Cap-and-Trade or Carbon Tax?

Recent reports have examined the strengths and weaknesses of the two systems. On April 7, the EcoFiscal Commission released The Way Forward: A Practical Approach to Reducing Canada’s Greenhouse Gas Emissions which employs policy analysis and new economic modelling to reach recommendations that every province should put a price on carbon, that existing and new policies should increase in stringency over time, should be designed to be as broad as practically possible, should be tailored to each province’s unique economic contexts and priorities, yet should be designed for longer-term coordination.

On April 13, Clean Energy Canada released Inside North America’s largest Carbon Market: Top Lessons from the Front Lines of Quebec’s Fight Against Carbon Pollution. Together with their February report, How To Adopt a Winning Carbon Pricewhich focused on British Columbia’s carbon tax, Clean Energy Canada provides what they call “under the hood” comparisons of the  two approaches to carbon pricing. 

 Sustainable Prosperity also weighed in with two Briefing Notes on April 23; Briefing Note #1

summarizes the rationale for pricing carbon, and the main policy approaches i.e. carbon tax and cap-and-trade. Briefing Note #2 reviews the key policy design criteria and considerations, and how they differ across approaches. 

Oil and Gas and Canada’s Energy Policy

Two other reports were released in advance of the Premiers meetings in Quebec City. Crafting an Effective Canadian Energy Strategy: How Energy East and the Oil Sands Affect Climate and Energy Objectives by the Pembina Institute reviews Canadian experience with carbon pricing, emissions levels, and states that any energy strategy will only be effective if it takes into account the emissions footprint of new infrastructure projects, including the proposed Energy East pipeline project. The report also recommends that the Council of the Federation create an advisory committee modelled on the disbanded National Round Table on the Environment and the Economy. The report is also available in French.

 Another study, released by Environmental Defence and Greenpeace, makes similar arguments and asserts that “continuing to expand tar sands production makes it virtually impossible for Canada to meet even weak carbon reduction targets or show climate leadership”. Read Digging a Big Hole: How tar sands expansion undermines a Canadian energy strategy that shows climate leadership.

 In April, Environment Canada released the UNFCC-mandated report, National Inventory Report 1990-2013: Greenhouse Gas Sources and Sinks in Canada. The report states that the Energy industry was responsible for 81% of Canada’s emissions in 2013. 

Provincial Updates, including the Premiers Agreement on a National Energy Plan

As the annual Premiers conference ended on August 29, Canada’s premiers announced a reinvigorated Canadian Energy Strategy (CES), a shared vision and set of principles emphasizing environmental responsibility, a diversified, climate-friendly energy and clean technology sector, and a robust, lower-carbon economy utilizing carbon pricing.

A driving force at the Premiers Conference may have come from Ontario Premiers Kathleen Wynne and Quebec Premier Philippe Couillard, who had agreed to revive the Ontario-Québec partnership at a bilateral meeting one week earlier. The central Canadian bloc will increase economic and energy integration between the provinces and advocate for national progress on climate change.

Reaction to the Energy Strategy announcement from Keith Stewart of Greenpeace provides historical context to the Premiers’ meetings, and laments the failure of the federal government to contribute meaningfully to the development of a coherent, effective national approach.

Yet Canadian provinces have made uneven progress on their climate action plans, according to monitoring reports released over the summer. In Alberta, the Auditor General’s report stated that the province lacked a plan to meet its goals. British Columbia has achieved its first interim target of a 6% emissions reduction below 2007 levels by 2012, largely due to government policies, including its well-regarded carbon tax. The Ontario Environment Commissioner reported that Ontario will meet its 2014 target (a 6% reduction in emissions below 1990 levels) largely because of the shutdown of the province’s coal plants, but it will miss the 2020 target because so little else has been done. In New Brunswick, the Climate Action Plan 2014-2020 document reports that New Brunswick’s GHG emissions declined by 17 per cent between 2005 and 2010, thus meeting its goals for 2012. A new plan establishes provincial GHG emissions reduction targets of 10 per cent below 1990 levels by 2020 and 75 to 85 per cent below 2001 levels by 2050.

LINKS:
The Canadian Energy Strategy and premiers’ news release are available at:

The Ontario news release on partnering with Québec is available at: http://news.ontario.ca/opo/en/2014/08/quebec-and-ontario-partner-to-strengthen-central-canadas-economy.html?utm_source=ondemand-multimedia&utm_medium=email&utm_campaign=p

 Comments from Keith Stewart of Greenpeace are available at: http://www.greenpeace.org/canada/en/Blog/provinces-leave-harper-increasingly-alone/blog/50444/

  A Letter to the Ottawa Citizen by Mark Winfield and Pierre Olivier Pineau provides insight into  Ontario’s and Quebec’s  electricity markets at: http://marksw.blog.yorku.ca/2014/06/11/ontario-quebec-electricity-and-climate-change-time-for-a-new-relationship/

 For a summary of the energy-related policies in Ontario’s July 2014 Budget statement, including the Industrial Electricity Incentive program to promote job creation, see the Gowlings Newsletter at: http://www.gowlings.com/KnowledgeCentre/article.asp?pubID=3675

Alberta Auditor General’s report is at: http://www.oag.ab.ca/webfiles/reports/AGJuly2014Report.pdf, with a Pembina Institute analysis at: http://www.pembina.org/blog/auditor-generals-scathing-review-ups-pressure-to-improve-albertas-weak-climate-policy

Ontario’s Environmental Commissioner’s report, Looking for Leadership: the Costs of Climate Inaction is at: http://www.eco.on.ca/index.php/en_US/pubs/greenhouse-gas-reports/2014-ghg-looking-for-leadership

  In British Columbia, Climate Action in British Columbia Progress Report 2014 is at: http://www.env.gov.bc.ca/cas/pdfs/2014-Progress-to-Targets.pdf.

The Pembina reaction to the report is generally positive at: http://www.pembina.org/blog/bc-climate-action-plan-2

Oil and Gas Sector Contributed Almost One Quarter of Canada’s Greenhouse Gas Emissions

On April 11th, a Friday afternoon, Environment Canada quietly released its annual national greenhouse gas emissions inventory, as required by the UN Framework Convention on Climate Change (UNFCCC). National emissions decreased by 0.3% between 2010 and 2012, but overall trends confirm that Canada is on track to significantly miss its commitment to a 17% decrease by 2020. Most provinces have cut their overall emissions, although Alberta’s have increased by 7% between 2005 and 2012, mainly because the oil sands experienced an 80% emissions increase. The oil sands alone now account for 9% of total Canadian emissions, while the oil and gas sector overall contributes about one quarter.

Signs of progress are emerging in the manufacturing and transportation sectors, and electricity emissions intensity is decreasing, largely attributable to efficiency improvements and the Ontario coal phase-out, which reduced the province’s electricity emissions by 56%.

Reaction from P.J. Partington, an analyst at the Pembina Institute, calls for Canada to make good on its promise to introduce national oil and gas regulations. See National Inventory Report 1990-2012: Greenhouse Gas Sources and Sinks in Canada at the Environment Canada website at: http://www.ec.gc.ca/ges-ghg/default.asp?lang=En&n=3808457C-1&offset=6&toc=show (English version), and http://www.ec.gc.ca/ges-ghg/default.asp?lang=Fr&n=3808457C-1 (French version).

For P.J. Partington’s blogs, go to “Big shiny trends: Canada’s new emissions numbers” at: http://www.pembina.org/blog/789; “Oil Sands Talking Point collides with Reality” at: http://www.pembina.org/blog/787; and “Getting Back in Gear: Oilsands Climate Performance” at: http://www.pembina.org/blog/788. The U.S. released its UNFCC National Inventory documents in the same week, showing that U.S. emissions are now 10% below 2005 levels, the lowest they have been in 20 years. Go to: http://www.epa.gov/climatechange/ghgemissions/usinventoryreport.html.

On its 20th Anniversary, Criticism of NAFTA for Environmental, Economic Damage

A new report from the Sierra Club, the Council of Canadians and others, condemns the North American Free Trade Agreement (NAFTA) for failing to improve economic and environmental conditions for most Canadian, American, and Mexican citizens.

According to the report, exports from Canada to the U.S. increased by 200 percent from 1994 to 2008, yet wages stagnated. Further, NAFTA contract obligations for oil encouraged development of the oil sands, while alternative energy sectors suffered, and NAFTA restricted Canada’s ability to regulate oil sands emissions. Pollution increased in the U.S. due to growth in dirtier manufacturing sectors, although employment in American manufacturing dropped overall.

In Mexico, small farmers were unable to compete with large-scale, export-oriented intensive agriculture. Many failed in attempts to improve profits by converting carbon-sequestering forest to arable land. While the mining industry in Mexico did enjoy a boom, smallholders lost out to associated industrial pollution. Wages in the maquila manufacturing sector near the U.S. border simultaneously stagnated, even as operations and pollution levels grew.

Other environmental impacts noted by the report include a significant jump in North American greenhouse gas emissions, unsustainable water use, and the rippling effects of NAFTA clauses that provide corporations with legal avenues to challenge environmental regulations, such as Lone Pine Resources’ ongoing lawsuit against Canada over the Québec fracking moratorium (see our previous report at: https://workandclimatechangereport.org/2013/11/22/fracking-company-suing-for-lost-profits-in-quebec/).

See NAFTA: 20 Years of Costs to Communities and the Environment at: http://www.sierraclub.ca/en/main-page/new-report-reveals-environmental-costs-north-american-free-trade-agreement-environmental-d, and “NAFTA Report Warns of Trade Deal Environmental Disasters” from the Huffington Post at: http://www.huffingtonpost.com/2014/03/11/nafta-environment_n_4938556.html.