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.

Canada Reports Climate Progress: 2020 Targets Further out of Reach as Oil Sands Emissions Rise

In late December, Canada quietly submitted its sixth report to the UN Framework Convention on Climate Change (UNFCCC), opting not to accompany the submission with an announcement or press release. The government reported a trend of increasing greenhouse gas emissions, largely attributable to the rapidly expanding oil sands, and admits that Canada is on track to miss the 2020 emissions reduction targets committed to in Copenhagen. The report emphasizes the “sector-by-sector” approach to emissions reduction programs, but also indicates that a lack of policy intervention in the oil and gas industry could mean Canada’s emissions will exceed the 2020 target by 20%, and continue to grow another 33% by 2030. Canada has not indicated how it plans to address its difficulties with meeting its targets, and in December, Prime Minister Stephen Harper announced that the long-awaited release of oil and gas regulations could be delayed for another two years. The issue may be a factor in President Obama’s Keystone XL pipeline decision, which he has said would be influenced by Canada’s climate plan.

By contrast, the US submission to the UNFCC contains specific goals associated with the Climate Action Plan implemented by President Obama last summer. The submission was further substantiated by the January 16th release of a progress report on the Plan, outlining US federal initiatives to reduce carbon pollution and increase energy efficiency.

LINKS:

Canada’s Sixth National Communication and First Biennial Report on Climate Change (January 2014): The Executive Summary is available at: http://www.ec.gc.ca/Publications/default.asp?lang=En&xml=109109A8-6636-418C-B743-94CD3459FB6B, and the full report is available at: http://www.unfccc.int/files/national_reports/non-annex_i_natcom/submitted_natcom/application/pdf/final_nc_br_dec20,_2013%5B1%5D.pdf.

“Emissions will Soar after 2020 without Oil-sector Regulation, Federal Report Says” in the Globe and Mail (Jan. 8, 2014) at: http://www.theglobeandmail.com/news/politics/emissions-will-soar-after-2020-without-oil-sands-regulation-federal-report-says/article16250220/.

“Canada’s New Emission Rules on Hold Again, Harper Says” in the Globe and Mail (Dec. 19, 2013) is at: http://www.theglobeandmail.com/news/politics/canadas-new-emissions-rules-on-hold-again-harper-says/article16065033/.

2014 U.S. Climate Action Report to the United Nations Framework Convention on Climate Change (UNFCCC) is available at: http://www.state.gov/e/oes/rls/rpts/car6/index.htm.

January 2014 Progress Report: President Obama’s Climate Action Plan is at: http://www.whitehouse.gov/sites/default/files/docs/fact_sheet_-_cap_progress_report_2014-01-16.pdf.

Canada’s Environmental Prestige at a New Low

Two new reports reflect the global dismay for Canada’s environmental performance. Climate Change Performance Index Results 2014, released by the Climate Action Network Europe and Germanwatch, ranks Canada at 58th in their index, “the worst performer of all industrialised countries”. Even China, the world’s highest CO2 emitter, ranked 46th, thanks to its heavy investment in renewable energies. See Climate Change Performance Index Results 2014 at: http://germanwatch.org/en/download/8599.pdf . And in Race to the Bottom, the 2014 report of the international Climate Action Tracker project, Japan, Australia and Canada are singled out for poor performance. See: http://climateactiontracker.org/news/151/In-talks-for-a-new-climate-treaty-a-race-to-the-bottom.html with the 8 page policy brief at:http://climateactiontracker.org/assets/publications/briefing_papers/CAT_Policy_brief_Race_to_the_bottom.pdf.

GHG Emissions in Canada

In releasing the 2013 Emissions Trends report in October, the Canadian government stated: “as a result of the combined efforts of federal, provincial and territorial governments, consumers and businesses, GHG emissions in 2020 will be 734 megatonnes (Mt). This is 128 Mt lower than where emissions would be in 2020 if no action were taken to reduce GHGs since 2005.” (The report did not state that it is also 122 Mt above Canada’s target level of 612 Mt.) The government will maintain its current course of regulating emissions on a sector-by-sector basis- in other words, no improvement, no national leadership. Canada’s Emissions Trends 2013 report (and those from 2011 and 2012) are at: http://www.ec.gc.ca/ges-ghg/default.asp?lang=En&n=985F05FB-1. See the Pembina reaction to the government report at: http://www.pembina.org/media-release/2488; and the Pembina October backgrounder concerning how the oil sands contribute to Canadian emissions, at: http://www.pembina.org/pub/2486.

TD Bank Report on Canada’s Green Economy: Reconcile the Economy and Environment

On October 2nd, one of Canada’s Big Five banks, the TD Bank, released a report on “green economics” in Canada. TD found that environmental considerations have already become entrenched in corporate decision-making in Canada, and that reducing environmental impact often reduces costs, drives innovation, and stimulates growth. TD’s preliminary analysis indicates a recent “decoupling of economic growth from environmental degradation”, wherein the percentage of GHG emissions per 1% GDP increase has fallen, while improved air and water quality, recycling rates and protected lands have accompanied strong overall growth. The report suggests that in order to better understand and encourage these trends, Canada needs a holistic focus on the “greening of the economy” in all sectors, rather than dichotomizing “green” and “brown” economics. To this end, TD calls for the development of environmental, economic, and government policy, and corporate responsibility indicators to help measure gains across industries and at all levels.         

LINKS

 

Should Alberta be the Model?

A Policy Brief released by the International Institute for Sustainable Development (IISD) in May summarizes the current proposals under negotiation for national GHG emission regulation in Canada, and then models the economic and emissions impacts of four scenarios for the year 2020.   

The IISD judges that the negotiations are likely to use Alberta’s Specified Gas Emitters Regulation (SGER) as the standard.  The paper concludes that “While all proposals on the table will deliver emission reductions at costs that seem reasonable, a 40 per cent intensity standard with a two-tiered price ceiling could strike a good balance.” 

See Regulating Carbon Emissions in Canada: Oil and Gas Greenhouse Gas Regulations: The Implications of Alternative Proposals is at http://www.iisd.org/pdf/2013/oil_and_gas_ggr.pdf.

How can Renewable Energy Meet Future Needs in Canada?

A survey released in March by the David Suzuki Foundation and the Trottier Energy Futures Project states that Canada’s supplies of solar, wind, hydroelectric and biomass energy are much larger than the current or forecast demand for fuel and electricity. It concludes that Canada can achieve an 80 % reduction in energy-related GHG emissions by 2050 by creating an integrated energy system which includes: a smart electricity grid which uses information technologies “to balance a wider range of supply sources, energy storage, interprovincial transfers of electricity and a wide variety of energy management and efficiency tools.” Still, the report sees “up to half of Canada’s energy demand would still be met by liquid fuels”. An Inventory of Low-Carbon Energy for Canada, released on March 27 at: http://www.davidsuzuki.org/media/news/2013/03/renewable-energy-sources-can-drive-canadas-low-carbon-future-trottier-energy-fut/ is the second research report released by the Trottier Energy Futures Project.

IN THE U.S. 

A new report from the Union of Concerned Scientists predicts that current renewable energy technologies-wind, solar, geothermal, biomass, and hydropower-could supply 80% of U.S. electricity in 2050, reliably and across the entire country. Such a conversion would require new power transmission lines, new technologies to store renewable energy and to create a “smart” grid, and economic policies to encourage energy efficiency and lower market barriers to renewable technologies. Read Ramping up Renewables: Energy you can Count on at:

http://www.ucsusa.org/assets/documents/clean_energy/Ramping-Up-Renewables-Energy-You-Can-Count-On.pdf 

IN NEW YORK STATE

A new study by Mark Jacobson and Mark Delucchi, published in the journal Energy Policy, proposes that New York State’s power needs could be met by solar, wind power, hydro and geothermal sources as early as 2030. See “Examining the Feasibility of Converting New York State’s All-Purpose Energy Infrastructure to One Using Wind, Water, and Sunlight” in Energy Policy 2013 v. 57, at: http://www.stanford.edu/group/efmh/jacobson/Articles/I/NewYorkWWSEnPolicy.pdf

 

IN EUROPE 

A newly released report from the World Future Council documents an October 2012 workshop in Denmark where representatives from around the world, including Canada, discussed strategies for implementing renewable energy, and shared successful examples from around Europe. From Vision to Action: A Workshop Report on 100% Renewable Energies in Europe is available at: http://www.worldfuturecouncil.org/fileadmin/user_upload/Climate_and_Energy/From_Vision_to_Action_Policy_Recommendations_for_100__RE_in_European_Regions.pdf

Changes in Oil and Gas Regulations for Canada and Alberta

While Canada waits for the new oil and gas regulations promised for Spring 2013 by Environment Minister Kent, the Pembina Institute has released its own recommendations for what it calls this “make-or-break moment for Canada’s climate credibility”. Author Claire Demerse recommends: the oil and gas industry reduce emissions intensity by 42 % ; the technology fund levy for those who don’t meet the emissions reduction target should increase to at least $100 per tonne by 2020; the current unlimited access to offset credits for companies should end.

Read Getting on Track to 2020: Recommendations for Greenhouse Gas Regulations in Canada’s Oil and Gas Sector from links at:http://www.pembina.org/pub/2427 .

In Alberta, discussion is underway for reform of the provincial carbon pricing system, with the media reporting proposals of a 40% target to improve emissions intensity, and a compensating payment of $40 per tonne if that is not achieved.

Read “Carbon levy talks in early stages, Alberta environment minister confirms” in the Edmonton Journal, April 4, 2013 at:http://www.edmontonjournal.com/technology/Alberta+reviewing+climate+change+policy+McQueen+confirms/8195862/story.html, and See What you need to know about Alberta’s 40/40 carbon pricing proposal, by Simon Dyer (April 5, 2013) at the Pembina website: http://www.pembina.org/blog/707.  

Fragmentation the Defining Trend in Canada’s Carbon Policy

The International Institute for Sustainable Development has published a policy brief which analyses Canada’s carbon policy developments in 2012 and identifies key trends to watch for in 2013. The authors note that “accommodating the historical patchwork of provincial policy is pushing the country down a path of further fragmentation, increasing the risk of high-cost compliance and decreasing the likelihood of meeting Canada’s aspirational GHG targets.” And further, “In 2012 the federal government set an important precedent …. The Canada-Nova Scotia Equivalency Agreement has therefore established a pattern of federal policy deferral that is expected to become entrenched in 2013. The splitting of policy responsibility, with architecture provincially tailored but GHG performance standards nationally set, will underscore policy development in 2013.” Among the recommendations for 2013: “Mechanisms for coordination of policy, whether through linkage, equivalency agreements or even common LCDR markets, should be nurtured and supported. Quebec’s experiment with linking permit trade bi-laterally with California is an important precedent to watch”.

Canadian Carbon Policy Year in Review and Emerging Trends, 2012 is available at:
http://www.iisd.org/pdf/2012/regulating_carbon_canadian_policy.pdf

 

Canada’s Fuel Efficiency Regulatons for Heavy Duty Vehicles Finalized

On February 25, Canada’s Environment Minister announced the final regulations to improve fuel efficiency and reduce greenhouse gas (GHG) emissions, with progressively more stringent standards for 2014 to 2018 model-year heavy-duty vehicles such as full-size pick-ups, semi-trucks, garbage trucks and buses. The regulations were first made public in April 2012, and follow the standards set in the U.S. See: http://www.ec.gc.ca/default.asp?lang=En&n=714D9AAE-1&news=3FC39747-ABF2-470A-A99E-48CA2B881E97   for the press release and links to a timeline, backgrounder, and Regulatory Impact Analysis statement.