Federal budget gets high marks for conservation initiatives but disappoints on green economy spending

Budget 2018, Equality + Growth: A Strong Middle Class   was tabled by the federal government on February 27.  The Globe and Mail published a concise overview in  “Federal budget highlights: Twelve things you need to know” .  A compilation of reaction and analysis from the Canadian Centre for Policy Analysis is here , including statements from CCPA partner organizations such as the United Steelworkers   and the Canadian Labour Congress.

budget_analysis 2018The section of the Budget which relates most to a low carbon economy is in Chapter 4: Advancement .  The Budget commits an unprecedented $1.3 billion over 5 years for conservation partnerships and the protection of lands, waters, and species at risk – prompting the Pew Trust in the U.S. to call the biodiversity targets “an example to the world” in  “With earth in peril, Canada steps up” .  Responses from the 19 environmental advocacy members of the Green Budget Coalition are compiled here , applauding the  “historic” and “landmark” investments in the Budget.  DeSmog Canada summarizes the provisions, which aim to protect 17 per cent of land and 10 per cent of oceans by 2020 under the United Nations Convention on Biological Diversity, and commit to recognizing  Indigenous leadership.

But on the climate change front?

The National Observer writes: “Budget delivers new conservation fund but avoids climate commitments” (Feb. 27) , highlighting the Budget allocations announced for the  the  $2.6 Billion Low Carbon Economy Fund  (announced in 2016) : $420 million will go to Ontario, for retrofitting houses and reducing emissions from farms;  $260 million will go to  Quebec for farming and forestry best practices, as well as energy retrofitting, and incentives for industry;  $162 million will go to British Columbia, partly for reforestation of public forests; $150 million will go to Alberta for energy efficiency programs for farmers and ranchers, for  renewable energy in Indigenous communities, and for restoring forests after wildfires;  $51 million is going to New Brunswick and $56 million to Nova Scotia for energy retrofitting. Allocations for Manitoba will be announced later, and for Saskatchewan if it signs on to the Pan-Canadian Framework.

The Pembina Institute reaction is also fairly positive in  “Budget 2018 builds on last year’s commitment to climate change” . “We are pleased to see that Budget 2018 allocates $109 million over five years to develop, implement, administer, and enforce the federal carbon pollution pricing system. …Another $20 million over five years is allocated to fulfill the PCF’s (Pan-Canadian Framework on Clean Growth and Climate Change) commitment to assess the effectiveness of its measures and identify best practices. ”

Less positive reaction:  “Council of Canadians disappointed by Trudeau government’s budget 2018” (Feb.27), which  points out that the government has allocated $600 million to host the G7 summit in June 2018 in Quebec,  yet the Budget fails to phase out subsidies for the fossil fuel industry, as it committed to at the G20 meetings and in the October 2015 election.  Elizabeth May of the Green Party also “laments squandered opportunities” and points out that “Budget 2018 does not touch subsidies to fossil fuels in the oil patch and for fracked natural gas”.

In advance of Budget 2018, the Canadian Labour Congress published “What Canada’s unions would like to see in the federal budget” – a broad perspective which included a call for “a  bold green economic program of targeted investments over the next five years for renewable energy development and infrastructure” … and “ the establishment of Just Transition training and adjustment funds for workers affected by climate change and the transition to a low-carbon economy, automation, the digitisation of work, and job losses caused by trade agreements like CETA.” The CLC response  to the actual Budget emphasizes the positive  developments on issues like pharmacare and pay equity, but is silent on the green economy issues. Canadian Union of Public Employees’ reaction is similar.

 

National Energy Board is a casualty of Canada’s new legislation for environmental assessment

On February 8, following 14 months of consultation and review, the Minister of Environment and Climate Change introduced the mammoth Bill C-69 An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts  . The government press release from Environment and Climate Change Canada highlights these talking points about the proposed legislation-  It will:  Restore public trust through increased public participation; Included transparent, science-based decisions; Achieve more comprehensive impact assessments by expanding the types of impacts studied to include health, social and economic impacts, as well as impacts on Indigenous Peoples, over the long-term. Also, it promises  “One project, one review” – through a new Impact Assessment Agency, (replacing the Canadian Environmental Assessment Agency) which will be the lead agency, working with a new Canadian Energy Regulator (replacing the National Energy Board), as well as the Canadian Nuclear Safety Commission and Offshore Boards.  Further, it will make decisions timely; Revise the project list; Protect water, fish and navigation ; and Increase funding.  The detailed government  explanation of the changes  is here ; other summaries appeared in the National Observer in “ McKenna unveils massive plan to overhaul Harper environmental regime”  ; “Ottawa to scrap National Energy Board, overhaul environmental assessment process for major projects”   in CBC News; and in the reaction by The Council of Canadians, which expresses reservations about the protection of navigable waters, and these “Quick Observations”:
“1- the current industry-friendly Calgary-based National Energy Board would be replaced by a proposed Calgary-based (and likely industry-friendly) Canadian Energy Regulator
2- it includes the ‘one project, one review’ principle as demanded by industry
3- assessments of major projects must be completed within two years, a ‘predictable timeline’ also demanded by industry
4- the bill notes the ‘traditional knowledge of the Indigenous Peoples of Canada’ but does not include the words ‘free, prior and informed consent’, a key principle of the United Nations Declaration on the Rights of Indigenous Peoples
5- McKenna said that no current projects (including the Kinder Morgan pipeline which crosses more than 1,300 water courses) would be sent back to ‘the starting line’
6- the government is seeking to implement the law by mid-2019.”

An overview of other reaction appears in   “New Federal Environmental Assessment Law Earns Praise from Climate Hawks, Cautious Acceptance from Fossils” from the Energy Mix.  Reaction from West Coast Environmental Law (WCEL) is here ; and from  Environmental Defence here .  The Canadian Environmental Law Association sees some forward progress but warns that “the Impact Assessment Act is marred by a number of serious flaws that must be fixed in the coming months.”    Reaction from the Pembina Institute says “Today’s legislation improves the federal assessment process by centralizing authority for impact assessment under a single agency; providing a broader set of criteria for assessing projects including impacts to social and health outcomes; and removing the limitations on public participation that were put in place in 2012…. Building on today’s legislation, we would like to see progress towards the establishment of an independent Canadian Energy Information Agency to ensure that project reviews include Paris Agreement-compliant supply and demand scenarios for coal, oil and gas.”

Companion legislation, also the product of the lengthy Environmental Regulation Review, was introduced on February 6, Bill C-68 An Act to amend the Fisheries Act and other Acts in consequence  (Press release is here ; there is also a Backgrounder comparing the old and new legislation). Most importantly, Bill C-68 restores a stronger protection of fish and fish habitat – the HADD provision – to the definition used before the 2012 amendments by the Harper government. (HADD = the harmful alteration, disruption or destruction of fish habitat).  Reaction is generally very favourable:   The David Suzuki Foundation says : “The most important changes we were looking for are part of these amendments” and West Coast Environmental Law says that the proposed legislation   “meets the mark”.  Reaction is also favourable from the Ecology Action Centre in Halifax . And from the Alberta Environmental Law Centre, some background in “Back to what we once HADD: Fisheries Act Amendments are Introduced” .

no consentAnd finally, where does the new environmental assessment process leave Canada’s Indigenous people?  The new legislation includes the creation of an Indigenous Advisory Committee and requires that an expert on Indigenous rights be included on the board of  the new Canadian Energy Regulator body, according to a CBC report, “Indigenous rights question remains in Ottawa’s planned environmental assessment overhaul” . Minister McKenna is also quoted as saying the government will “try really hard” to conform to the principles of the UN Declaration on the Rights of Indigenous Peoples   – a statement that is not satisfactory to some Indigenous leaders.    See “Indigenous consultation and environmental assessments” (Feb. 7)  in Policy Options for a discussion of the issue of “free, prior and informed consent”.  On February 7, Private member’s Bill C-262, an Act to Harmonize Canada’s Laws with the United Nations Declaration on the Rights of Indigenous Peoples passed 2nd reading in the House of Commons.

Canada needs a mix of reactive and proactive Just Transition policies across the country

Hadrian Decarbonization coverMaking Decarbonization Work for Workers: Policies for a just transition to a zero-carbon economy”  was released by the Canadian Centre for Policy Alternatives on January 25th.  In light of  the federal government’s pledge to launch a Task Force on Just Transition in 2018, this report makes a unique contribution by using census data to identify the regions in each province with the greatest reliance on fossil fuel jobs. While fossil fuel dependence is overwhelmingly concentrated in Alberta, with a few “hot spots” in Saskatchewan and British Columbia, the report identifies communities from other provinces where fossil fuel jobs represent a significant part of the local economy – for example, Bay Roberts, Newfoundland; Cape Breton, Nova Scotia; Saint John, New Brunswick; Sarnia, Ontario.  The report also makes the useful distinction between “reactive”  just transition policies, which are intended to minimize the harm to workers of decarbonization, and “pro-active” just transition policies, which are intended to maximize the benefits.   The author argues that, if the broad goal of a just transition is to ensure an equitable, productive outcome for all workers in the zero-carbon economy, a mix of reactive and proactive elements is necessary. Thus,  a national just transition strategy is required for fossil fuel-dependent communities, but workers in any industry facing job loss and retraining costs will also need support from enhanced social security programs.  In addition, governments must invest in workforce development programs to ensure there are enough skilled workers to fill the new jobs which will be created by the zero-carbon economy.

Making Decarbonization Work for Workers is  a co-publication by the Canadian Centre for Policy Alternatives and the Adapting Canadian Work and Workplaces to Respond to Climate Change research program . The author is  CCPA researcher Hadrian Mertins-Kirkwood.

Federal government releases detailed proposals for Canada’s carbon pricing system, including output-based pricing for industrial emitters

On January 15, the Minister of Environment and Climate Change and the Minister of Finance issued a press release  announcing the full draft legislative proposals relating to the carbon pricing system. Public comment will be accepted until February 12, 2018.   The full text of  Legislative and Regulatory Proposals Relating to the Greenhouse Gas Pollution Pricing Act and Explanatory Notes are in English  and French versions . Comment on the legislative proposals will be accepted until April 9, 2018, with “structured engagement” and consultation with provinces and territories, Indigenous Peoples, environmental non-governmental organizations, industry, and business promised over the Winter/Spring of 2018.

Minister McKenna also released for comment the proposed regulatory framework for carbon pricing for large industrial facilities – an Output-based Pricing System (OBPS), with the aim “to minimize competitiveness risks for emissions-intensive, trade-exposed industrial facilities, while retaining the carbon price signal and incentive to reduce GHG emissions.   Emission sources covered by OBPS will include fuel combustion, industrial process, flaring, and some venting and fugitive sources – but notably, “Methane venting and methane fugitive emissions from oil and gas facilities will not be subject to pricing under the OBPS.”  The system will include emissions of all seven of the UNFCCC-designated greenhouse gases, “to the extent practicable” – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and nitrogen trifluoride. Details are  in Carbon pricing: regulatory framework for the output-based pricing system  (French version here) , and  build on the Technical Paper : Federal Carbon Pricing Backstop (French version here) , released in May 2017.

Leading up to the January release, the federal government had released clarification about the timing of  the planned backstop carbon pricing mechanism on December 20, 2017 – it  will come into effect by January 2019, bringing the carbon price to $20 per tonne in any jurisdiction that doesn’t meet the federal benchmark.  Full details are set out in:  Supplemental Benchmark GuidanceTimelines , and the Letter to Ministers . Generally positive reaction followed, from the Pembina Institute  and  Clean Energy Canada.

Initial reaction/summary of the proposed legislation released on January 15:  “Ottawa’s new carbon pricing plan will reward clean companies” from CBC,  and from the Globe and Mail, “Ottawa prepares to relax carbon-pricing measures to aid industry competitiveness” .  More substantive comment comes from the National Observer, in  “Trudeau government explains how it will make polluters pay” (Jan. 15).  Reaction from Environmental Defence came from Keith Brooks , who calls the proposed plan “an effective and fair pan-Canadian carbon pricing system.”  Reaction from  Clean Energy Canada is similar.

Meanwhile, in Alberta: Note also that the province of Alberta released their new Carbon Competitiveness Incentive Regulation (CCIR) for large industrial emitters in December 2017, also based on an output-based allocation system.  Carbon Competitiveness Incentive regulations replaced the current Specified Gas Emitters Regulation (SGER) on Jan 1, 2018, and will be phased in over 3 years.  It’s expected to cut emissions by 20 million tonnes by 2020, and 50 million tonnes by 2030.  Favourable testimonials from the oil and gas, wind energy, and cement industry are quoted in the government press release on December 6.

To explain output-based carbon pricing, the Ecofiscal Commission published Output-Based Pricing: Theory and Practice in the Canadian context , by Dave Sawyer and Seton Stiebert of EnviroEconomics in early December.  The highlights of the paper are summarized here, with a discussion of the pros and cons and challenges of implementation, with special attention to Alberta’s provisions.

Canada’s progress on emissions reduction: New reports from OECD, UNFCCC , and policy discussion

An excellent overview article about Canada’s  “staggering challenge” and policy options to meet its emissions reduction targets appeared in The Conversation on January  11, 2018),  written by Warren Mabee, Director of the  Institute for Energy and Environmental Policy at Queen’s University and a Co-Investigator in  the Adapting Canadian Work and Workplaces to Respond to Climate Change (  ACW) project.   “How your online shopping is impeding Canada’s emissions targets”  outlines  the issues of clean electricity, transportation emissions (where your online shopping can make a difference), greener homes,  and rethinking fossil resources, and concludes that  “If we’re to succeed, Canada will need an integrated, holistic suite of policies – and we need them to be in place soon.”

oecd-environmental-performance-reviews-canada-2017_9789264279612-enOther recent publications take stock of Canada’s emissions reductions in greater detail.  In its  3rd Environmental Performance Review for Canada released on December 19, the OECD warns that  “Without a drastic decrease in the emissions intensity of the oilsands industry, the projected increase in oil production may seriously risk the achievement of Canada’s climate mitigation targets… …“Canada is the fourth-largest emitter of greenhouse gasses in the OECD [in absolute terms], and emissions show no sign of falling yet.”  Canada’s emissions actually did decrease since the last report was issued in 2004, but only by 1.5 per cent compared to reduction of 4.7 per cent by the OECD as a whole.  In addition to the impact of oil sands production, the OECD singles out a regime of poor tax incentives: “Petrol and diesel taxes for road use are among the lowest in the OECD, fossil fuels used for electricity and heating remain untaxed or taxed at low rates in most jurisdictions, and the federal excise tax on fuel-inefficient vehicles is an ineffective incentive to purchase low-emission vehicles.”

The OECD analysis finds support in a report from two researchers from the University of Toronto, in “How the oil sands make our GHG targets unachievable”   in Policy Options.  They state: “… only with a complete phase-out of oil production from the oil sands, elimination of coal for electricity generation, significant replacement of natural-gas-fuelled electricity generation with electricity from carbon-free sources, and stringent efficiency measures in all other sectors of the economy could Canada plausibly meet its 30 percent target.” The authors recommend a  gradual (12-to-15-year) phase-out of oil sands operations, with workers and capital redeployed to emerging sectors  such as renewable energy and building retrofits, and contend that  the importance of oil sands production is overstated. “….  the direct contribution of the entire oil, gas and mining sector to Alberta’s 2016 GDP was 16.4 percent, of which oil sands mining and processing was likely about one-third (or 5 to 6 percent of total provincial GDP)” ….and oil sands oil production is estimated to account for only 2 percent of Canadian GDP.”

Yet the federal government continues the difficult balancing act of a  “have-it-all” approach – for example, in a speech by Natural Resources Minister Jim Carr  in November 2017, in which he defended the approval of the Trans Mountain Pipeline with: “We need to prepare for the future, but we must deal with the present …..That means continuing to support our oil and gas resources even as we develop alternatives – including solar, wind and tidal…. new pipelines will diversify our markets, be built with improved environmental safety and create thousands of good middle-class jobs, including in Indigenous communities. They were the right decisions then and they are the right ones now. ” A recent blog by Patrick DeRochie of Environmental Defence, “Trudeau Thinks We Can Expand Oil And Still Reduce Carbon. Let’s Put That To A Test” , challenges this view .

On December 29, Canada issued a press release announcing that it has submitted its Seventh National Communication and Third Biennial Report to the United Nations Framework Convention on Climate Change , required by the UNFCCC to document progress towards its 2030 greenhouse gas emissions reduction goal of 30% reduction from 2005 levels.  The title of the government press release, “Canada’s Climate action is Working, Report to United Nations Confirms” is justified by including estimates of the effects of policies still under development in a “with additional measures scenario”. Under that scenario, the government forecasts an emissions decline across all economic sectors,  equivalent to approximately a third of Canada’s emissions in 2015 by 2030… ”

Meanwhile, the federal government has released a number of announcements and legislative proposals in December 2017 and January 2018. Regarding  the planned carbon pricing backstop under the Pan-Canadian Framework, which will come into effect by January 2019:  Details are set out in:  Supplemental Benchmark Guidance   Timelines ,  and the Letter to Ministers in December, and on January 15, the  proposed carbon backstop  legislative framework was released as Legislative and Regulatory Proposals Relating to the Greenhouse Gas Pollution Pricing Act and Explanatory Notes (French version here) .  Also on January 15, the federal government released for comment the proposed regulatory framework for  carbon pricing for large industrial facilities – an Output-based Pricing System (OBPS) described in more detail in a separate WCR post here.

On December 12, the  Clean Fuel Standard Regulatory Framework was released for comment.  The government has also committed to developing a national strategy for zero emission vehicles in 2018 to increase the supply of zero-emission vehicles.

Also on December 12, and capping six months of consultation under the banner Generation Energy,  the Minister of Natural Resources announced the creation of a 14-member Generation Energy Council to be co-chaired by Merran Smith,  Executive Director of Clean Energy Canada, and Linda Coady, Chief Sustainability Officer at Enbridge. (Bios of all members are here ). The council is tasked with preparing a  report to advise the government on an “ energy policy that ensures meaningful engagement with Indigenous peoples; aligns with Canada’s Paris Agreement commitments and the Pan-Canadian Framework on Clean Growth and Climate Change; and complements the work being done by the provinces and territories, building on the shared priorities identified at the Federal, Provincial and Territorial Ministers Meeting at the Forum.”