigan on March 13, pledging cooperation on regulatory standards as well as technology  and supply chain management.

Harmonization will be more difficult after Trump’s announcement on March 15, just as Canada and Ontario are reviewing their own revisions to fuel emissions regulation . Ontario reacted to the Trump  announcement with a  pledge to continue to cooperate with California and Quebec in the Western Climate Initiative – read “Ontario plans to team up with California against Trump on climate change” in the National Observer (March 16). California won the right to set its own fuel emission standards in the 1970’s, and today, fifteen other states voluntarily follow  California’s tougher standards, including Georgia, Pennsylvania, North Carolina, and the New York metropolitan area – translating into more than 40% of the U.S. population.  “The Coming Clean-Air war between Trump and California” in The Atlantic surveys this  latest conflict between California and the Trump administration .  A press release from Governor Gerry Brown called the fuel standards  announcement  “a cynical ploy” that puts politics ahead of science, and pledged that California will fight it in court.

Renewable Energy legislation in Massachusetts earmarks funds for Just Transition, Environmental Justice

We are used to looking to California for leadership in climate change policy – and the Senate bill SB58, California Renewables Portfolio Standard Program  continues that reputation. Although only in rough draft form as it was introduced in February, it proposes to accelerate the target for sourcing electricity from renewable energy to 50 per cent by 2025, and 100% by 2045.  Inside Climate News has a summary of the renewable energy legislation; for a detailed view of the importance of California as a standard-bearer for climate change action, read “In the Face of a Trump Environmental Rollback, California Stands in Defiance” (Feb. 21) in Yale Environment 360.

Massachusetts is less often recognized for its leadership, despite its commitment in the  Global Warming Solutions Act, 2008 to reduce the state’s greenhouse gas emissions 80 per cent from 1990 levels by 2050 .  In addition,  An Act to transition Massachusetts to 100 per cent renewable energy  (S.1849)  was  introduced into the legislature in January 2017, requiring  the state to achieve 100 percent renewable electricity generation by 2035, and phase out the use of fossil fuels across all sectors, including heating and transportation, by 2050. Advocacy group Environment Massachusetts provides a summary here . The text of the Act   calls for a  Council for Clean Energy Workforce Development, specifying that it include representatives from organized labour, as well as universities and community colleges, renewable energy businesses, occupational training organizations, economic development organizations, community development organizations, and “organizations serving Environmental Justice Populations”.   A Workforce Development Fund would also be authorized, with “At least half of the funds spent from the clean energy workforce development account on an annual basis shall be spent on programs and initiatives that primarily benefit (1) fossil fuel workers displaced in the transition to renewable energy, (2) residents of gateway municipalities …., or (3) residents of areas identified as Environmental Justice Populations under the Environmental Justice Policy of the executive office of energy and environmental affairs. “

Health Impacts of Cap and Trade policies on California’s disadvantaged communities

Acting on a December 2016 Executive Order of Governor Gerry Brown, the California Office of Environmental Health Hazard Assessment released the first in a series of reports which will examine the impact of the state’s climate change programs on communities designated as “disadvantaged”.  The February report,  Tracking and Evaluation of Benefits and Impacts of Greenhouse Gas Limits in Disadvantaged Communities: Initial Report   measuring the effects of  the Air Resources Board’s Cap-and-Trade Program, which regulates greenhouse gas emissions from industrial facilities and other sources.  The report is largely based on 2014 emissions data, and warns that “limited data does not yet allow for comprehensive analysis of the impacts of Cap-and-Trade on disadvantaged communities”.   Initial findings however, are that  major industrial facilities are disproportionately located in disadvantaged communities;  there is a moderate correlation between GHG and other air pollutants, with refineries showing the strongest correlation.   California maintains  a planning and enforcement tool,  CalEnviroScreen, the “ first comprehensive, statewide environmental health screening tool” in the U.S.  In late January, California Air Resources Board   announced the appointment of its first Assistant Executive Officer for Environmental Justice, with a mandate to ensure that environmental justice and tribal concerns are considered in air pollution policy-making and decision- making.

California reaffirms commitment to Cap-and-Trade policies, based on economic evidence

California’s climate leadership position in the U.S.  was solidified on January 20, 2017 – coincidentally Inauguration Day in Washington-  when the California Air Resources Board released its 2017 Scoping Plan Update: The Proposed Plan for Achieving California’s 2030 Greenhouse Gas Target . Proposals include a target to reduce greenhouse gas emissions by 40 percent below 1990 levels by 2030 – the most ambitious target in North America, according to a Reuters report  .  The plan also extends the cap-and-trade program to 2030, based on economic modelling  which concludes that cap-and-trade is the lowest cost, most efficient policy approach and provides certainty that the state will meet the 2030 emissions goals even if other measures fall short.  The Scoping Plan also call for an 18 percent reduction in the carbon intensity of transportation fuels burned in the state, and for 4.2 million zero-emission vehicles on the road.  The proposals, a hearings schedule, and technical appendices are all available at the ARB website .

Another  economic analysis evaluating cap-and-trade was published in January by Next10.    The Economic Impacts of California’s Major Climate Programs On The San Joaquin Valley ,  analyses the  costs and benefits, including job gain and loss, of three pro­grams: Cap- and- trade, the Renewables Portfolio Stan­dard,  and energy efficiency programs, specific to the to the San Joaquin Valley economy. The authors chose to examine the San Joaquin  as a “a bellwether of the state’s transition to a low-carbon economy” since its geography and dependence on agriculture  make it vulnerable to climate change effects , and vulnerable also  to climate policies because “it faces more socioeconomic chal­lenges than the state as a whole”.    After examining the data and using advanced modeling software, they found that the three programs brought over $13 billion in economic benefits to the Valley, mostly in renewable energy, and created over 31,000 jobs just in the renewable energy sector alone.  Research and analysis was done by academics at  the Center for Law, Energy and the Environment (CLEE) at UC Berkeley Law and UC Berkeley’s Donald Vial Center on Employment in the Green Economy .