Corporate net zero goals: solution or deception?

Climate change superstar Mark Carney set off a media flurry in a video interview with Bloomberg Live on February 10, in which he claimed that Brookfield Asset Management is a “net zero” company because its renewables investments offset emissions from its other holdings. Carney reflects a new trend of corporate aspirational statements, for example: Jeff Bezos’ corporate network The Climate Pledge claimed in February that 53 companies across 18 industries have committed to working toward net-zero carbon in their worldwide businesses, most by 2050.  Recent  high profile examples include Royal Dutch Shell , Canada’s TD Bank  and Bank of Montreal, and  FedEx , which on March 5 announced its goal to be carbon-neutral by 2040 as well as an initial investment of $2 billion to start electrifying its delivery fleet and $100 million to fund a new research centre for carbon capture at  Yale University.

Will these corporate goals help to reach the Paris Agreement target?  Many recent articles are skeptical,  labelling them “sham”, “greenwash”, and “deception” which seeks to protect the status quo.  Some examples:

The climate crisis can’t be solved by carbon accounting tricks” (The Guardian, March 3) which offers a concise explanation of why “Disaster looms if big finance is allowed to game the carbon offsetting markets to achieve ‘net zero’ emissions.”

Global oil companies have committed to ‘net zero’ emissions. It’s a sham” by Tzeporah Berman and Nathan Taft (The Guardian, March 3) – which instead advocates for an international Fossil Fuel Non-Proliferation Treaty.

Call the Fossil Fuel Industry’s Net-Zero Bluff” by Kate Aronoff  in New Republic. She writes: “This isn’t the old denialism oil companies funded decades ago. … Instead of casting doubt on whether the climate is changing, this new messaging strategy casts doubt on the obvious answer to what should be done about it: i.e., rapidly scaling down production….. For now, it’s one part creative accounting and many parts a P.R. strategy of waving around shiny objects like biofuels, hydrogen, and carbon capture and storage.”

Can the market save the planet?  FedEx is the latest brand-name firm to say it’s trying” in the Washington Post , which quotes Yale Professor Paul Sabin, warning that “carbon capture research also should not become an excuse for doubling down on fossil fuel consumption, or delaying urgently needed policies to move away from fossil fuel consumption, including the electrification of transportation.”

Chasing Carbon Unicorns: The Deception of Carbon Markets and Net Zero  – a hard-hitting report by Friends of the Earth International which argues that net zero pledges are “a new addition to the strategy basket of these actors who are fighting hard to maintain the status quo.”   The report names these actors, led by the  financial community’s new Taskforce on Scaling Voluntary Carbon Markets (TSVCM) – established by Mark Carney and the led by the CEO of the Standard Chartered Bank, with a goal to develop standards for “credible offsets” . FOE International also names a
group of Oxford academics which is supporting the TSVCM work by developing the Oxford Principles for Net Zero Aligned Carbon Offsetting , and  conservation agencies which have endorsed the work: Conservation International (CI), Environmental Defense Fund (EDF), The Nature Conservancy (TNC), and World Wildlife Fund (WWF).

Chasing Carbon Unicorns concludes:

“Net zero” is a smokescreen, a conveniently invented concept that is both dangerous and problematic because of how effectively it hides inaction. We have to unpack “net zero” strategies and pledges to see which are real and which are fake. Fake zero strategies rely on offsets, rather than real emission reductions. Real zero strategies require emissions to really go to zero, or as close to zero as possible.”

Doug Ford has begun to dismantle Ontario’s climate leadership – Step 1, exit the cap-and-trade agreement

Doug FordAs a result of the provincial election on June 7, Progressive Conservative leader Doug Ford will take power as the premier of Ontario on  June 29, 2018.  Even before that hand-over date, he has begun to make the changes many feared –  announcing on June 15 that Ontario will exit the cap and trade market of the Western Climate Initiative (which includes California and Quebec)  and on June 19,  cancelling the $377-million Green Ontario Fund,  financed by the proceeds of cap-and-trade auctions and which provided consumer incentives for energy efficiency improvements.  On June 21, he committed to keep the Pickering Nuclear Generating Station in operation until 2024  –  in the name of protecting 4,500 local jobs and an additional 3,000 jobs province-wide.  Some general articles about the Ford government appeared in The Tyee  “Green hopes, NDP fears, and PC Dreams: The challenges that await Ontario in Ford Nation” (June 15);  “What does a Doug Ford victory mean for the climate?”  in The Narwhal (by DeSmog Canada),  and “Doug Ford’s Environmental policies light on details, advocates say” on CBC News (June 13).

Ford’s decision to end the cap and trade market has many implications – the possibility of lawsuits from investors and companies who had bought carbon credits, as well as a direct confrontation with the federal government, which requires all provinces to enact carbon pricing by 2019, under the Pan-Canadian Framework for Clean Energy and Climate Change.  Additionally, the federal government  just passed Bill C-74, which includes Part 5: The Greenhouse Gas Pollution Pricing Act on June 14 , the day before Ford’s announcement.  For discussion of the carbon pricing issue, see  “Ontario’s Doug Ford says the province is abandoning its price on carbon pollution” in the National Observer (June 15) ;  “PC’s will end Ontario cap and trade program, Ford vows” in the Globe and Mail (June 15).  An official reaction from Environmental Defence is here , with more detail in their blog, “What you need to know about Ontario’s carbon pricing drama” . From the Ecofiscal Commission, “Tread Carefully: Ontario’s cap-and-trade system meets a fork in the road” (June 8) , and “Can Ontario hits its targets without carbon pricing?”  (June 21) , which discusses the two remaining options for reducing emissions: regulations and incentives.  Finally,  the arguments are summed up in the Unifor press release, “Unifor urges Premier-designate Doug Ford to maintain the cap and trade system” : “Workers in Ontario need forward-looking policies with the intention to build a green economy, but instead Ford announced his intention to cancel a successful program and pick an unnecessary fight with the federal government…. Workers accept that climate change is real and need our government to lead with a real, predictable plan to reduce emissions and grow green jobs.”

New evidence supports benefits of cap and trade policies – an important issue for Ontario voters

With a June 2018 election approaching in Ontario,  climate change policies and the cap and trade program are already emerging as  key issues.  Several relevant reports have been published since the Environmental Commissioner of Ontario addressed these issues in her audit report,  Ontario’s Climate Act: From Plan to Progress  in January 2018.

The government’s own progress report on the 5-year Climate Change Action Plan was released on March 14  , and includes an evaluation of the policies and projects funded through Ontario’s cap and trade program. One such program is the “Low Carbon Building Skills” initiative announced in August 2017 under the Ministry of Advanced Education and Skills Development, which  aims to improve training for low carbon building projects –  including retrofits, green construction and building operations.  Other highlighted initiatives relate to hospital energy efficiency; building and school retrofits; social housing; research into climate change impacts on  building codes.

clean economy alliance progress report ontario year 1A more independent view comes in   A Progress Report on Ontario’s Cap-and-Trade Program and Climate Change Action Plan: Year One ,  published by the Clean Economy Alliance – an alliance of Ontario’s  businesses, clean technology firms, industry associations, labour unions, farmers, health advocates and environmental organizations.   In answering its key question, “Is there any evidence that cap-and-trade has hurt Ontario’s economy or cost jobs?” the report concludes that “Rather than shedding jobs, Ontario added 155,000 jobs between January 2017 and December 2017 – the first year of cap-and-trade. Gains were driven by employment growth in wholesale and retail trade, professional services and manufacturing. Cap-and-trade doesn’t appear to have hurt economic growth either. 2017 marked a 7-year high in Ontario’s GDP growth. Forecasters including RBC, TD Bank and the Conference Board of Canada agree that in 2018, economic growth will slow slightly, but will remain strong.” The report card evaluates impact on emissions reduction, as well as implementation rates by policy area (transportation, buildings and homes, land use planning, and “others”) . It concludes with a brief case study of the incentives for electric vehicles – noting that 2017 was the first year that  more electric vehicles (EVs) were sold in Ontario than in any other province.

On  April 10, the Environmental Commissioner of Ontario released another relevant report: the 2018 Energy Conservation Progress report, Making Connections: Straight Talk about Electricity in Ontario.  In this statistically-dense report, she acknowledges that the province’s electricity  system was 96 per cent emission-free in 2017, but warns that the province will fall short of its 2030 carbon reduction target unless consumer behaviour changes:  “Looking ahead, much more conservation and low-carbon electricity will be needed to displace fossil fuels as the climate crisis continues to worsen. Ontario is not yet preparing seriously for this future.”

With the explicit purpose of informing the policy discussion before and after the Ontario election in June 2018, Ontario 360  has been established at the University of Toronto’s School of Public Policy and Governance, as an “ independent, non-partisan, and fact-based” resource.  On April 18, their first briefing on Climate Policy was published, written by Trevor Tombe, associate professor of economics at the University of Calgary. The briefing reviews the cap-and-trade system and the various initiatives which have been funded by its proceeds, and provides a top-level explanation of the merits of carbon pricing in general, with a comparison of cap and trade and carbon taxes. His conclusion: “while the evidence finds that pricing should be the backbone of any credible climate policy in Ontario, it is not a magic wand. There are areas where it may not be administratively feasible, and therefore narrow complementary policies should also be on the table. And even where pricing is appropriate, reasonable people will disagree over the appropriate price level and coverage. But whatever path forward future governments choose, they should strive for transparency in costs and benefits, clarity in the goals a policy is trying to achieve, and flexibility as new evidence emerges.”

Finally, a related report from the United States was released on April 17, evaluating the economic and environmental impacts of the cap and trade markets of the Regional Greenhouse Gas Initiative ( RGGI) in the U.S. from 2015-2017 .  The Economic Impacts of the Regional Greenhouse Gas Initiative on Nine Northeast and Mid-Atlantic States   found that the nine states which form the network  gained $1.4 billion in economic benefits over the past three years because of the way they invested proceeds, with the biggest payoffs (including in new jobs) coming from investments in energy efficiency programs.  In the same period, there has been no damage to the reliability of the electricity grid, nor a net increase in electricity bills.    The Economic Impacts of the Regional Greenhouse Gas Initiative on Nine Northeast and Mid-Atlantic States  was produced by The Analysis Group , who also were responsible for two previous evaluations since the RGGI launched in 2009, available here .

Ontario’s GHG emissions at lowest level since 1990 – Environmental Commissioner commends the first year of cap and trade but recommends changes for freight sector, green procurement

Ontario logoOn January 30, 2018  the Environmental Commissioner of Ontario (ECO) submitted her annual Greenhouse Gas Progress Report to the Legislative Assembly of Ontario –  an independent, non-partisan review of the government’s progress in reducing emissions for 2016-2017.  The report, Ontario’s Climate Act: From Plan to Progress  covers the period since the  Climate Change Action Plan was introduced in June 2016, and the  cap and trade market became effective January 2017.  The report provides detailed emissions  statistics by sector and sub-sector, catalogues and critiques climate-related policies, and places Ontario’s initiatives in a national and international context – especially the cap and trade market and its relationship with the Pan-Canadian Framework on Clean Growth and Climate Change.  Top-level findings:  overall, GHG emissions were at the lowest level since reporting began in 1990 and “the first year of cap and trade went remarkably well”. Because  Ontario’s market is part of the Western Climate Initiative (WCI) which  includes California and Quebec, the report warns that prices make weaken because of political  uncertainty in the U.S., and also calls for more “bang for the bucks” in the Greenhouse Gas Reduction Account, which manages the proceeds of the carbon auctions.  Chapter 4 includes an explanation and critique of Ontario’s proposed carbon offsets, which are also tied to the WCI, and states that some sectors at some risk of being little more than greenwashing.  The Commissioner singles out the emissions of Ontario’s transportation industry and  states that it will be impossible to meet Ontario’s emissions reduction targets unless urgent action is taken to rein in emissions from the freight sector, with recommendations to “encourage the freight sector to avoid trucking where possible (e.g., through logistics and road pricing), improve diesel truck efficiency (e.g., through incenting the scrapping of older diesel trucks), and shift freight away from fossil fuels (e.g., providing more targeted support for zero-emission trucks).” UPS electric truck The report also calls for improved green procurement policies in government’s own spending and a stronger climate lens for regulation, taxation and fiscal policies.  The  Ministry of Energy is singled out in this regard:   “For example, the Ministry of Energy by itself governs 70% of Ontario’s emissions, yet its 2017 Long-Term Energy Plan does little to achieve Ontario’s climate targets.”  An 8-page summary of the report is here ; the full report, (all 284 pages) is here ;  eight Technical Appendices are available from this link.

 

Ontario, Quebec and California sign formal agreement to link their carbon markets

On September 22, Premier Couillard of Quebec hosted Premier Wynne of Ontario and California Governor Jerry Brown in Québec City, where they signed an agreement which formally brings Ontario into the existing joint carbon market of the Western Climate Initiative (WCI).  This comes as no surprise: the government had announced its intention to join the WCR in April 2015 as part of its Climate Change Action Plan.  When Ontario joins up with Quebec and California, effective January 1, 2018,  the carbon market will cover a population of more than 60 million people and about C$4 trillion in GDP. The three governments will harmonize regulations and reporting, while also planning and holding joint auctions of GHG emission allowances.  Text of the Agreement on the Harmonization and Integration of Cap-and-Trade Programs for Reducing Greenhouse Gas Emissions is here.  Here is  an introduction to Ontario’s cap and trade program, which was announced as part of the  For an up-to-date description of the Western Climate Initiative and its importance as a model for sub-national, international co-operation, see   “Will Other States Join California’s International Climate Pact?”  in The Atlantic (August 10  2017).

The Western Climate Initiative Inc. is  based in Sacramento California, and  is now  “a non-profit corporation formed to provide administrative and technical services to support the implementation of state and provincial greenhouse gas emissions trading programs” .