State of carbon pricing in Canada, with recommendations for improvement

The Canadian Institute for Climate Choices was commissioned by Environment and Climate Change Canada to undertake an assessment of carbon pricing in Canada. The resulting report, The State of Carbon Pricing in Canada was released in June along with an accompanying detailed technical report, 2020 Expert Assessment of Carbon Pricing Systems. Focusing on the design of carbon pricing systems across all jurisdictions (and not measuring performance), the authors identify five key challenges: Not all policies apply to the same emissions; Not all policies have the same price; Not all policies impose the same costs on industry; Almost all policies lack transparency about key design choices and outcomes; and Long-term and transparent price signals are typically absent from programs.  

Their  recommendations for improvement are:

  • Develop a common standard of emissions coverage for carbon pricing across all jurisdictions.
  • Remove point-of-sale rebates that are tied to fuel consumption: such rebates should be replaced with other approaches such as direct rebates, income tax reductions, or abatement technology subsidies.
  • Define a “glide-path” to better align and increase average costs to large emitters
  • Engage Indigenous people in carbon pricing – at present, some communities are exempt and some are subject to full carbon costs
  • Ensure continuous improvement through more transparency and more independent evaluation.

A related blog, “3 Maps That Show Why Carbon Pricing in Canada Needs a Tune-Up”  summarizes the differences in carbon pricing design choices across the country, in a less formal style. 

For Alberta oil workers facing a future of industry volatility- policy options include Just Transition, green tax reform

In Search of Prosperity: The role of oil in the future of Alberta and Canada  was released on May 26, that cataclysmic day of bad news for the oil and gas industry when the Dutch courts ordered Royal Dutch Shell to reduce its emissions immediately, and shareholders at Exxon and Chevron defied management to press for climate-friendly policies. The future of the oil and gas industry is also grim in Canada, according to In Search of Prosperity, published by the International Institute for Sustainable Development (IISD). Using economic models, it concludes that “the volatility of the industry poses a much greater threat than low prices to the Alberta economy – more than five times worse than the effect of just low prices.” And further: “….. unless there are innovations in the uses of oil for non-combustion, also known as “bitumen beyond combustion,” the oil sector will contribute less and less to Alberta’s prosperity.” According to the modelling, employment in the oil sector will potentially decrease byan average 24,300 full-time jobs per year toward 2050 ( accompanied by a potential 43% drop in royalties to the Alberta government). 

How to cope with those upcoming job losses? Another report from the International Institute for Sustainable Development (IISD), also released on May 26, suggests the EU Just Transition Mechanism as one of its model strategies for the future. 10 Ways to Win the Global Race to Net-Zero: Global insights to inform Canadian climate competitiveness offers an overview of the global policy literature and describes successful case studies, including the innovation of green steel in Sweden; hydrogen policy in Germany; collaboration in the form of the European Battery Alliance and the European Transition Commission; the Biden “all of government” approach to governance in the U.S.; New Zealand’s consultation with and inclusion of the indigenous Maori; and the EU’s Just Transition Mechanism as part of the European Green New Deal. The report’s conclusion offers five strategies, including that the Canadian government must take action as a “top priority” on its promised Just Transition Act.

The discussion of Just Transition in 10 Ways to Win provides a brief, clear summary of the complexity of the EU Just Transition Mechanism, and states that the EU approach is consistent with the recent report,  Employment Transitions and the Phase-Out of Fossil Fuels by Jim Stanford, published by the Centre for Future Work in January 2021. Stanford argues that a gradual transition from fossil fuels is possible without involuntary layoffs, given a “clear timetable for phase-out, combined with generous supports for retirement, redeployment, and regional diversification”.

The IISD also recently published Achieving a Fossil Free Recovery (May 17), an international policy discussion with a focus on ending subsidies and preferential tax treatments for the fossil fuel industry. The report concludes with a brief section on Just Transition as the predominant framework for the transition to a clean energy economy, and calls for a social dialogue approach. As in previous IISD reports (for example, Fossil Fuel Subsidy Reform and the Just Transition in 2017), the authors argue that dollars spent to support and subsidize the fossil fuel industry could be better spent in encouraging clean energy industries.  This argument also relates to an April 2021 IISD report, Nordic Environmental Fiscal Reform, which offers case studies of the success of environmental taxes – for example, in the use of tax revenue to support the Danish wind energy industry which now employs 33,000 workers.

Canada’s Supreme Court affirms federal government’s constitutional right to enact carbon pricing legislation

On March 25, the Supreme Court of Canada released a majority decision stating that the federal government of Canada was within its constitutional rights when it enacted the 2018 Greenhouse Gas Pollution Pricing Act — which required the provinces to meet minimum national standards to reduce greenhouse gas emissions. The decision enables the federal government to move on to more ambitious climate action plans, since it ends a two-year battle with the provinces, and affirms the importance of the climate change issue. The majority decision states that national climate action “is critical to our response to an existential threat to human life in Canada and around the world.”   Summaries and reaction to this hugely important decision include an Explainer in The Narwhal , and “Supreme Court rules federal carbon pricing law constitutional” (National Observer) . Mainstream media also covered the decision, including a brief article in the New York Times which relates it to U.S. policy climate.

The Canadian Labour Congress issued a press release “Canada’s unions applaud Supreme Court decision upholding federal carbon pricing” – pointing out that the carbon tax is only one piece of the puzzle in reducing GHG emissions. Unifor emphasized next steps, calling on the provincial premiers of Ontario, Saskatchewan and Alberta, and the federal Conservative leader, to “stop complaining” and devise their own climate action plans. Similar sentiments appeared in the reactions of other advocacy groups: for example,  Council of Canadians;  the Pembina InstituteClean Energy Canada, and the Canadian Association of Physicians for the Environment (CAPE) .

Political reactions

The reaction and explanation of the case from the federal government is here. The CBC provides a survey of political reaction here. Ontario, Saskatchewan, and Alberta were the three provinces who lost their Supreme Court case: in a press release,  Alberta’s Premier Jason Kenney pledged that his government will continue to “fight on”, and will now begin to consult with Albertans on how to respond to the court’s decision – as reported in the National Observer, “Alberta has no carbon tax Plan B, was hoping to win in court: Kenney” (March 26) . Kenney further stated,  “We will continue to press our case challenging Bill C-69, the federal ‘No More Pipelines Law,’ which is currently before the Alberta Court of Appeal.”  [Note Bill C-69 is actually titled An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act… and was enacted in June 2019]. Ontario’s “disappointment” is described in this article in the Toronto Star and Saskatchewan’s government reaction is described here by the CBC .   A sum-up Opinion piece appears in The Tyee: “Sorry Cranky Conservatives! Carbon Pricing Wins the Day” (March 29).

Updated: Supreme Court upholds legislation underpinning Canada’s carbon pricing system

On March 25, majority of Canada’s Supreme Court ruled in what  EcoJustice calls a “monumental” decision, that the federal Greenhouse Gas Pollution Pricing Act does not violate the Canadian constitution. The Summary decision is available at the Supreme Court website as of March 25, here. The Justices noted that global warming causes harm beyond provincial boundaries and that it is a matter of national concern under the “peace, order and good government” clause of the Constitution. The Justices further noted that the term “carbon tax” is a misnomer, and the fuel and excess emission charges imposed by the Act were constitutionally valid regulatory charges and not taxes.

The federal government’s constitutional right to set the framework for pollution pricing lies at the heart of our national policies to fight climate change – originally, through the Pan-Canadian Framework on Clean Growth and Climate Change (2016) and now, through the Healthy Environment Healthy Economy Plan released in December 2020, which proposes to raise the existing carbon tax to $170 per tonne by 2050.

The Greenhouse Gas Pollution Pricing Act allows the federal government to impose a carbon price, a “backstop”, in any province or territory which fails to design their own policies to meet the federal emission reduction targets. The provinces of Saskatchewan, Ontario, and Alberta all filed separate challenges to the federal jurisdiction – with the provincial appeals courts in Saskatchewan and Ontario both upholding the federal government’s constitutional right to enact the law. In February 2020, the  Alberta Court of Appeal upheld the provincial challenge, and appeals to the Supreme Court from all three provinces were heard in Fall 2020. A more complete chronology of the legal cases is here .

The Supreme Court decision is summarized here – with a link to the full Decision (the Court notes that the Full Decision is so lengthly that it may cause an error message when trying to download it).

Roadmap for U.S. Decarbonization emphasizes job creation, equity in Transition

A Committee of Experts in the United States collaborated to produce a sweeping policy blueprint for how the U.S. can reach net-zero carbon emissions by 2050.  Accelerating Decarbonization of the United States Energy System was published by the U.S. National Academies of Sciences, Engineering and Medicine in February 2021, and discusses how to decarbonize the transportation, electricity, buildings, and industrial sectors.  The Overview emphasizes goals of job creation and equity, with a need to build social license.  This aspect of the report is drawn out in “We risk a yellow vest movement”: Why the US clean energy transition must be equitable”  a summary which appeared in Vox.

From the report overview

“The transition represents an opportunity to build a more competitive U.S. economy, increase the availability of high-quality jobs, build an energy system without the social injustices that permeate our current system, and allow those individuals, communities, and businesses that are marginalized today to share equitably in future benefits. Maintaining public support through a three decade transition to net zero simply cannot be achieved without the development and maintenance of a strong social contract. This is true for all policy proposals described here, including a carbon tax, clean energy standards, and the push to electrify and increase efficiencies in end uses such as vehicle and building energy use. “

The report recommendations are summarized in this  Policy Table, and in a 4-page Highlights document.  These include:   Setting an emissions budget for carbon dioxide and other greenhouse gases • Setting an economy-wide price on carbon (though a low price is set “because of concerns about equity, fairness, and competitiveness”) • Establish a 2-year federal National Transition Task Force “to evaluate the long-term implications of the transition for communities, workers, and families,  and identify strategies for ensuring a just transition”.• Establish a new Office of Equitable Energy Transitions within the White House to act on the recommendations of the task force, establish just transition targets and  track progress • A  new independent National Transition Corporation. • A new Green Bank, initially capitalized at $30 billion, to ensure the required capital is available for the net-zero transition and to mobilize greater private investment • A comprehensive education and training initiative “to develop the workforce required for the net-zero transition, to fuel future innovation, and to provide new high-quality jobs” • Triple federal investment in clean energy RD&D at the Department of Energy over the next ten years,  as well as the support for social science research on the socio-economic aspects of advancing the transition.

The full report, 210 pages, is available free for download from this link  (registration required).

Favourable reaction by Canadians to an updated Climate Plan -including a carbon tax rising to $170 per tonne by 2030

On December 11, the federal government released its highly-anticipated new climate plan, A Healthy Environment and a Healthy Economy, announcing 64 policy measures costing $15 billion. The Plan addresses energy, energy efficiency, infrastructure,  transportation emissions, the Clean Fuel Standard, an adaptation strategy – and a centrepiece policy to increase the carbon tax by $15 a tonne each year for the next eight years, as summarized by the CBC in  “Ottawa to hike federal carbon tax to $170 a tonne by 2030 “. Taken with the proposed Canadian Net-Zero Emissions Accountability Act currently before Parliament, which formalizes Canada’s target of net-zero emissions by the year 2050, A Healthy Environment and a Healthy Economy lays out the most specific path forward for Canada since the 2016 Pan-Canadian Framework in 2016.

A Backgrounder is here,  and specific initiatives are explained in Annex documents here.  One missing piece, as pointed out in Unifor’s reaction to the new Plan: the previously-promised Just Transition Act.   Also missing: the slightest notice by the international press, even the normally climate-vigilant Guardian in the U.K.  Reaction within Canada was strong, and ranged widely (compiled by the CBC here). In the mainstream media, the conservative-leaning Globe and Mail  approved in its Editorial:  “Justin Trudeau goes all in on the carbon tax. It’s the right thing – for the environment, and the economy”. Political writer Paul Wells uses similar language and  confesses to “startled admiration” in “On climate, at last, Justin Trudeau is all in” in Maclean’s magazine . The National Observer published  “Trudeau goes it alone with new climate plan, proposes carbon price hike”, drawing the contrast with the 2016 Framework, which was drafted in consultation with all the provinces.  The Energy Mix  is less approving in “With $170/Tonne Carbon Price, $15b In New Spending, Canada’s 2030 Carbon Target Still Falls Far Short”  (Dec. 14), which summarizes reaction from environmental groups.

Reaction from Labour and Environmentalists:

Like Unifor , the Canadian Labour Congress highlights the need for more transition measures in the new Plan, and states: “Labour will be looking to the federal government to make good on its commitment to supporting local job creation, skills training, apprenticeships and decent wages for workers, especially to those historically underrepresented in the skilled trades sector, including Indigenous workers, racialized workers and women…. Canada’s unions welcome the government’s emphasis on domestic manufacturing, including developing Canadian supply chains for low-emission building materials, clean tech, and aerospace and automotive investments, and leveraging the power of public procurement. Additionally, unions are noting the crucial commitments made today towards bringing Indigenous communities into the process.”

The International Brotherhood of Electrical Workers Canada (IBEW) commends the Plan and states:  “The highly skilled members of the IBEW are trained and ready to take on these important jobs, and the government’s commitment to investing in green buildings and retrofits, electrified public and private transportation and grid modernization will require exactly the sort of knowledge and skills that IBEW members demonstrate on the job every day.”

From the Climate Action Network Canada, which includes both labour and environmental groups:  “… this plan does not change the fact that Canadian governments continue to double down on fossil fuels, subjecting workers and our economy to the ever-increasing volatility of oil and gas markets…. It’s good to see policies that can, if implemented quickly and with the greatest stringency possible, take Canada’s climate ambitions further than our current insufficient Paris pledge – reducing emissions up to 40% below 2005 levels by 2030. It is also good to see a significant investment of $15B in climate action. However, these numbers pale in comparison to commitments being made by our closest trading partners in the EU and the U.S. (under a new Biden administration)”.

Similarly, from Environmental Defence: “The climate action plan released today has a more comprehensive suite of climate policies than in the past and we welcome the meaningful escalation of the retail portion of the carbon price. We’re also pleased about the portion of the $15 billion investment that is not in effect yet another fossil fuel subsidy. But that amount, which is a small fraction of what other countries are doing on a per capita basis, clearly cannot get the job done. In fact, Canada should be investing $270 billion if it was following the level of ambition of the US or EU.”  West Coast Environmental Law agrees with these points, and also  states:  “While we applaud much of this climate plan, the government continues to ignore the reality that climate leaders don’t build oil pipelines. The recent analysis released by Canada’s Parliamentary Budget Officer confirms that the Trans Mountain pipeline will lose money if any climate action is taken, let alone the action promised in this plan. If Canada is serious about acting on climate change, the government must cancel this ill-conceived project once and for all.”

Economists applaud carbon tax initiative

The federal government announcement includes a 4-page Annex document about its carbon pricing proposals. The carbon tax will rise by $15 per tonne after 2022 until 2030, when it will reach $170 per tonne. The government is banking on a favourable decision by the Supreme Court of Canada when it rules on the constitutionality of the existing federal carbon tax in 2021. In a politically shrewd change from current practice, carbon rebates will be distributed to households on a quarterly basis, and as now, most households will receive more in rebates than they pay out.

Mainstream economic voices support the carbon tax:  The Canadian Institute for Climate Choices calls the plan “a big deal”, and says: “The government’s emissions projections under a carbon price that rises by $15/tonne per year is consistent with analysis from the Parliamentary Budget OfficeClean ProsperityCanada’s Ecofiscal Commission, and our own principal economist, Dave Sawyer. This is a policy that can deliver on the emissions reductions it promises.” Clean Prosperity states “This is a bold, brave, and wise move that will set Canada on the path to decarbonization. It sends a clear message to investors around the globe that Canada is serious about climate action.…. This was not an easy choice, but it’s the right choice. The government is wisely adopting a low-cost policy option that is good for the economy.”   And Merran Smith, speaking for Clean Energy Canada, calls it a “comprehensive and honest plan…. historically and globally significant. The plan will retool and position Canada’s economy to be increasingly competitive in a low-carbon world.”

Updating carbon pricing in Canada: PBO Report , Supreme Court case, and provincial opt-outs

On October 8, the Office of Canada’s Parliamentary Budget Officer (PBO) released its latest report on carbon pricing, Carbon pricing for the Paris target: Closing the gap with output-based pricing . The report concludes that the government’s existing and announced policies and measures – including a carbon tax which rises to $50 per tonne in 2022 and an Output-Based Pricing System (OBPS) will not be sufficient to allow Canada to meet its emissions target under the Paris Agreement – 30 per cent below 2005 levels by 2030. The PBO models three complex scenarios to estimate that the level of the carbon price necessary to achieve the Paris target ranges from $67 per tonne to between $81 and $239 per tonne.

A critique by Clean Prosperity , a Toronto NGO focused on carbon tax research and education,  finds two of the PBO scenarios “unrealistic” and calls for a fourth approach, which transitions the industrial output-based pricing system to economy-wide pricing plus a border carbon adjustment. Clean Prosperity concludes:  “The bottom line is that carbon pricing works and should continue to increase after 2022 at roughly the same level as today in order to help us meet our Paris targets.”  Clean Prosperity promises to  release its own modelling of such an approach “in the near future”.

The report was released while a constitutional challenge to the federal carbon pricing system is still before the Supreme Court, and does not reflect the September 20 announcement that “The Government of Canada will stand down the federal carbon pricing system for industry in Ontario and New Brunswick as of a date in the future.” (that date and formal change to the systems to be determined in consultation with each province.) 

Smart Prosperity (a University of Ottawa research centre)  posted a blog and a report Ontario’s Options: Evaluating How Provincial Carbon Pricing Revenues Can Improve Affordability on October 8 .  Smart Prosperity has published a number of relevant working papers, including : Environmental Taxes and Productivity: Lessons from Canadian Manufacturing  (April 2020);  Border Carbon Adjustments in Support of Domestic Climate Policies: Explaining the Gap Between Theory and Practice (Oct. 2019) and Do Carbon Taxes Kill Jobs? Firm-Level Evidence from British Columbia in March 2019.  Canada’s Ecofiscal Commission also researched and published numerous reports (archived here ) before it closed its doors in November 2019.

Ontario Court of Appeal rules against the provincial challenge to the federal carbon price – Seven provinces will intervene in the Supreme Court appeal

doug ford scrap the taxOn June 28, the Ontario Court of Appeal issued their Decision , 4 to 1 in favour of the federal government’s right to impose a system of carbon pricing across Canada, under the Greenhouse Gas Pollution Pricing Act.   Some important excerpts from the majority decision:

“Parliament has determined that atmospheric accumulation of greenhouse gases causes climate changes that pose an existential threat to human civilization and the global ecosystem ….The need for a collective approach to a matter of national concern, and the risk of non-participation by one or more provinces, permits Canada to adopt minimum national standards to reduce [greenhouse gas] emissions…

The Act does this and no more. It leaves ample scope for provincial legislation in relation to the environment, climate change, and GHGs, while narrowly constraining federal jurisdiction to address the risk of provincial inaction.

The charges imposed by the Act are themselves constitutional. They are regulatory in nature and connected to the purposes of the Act. They are not taxes.

The Act is the product of extensive efforts – efforts originally endorsed by almost all provinces, including Ontario – to develop a pan-Canadian approach to reducing GHG emissions and mitigating climate change. This, too, reflects the fact that minimum national standards to reduce GHG emissions are of concern to Canada as a whole. The failure of those efforts reflects the reality that one or more dissenting provinces can defeat a national solution to a matter of national concern”

The Ontario government immediately announced that it will appeal the decision to the Supreme Court.  The Premier of Alberta, part of the Canada-wide Conservative opposition to the federal carbon tax, said that Alberta is reviewing the decision in his press release.  Saskatchewan, which lost its own court challenge to the GGPPA  in May 2019, has already filed an appeal in the Supreme Court of Canada, scheduled for December 5 2019 – notably after the coming federal election, in which climate change issues are widely expected to be a top priority for voters.

For a thorough discussion of the decision and compilation of reactions, read: “Doug Ford loses carbon tax battle with Trudeau” in the National Observer .  “Ontario Court of Appeal Upholds Federal Carbon Tax” appeared in The Energy Mix on July 2 and also compiles reaction from many sources. “Federal Carbon Pricing Regime Now Two-for-Two” (July 2) in Lexology offers a more lawyerly perspective.   And for the mood in Ontario, read “Doug Ford’s $30 million carbon tax fight is money down the drain but it keeps his brand afloat” in the Toronto Star (July 3) or in the Globe and Mail, The real carbon tax is the money provinces are spending on lawyers.”

Provinces line up to participate in Supreme Court appeal: ( Updated as of July 10):  As of July 8, seven provinces are  registered as intervenors in the Saskatchewan challenge to the carbon tax, scheduled to be heard by the Supreme Court of Canada in December 2019.  On July 8, CBC reported that  New Brunswick Premier Blaine  Higgs  abandons  planned carbon tax court fight , stating that the province will not waste taxpayers’ money on their own carbon tax court case, but will act as an intervenor in the Saskatchewan’s appeal.  Prince Edward Island is also intervening, as explained in  P.E.I. intervening in Saskatchewan’s carbon tax court challenge” (July 5).  The Premier of PEI states they are “absolutely not” joining the fight against a carbon tax, but are intervening as a way to reserve the right to participate in future. Even more surprisingly, “Quebec intervenes in Saskatchewan’s challenge of carbon tax“, as reported in the Montreal Gazette on July 8.  Quebec has joined the case to ensure its provincial rights are upheld in any court decision, and to protect Quebec’s existing cap and trade system. 

stampede ford 2019Aaron Wherry of CBC posted an analysis of the Conservative premiers’ positions against the federal carbon price in Premiers say they want a ‘co-operative’ approach to climate policy. Are they serious? (July 10).  It discusses the differences amongst  Alberta’s Jason Kenney, Ontario’s Doug Ford, Saskatchewan’s Scott Moe, New Brunswick’s Blaine Higgs and Bob McLeod of the Northwest Territories, who are meeting separately, in advance of the formal Council of the Federation meeting in Saskatoon, July 9 to 11.

 

Climate policy progress in Canada suffers from an overemphasis on carbon pricing, an absence of supply-side energy policies

heating up backing downcoverHeating up, Backing Down  by Hadrian Mertins-Kirkwood was released on June 13, updating the author’s previous 2017 report Tracking Progress: Evaluating government plans and actions to reduce greenhouse gas emissions in Canada.   It analyzes emissions data and policy announcements in the last two years to assess federal, provincial and territorial governments’ progress toward Canada’s domestic and international greenhouse gas (GHG) emission reduction targets.  The report identifies and discusses two new important issues in the Canadian climate policy discussion: an overemphasis on carbon pricing and an absence of supply-side energy policies. These are in addition to the three key obstacles to effective climate policy identified in the 2017 report, and still considered relevant: (1) an ambition gap between government policies and official targets; (2) Canada’s  deep economic dependence on fossil fuels, and; (3) an under-appreciation of the need to support workers in the transition to a cleaner economy.

Following a succinct overview of policy developments and emissions statistics for each province, the author concludes that positive progress in British Columbia and Quebec is outweighed by backsliding in the rest of Canada, and future progress is further threatened by the legislative reversals enacted by the recently-elected conservative governments in Alberta and Ontario, which are Canada’s two biggest carbon polluting provinces.

Heating up, Backing Down is co-published by the Canadian Centre for Policy Alternatives and the Adapting Canadian Work and Workplaces to Respond to Climate Change research program (ACW) .

New Brunswick launches consultation on industrial emissions – updated

The Government of New Brunswick opposes the federal government carbon tax and maintains a “We can’t afford a carbon tax” page on the government website – which estimates the costs (but none of the benefits) of the federal carbon backstop in effect in the province.  On June 13, New Brunswick introduced its own Made-in-New Brunswick  Regulatory Approach for Large Emitters ,  an output-based pricing system which will cover roughly 50 per cent of greenhouse gas emissions in the province and will require large industrial emitters, including electricity generators, to reduce their greenhouse gas emissions intensity by 10 per cent by 2030.

The CBC summarized the plan and reaction in “Province proposes carbon tax on tiny fraction of emissions from big industrial polluters”  (June 13) . CBC states that the proposed system would tax only 0.84 percent of greenhouse gas emissions from the province’s biggest emitters, such as Irving Oil,  far below the 20 per cent in the existing federal system. However, it covers the same industrial sectors, applies to the same gases and applies the same price scale of $20 per tonne this year, rising to $50 per tonne in 2022.

A Discussion paper , Holding Large Emitters Accountable: New Brunswick’s Output-Based Pricing System  forms the basis of a public comment period about the proposed system, which runs from June 13 to July 12.  One public response has been published by the Ecofiscal Commission in Exception to the Rule: Why New Brunswick’s Industrial Carbon Pricing System is Problematic (June 19) , which contends that under the proposed regulations, “firms can very easily achieve their emissions intensity benchmark, because it will be essentially set to current levels.”

The Conservation Council of New Brunswick reaction was quoted by the CBC, and also states that the proposed regulations are too weak.  Emphasizing the importance of the issue, on June 25 the Council released Healthy Climate, Healthy New Brunswickers: A proposal for New Brunswick that cuts pollution and protects health,  by Louise Comeau and Daniel Nunes. The Council characterizes the report as “the first comprehensive look at how climate change will affect the physical and mental health of all New Brunswickers, but particularly the very young, seniors, the isolated, and those living on low incomes.”  The report combines climate projections and existing community health profiles for 16 New Brunswick communities, emphasizing the risks of more intense precipitation, flooding and heat waves. It includes recommendations for action and attempts to end on a hopeful note. The report is available in English and French versions from this link .

Updates on New Brunswick’s carbon tax:  On July 8, CBC reported “New Brunswick Premier Blaine  Higgs  abandons  planned carbon tax court fight” , which explains that the province will save taxpayers’ money by supporting Saskatchewan’s Supreme Court of Canada challenge to the carbon tax as an intervenor, since Saskatchewan’s arguments are the same as New Brunswick’s.   Also in  July, an historical and political analysis appeared in Policy Options, “ New Brunswick’s timid foray into carbon pricing”, as part of the week-long series , The Evolution of Carbon Pricing in the Provinces .

 

New Alberta government all-in for oil and gas, beginning with repeal of carbon tax

Jason-Kenney Open for businessThe new UCP government of Alberta, led by Premier Jason Kenney,  kicked off  its legislative session agenda on May 22  with a Throne Speech  promising to “show the world that Alberta is open for business by restoring investor confidence and re-establishing the province as a job-creating investment magnet.” That “open for business” approach, applied to the oil and gas sector, includes some ominous statements : …”Protect and maximize the value of Alberta’s resources – including using, as necessary, the Preserving Canada’s Economic Prosperity Act” (Rachel Notley’s law which gives Alberta the right to restrict oil and gas exports to British Columbia)…. “Challenge those who misrepresent our industry and launch a public inquiry into campaigns to landlock Alberta’s energy”…and “Make life more affordable for Albertans by repealing the carbon tax and focusing climate change action on large emitters.”  More positively, “Be transparent and honest about how Alberta produces energy to the highest environmental, labour and human rights standards on earth” ….”Take action on climate change by introducing the Technology Innovation and Emissions Reduction Fund through regulation targeting large emitters.”  Columnist Chris Varcoe provides one Alberta viewpoint  in “Throne speech ‘roadmap’ to revive oilpatch hinges on pipelines” in the Edmonton Journal (May 23) .

The first legislation to be introduced, on May 22, was Bill 1, An Act to Repeal the Carbon Tax . The government press release claims that “Scrapping the carbon tax will free up nearly $1.4 billion of tax burden, create 6,000 jobs, save the average small business $4,500 annually and save Alberta families up to $1,150 a year.”  Even before the Bill was passed in the legislature, the Kenney government ended collection of the tax, on May 30.  In a press release titled “Albertans lose more than they gain with carbon tax repeal”, the Pembina Institute disagrees: “With the tabling of Bill 1 to repeal the Climate Leadership Act, the Alberta government is cutting existing jobs, stunting innovation, removing financial benefits for small- and medium-size businesses, families and communities, and is allowing greenhouse gas emissions to continue to increase. The government has yet to produce a plan that will make up for these losses and build on previous progress.” The National Observer summary is here  . And of course, there is also the issue that, by repealing Alberta’s own carbon tax, the government has made the province subject to the federal backstop carbon levy.

Without the revenue stream of the carbon tax, energy efficiency programs initiated by the NDP government are in jeopardy. On May 24, the Calgary Herald reported  “UCP steps back from scrapping NDP’s Energy Efficiency Alberta; will look at programs ‘with an open mind’” .  Although Jason Kenney derides the Energy Efficiency Alberta programs  as “subsidizing showerheads and lightbulbs”, in fact, the agency supports major economic programs, including those encouraging  the growth of Alberta’s solar industry.  Efficiency Canada documents the benefits for Alberta and points out that Alberta would be the only jurisdiction in North America not to have an energy efficiency program if it is scrapped .

On May 23, the Alberta legislature gave unanimous approval of a motion condemning federal bills C-69 , An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act,  and C-48, the Oil Tanker Moratorium Act . The Alberta government  claims that the legislation “poses a very real threat to hundreds of thousands of jobs in Alberta and across Canada, and the $16 trillion in economic potential within Alberta’s oilsands that could be lost if they proceed.”  After the Senate Committee tabled its controversial amendments to C-69, the Alberta party leaders sent a joint letter to Prime Minister Trudeau on May 28, stating: “While we remain concerned about the overall spirit of Bill C-69, we believe that with the inclusion of all these amendments, that the bill would be acceptable to the interests of Albertans” . The letter is summarized by Energy Mix in “Alberta Party Leaders Unanimously Back C-69 Amendments from Unelected Senate Committee”.  The marked-up version of Bill-69 with the Senate Committee amendments is dismaying to environmentalists;  a 2018  analysis of the original Bill-69 by Environmental Defence is here .  (The complicated issue of the unelected Senate’s hearings and recommendations regarding Bill C-69 will be the subject of a future WCR report.)

Other  new Alberta legislation in the ”Open for Business” agenda: On May 27,  Bill 2, the Open for Business Act,  promises to “reduce unfair burdens on businesses and give workers more rights in unionized workplaces. Recent changes to employment rules, such as requiring employers to provide holiday pay even if they are not open that day, created an unfair cost burden on job creators.”  The Alberta Federation of Labour reacted,  as did The Parkland Institute in a blog: “Bill 2 grinds wages, complicates payroll, and impedes union drives” .  On May 28, Bill 3: the Job Creation Tax Cut (Alberta Corporate Tax Amendment) Act  was introduced, promising to  lower the corporate tax rate from 12% to 8% over the next 4 years. The Alberta Union of Provincial Employees calls the tax cuts “corporate welfare” in Bill 3 Is UCP’s Second Gift In As Many Days To Wealthy Corporations.  And on May 29, Bill 4, The Red Tape Reduction Act was introduced.

None of these Bills have been passed or enacted as of May 30, although Premier Kenney announced that Albertans were “liberated” from the carbon tax as of May 30,  according to a CBC report , and retailers were forbidden from collecting it.

Saskatchewan Court of Appeal rules for federal carbon tax program

With implications across the country, the Saskatchewan Court of Appeal handed down a 3-2 decision  on May 3, ruling that the federal Greenhouse Gas Pollution Pricing Act (GGPPA) falls within federal government’s “National Concern” constitutional power. The Saskatchewan Association for Environmental Law has compiled all the legal submission documents here ; the EcoFiscal Commission provides a summary of the 155-page Decision here  .

Local coverage and reaction appeared in the Regina Leader Post (May 3) in “Court of Appeal: Saskatchewan government loses carbon tax challenge , and the Premier of Saskatchewan immediately declared that the province will appeal to the Supreme Court of Canada, which it must do within 30 days.  As the Globe and Mail points out,  “Saskatchewan court rules federal carbon tax constitutional in first of several legal challenges” .  According to a CBC report, the Premier of New Brunswick  is still considering his options, but newly-elected Premier Jason Kenny of Alberta will join the Saskatchewan Supreme Court action. The Premier of Manitoba announced that his government will not abandon its own court challenge, which it launched on April 3. In Ontario, the Ford government is aggressively promoting its own battle over the carbon tax: four days of hearings ended on April 18th, and the Ontario Court of Appeal is expected to render its own decision on the constitutionality of the carbon tax in several months – possibly not until after the federal election in October 2019.

The political significance of the Saskatchewan decision:  Aaron Wherry at CBC  summarizes the general situation in  “The carbon tax survived Saskatchewan. That was the easy part”  (May 4).  The Globe and Mail states what is a widely accepted opinion in its editorial,  “Why conservatives secretly love the carbon tax”: “Round One goes to Ottawa. But the courtroom war against the federal carbon tax continues – waged by a fraternity of conservative provincial governments with more of an eye on immediate political returns than ultimate legal outcomes.”

Update:  Three law professors- Jason MacLean (University of Saskatchewan), Nathalie Chalifour ( University of Ottawa) and Sharon Mascher (University of Calgary)  published a reaction to the Saskatchewan Court’s decision on May 7 in The Conversation“Work on Climate not weaponizing the constitution”   takes issue with some of the finer legal points of the decision, but welcomes the Court’s recognition of the urgency and scale  of the climate emergency, and concludes: “We have to stop weaponizing the Constitution and start working together, across party lines at all levels of government, on urgent and ambitious climate action.”

Job shifting effects of carbon pricing policy, with a focus on the Canadian construction industry

Construction and Carbon: The Impact of Climate Policy on Building in Canada in 2025  is a report released on May 1 by the Smart Prosperity Institute, with a title that doesn’t reflect the full range of the study.  The report actually models the effect of carbon pricing on GDP and employment in six sectors, although construction is the focal point since the research was financed by the Canadian Building Trades Unions.  Author Mike Moffatt uses the general equilibrium model gTech  to project two scenarios for the medium term (2025) :  a “business as usual” case (which assumes federal and provincial carbon policies as they existed in 2018) and an “aggressive” case, which assumes carbon prices increasing over time so that Canada would achieve its  Paris Agreement commitment to reduce  greenhouse gas emissions  by 30% by 2030.

Smart Prosperity emphasizes that “the construction sector is one of the ‘winners’ of carbon pricing, as escalating carbon prices unleash a wave of business and household investment.”  Specifically, raising the stringency of carbon prices (the aggressive scenario) shows that the total number of jobs in Canada would  increase by an 39,500 – 19,000 of which would be in construction, and 55,000 of which would be in services. These gains are offset by job losses in the other sectors: utilities, resources, manufacturing, and transportation. smart prosperity map re construction reportProjections are broken down by province: showing that for construction jobs, Saskatchewan would see the greatest growth, followed by Quebec, Ontario, New Brunswick, Alberta, and British Columbia.

The report also provides forecasts for: Investment by sector; Impact of Higher Carbon Policies on Business Investment by Type (e.g. renewable energy, CCS, public transit); and  Impact of Higher Carbon Policies on Household Investment by Type (building efficiency, low-carbon vehicles).

The differentiated effect of carbon taxes by sector is a theme explored in an earlier Smart Prosperity working paper  Do Carbon Taxes Kill Jobs? Firm-Level Evidence from British Columbia , released in March 2019 as part of the Clean Economy Working Paper series.  The Smart Prosperity Institute is based at  the University of Ottawa.

Alberta elects United Conservative Party, promising a new climate policy, and to fight for the oil and gas industry

jason kenneyCitizens of the province of Alberta woke up to a new government on April 17th, with the election of the United Conservative Party (UCP), led by Jason Kenney.  After what Macleans magazine called  The most visceral Alberta election campaign in memory and CBC called “toxic” and “divisive” , the UCP election platform , Alberta Strong and Free  will begin to unfold, based on the promise to “ fight without relent to build pipelines. We will stand up for Alberta and demand a fair deal in Canada. We will fight back against the foreign funded special interests who are trying to landlock our energy.”  Ontarians will recognize much of the same rhetoric as that of  the Doug Ford Conservative government, including  cancellation of the “job-killing carbon tax”;  an “open for business” approach  to “cut red tape”, including worker protection; and creating jobs – in Alberta’s case, oil and gas jobs.

The CBC analysis of the election outlines further implications for the rest of Canada in  ” Jason Kenney won big — and the Ottawa-Alberta relationship is about to get unruly” , which highlights Kenney’s  combative style, his antipathy to the current Liberal government of Justin Trudeau,  and his close connections with the federal Conservative party (having served in Stephen Harper’s government).  The National Observer, on the morning after, sums up what to expect: “Jason Kenney’s United Conservatives issue warning to Suzuki Foundation after winning Alberta majority” , which also touches on what progressives can expect:  ”… the premier-designate delivered a warning to environmentalists, accusing them of being funded by foreign interests who are trying to shut down the Alberta oil and gas industry. He pledged to launch a public inquiry into their activities, singling out several charitable organizations including the David Suzuki Foundation  and the Tides Foundation …”

From Alberta: Calgary Herald election coverage  is triumphant, including Columnist Chris Varcoe with “Expectations are high as Kenney gives voice to Alberta’s angst“; Lucia Corbella with  “Kenney the Ironman performs miracle on the Prairies”In“Jason Kenney’s united right wins big, dashing NDP dreams of a Rachel Notley repeat“, David Staples from the Edmonton Journal acknowledges that growing the oil industry  is “a difficult, complex, multi-dimensional battle” but  “when it comes to oil and gas policy Alberta hasn’t been this united in a generation.”  The majority of his Opinion piece discusses “the malignant force that helped to divide us, the “Tar Sands campaign” which saw tens of millions in funding coming from U.S. foundations dedicated to demonizing the oilsands and landlocking Alberta oil.” He calls on the NDP to support the UCP plan for a public inquiry into “foreign interference” and  states that the NDP, the federal Liberals, and groups such as the Pembina Institute and Greenpeace are tarnished by association with that “Tar Sands Campaign”.

Union voices were strong in the Alberta Election:  The  Alberta Federation of Labour (AFL) was extremely active in support of the NDP, with a “Next Alberta” campaign built around the AFL  12 Point Plan.  With a very pragmatic orientation, the Plan makes no mention of “Just Transition” or coal phase-out, and emissions reduction is proposed in these terms:  “Reduce carbon emissions, as much as possible, from each barrel of oil produced in Alberta so, we can continue to access markets with increasingly stringent emission standards. ..Our goal should be to make sure that Alberta is last heavy oil producer standing in an increasingly carbon constrained world.”  The AFL also commissioned a report by Hugh Mackenzie: The Employment Impact of Election Promises: Analysis of budgetary scenarios of UCP and NDP platforms , which concluded:  “Under the Notley budget plan, 5500 jobs would be lost. Under the Kenny budget plan between 58,000-85,000 jobs would be lost – more than were lost in the recession of 2015-16.” President of the AFL, Gil McGowan, discussed the report in an Opinion Piece,  “How NOT to fix Alberta’s hurting jobs economy in The Tyee.

Unifor, the union which represents thousands of workers at oil producers Suncor, Imperial, Husky and Shell, also mounted  an active Unifor Votes campaign which acknowledges that “in oil and gas, our biggest customer has become our biggest competitor”.  Unifor calls for policies for  “Next Generation Energy Jobs” to invest in new pipeline infrastructure ;  diversify and upgrade in the oil and gas sector and ” Use our resource wealth as a springboard to the future.”

Stepping back, here are some of the  articles which appeared during the election campaign, and which summarize the environmental and economic issues:  “Eleven Ignored Issues that Albertans Should Think about Before They Vote” (April 12), by  Andrew Nikoforuk, outlining :  the risks of global oil price volatility; the need for economic diversification; the growing fiscal pressure on oil-producing states; the cost of climate change; the need to promote a leaner and more local economy as opposed to the boom-and-bust one; Alberta’s failure to collect its fair share of profits from bitumen production; and, hanging over them all, the risk of economic collapse.”  In  “Analysis: Alberta Misses Out On Grown-Up Conversation About Fossil Transition” ,  Mitchell Beer of The Energy Mix compiles the statements from Nikoforuk, as well as economists Mark Jaccard, Vaclav Smil,  and columnist Gary Mason, concluding with: “ Smart, resourceful, and tech-enabled a place as it is, “too many in Alberta want to believe that a new pipeline will fix all that ails the province,” Mason writes . “That’s a fantasy, one that even the political leaders running to govern the province understand (but won’t admit publicly).” And several blogs from the Parkland Institute examine the implications for workers, including “UCP Platform will drive down wages”  .

Generational justice and climate change: we can all strike for our future

The constitutional challenge by the government of  Saskatchewan to the Canadian government’s Greenhouse Gas Pollution Pricing Act of 2018  is underway – hearings were held in February and a decision is pending, with a similar challenge by Ontario to be heard in April. The main purpose of the court challenges is to nullify the federal government’s national carbon tax program , the signature issue of the Pan-Canadian Framework on Clean Growth and Climate Change.  But the case has also given youth activists an opportunity to address the intergenerational justice of Canada’s climate change policies, as described in “Canada obliged to protect future generations from climate change, test case on carbon tax hears”   (Feb. 20)  in The Narwhal.

The preamble of the Greenhouse Gas Pollution Pricing Act of 2018  states: “…Parliament recognizes it is the responsibility of the present generation to minimize impacts of climate change on future generations.”   This gave the Intergenerational Climate Coalition, led by  Generation Squeeze ,  a platform, as recognized intervenors, to argue that: “Failure to price pollution discriminates against younger Canadians, because it puts in jeopardy our reasonable aspiration to thrive in 2030 and beyond” and “the health threats to children and future generations are vastly disproportionate to their contribution to greenhouse gas emissions”. A press release in December 2018 describes the coalition and summarizes their arguments – mostly based on health consequences of climate change.

This issue of intergenerational  justice was also addressed by Hadrian Mertins-Kirkwood in “The all too ugly truth: Climate change is generational genocide” , published  in Behind the Numbers in February.  Echoing the strong and direct tone we have come to expect from Greta Thunberg,  Mertins-Kirkwood states: “For the generations poised to inherit our warming world, the complacency and greed of their predecessors is no longer being tolerated. From Autumn Peltier’s presentation to the United Nations to the climate strikes organized by school children across Europe to the Quebec youth suing the government for failing to protect the environment, young people are refusing to sit by while this existential crisis deepens.”  He continues: “The perpetrators of the climate change genocide include the fossil fuel industry and climate-denying politicians, of course, but also the silent majority of fossil fuel consumers who actively ignore the mounting scientific evidence or otherwise take no responsibility for the path we are on. It is this generation’s campaign of destruction that is being inflicted upon all other and future generations.”

Youth are asking for help:  The main point of Mertins-Kirkwood’s article is to urge us all to act:  First, by recognizing and acknowledging how we have contributed to the problem; Second, by making climate change “a central concern for everyone in your life” ; and third, by supporting  those fighting for a better future, through donations, but also by amplifying youth voices “online and beyond”.  Greta Thunberg has also stated:  “If you think that we should be in school instead, then we suggest that you take our place in the streets, striking from your work. Or, better yet, join us, so we can speed up the process.”

How to respond? “Intergenerational” organizations exist to support the actions of youth activists:  for example, in Canada, Canadian Parents for Climate Action, and  For our Grandchildren Canada ; in Australia, Australian Parents for Climate Action and  1 Million Women .   Fridays for Future Canada   is coordinating the school strikes, but there are many more  youth-led activist groups, many of whom are asking for support and donations.   Some Canadian examples:  Canadian Youth Climate Coalition ; ENvironment JEUnesse  (Quebec group for under-35’s suing the government) ; PowerShift Young and Rising  ; Youth Climate Lab ; The 3% Project .

Youth in at least 22 communities in Canada are participating in the Global Fridays for the Future climate Strike on March 15.  As George Monbiot wrote in Resilience,  “Young climate strikes can win their fight. We must all help”.

fridays for future strikes

An excellent example:  At their most recent climate strike, elementary school students in Sudbury were presented with a letter  of support from the faculty members of Laurentian University.

Public opinion polls: on carbon tax, pipelines, and a growing fear of climate change around the world

On February 8, Clean Energy Canada released results from an online survey of 2,500 Canadian adults, conducted by Abacus Data. Across Canada, 35% support a federal carbon tax, 37% say they are open to considering it, and 28% oppose it  – with the highest opposition from Alberta (41%). When told that revenues would be rebated to households (the ford and carbon tax infographicCarbon Incentive Plan),  support climbed by 9 points – and even more in Alberta. Asked if they agreed with  Ontario Premier Doug Ford’s statement that a carbon tax will bring a recession, 64% of Canadians  and 63% of Ontarians disagreed – and when asked a follow-up question asserting that many economists disagree with Premier Ford, 74% of Canadians and 73% of Ontarians stated they would trust the economists over the Premier.

The Angus Reid Institute  has tracked opinion about a carbon tax in Canada since April 2015, and are due to release new survey results in winter 2019 . Their online survey conducted in October 2018 (just after the announcement of the federal Carbon Incentive plan), showed that support for a carbon tax had increased nationally  from 43% in July 2018 to 54% in October.  The leading cause of opposition to the carbon plan is the sense that it is a “tax grab”, followed by the opinion that it will not help reduce emissions. Also notably, “six-in-ten Canadians say they do not trust information about climate change from their provincial government – with  only 24% of Manitobans  trusting their government.  Who do Canadians trust on this issue?  78% trust university scientists; 56% trust “international organizations doing work in this field”.

Angus ReidI can help cc

From Angus Reid Institute, “Duelling realities” poll

Other recent Angus Reid analysis of Canadians’ overall attitudes on climate change was released on November 30 in “Dueling realities? Age, political ideology divide Canadians over cause & threat of climate change”.   Only 9% of Canadians do NOT perceive climate change as a threat, with 55% of 18 to 34-year-olds  said they believe climate change to be a very serious threat.  Yet  a survey  released in January 2019, “Six-in-ten Canadians say lack of new pipeline capacity represents a crisis in this country” details the polarized opinions about oil pipelines, showing that 53% of Canadians surveyed support both the Energy East and TransMountain pipeline projects, and  six-in-ten say the lack of new pipeline capacity constitutes a “crisis”. Opinions are divided by region, ranging from 87% in Alberta and 74% in Saskatchewan seeing a crisis, versus 40% in Quebec.

Opinion in the United States:  Results from the December 2018 national survey, Climate Change in the American Mind ,  reveal that 46% of Americans polled have personally experienced the effects of global warming, and a majority are worried about harm from extreme events in their local area –  including extreme heat (61%), flooding (61%), droughts (58%), and/or water shortages (51%).  This longstanding survey (since 2013) is conducted by the Yale Program on Climate Change Communication and the George Mason University Center for Climate Change Communication. It also updates the results in the series, “Global Warming’s Six Americas” , which categorizes attitudes from  “Alarmed”, to “Concerned”, all the way to “Doubtful” and “Dismissive” –  showing that in December 2018, the “Alarmed” segment is at an all-time high of 29% , while the “Dismissive” and “Doubtful” responses have declined to only 9%.  The full report   also includes responses concerning emotional responses to global warming, perceived risks, and personal and  social engagement – which includes such questions as “How much of an effort do your family and friends make to reduce global warming?”

Australian women are re-considering having children:  A survey released in February by the Australian Conservation Foundation and the  1 Million Women organization reports on climate change attitudes of Australian women, in the lead-up to the country’s federal election in 2019.  Of the 6514 Australian women who responded to the survey between September – October 2018, nearly 90% are extremely concerned about climate change.  Again, concern is highest in the under-30 bracket, where  one in three are so worried about what global warming that they are reconsidering having children.  A four page summary of survey results is here 

Finally, international attitudes are reflected in a survey published in February by Pew Research Center:  “Climate Change Still Seen as the Top Global Threat, but Cyberattacks a Rising Concern”.   This top-level survey of 26 countries shows that climate change was perceived as the most important threat in 13 countries:  including Canada,   Germany, Greece, Hungary, Spain, Sweden, U.K., Australia, South Korea, Kenya, Argentina, Brazil, and Mexico.  In the U.S., the top threat was seen to be cyberattacks from other countries (74%), followed by attacks from ISIS (62%). Global climate change was the third-ranked threat at 59% .

ILO report: “It is not action against climate change and environmental degradation that will destroy jobs, it is inaction that will destroy jobs”

ilo2019workforabrighterfutureTo mark its centenary in 2019, the International Labour Organization (ILO) commissioned a Global Commission on the Future of Work in 2015. On January 22, the Centenary was launched with the release of the Commission’s report : Work for a Brighter Future , an aspirational document with  recommendations for government policies to address the “ unprecedented transformational change in the world of work.”   The ten recommendations in the report call for a universal labour guarantee that protects fundamental workers’ rights, an adequate living wage, limits on hours of work and safe and healthy workplaces, a universal entitlement to lifelong learning , managing technological change to boost decent work, and greater investments in the care economy, green economy, and rural economy. The Executive Summary is here ; the full 66-page Report is here  .

Work for a Brighter Future is a broad and visionary document, but its arguments and proposals are supported by a series of more detailed research papers, including The Future of work in a Changing Natural Environment: Climate change, degradation and sustainability (August 2018) . The Research Paper argues that “… on the one hand, environmental degradation destroys work opportunities and worsens working conditions. On the other hand, any efforts to achieve sustainability will entail a structural transformation. Crucially, this transformation can result in more and better jobs.”

The paper calls for a new development model that acknowledges that the economy, including the world of work, is a subsystem of the global ecosystem, and cannot expand beyond the confines of ecological limits. It concludes: “….For developing economies, it means adopting a development strategy based on sustainable principles in energy, transport, construction, resource-intensive manufacturing, agriculture, forestry, fisheries and waste management. For developed economies, it means restructuring these industries so they become sustainable … In advanced economies, it means, potentially, embracing zero growth… For both developed and developing economies, it means developing a service sector that is decoupled from material extraction or carbon emissions in addition to progress towards resource efficiency and low carbon intensity….….At a global level, if a tax on CO2 emissions were imposed and the resulting revenues were used to cut labour taxes, then up to 14 million net new jobs could be created.”

ILO Director-General Guy Ryder summed up some of these themes in his address to the Ministerial Conference of the Partnership for Action on Green Economy (PAGE), held on January 10 – 11 2019 in South Africa. He stated:  “It is not action against climate change and environmental degradation that will destroy jobs, it is inaction that will destroy jobs. …Economic activity and jobs depend on ecosystem services and a safeguarding of the natural environment. Around 1.2 billion jobs, or 40 per cent of world employment in 2014, were in industries that depend heavily on natural processes.… ultimately, environmental degradation will compromise livelihoods and magnify inequality. We must work around these highly interconnected challenges to devise workable solutions in specific country contexts. “

Climate change and health: a new call to action for doctors

Two new articles appeared in the January issue of the New England Journal of Medicine, recognizing the health impacts of climate change and the gap in environmental justice. Most frequently cited, sometimes with alarmist headlines, is  “The Imperative for Climate Action to Protect Health” (Jan. 17)  (registration required). The authors state that the World Health Organization may have underestimated the health effects of climate cop24_health_climate_change_reportchange when it predicted in a 2018 report that climate change will kill 250,000 people per year between 2030 and 2050.  The NEJM authors Haines and Ebi state: “We think the impact is more difficult to quantify because there is also population displacement and a range of additional factors like food production and crop yields, and the increase in heat that will limit labour productivity from farmers in tropical regions that wasn’t taken into account, among other factors. ”  They point to the need for investment and policies to promote adaptation to reduce health risks.

The other article in January’s New England Journal of Medicine is an overview of the issue and a more direct call to action for doctors.  ” Climate Change: A health emergency ”   by Drs. Caren G. Solomon and Regina C. LaRocque states:    “Disruption of our climate system, once a theoretical concern, is now occurring in plain view — with a growing human toll brought by powerful storms, flooding, droughts, wildfires, and rising numbers of insect borne diseases. Psychological stress, political instability, forced migration, and conflict are other unsettling consequences. In addition, particulate air pollutants released by burning fossil fuels are shortening human life in many regions of the world. These effects of climate disruption are fundamentally health issues, and they pose existential risks to all of us. People who are sick or poor will suffer the most….As physicians, we have a special responsibility to safeguard health and alleviate suffering. Working to rapidly curtail greenhouse gas emissions is now essential to our healing mission….  The authors’ call to action includes: “working with medical students on climate action, supporting the undergraduate divestment movement, joining forces with like-minded health professionals, and speaking with our legislators. “

In Canada, the Canadian Association for Physicians and the Environment (CAPE)   is leading the way on such education and advocacy – a compilation of their press releases  reveals the broad range of their actions. Most recently, on January 15, CAPE announced  that the Ontario Court of Appeal has granted intervenor status to the Intergenerational Climate Coalition, of which  CAPE is a member, to defend the constitutionality of the federal pricing of climate emissions, challenged by the Ontario provincial government in a case to be heard in April 2019.  Other members of the Intergenerational Climate Coalition are Generation Squeeze,  Saskatchewan Public Health Association, the Public Health Association of BC, the Canadian Coalition for the Rights of Children , and the Youth Climate Lab.  The same group announced in December 2018  that it has intervenor status in the Saskatchewan government’s challenge to the federal carbon tax plan.

UPDATE: 

A February 5 press release states: “Together, representatives from the Canadian Association of Physicians for the Environment (CAPE) , the Canadian Medical Association (CMA)  , the Canadian Nurses Association (CNA), the Canadian Public Health Association (CPHA) and the Urban Public Health Network (UPHN) are calling for action: asking federal parties to recognize that climate change is the greatest public health challenge of the 21st century, and to make climate solutions a priority in the 2019 federal election.”

Dr. Gigi Osler, President of the Canadian Medical Association (CMA) is quoted  : “Climate change is no longer some abstract idea that may harm future generations or people on the other side of the globe; it’s a reality that’s already harming the physical and mental health of Canadians. We cannot afford to treat climate change as a wedge issue. We must treat it as the public health crisis that it is.”

Economists weigh in on deceptive carbon pricing messages

Economist Brenda Frank contributes to the ongoing battle of ideas about carbon pricing in Canada with his  January 9 blog : “Carbon pricing works even when emissions are rising”. Frank begins:  “An old, debunked argument against carbon taxes has flared up recently: If total emissions aren’t falling, the tax must not be working. Let’s quash that myth.”  Continuing the arguments he published in a 2017 blog, “The curious case of counterfactuals”, his central question is, “if emissions are still rising, how fast would they have been rising without a carbon price?”  He cites recent studies, such as “The Impact of British Columbia’s Carbon Tax on Residential Natural Gas Consumption” (in  Energy Economics, Dec. 2018), as well as  the extensive carbon pricing reports produced by the Ecofiscal Commission, most recently Clearing the Air: How carbon pricing helps Canada fight climate change (April 2018).  The  conclusion: carbon pricing is more “complicated than something you can fit in a tweet”, and  complex analysis demonstrates that it does work.

Marc Hafstead , U.S. economist and Director of the Carbon Pricing Initiative pursues a similar theme in  “Buyer Beware: An Analysis of the Latest Flawed Carbon Tax Report” ( November 28).   Hafstead contends that “some papers can introduce confusion and misinformation”, and demonstrates how this is done in  The Carbon Tax: Analysis of Six Potential Scenarios , a study commissioned by the Institute for Energy Research and conducted by Capital Alpha Partners.  Hafstead critiques the modelling assumptions and concludes they are flawed ; he also charges that the paper fails to explain its differences from the prevailing academic literature.

Even without Hafstead’s economic skills, one might be wary of the U.S. paper after a check of the DeSmog’s  Global Warming Disinformation Database , which provides mind-blowing detail about the financial and personnel connections between the Institute for Energy Research and  Koch Industries . DeSmog maintains records on organizations and individuals engaged in “climate change disinformation” in the U.S. and the United Kingdom.

Newfoundland and Labrador announces its “lax tax” on carbon

offshore oil rigA “ Made-in-Newfoundland and Labrador Approach to Carbon Pricing” was announced and  described in a press release on October 23 , with a carbon tax rate of $20 tonne starting on January 1, 2019.  The details are many, as published here . Exemptions are granted for consumers (e.g. for home heating fuel) , and for industry – specifically “for agriculture, fishing, forestry, offshore and mineral exploration, and methane gases from venting and fugitive emissions in the oil and gas sector.”  These exemptions make sense in light of the province’s Oil and Gas  growth strategy announced in February 2018,  Advance 2030 , which aims for 100 new exploration wells to be drilled by 2030.

Despite the weakness of the provincial plan, it has been accepted by the federal government – thus, Newfoundland will avoid the stricter regime which would have been imposed by the federal backstop plan in 2019.  For a brief overview: “Why the lax tax? Finance minister says Muskrat burden played role in carbon pricing” (CBC) . In depth analysis appears in  “Newfoundland’s carbon tax gives ‘free pass’ to offshore oil industry” in The Narwhal.   (Nov. 9)

Updating the political battle of carbon pricing in Canada

Justin TrudeauOn October 23,  Prime Minister Justin Trudeau announced that the federal government will hold its resolve to impose a carbon pricing policy across all Canadian jurisdictions in 2019 – see the press release, “Government of Canada Putting a price on pollution”   (Oct. 23).  Key to the plan: the Climate Action Incentive, whereby all carbon revenue will go directly back to people in the provinces from which it was generated.  David Roberts of Vox hits the nail on the head with  “Canadian Prime Minister Justin Trudeau is betting his reelection on a carbon tax” (Oct. 24) , stating,  “It’s a thoughtful plan, remarkably simple, transparent, and economically sound for something cooked up in a politically fraught context. If it’s put into place (and stays in place), it would vault Canada to the head of the international pack on climate policy.”

Reaction from the Canadian mainstream media: From the Globe and Mail, an Editorial:  “For the Liberals, a spoonful of sugar helps the carbon tax go down” ;  “Arguments against the carbon tax boil down to a desire to do nothing” (Oct. 24)   by Campbell Clark ; “Carbon tax vs. climate change will be an epic contest” by John Ibbitson  and “Trudeau’s carbon tax rebate is smart – but complicated”  by Chris Ragan of the Ecofiscal Commission . From Andrew Coyne in the National Post: “Liberals’ carbon tax plan has its faults — but who has a better option?”  and from Chris Hall of the CBC, “How the Liberals hope to escape the ‘Green Shift’ curse in 2019”  (Oct.23)  .

The National Observer provides some detail to the complex calculations of the backstop rebates of the Climate Action Incentive, but the detail is at the government’s webpage, Pricing Pollution: How it will work  which provides links to individual explainers for each province and territory.

Other Responses: Rabble.ca Elizabeth May of the Green Party of Canada ;  Canadians for Clean Prosperity ;  and the Smart Prosperity Institute , which also provides a compilation of reaction and reports .

There seems to be general agreement that it is politics, not economics, which will determine support for the carbon plan.  Ontario Premier Doug Ford has been making the rounds with other Conservative politicians in Canada to coordinate their messaging and opposition to the federal carbon tax – culminating in the introduction of Bill No. 132—The Management and Reduction of Greenhouse Gases Amendment Act , 2018 in Saskatchewan on October 30, and on October 31, passage of Ontario’s Bill 4, The Cap and Trade Cancellation Act.  The National Observer describes the events of October 31 and summarizes the recent  political dance in “Doug Ford and Andrew Scheer play fast and loose with facts about carbon tax”  . Other press coverage: from the CBC:   “‘The worst tax ever’: Doug Ford and Jason Kenney hold campaign-style rally against carbon levy”  on Oct. 5 ;   “Doug Ford attacks ‘terrible tax’ on carbon alongside Saskatchewan Premier Scott Moe” on Oct. 29; and  “Doug Ford meets Andrew Scheer as carbon tax war heats up”  on October 30, describing their meeting in Toronto.  The gist of their arguments:  the carbon tax is a money-grab which will “drive up the price of heating your home”, with Doug Ford stating “It’s just another Trudeau Liberal tax grab. It’s a job-killing, family-hurting tax. ”  After the rebate details were announced on October 23, Ford has added that the promised rebates are “a complete scam”, “trying to buy Canadians with their own money.”   But as iPolitics reported on October 26, “Ford gets his facts wrong while bashing federal carbon tax”  and  “Ford doubles down on falsehoods about federal carbon tax”  .  iPolitics cites the independent analysis of the carbon tax’s impact by  Ontario’s Financial Accountability Officer, Ontario financial office cap and tradewhich supports the federal government’s numbers, and differs from Premier Ford’s public statements.  Meanwhile, the Ontario government promises to release their climate plan in November,  according to the Toronto Star   (Oct. 29), and Andrew Scheer also promises a climate plan “in 183 days”.

Research and opinion support a carbon tax for Canada

Carbon taxes continue to be a hot topic in Canada for many reasons, including the October Intergovernmental Panel on Climate Change report , the Nobel Prize in Economics  to William Nordhaus, and the report from Ontario’s Financial Accountability Officer on October 16, which estimates that the cancelling the province’s cap and trade program will drive the provincial deficit up by $3 billion, ($841 million in the first fiscal year alone).  And as provinces rebel against the federal carbon pricing plans, the January 1 2019 deadline approaches, by which the federal government will impose its “backstop” carbon pricing on any province without it own equivalent carbon pricing regime in place.

In response to these developments, there are many responses.  Recent articles emphasize William Nordhaus’ work: for example, “Nordhaus Nobel Recognizes What We’ve Long Known: Carbon pricing works” by Scott Vaughan at the IISD ;  “Nobel award recognizes how economic forces can fight climate change” in The Conversation Canada (Oct. 9); “Hurricanes, hog manure and the dire need for carbon pricing” in The Conversation Canada (Oct. 14);  and “Opinion: To avoid catastrophic climate change we need carbon pricing” from the Ecofiscal Commission , one of Canada’s strongest proponents of carbon pricing.  From the horse’s mouth: “After Nobel in Economics, William Nordhaus Talks About Who’s Getting His Pollution-Tax Ideas Right”  (New York Times, Oct. 13),  in which William Nordhaus is interviewed by Coral Davenport and states:  “…. I think the model is British Columbia. .. It would have the right economic effects but politically not be so toxic. … British Columbia is not only well designed but has been politically successful.”

CARBON DIVIDENDS:  The issue of political acceptability of carbon taxes generated an academic discussion  in “Overcoming public resistance to carbon taxes” by Carattini  , Carvalho and  Fankhauser  in  WiRES Climate Change  in June 2018.  In Canada, a change in vocabulary in taking hold. “Carbon Dividends could save carbon pricing – and create a new national climate consensus”  say Mark Cameron (from Canadians for Clean Prosperity) and David McLaughlin (from the International Institute of Sustainable Development) in the Globe and Mail .   The commissioned studies released by   Canadians for Clean Prosperity in September showed  that most  households, regardless of income level, would receive more money in the form of carbon dividend cheques than they would pay in carbon taxes under the backstop plan.  They have produced estimates for Alberta, Manitoba, Saskatchewan, Ontario, and New Brunswick, and maintain an online petition at a website called  Canadians for Carbon Dividends  .

rocky road tableIn  “The Rocky Road to Canada-wide Carbon Pricing,”  released by the C.D. Howe Institute on October 17,  author Tracy Snoddon from Wilfred Laurier University offers recommendations on how the revenues should be distributed after January 1, 2019, when the minimum carbon price backstop comes into force.  The author estimates carbon revenues of $ 2.8 billion in 2019 if the backstop was implemented in Ontario, Saskatchewan, New Brunswick, Newfoundland and Prince Edward Island. She recommends that the federal government should impose the backstop price and return the revenues as an equal per-capita rebate to residents- with the justification that such an approach minimizes intrusion in provincial fiscal matters, reinforces the environmental goals  rather than revenue generation, and is most progressive in its  distributional impacts.  A summary appears in the C.D. Howe press release  and in  “C.D. Howe Institute throws its weight behind federal carbon tax” in the Globe and Mail (Oct. 19).

put a price on itFinally, a new organization launched in October. Put A Price On It Canada promotes carbon pricing as a solution to climate change – and asks “why does Canada need another group fighting for carbon pricing?”  The difference: it aspires to be a national network to empower students on university campuses – currently at Simon Fraser University, the University of Ottawa, University of Waterloo, and Carleton University.

So in response to the  National Observer Opinion piece on October 18, asking  “Is it time to torch the carbon tax debate?” , the answer seems to be a strong “no”.

Manitoba cancels its carbon tax, joining Ontario and Saskatchewan in opposition

On October 3, Manitoba’s Premier joined the Premiers of Ontario and Saskatchewan in opposing carbon taxes.  In  ” ‘We say no’: Manitoba defies Ottawa by killing its carbon tax plan” , the CBC reports that the government will introduce amending legislation in the week of October 8;  Its previous legislation, The Climate and Green Plan Implementation Act  (March 2018)  had set a carbon price of $25 per ton, and followed the Made-in-Manitoba Green Plan  submitted to fulfill the federal Pan-Canadian Framework on Clean Growth and Climate Change agreement .  “The Drilldown: Carbon tax clash intensifies as Manitoba joins resistance”   in iPolitics  explains the Premier’s reasons;  “Feds on track to impose carbon price on growing number of provinces on Jan. 1“, also from iPolitics, gives more detail.

Against the evidence for its efficiency, Ontario’s Cap and Trade program axed

Doug Ford clappingIn Ontario, newly-elected Premier Doug Ford quickly fulfilled a central campaign promise, as the Province revoked the cap-and-trade  regulations and prohibited all trading of emission allowances, officially announced on July 3, 2018.   A further July 25  press release  announced the introduction of Bill 4, The Cap and Trade Cancellation Act, 2018  and claimed that “The average Ontario family will receive $260 in annual savings thanks to the elimination of the cap-and-trade carbon tax.”  All programs currently funded through the cap-and-trade revenues have been cancelled, including the immediate wind-down of the Green Ontario Fund, which funded many energy efficiency incentive programs.  The Cap and Trade Cancellation Act repeals the Climate Change Mitigation and Low-carbon Economy Act, 2016  of the previous Wynne government “and provides for various matters related to the wind down of the Cap and Trade Program.”

Earlier, on July 13, the province had announced  the cancellation of 758 renewable energy projects, calling them “unnecessary and wasteful” – one notable example, the almost-completed White Pines wind project in Prince Edward County.  And on August 2, in addition to the previously announced court challenge  to the federal government’s carbon pricing requirements under the Pan Canadian Framework,  Ontario’s  Attorney General announced a second court challenge  – this time in  the Ontario Court of Appeal.  “Doug Ford’s Ontario pursues ‘doomed’ plan to stop Trudeau government’s efforts to fight climate change”   in the National Observer (August 2) summarizes the development from a political viewpoint, and the Globe and Mail’s editorial is titled: “Caroline Mulroney’s carbon-tax court challenge is a partisan waste of money

Reactions :

Ford government Attempts to minimize Ontario taxpayer losses after abandoning carbon markets”   (July 25) in the National Observer;

“Ontario’s fiscal watchdog to probe cancellation of cap and trade,at Horwath’s request”   in the Globe and Mail (July 24);

From Professor Mark Winfield, York University:  “Doug Ford’s energy shake-up could cost Ontario”  in The Conversation (July 25)   ;

Clean power advocates disappointed but defiant in the face of Ford’s sweeping cuts” from the National Observer (July 17)

Solar companies may exit Ontario for Alberta after Doug Ford kills rebate program”  from CBC News (June 21) ;

Scrapping of cap and trade revenues a big loss for Ontario tenants badly in need of apartment retrofits”   from ACORN Canada;

  “From Cap-and-Trade to White Pines: What Lies Ahead In Ontario’s Energy Sector” from Toronto law firm Gowlings .

Before his election but based on the platform statements,  Unifor said in June  : “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.”

Was there a problem with Ontario’s cap and trade system?  The April 2018 WCR article “New evidence supports benefits of cap and trade policies”  summarized several favourable studies, including  A Progress Report on Ontario’s Cap-and-Trade Program and Climate Change Action Plan: Year One ,  published by the Clean Economy Alliance –   which concluded that, in the first year of cap-and-trade employment had grown at the same time that Ontario economy grew to a 7-year high.  Environmental Defense published “Carbon pricing has no downside: why are we still arguing about it?” , which summarized the Clean Economy Alliance report, as well as No Bad Option: Comparing the Economic Impact of Ontario Carbon Pricing Scenarios  by Hadrian Mertins-Kirkwood, published in April 2018 by CCPA in partnership with the Clean Economy Alliance.

More recently, Dale Beugin, Don Drummond, Glen Hodgson and Mel Cappe asked “If not carbon pricing in Ontario – which works well – then what, Mr. Ford?”   in a blog published by the Ecofiscal Commission.   The purpose of the brief summary is to “correct the record on some of the myths and misunderstandings surrounding carbon pricing. The economic evidence clearly contradicts some of the recent rhetoric coming from Ontario.”  Earlier Ecofiscal opinion appeared in “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?”  .

In the U.S.,  economist Marc Hafstead  recently published “Carbon taxes and employment: Rhetoric vs research” in the Summer Issue of Resources, the online newsletter of Resources for the Future (RFF) , stating  “Opponents of policies to price carbon will likely continue with the “job-killing” rhetoric, but careful economic analysis suggests that these arguments are seriously exaggerated.”  (the brief article is based largely on his academic working paper Unemployment and Environmental Regulation in General Equilibrium: Considering a US Carbon Tax: Economic Analysis and Dialogue on Carbon Pricing Options  )  .

 

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.”

 

 

 

 

Alberta reports progress under Climate Leadership Plan, increases carbon levy

Climate Leadership Plan Progress Report 2016 – 2017 ,  released in December 2017, summarizes and measures the outcomes for the programs initiated under the Climate Leadership Plan .  The report  includes a section on Skills and Employment, providing very basic measures of  “Green Skills Demand” and “Jobs Supported”.   Green Skills Demand is measured as the percentage of job postings categorized as green, and the results show an increase from 2014 to 2016, though green job postings have not yet recovered to 2014 levels.  The  Jobs Supported section estimates include total direct, indirect and induced jobs created, calculated by Statistics Canada and using an input-output (IO) model.  It concludes that, in 2016-17, $311 million was invested back into the economy in programs and policies under the Climate Leadership Plan, which  supported approximately  2700 jobs.

Also, effective January 1, 2018, Alberta’s carbon levy increased from $20 per ton to $30 per ton.  The government press release states that 60 per cent of households are expected to receive a full or partial carbon levy rebate in 2018, ranging from approximately $300 (tax-free) for a  single adult earning up to $47,500 per year to $540 for  a couple with two children earning up to $95,000 per year .    The Pembina Institute has produced an Infographic and FAQ’s “What you need to know about Alberta’s Carbon Levy” .

The government also released a new Carbon Competitiveness Incentive Regulation (CCIR) in December 2017, designed to help trade-exposed industries.  From the  press release on December 6:  “The CCIRs are the product of extensive consultation with industry and will be phased in over three years. Companies will have further incentives to invest in innovation and technology to create jobs and reduce emissions through a $1.4-billion innovation package released earlier this week, which includes $440 million for oil sands innovation alone.”  Although the oil sands industry receives the lion’s share of the Energy Innovation Fund, described here   and here , the Fund also includes incentives for bioenergy producers, cross-sector green loan guarantees of $400 million, and funding for energy efficiency upgrades for large agricultural and manufacturing operations, institutions, commercial facilities and not-for-profit organizations.   The Pembina Institute explains the new regulations in a detailed technical report, Understanding the Pros and Cons of Alberta’s new industrial carbon pricing rules , released on December 20.

New Brunswick’s new Climate Change Act unlikely to meet the federal carbon pricing benchmark

The government of New Brunswick introduced its Climate Change Act on December 14, 2017. According to the government press release ,   the province will adopt the federal government’s intensity targets for the 10 large industrial emitters in the province,  and  will redirect existing taxes on gasoline and diesel fuel – but not heating fuel –  to a new Climate Change Fund.  It forecasts that in 2018, 2.33 cents per litre of existing gasoline taxes and 2.76 cents per litre of existing diesel fuel taxes will be transferred to the Climate Change Fund, amounting to about $37 million, to be invested in infrastructure adaptation and energy efficiency improvements for homes, business, industry and transportation.  For details, see the government Backgrounder  and see the CBC analysis “Liberals’ sleight-of-hand carbon tax formally proposed in climate bill “(Dec. 14) for summary and reaction.  In  “Legislation misses mark on protecting families and communities from worst of climate change impacts in N.B.” , the Conservation Council of New Brunswick calls the government plan “an uninspiring follow-up to last December’s climate change action plan , which was a smart road map for climate action and job creation that was among the best in the country…. we have legislation that largely maintains the status quo and sets us on a race to the bottom when it comes to protecting the health and safety of New Brunswickers and taking advantage of the economic opportunities that come with ambitious climate action.”

The National Observer summarizes the reaction from the federal government  in “New Brunswick defends climate plan against McKenna’s concerns”, quoting the Minister’s  Facebook post which reiterated the federal position that it will impose a carbon tax on any jurisdiction which falls short of federal carbon pricing benchmarks under the Pan-Canadian Framework on Clean Growth and Climate Change.  In a separate statement on December 15 , the Minister extended the deadline for provincial compliance till the end of 2018.

First year progress report on the Pan-Canadian Framework lacks any mention of Just Transition

pan-canadian framework on clean growth coverOn December 9th, the Governments of Canada and British Columbia jointly announced the first annual progress report on the implementation of the Pan-Canadian Framework on Clean Growth and Climate Change – officially titled,  the First Annual Synthesis Report on the Status of Implementation – December 2017 (English version)  and Premier rapport annuel du cadre pancanadien sur la croissance propre et les changements climatiques (French version).     The report summarizes the year’s policy developments at the federal and provincial/territorial  level – under the headings pricing carbon pollution ; complementary actions to reduce emissions;  adaptation and climate change resilience ; clean technology, innovation and jobs; reporting and oversight; and looking ahead.  It is striking that the report is up to date enough to include mention of the Saskatchewan climate change strategy, released on December 4, as well as the Powering Past Coal global alliance launched by Canada and Great Britain in November at the Bonn climate talks – yet in the section on “Looking Ahead”, there is no mention of another important outcome of the Bonn talks: a Just Transition Task Force in Canada.  As reported by the Canadian Labour Congress in “Unions applaud Canada’s commitment to a just transition for coal workers”,  “Minister McKenna also announced her government’s intention to work directly with the Canadian Labour Congress to launch a task force that will develop a national framework on Just Transition for workers affected by the coal phase-out. The work of this task force is slated to begin early in the new year.”  No  mention of that, nor in fact, any use of the term “Just Transition” anywhere in the government’s progress report.

Environment Canada touts ‘good progress’ on climate after scathing audit” appeared in the National Oberserver (Dec. 11), summarizing some of the progress report highlights and pointing out that not everyone agrees with the government’s self-assessment that “While good progress has been made to date, much work remains”. Recent criticism has come from the Commissioner of the Environment and Sustainable Development in her October report ; from Marc Lee at the Canadian Centre for Policy Analysis in “Canada is still a rogue state on climate change”  (Dec.11) ; and from the Pembina Institute in  State of the Framework: Tracking implementation of the Pan-Canadian Framework on Clean Growth and Climate Change .  The Pembina Institute report calls on the federal government to speed up on all policy fronts, with specific recommendations including: “extend the pan-Canadian carbon price up to $130 per tonne of pollution by 2030, implement Canada-wide zero emission vehicle legislation, ban the sale of internal combustion engines, and establish long-term energy efficiency targets.”

Saskatchewan’s new Climate Strategy maintains old positions: No to carbon tax, yes to Carbon Capture and Storage

Prairie Resilience: A Made-in-Saskatchewan Climate Change Strategy was released by the government of Saskatchewan on December 4,  maintaining the province’s  position outside the Pan-Canadian Framework  agreement  with this introductory statement:    “A federal carbon tax is ineffective and will impair Saskatchewan’s ability to respond to climate change.”  A summary of all the strategy commitments appears as  a “Backgrounder” from this link.  An Opinion column in the Regina Leader Post newspaper summarizes it as  a “repackaging” of past policies, and “oil over the environment”.

The provincial government defends their plan as “broader and bolder than a single policy such as a carbon tax and will achieve better and more meaningful outcomes over the long term” by encouraging innovation and investment – and yes, that Prairie spirit of independent resilience.  The strategy includes provisions re protecting communities through physical infrastructure investment,  water system management, energy efficiency for buildings and freight, and disaster management.   It commits to “maintain and enhance partnerships with First Nations and Métis communities to address and adapt to a changing climate through actions that are guided by traditional ecological knowledge.”   In the electricity sector, which at 19% is the third largest source of emissions, it proposes  to introduce regulations governing emissions from electricity generation by SaskPower and Independent Power Producers; meet a previous commitment of up to 50 per cent electricity capacity from renewables; and “determine the viability of extending carbon capture use and storage technology to remaining coal power plants while continuing to work with partners on the potential application for  CCUS technology globally.”    The Strategy is still open to consultation on the regulatory standards and implementation details, with a goal of implementation on January 1, 2019.  Consultation is likely to reflect the state of public opinion on climate change issues as revealed by the Corporate Mapping Project  in Climate Politics in the Patch: Engaging Saskatchewan’s Oil-Producing Communities on Climate Change Issues. The participants in that  study “were largely dismissive over concerns about climate change, were antagonistic towards people they understood as urban environmentalists and Eastern politicians, and believed that the oil industry was already a leader in terms of adopting environmentally sound practices.”      The oil and gas industry is Saskatchewan’s largest emitter, at 32% of emissions in 2015.  For an informed reaction, see Brett Dolter’s article in Policy Options, “How Saskatchewan’s Climate Change Strategy falls short”  (December 11).

sask-power-boundary-damOn the issue of carbon capture and storage:  The Climate Strategy document released on December 4 states a commitment to:  “determine the viability of extending carbon capture use and storage technology to remaining coal power plants while continuing to work with partners on the potential application for  CCUS technology globally.” On December 1, CBC reported that Saskatchewan had signed a Memorandum of Understanding with Montana, North Dakota, and Wyoming  to “share knowledge, policy and regulatory expertise in carbon dioxide capture, transportation, storage and applications such as enhanced oil recovery.”  By late 2017 or early 2018, SaskPower is required to make its recommendation on whether  two units at the Boundary Dam will be retired, or retrofitted to capture carbon and storage (CCS) by 2020.  As reported by the CBC , the research of economist Brett Dolter at the University of Regina has found  that conversion to natural gas power generation would cost about 16% of the cost of continuing with CCS ($2.7 billion to replace all remaining coal-fired plants with natural gas plants, compared to  $17 billion to retrofit all coal-fired plants with carbon capture and storage.)  The final decision will need to  consider the economic implications for approximately 1,100 Saskatchewan coal workers, and isn’t expected until a replacement for Premier Brad Wall  has been chosen after his retirement in late January 2018.

For more details:  “Saskatchewan, 3 U.S. states sign agreement on carbon capture, storage” at CBC News (Dec. 1) ; “SaskPower’s carbon capture future hangs in the balance” at CBC News (Nov 23)  , and  “Saskatchewan Faces Tough Decision on Costly Boundary Dam CCS Plant” in The Energy Mix (Nov. 28).

Made-in-Manitoba Green Plan proposes a $25 per tonne carbon tax

Manitoba climate plan coverOn October 27,  the Conservative Government of Manitoba released  a discussion paper, The Made-in-Manitoba Climate and Green Plan , which announces a vision for the province  to be Canada’s “cleanest, greenest and most climate resilient province.”  It opens a brief  public consultation period  till November 30,  with proposals organized around four stated “pillars” : climate, jobs, water and infrastructure.  Although most of the attention has been focused on the carbon tax proposals, the Discussion Paper  proposes dozens of possible initiatives, including electrification of Winnipeg’s transit, encouraging biofuels (e.g. by raising the provincial biodiesel mandate from two per cent to five per cent), and improving waste management to reduce methane emissions, among many others.  Regarding jobs, the report states: “We need to focus on how to prosper through climate change and create new jobs and growth in the transition to a global low-carbon economy. Environmental services and clean technology are opportunity sectors for Manitoba companies.”  The report presents potential initiatives  to create jobs – (for example, reducing “green tape”, encouraging finance and capital markets) and to improve skills and training (e.g. through participation in the U.N. Green Youth Corps, or working with the private sector work “to develop a Clean Growth Talent Plan as part of a new Labour Market Strategy incorporating a focus on climate and sustainability jobs and skills. “)

The section on carbon pricing has attracted most attention because it so clearly misses the criteria laid out outlined by Environment and Climate Change Canada  in The Pan-Canadian Approach to pricing carbon pollution   (the Backstop plan)  and the  Pan-Canadian Framework on Clean Growth and Climate Change . Manitoba’s Discussion Paper proposes  a carbon tax of $25 per tonne to remain in place till 2022 (only half of what the federal Framework Agreement calls for), with farm fuel use exempt.   In a shift of its earlier position, however, Manitoba acknowledges the federal government’s legal right to impose a carbon tax plan on the province,  but continues to insist on its uniqueness:  “Any carbon pricing system in Manitoba must recognize two essential facts: First, Manitoba is already ‘clean’ given our hydroelectricity system with 98 per cent of electricity generated from non-carbon emitting sources. Second, Manitobans have already invested billions of dollars in building our clean energy system and are still doing so with the Keeyask Dam and the Bipole transmission line. Adding a $50 per tonne carbon price on Manitobans at the same time Hydro rates are rising is neither fair nor sensible.”

A thorough discussion of the proposed carbon tax comes from the Ecofiscal Commission. Headlines reflect the reaction to the $25 per tonne carbon tax: at CBC News: “Manitoba thumbs nose at Ottawa, sets own carbon tax scheme” ,  and  “Proposed Manitoba carbon tax ‘will have to go up’: Federal environment minister”.   “Manitoba defies feds, unveils its own carbon pricing plan”  (Oct. 27) in the Winnipeg Free Press includes reaction from political parties and academics.  Also in the Winnipeg Free Press, “Details hazy in Made-in-Manitoba Green plan” – which calls the Green Plan “the political equivalent of a Rubik’s Cube. It’s colourful, intriguing and almost impossible to figure out.”  That was no doubt a topic at the Canadian Council of Ministers of the Environment conference in Vancouver on November 3.

Business think tank calls for Low-carbon policies for Canada

The Conference Board of Canada acknowledged that Canada must institute a carbon tax and decarbonize its electricity system in its September report, The Cost of a Cleaner Future: Examining the Economic Impacts of Reducing GHG Emissions (free, registration required).  The report presents a range of economic scenarios, relying on modelling from the Trottier Energy Futures project, and focusing on three issues:  carbon pricing; eliminating oil and natural gas from electricity generation; and the investment of trillions of dollars in green technology. On the impact of carbon pricing, one scenario assumes a carbon tax of $80 per tonne in 2025, yielding an average annual cost to Canadian household of approximately $2,000, shrinking the economy by only 1.8%, and cutting employment by 0.1%.  The total economic impact is forecast to be small, assuming that carbon tax revenues are reinvested in the economy in the form of corporate and personal income tax cuts and additional public spending on infrastructure. Industries most likely to suffer from reduced competitiveness are chemicals, mining and smelting, and pulp and paper; and  “industries with a domestic focus and sensitivity to price changes, such as residential construction, will be hard hit”.

Negative press coverage of the report appeared in  “Carbon tax to shrink economy by $3 billion, hurt loonie, study warns” in the Financial Post. The Globe and Mail was more optimistic, with “Canada urged to bite the bullet on shift to low carbon economy” and an OpEd “Can Canada remain an energy superpower?”.   In the OpEd , Glenn  Hodgson of the Conference Board recommends public policy support for a low-carbon energy strategy so that Canada can become North America’s most efficient, low-carbon source of oil and gas, while building up the country’s expertise in a range of other energy services, including carbon capture and storage, nuclear, and energy storage technologies. Such an outlook coincides with two other Conference Board publications over the summer: Clean Trade: Global Opportunities in Climate-Friendly Technologies  and Canadian Green Trade and Value Chains: Defining the Opportunities (both free with registration).  These new reports are the product of the new  Low-Carbon Growth Economy Centre at the Conference Board of Canada.

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.”

How will Canada’s 2017 Budget support the environment and green job creation?

The shocking budget cuts proposed   by  the Trump administration on March 16  will make it easier for  Canada’s Finance Minister  to shine when the Canadian  Budget for 2017  is unveiled  on March 22.  Once made public, the Budget document will be available here .   Amongst the “10 Things Unions are looking for in Budget 2017” , released by the Canadian Labour Congress on March 15,   #6 is “Green Job Creation”. Mirroring the language of the Clean Growth Century initiative, the CLC states: “Canada needs to envision the next hundred years as a Clean Growth Century, and we know it can be done in a way that is economically and socially responsible, without leaving behind workers and their communities. Budget 2017 should kick off ambitious programs to expand renewable energy generation, support home and building retrofits and dramatically increase the scale and quality of public transit in Canada.” Many other proposals  were outlined in the CLC’s Submission to the House of Commons Finance Committee in the pre-Budget consultations , including:  green bonds; expanded access to Labour Market Development Assistance programs  and skills development for workers in the oil and gas, mining, steel production, and manufacturing industries; and renewable energy policies to improve access to renewable energy and facilitate local, renewable energy projects  and reduce dependency on diesel in remote and First Nations communities.

Green Budget Coalition cover 2017The Green Budget Coalition  represents sixteen of Canada’s largest environmental and conservation organizations.  Their Submission regarding the 2017 Budget (November 2016)  includes economic proposals  – including an end to fossil fuel subsidies, and a carbon tax set at a realistic level based on the Social Cost of Carbon.  With their strong, green focus, the Green Budget Coalition also includes specific proposals regarding conservation issues – freshwater resources, oceans and fisheries, habitat protection, and air quality.  One specific, unique proposal relating to air quality – because of  the link between radon and lung cancer, a federal income tax credit for individuals and small-scale landlords of 15 percent of the cost of radon mitigation work. Each recommendation is written by an expert member of the coalition, with specific, costed proposals and an indication of the federal government department needed to take the lead on action.

The Canadian Centre for Policy Alternatives is well-known for its  Alternative Budget,  CCPA alternative budget 2017which takes a broader approach to the  inequalities of the economy . Some of its main recommendations in the 2017 edition:  a federal minimum wage of $15 an hour, indexed to inflation; a national pharmacare program; improved access to child care; elimination of post-secondary education tuition; and  investment  in First Nations housing, water, infrastructure and education.   The full report is titled High Stakes, Clear Choices.  Proposals relating to Just Transition are mainly outlined in the section on Employment Insurance (page 60) , which frames it as  “a major opportunity to move unemployed, underemployed, and low-paid workers into better jobs as a part of a strategic response to meeting our climate change targets. We can expand access to EI training programs with a focus on labour adjustment and transition. That way, Canadian workers could benefit from the transition to a green economy by accessing new, green jobs created by public investment programs and sector strategies.” Other (costed) proposals  regarding the environment and climate change (page 63) : an end to federal fossil fuel subsidies; reinstatement of  energy efficiency incentive programs;   assessment of the environmental impact of energy, tar sands, mining developments;  and reinstatement of water programs at Environment and Climate Change Canada and Fisheries and Oceans Canada.

Alberta reinvesting carbon levy revenues in clean energy programs

cropped-worksolar.jpgAlberta announced  a new Residential and Commercial Solar rebate program  on February 27, funded with $36 million from revenues from the province’s carbon levy. The government estimates that the program will stimulate up to 900 jobs in the solar sector, while reducing GHG emissions and cutting installation costs for residences by 30 per cent and  for businesses and non-profits by 25 per cent.  In combination with a December 2016  change to the  Micro-generation Regulation ,  which increased the allowable capacity of  micro-generation systems to five megawatts, the rebate program  is meant especially to encourage solar commercial  and community operations .  The Pembina Institute reaction    highlights the aspect of microgeneration and distributed energy; DeSmog Blog   gives more details and context about the overall growth of solar in Alberta. Iron and Earth , the workers’ organization promoting the transition from oil and gas to renewables, calls the announcement a “great first step” on their Facebook page   , and notes their previous call to the Alberta government for increased access to solar skills training programs.

smart-thermostatOn  Febrary 28,  the government issued an invitation for Albertans to register for a Residential No-Charge Energy Savings Program   ,  encouraging all households, regardless of income, to upgrade to more energy-efficient products, including LED lights, high efficiency shower heads, and smart thermostats. Installation and product costs will be borne by the province and financed, again, through carbon levy revenues.

Finally, on March 3, Alberta announced matched funding of $10 million from the province and the federal government for a Calgary-based Alberta Carbon Conversion Technology Centre (ACCTC) .  The facility will “test breakthrough technologies that convert CO2 from harmful emissions into applications for everyday use.”  It will be owned and operated by InnoTech Alberta   , a subsidiary of Alberta Innovates; the goal is to support “Alberta-based technology developers, as well as attracting global companies and world-class researchers to the province”.  The Pembina Institute calls it “a plug and play technology sandbox”  and “an excellent way to create partnerships and accelerate our learning with respect to new technologies, in order to develop emissions solutions and create economic opportunities.” The Alberta Clean Technology Industry Alliance also approves.  The investment follows a February 13 meeting to expand and renew the Alberta – Canada Collaboratory on Clean Energy Research and Technology Memorandum of Understanding.

Carbon pricing in Canada: Recent research, and implementation in Alberta and Ontario

Research about carbon pricing continues in the effort to implement the Pan-Canadian Framework.   In November,  Carbon Pricing and Intergovernmental Relations in Canada was released by the Institute for Research on Public Policy,  evaluating  the federal government’s national carbon pricing plan to that point (i.e. before the announcement of the Pan-Canadian Framework ), with an emphasis on the flexibility required for provincial differences. It then discusses the intergovernmental coordination in other policy fields in Canada ( income taxes, goods and services taxes, and environmental standards) as a possible model for carbon pricing.

As part of the Pan-Canadian Framework in December , the comprehensive  Final Report of the Working Group on Carbon Pricing Mechanisms  was released, providing an overview of Canadian and international practice, as well as a discussion of principles for design and implementation.

Finally, a report about British Columbia, the home of Canada’s first carbon tax. A  December report modelled the impact of the 2016 provincial Climate Leadership Plan and a federal carbon price on GHG emissions. It concludes that even  if all provincial policies were implemented,  B.C.’s emissions will exceed the targets for 2020 and for 2050. The report provides a breakdown of emissions by sector and forecasts that the largest single source of emissions in 2050 will be from shale gas operations and liquefied natural gas projects.  Modelling the Impact of the Climate Leadership Plan and Federal Carbon Price on British Columbia’s Greenhouse Gas Emissions  was commissioned by Clean Energy Canada,  the Pacific Institute for Climate Solutions and the Pembina Institute, with analysis by Navius Research.

In the meantime, two provinces have moved ahead with previously announced policies. Alberta’s carbon levy came into effect on January 1, 2017, cushioned by the government press release of  December 31  titled  “Carbon levy supports diverse, green economy and jobs”  which summarized the details. The levy will be charged on transportation and heating fuels  – diesel, gasoline, natural gas and propane – at a rate of $20 per tonne, increasing to  $30 per tonne in 2018.  As further explained on a government website  , farmers and First Nations are generally exempt; a 33 per cent small business tax rate cut will help offset costs for small businesses, and the direct and indirect costs to consumers  are estimated. Rebates started flowing for a majority of Alberta households on January 5, with a payment  of $200 per year for a single adult earning up to $47,500 per year , and $300 for a couple earning up to $95,000 per year.   In addition to the government explanation, see “What you need to know about Alberta’s Carbon Levy”   from the Pembina Institute ,  or a CBC  interview with Andrew Leach , generally considered the architect of Alberta’s climate plan . “The Cost of Carbon Pricing in Alberta and Ontario”, by professors Trevor Tombe and Nic Rivers, appeared in Maclean’s magazine (Jan. 4). It explains the differences in the two approaches and explains the methodology for their estimate that  “Overall, for the average Alberta and Ontario household in 2017, direct costs will likely be on the order of $150 to $200 annually and indirect costs will add an additional $80 to $100 or so.”  The conclusion:  “heated political rhetoric that suggests carbon pricing will lead to skyrocketing price increases throughout the economy is misplaced at best and misleading at worst.”

Media rhetoric seems to have been directed at Alberta, rather than Ontario, where the cap and trade system, a cornerstone of the Climate Action Plan , also took effect on January 1, 2017.  The government’s Explainer is here , and estimates that “it will cost the average Ontario household about $13 more per month to fuel a car and heat a home in 2017”.  The government also estimates  proceeds of $1.9 billion per year , which must be re-invested to reduce GHG emissions, such as social housing retrofits, public  transit, and electric vehicle incentives.  See details of the related Green Investment Fund here.  The 2016 Annual Greenhouse Gas Progress Report  (November 2016) of Ontario’s Commissioner of the Environment  offers an explanation of how the system works, and discusses pitfalls, solutions, the need for transparency, and the likelihood that the system will deliver the scale of GHG reductions promised.

 

Canada’s Pan-Canadian Framework on Clean Growth and Climate Change: an important first step

first ministers.jpgOn December 9, a Communique from the First Ministers of Canada announced the Pan-Canadian Framework on Clean Growth and Climate Change, following the commitments made in the Vancouver Declaration of March 2016 . The Framework promises that 90 percent of Canada’s energy needs will be met by clean sources by 2030, and  emphasizes carbon taxes and new investment in clean technologies.  For a general summary, see the CBC here  .  Unsurprisingly, Saskatchewan, which has been steadfastly opposed to carbon taxes, refused to sign the agreement; Manitoba, more surprisingly, also refused, and has been accused of attempting political horsetrading by linking support for the climate pact to health care budget needs.  See “Trudeau claims victory on national climate framework”  and  “Inside Christy Clark’s climate change brinksmanship”  in Maclean’s (Dec. 9 &  10) for reporting on what went on behind the closed doors of the premiers’ meeting.

There is scant reference to jobs or workers in the Pan-Canadian Framework.  A weak and unique reference to Just transition appears in this statement on page 40, in the “Section on Clean Technology, Innovation and Jobs”:  “Further development of clean technologies could create new opportunities in Canada’s resource sectors, increase the productivity and competitiveness of Canadian businesses, and create new employment opportunities, while also improving environmental performance. Canada will need to be able to access the skills and expertise of talented workers from around the world to enable Canadian businesses to succeed in the global marketplace. It will also be important to ensure a commitment to skills and training to provide Canadian workers with a just and fair transition to opportunities in Canada’s clean growth economy.” Civil society groups are only vaguely indicated in the statement:  “Governments, Indigenous Peoples, industry, and other stakeholders all have a role to play and must be engaged.”

See a dedicated website with details of the Pan-Canadian Framework on Clean Growth and Climate Change . The Framework document is here .   The Ministers’ discussions were informed by the reports of the four Working Groups struck following the Vancouver Declaration : the Working Group Report on Carbon Pricing;    the Working Group Report on Clean Technology, Innovation and Jobs;  the Working Group Report on Specific Mitigation Opportunities ; and the Working Group Report on Adaptation and Climate Resilience .

Climate Action Network has compiled responses to the Framework  in “ Civil Society Responds to Release of Canada’s National Framework for Climate Action”;  most reactions reflect the  common theme that this is a commendable good start, but much more is required to meet our Paris commitments.  The comment from the David Suzuki Foundation was also typical:  “For a plan to be credible, it must not send mixed signals about national priorities. Responsible action on climate change means shifting from fossil fuels and diversifying the economy to ensure Canadians have good jobs today and into the future while also protecting the environment.”

The Pembina Institute says specifically:   “We applaud the first ministers’ effort made to date and expect continued collaboration and swift implementation of all recently announced climate measures. In particular, it is essential that provinces work with the federal government to adopt strengthened building codes, to implement an effective clean fuels standard, and to increase the carbon price after 2022.”

The Climate Action Network also cites specifics  in  A Canadian Accountability Mechanism ,   asserting: “Canada must adopt a more ambitious climate pledge (NDC) in 2018, by which time all countries should come up with the tougher actions they will take after 2020. …  “It’s time to break the cycle of empty target-setting in Canada. We know it’s absolutely possible to reach Canada’s current goal of reducing GHG emissions by 30% below 2005 levels by 2030. We also know the 2030 target does not represent our fair share of addressing global climate change and that Canada needs to do more. CAN-Rac’s estimations of Canada’s fair share contribution suggests we should be reducing emissions by 50% below 2005 levels by 2030 while increasing our contribution to international climate financing to $4 billion/year by 2020.”

The Framework highlights all the right things, including: “ respecting the rights of Indigenous Peoples, with robust, meaningful engagement drawing on their Traditional Knowledge” , and  “the importance of ongoing collaboration”, “leveraging technology and innovation to seize export and trade opportunities for Canada, which will allow us to become a leader in the global clean growth economy”.  But it is not yet a plan: (“We have tasked our ministers and officials to implement the Framework and report back to us on progress within a year, and annually thereafter.”) Nor will it be implemented quickly: (“ Federal, provincial and territorial governments will work together to establish a review of carbon pricing, including expert assessment of stringency and effectiveness that compares carbon pricing systems across Canada, which will be completed by early 2022 to provide certainty on the path forward. An interim report will be completed in 2020, which will be reviewed and assessed by First Ministers. As an early deliverable, the review will assess approaches and best practices to address the competitiveness of emissions-intensive, trade-exposed sectors.”)    An essay by the Pembina Institute, from the Pembina Institute, “Canada is back” — on Friday, let’s hope for one more time with feeling”  (Dec. 8) anticipates what should be included, and thus   provides a yardstick by which to measure how successful the Framework agreement will be.

Carbon Pricing now covering 13% of global GHG emissions; Canadian and U.S. developments

The World Bank released  the State and Trends of Carbon Pricing 2016 report on October 18,  which  measures the growing momentum of carbon markets: in 2016, 40 national jurisdictions and over 20 cities, states, and regions are putting a price on carbon, including seven out of 10 of the world’s largest economies.  About 13 percent of global GHG emissions are now covered by carbon pricing initiatives.  Drawing on new economic modelling, the report also predicts that this coverage could increase by the largest leap ever in 2017, to between 20 – 25 percent,  if the Chinese national Emissions Trading System (ETS) is implemented in 2017 as planned .

Carbon pricing in Canada continues to draw opinion and reaction, including  from Toby Sanger, a Senior Economist at CUPE and  a member of the Federal Sustainable Development Advisory Council, who reiterates a call for Just Transition and equity considerations in “How to offset the hardship of carbon pricing”  in the Ottawa Citizen (Oct. 6) . Andrew Gage at West Coast Environmental Law (Oct. 17) asks important questions about the price levels, scope, and timing of the national carbon price proposals currently under consideration  in “Will Canada’s national carbon price clean up our climate mess?” . His blog includes consideration of the impact  on B.C., and sends a message for  Saskatchewan: “So suck it up, Mr. Wall – it’s time to pay the carbon price and get on board with a national plan to deal with Canada’s climate mess”.   And a blog from Keith Brooks at Environmental Defence takes issue from an Ontario viewpoint with a recent Fraser Institute criticism of the Trudeau carbon pricing proposal in “Stupid or Just Lying? What’s up with the Fraser Institute?” (Oct. 13).

In the U.S., all eyes are on the State of Washington, where a ballot question in the November 8 election will decide whether Washington becomes the first state in the U.S. with a  carbon tax.   The Washington Carbon Emission Tax and Sales Tax Reduction question, known as Initiative 732 (I-732)  is modelled after B.C.’s carbon tax, but has divided traditional left and environmental allies, with the Alliance for Clean Jobs and Energy and the Washington District Labor Council opposed to the initiative, and the Sierra Club and others taking a “do not support” position.   For background, see the excellent overview (with links) at Ballotpedia, or “How a tax on carbon has divided Northwest climate activists” in the Los Angeles Times (Oct. 13) .

Proposals for carbon pricing designs:    A new policy brief released by the Centre for International Governance Innovation (CIGI)  in Waterloo, Ontario  proposes  a carbon-fee-and-dividend (CFD) program , which has been advocated by the Citizens’ Climate Lobby.  How the United States Can Do Much More on Climate and Jobs  envisions a federal program which would  collect a carbon fee from coal, oil and natural gas producers and importers, and distribute  all the revenue (after administrative costs) directly to American households in equal per capita monthly dividends.   To address fears of carbon leakage, the  program would include a border adjustment,  authorizing  a special duty on imports from countries lacking equivalent carbon pricing.   The paper concludes with arguments as to why this is the most likely- to- succeed political option.

Another U.S. discussion paper, from Resources for the Future,  Adding Quantity Certainty to a Carbon Tax, defines and discusses  the multitude of design elements for a Tax Adjustment Mechanism for Policy Pre-Commitment (TAMPP) –  which would adjust the tax rate of a carbon tax  at intermediate benchmark points if emissions reductions deviate sufficiently to threaten the long-term targets . The paper argues that the approach should be rule-based with a clear and transparent adjustment process to reduce unnecessary uncertainty for investment.

 

 

Carbon Pricing: Important, Complicated, but only part of the solution

Prime Minister Trudeau, in an interview with CBC news on July 22 after the Premiers’ meetings in Whitehorse, stated that a price on carbon  is an “essential element” of Canada’s climate change plan and the federal government is “going to make sure there is a strong price on carbon right across the country”. Premier Brad Wall of Saskatchewan is the most vocal of the Premiers opposed to carbon pricing: see  “Saskatchewan threatens legal clash over nationwide carbon price”. There’s been no shortage of reports on the issue:most recently, The Least Costly Path to  Climate Action  was released by think tank Clean Prosperity on August 25. Dave Sawyer and Chris Bataille were commissioned as co-authors to  model the economic performance, environmental effectiveness,  and scalability of  two carbon pricing alternatives:  a “pure carbon tax” modelled on the B.C. program, and a “hybrid” scenario based on Alberta’s system. Both scenarios assumed the carbon price would rise from $30 per tonne in 2018 to roughly $110 per tonne by 2030.  Among the conclusions: “When applied to key jurisdictions and Canada-wide, the hybrid carbon price policy actually boosts economic performance when compared to current and developing federal and provincial policies. For energy producing provinces, an Alberta-style hybrid carbon price model … improves economic performance by 1.43% in Alberta and 4.23% in Saskatchewan.” The authors conclude: We believe that adopting an Alberta-style hybrid carbon pricing policy, and recycling the revenues by reducing personal and corporate income taxes, represents the best way forward for Canadian governments” to achieve the goals of environmental and  economic performance as well as a perception of regional fairness.

Other notable reports: On July 27, the EcoFiscal Commission released  Comparing Stringency of Carbon Pricing Policies  in Alberta, British Columbia, Ontario, and Quebec. Although the report provides numbers and rankings, Energy Mix states  that “More important than the ranking of provincial carbon taxes may be the Ecofiscal Commission’s development of a methodology for comparing dissimilar systems across the country.” Also in July, the C.D. Howe Institute published A Blueprint for Going Green: The Best Policy Mix for Promoting Low-Emissions Technology , which concludes that “Supporting technology development means not only investing in new technologies but also creating demand for clean technologies in the broader economy, through carbon pricing.” Internationally, the Carbon Pricing Leadership Coalition  of the World Bank released Carbon Pricing Leadership Coalition: What is the Impact of Carbon Pricing on Competitiveness?  in September.

Though important, carbon tax policy is only one aspect of climate change policy. An August 30 Opinion Piece in the National Observer,  “Carbon tax fetishism: We’re losing the plot on climate change”  reflects on the intense attention to carbon taxes, including in the public reaction to the B.C. Climate Leadership Plan.  It argues that the attention to carbon taxes “sucks politicians, analysts, and journalists into groupthink, and the entire national climate conversation is losing the plot.”  And “5 reasons there’s more to climate policy than a price on carbon”  in Vox  (June 28) defends Ontario’s cap and trade policy from the criticism in a June 10 Globe and Mail editorial.  The Vox article is based on an essay by Brendan Haley, which concludes “The sooner we dispel ourselves from the myth that the market alone will solve the climate change problem, the sooner we can start to ensure more technology and sector specific policy approaches are implemented effectively and democratically.”  It’s complicated.

New B.C. Climate Leadership Plan leaves carbon tax untouched

Months later than scheduled, the Government of B.C. released its Climate Leadership Plan   on August 19, claiming that it will create 66,000 green jobs and decrease carbon emissions by 25 MT by 2050. See the news release and backgrounders here .  The Plan largely ignores the 2015 recommendations of the government’s own Climate Leadership Team (CLT) and does not increase the carbon tax, to allow other jurisdictions to “catch up”.    It organizes its  21 “action items” into 6 areas —natural gas, transport, forestry and agriculture, the built environment, industry and utilities, and the public sector, and focuses on  electric vehicles,  energy efficiency in buildings,  carbon sequestration in the forestry industry,  and promised emission reductions in natural gas production.   The Pacific Institute for Climate Solutions (PICS) reviews each of these areas in its Initial Assessment: Part 1 here     and Part 2 here .  In   “3 Big Questions about British Columbia’s Climate Plan”    , Clean Energy Canada states that carbon reduction measures “aren’t backed up by either the dollars or the regulations” – resulting in emissions reductions that are likely to be approximately 2 MT, rather than the 25 MT that the Leadership Plan promises.

The tone of reaction is summed up by Tzeporah Berman’s Facebook posting:  “pathetic and cowardly”.  For more detailed reactions, see   “5 Things you need to know about B.C.’s new climate plan” from the Pembina Institute;    “B.C.’s Climate Plan reaches Olympian heights of Political Cynicism” , an OpEd by Marc Jaccard in the Globe and Mail;  “B.C. hesitates when it should lead” by the David Suzuki Foundation;  “Christy Clark gives up the Climate Change Battle” in The Tyee ;  “B.C. Climate Plan leaves hard work for another day” by the Pembina Institute , and “B.C. Climate Plan full of holes”    in the National Observer.

June 2016 News: Alberta

REVISITING THE CLIMATE LEADERSHIP PLAN:   “The Economic Cost of Carbon Policy”  was written  by Andrew Leach, Chair of Alberta’s Climate Leadership Plan , and appeared in Maclean’s online on June 19th  in response to a controversial article in the Calgary Herald on June 17th . The Herald article reported that a leaked memo from the government’s Treasury Board staff had predicted that the Climate Leadership Plan would result in 15,000 fewer jobs, a $4-billion drop in household income, as well as lower corporate profits, oil exports and overall economic activity.  Andrew Leach defends the Climate Leadership process and “sets things straight” in a thorough discussion of the economics and politics of carbon pricing . He concedes that the policy prescriptions come at a cost – which he estimates at  0.25 to 0.5 per cent cumulatively by 2022, but he concludes that Alberta cannot maintain a “business as usual” policy; “ We believe that our policy recommendations will be of net benefit to Alberta, yes in terms of the avoided costs of greenhouse gas emissions and air pollution, but also in terms of the avoided costs of discriminatory and punitive policies imposed upon Alberta.”

On May 26, The Premiers of Alberta and Ontario announced  a Memorandum of Understanding pledging cooperation regarding GHG reduction in the production, transportation and use of natural resources in Alberta and Ontario, as well as  development of renewable energy and energy storage, and fostering new and innovative uses of carbon dioxide.

On June 6, Alberta announced the new Energy Efficiency Agency, and an Energy Efficiency Advisory Panel  ,  which will consult with the public, Indigenous people, and technical experts until September.  A Discussion Document   will guide consultations.The Panel ‘s report to the Minister is due in Fall 2016, with the goal that Energy Efficiency Alberta will launch programs by January 2017. Listed as “measures of success” for the Agency:  “Economic impact: the number of stable green jobs associated with program  options and the direct and indirect benefits to urban and rural economies associated with the implementation of programs.”

Recent research on Carbon Taxes and Cap and Trade

Before the May announcement of Ontario’s Climate Change Mitigation and Low-carbon Economy Act ,   a working paper released in April by the Institute for Competitiveness and Prosperity at the University of Toronto models the impact of Ontario’s proposed cap-and-trade program on economic growth and greenhouse gas emissions, considers complementary policies that reduce greenhouse gas emissions , and makes ten recommendations.  Read  Towards a low Carbon Economy: The Costs and Benefits of Cap and Trade here  .   The Effect of Environmental Policies on Jobs: Painting a More Complete Picture   explains a new general equilibrium model, developed by economists at Resources for the Future,  which incorporates a job search requirement in the model.   The subsequent Discussion Paper, Unemployment and Environmental Regulation in General Equilibrium  concludes that “a modest economy-wide carbon tax would likely cause a substantial shift in employment between industries, but would have little overall effect on unemployment, even in the short run…An environmental performance standard causes a substantially smaller sectoral shift in employment than the emissions tax, with roughly similar net effects.”

Nova Scotia holds off on a Carbon Tax

In advance of the Nova Scotia Budget  on April 19, the  Nova Scotia Federation of Labour, CCPA-Nova Scotia, and clean energy groups issued an  Open Letter    calling for made-in-Nova Scotia carbon pricing, stating “The Nova Scotia government should immediately create a multi-sectoral working group on this issue, including environmental, anti-poverty and fair economy groups.”  Their concerns were not addressed in the Budget, as government policy focused mainly on  protecting the small budget surplus reported.  For a summary, see the CBC report here   .

Plans for a carbon levy revealed with Alberta’s Budget

Faced with unprecedented economic challenges, the Alberta government delivered an April  Budget with frequent references to its Climate Leadership Plan, including plans for $3.4 billion to be invested in large-scale renewable energy projects and technologies; $25 million to be invested directly into new apprenticeship and training opportunities; $25 million for startup companies with high job growth potential, such as clean energy and clean technology; and funding and training for workers in communities affected by the promised coal phase-out. See coverage in The Globe and Mail  and the Calgary Herald  .  Most attention went to the specifics of the Climate Leadership Adjustment Rebate , to help individual Albertans offset the costs of the carbon levy.

Academic research advice related to carbon pricing for Alberta appeared in Policy Options in March: “Alberta’s Carrot and Stick approach to GHG Emission Reduction”   and from the University of Calgary School of Public Policy,  Make the Alberta Carbon Levy Revenue Neutral .

Where do unions stand on Carbon Markets?

In a Working Paper titled Carbon Markets After Paris: Trading in Trouble , Sean Sweeney, Coordinator of Trade Unions for Energy Democracy (TUED),  argues that it is time for unions to reevaluate their stance on emissions trading. He asserts a “Paris Contradiction” –   that the INDC’s targets from COP21 in Paris in December 2015 are not sufficient to reduce GhG emissions, and  are part of a “neo liberal fantasy”.  Focusing on Europe and the problems of the European carbon market ( the EU ETS), Sweeney criticizes the  European Trade Union Confederation for its “defensive approach (prevention of carbon leakage and the protection of existing jobs)”, and its continued participation in the Social Partnership framework. In his accompanying blog , he states:  “ Facing up to the the failure of carbon markets will allow unions and their allies to better concentrate on developing and organizing around the kind of programmatic commitments that can seriously tackle climate change and the systemic roots of the crisis…. by extending social ownership of key sectors like energy, a genuine ‘just transition’ is possible and that unions can play an important role in making it happen.”    Even outside the neo-liberal fold, Sweeney’s call to reject carbon markets is controversial.  The European Trade Union Confederation, subject of Sweeney’s criticism, most recently issued its  “Position on the structural reform of the EU Emissions Trading System”  in December 2015, reflecting a concern for “carbon leakage” but demanding a Just Transition Fund to protect workers.  The ETUC claims to have consulted widely amongst European labour unions to reach its position.   The Canadian Labour Congress, in the lead-up to COP21 stated (Nov. 2015)  “The Canadian labour movement supports a national cap and trade carbon-pricing system”, and the Canadian Union of Public Employees, in its response to the 2016 Federal Budget  states, “CUPE supports putting a price on carbon, but it must be done in a progressive way that penalizes corporate polluters rather than low-income and working Canadians. Revenues raised from carbon pricing should be used to invest in complementary green investments, job retraining, create green jobs, and to mitigate negative impacts of climate change and carbon pricing measures on vulnerable Canadians.”  See also  Marc Lee, “Don’t believe the Hype on B.C.’s Carbon Tax” (March 4), and in the U.S.,   the Center for American Progress called for an integrated North American carbon market on March 17.

Upcoming Nova Scotia budget: another forum for the carbon tax question

With a large deficit projected, the government of Nova Scotia has been holding budget consultations , which run until February 26, 2016. In December, the Canadian Centre for Policy Alternatives contributed Stronger Together: the Nova Scotia Alternative Provincial Budget 2016 . It calls for a carbon tax, with half the revenue directed to income support programs, and the other half used to set up a Greenhouse Gas Reduction Fund to enable low-carbon investment, green job growth, and poverty reduction. A February 3 Editorial in the Halifax Chronical-Herald endorsed the idea of a carbon tax. In February 2015, Brendan Haley wrote Will Nova Scotia Implement a Carbon Tax?  which explained the context of the on-going debate.

Carbon Pricing: Provincial differences and the risk of Carbon Leakage

In the second of two reports it has published on carbon pricing, the EcoFiscal Commission concludes that “In the context of a $30 per tonne carbon price, only a small number of sectors, representing less than 5 per cent of Canada’s economy, are likely to experience significant competitive pressures. Even with a $120 per tonne carbon price … 90 per cent of Canada’s economy would still be virtually unaffected by competitiveness challenges. ”   Provincial Carbon Pricing & Competitiveness Pressures: Guidelines for Business and Policy Makers  examines the economies of British Columbia, Alberta, Ontario, and Nova Scotia, and states that impacts will differ across sectors and provinces. In Alberta, 18 % of the economy is potentially exposed, compared to 2% in B.C., Ontario, and Nova Scotia.   The report recommends targeted, transparent, and temporary support measures for genuinely vulnerable industries, in the form of free permits (under a cap and trade system) or carbon tax rebates. Other recent reports related to carbon pricing: Implementing Effective Carbon Pricing  from the New Climate Economy; “The Path to Carbon Pricing” by Christine Lagarde (IMF) and Jim Yong Kim (World Bank) in Project Syndicate; and Uses of Revenue from Carbon Pricing in which the Climate Markets and Investment Association forecasts that globally, governments will raise $22 billion in climate revenue in 2015. From Resources for the Future, Lessons Learned from Three Decades of Experience with Cap-and-Trade examines U.S. programs and the European ETS.

Public Opinion about Climate Change policies: Alberta and Canada

In September, 2015  Pembina Institute released an opinion poll of Albertans, conducted by EKOS Research. Of the 1,885 respondents, 50% would support an economy-wide carbon tax, rising to 72% if the proceeds were invested in low-carbon projects; 70% want stricter enforcement of the existing environmental rules and safeguards in the oilsands; 70% support investing in renewables to reduce coal use, and 86% want the province to increase support for clean energy and clean technology.  
 
Other opinions were expressed at the 2015 Alberta Climate Summit, convened on September 9 by Pembina Institute. Discussions centred on the economy and jobs, carbon pricing, energy efficiency, and renewable energy.
 
The Climate Change Advisory Panel of the Alberta government invited submissions from Albertans in August and September. Views of individuals, companies, academics, advocacy groups and associations, and three labour unions are available: A list by name helps to locate items of interest amongst over 400 documents. The union submissions are: #94, by the International Association of Heat and Frost Insulators and Allied Workers Local 110 (Alberta); #387, by the Alberta Federation of Labour and #494, a 1-page statement by the Business Agent of International Union of Operating Engineers Local 955.
 
Environics Institute, partnered with the David Suzuki Foundation, released Canadian Public Opinion about Climate Change, showing that support for the B.C. carbon tax is at an all time high in that province, and has increased to 60% in other provinces – notably Atlantic Canada, and amongst women. 74% of Canadians say they believe it is possible for their province to shift most of its energy requirements from fossil fuels to clean renewable forms of energy.

CARBON TAXES: THE POPE’S MORAL POSITION AND THE SECULAR ANALYSIS

On the issue of carbon taxes, the Pope’s Encyclical of June 2015 was clear:   “The strategy of buying and selling “carbon credits” can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors. ” Yet economists continue to take an interest: new analysis by B.Murray and Nic Rivers, released by Duke University, reviews the studies to date on the economic effects of British Columbia’s carbon tax, and discovers “little net impact” either for or against economic growth in the province. See British Columbia’s Revenue-Neutral Carbon Tax: A Review of the Latest ‘Grand Experiment’ in Environmental Policy  . And in June, the Ecofiscal Commission released a brief, The Way Forward for Ontario: Design Principles for Ontario’s New Cap-and-Trade System  which outlines four fundamental principles of good cap-and-trade design for Ontario, based on their April report.

IMF Report estimates Global Fossil Fuel Subsidies at $5.3 Trillion – More than global spending on Public Health

A new working paper from the International Monetary Fund , How Large are Global Energy Subsidies? reflects the shifting attitudes in the corporate world to the fossil fuel industry . A quote from the summary at the CBC website  : “Described as a “post-tax” subsidy, the figure doesn’t take into account the pre-tax incentives used to encourage exploration and production, and is still much larger than ever before calculated.”… “The fiscal implications are mammoth: At $5.3 trillion, energy subsidies exceed the estimated public health spending for the entire globe”. The report concludes that energy subsidy reform is urgently needed, and though not perfect, “energy taxes” are the most effective tool currently available .

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. 

B.C. Carbon Tax Receives International Praise

While Ontario hasn’t stated whether it will choose a cap and trade system or a carbon tax, British Columbia`s carbon tax has received a  recent flurry of praise. In a December 8 speech  leading up to the COP Lima meetings, World Bank President Jim Yong Kim stated that “all countries should commit to put a price on carbon” and singled out British Columbia’s system as one of the most “powerful” examples…”It’s worth noting that British Columbia’s GDP has outperformed the rest of Canada’s after introduction of the tax”.
Read also: a Globe and Mail editorial of December 13, “Why Stephen Harper should Love Carbon Taxes”; Alberta Federation of Labour President Gil McGowan in “Cutting Emissions needn`t kill Jobs, Says Oilsands Labour” in The Tyee (December 8). Even well-established conservative Preston Manning, now part of the Ecofiscal Commission, appears to endorse the concept in a November 19 Globe and Mail article: “How to Communicate a Good Idea: Carbon Pricing”. Last word goes to Larry Sommers, former Secretary of the Treasury in the U.S., in his January article in the Financial Times titled “Let this be the Year we Put a Proper Price on Carbon”.

    For more factual information about carbon taxes and how B.C. has achieved revenue neutrality, see Proof Positive: The Mechanics and Impacts of British Columbia’s Carbon Tax, released by Clean Energy Canada in December. A new, much more detailed study of the effect of a carbon tax, modelling with various revenue structures, was released by the state of Oregon in December.

Labour Should Lead with a Worker-Friendly Climate Plan

Drawing on American economic and labour policy during World War II, authors Jeremy Brecher, Ron Blackwell and Joe Uehlein envision what climate policy could look like with labour in the lead, in an article in the September 2014 issue of New Labor Forum.

The authors acknowledge that unions are caught between the immediate interests of their members, many of whom work in industries vulnerable to new climate regulations, and long-term social, economic, and ecological wellbeing. As a result, labour has at times remained “aloof” to the climate movement, but the authors advocate that the labour movement should take the initiative to develop its own government-led climate plan – one that bridges the divide between work and environment, reverses austerity, raises wages, and offers full employment, job security, and transition training.

As during wartime, the authors contend, climate change demands ramped up production and expansion in innovative sectors. The government should take the lead in financing the low-carbon transition during its initial, more expensive stages, thereby encouraging private investment by creating stable green markets. Citizens should be supported during the transformation through the establishment of a welfare state that diverts carbon tax revenues to workers and the unemployed, provides education and training, and recruits and distributes workers to where they are most needed.

LINKS:

“If Not Now, When? A Labor Movement Plan to Address Climate Change” in New Labor Forum (v.23, #3) is at: http://nlf.sagepub.com/content/23/3/40.full.pdf+html

IMF Calls for Higher Taxes on Fossil Fuels Around the World, including Canada

Getting Energy Prices Right: From Principle to Practice “green-shift” tax analysis calculates the cost of carbon energy – including health effects of pollution – in 156 countries, and proposes precise levels of taxation: higher levels on fossil fuels, and lower levels on people and capital. Their prescription is gradual tax increases which would be balanced by decreases to income taxes – for Canada, the tax increases average out to about 52% on gasoline and diesel.

Canadian Finance Minister Joe Oliver rejected the proposals, according to a report at the CBC website at: http://www.cbc.ca/news/business/imf-calls-for-green-shift-with-52-gas-tax-hike-in-canada-1.2724294. See also the Globe and Mail article at: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/imf-calls-on-canada-to-raise-carbon-taxes-cut-income-taxes/article19872600/.

The full report is available for purchase ($28) at: http://www.imfbookstore.org/ProdDetails.asp?ID=9781484388570.

 

Proposed Carbon Tax Model Forecasts Job Increases; Hank Paulsen Calls Urgent Action Against Climate Change, Including a Carbon Tax

A new report models the effects of a carbon tax in the U.S. at the point of extraction, beginning in 2016 at a rate of $10 per metric ton of carbon dioxide and escalating at $10 per year until 2035. All proceeds from the carbon tax would enter into a “fee-and-dividend” (F&D) system that would refund money to all American households on a monthly basis, based on the number of people in the household. The report forecasts that by 2025, there would be: 2.1 million more jobs under the F&D carbon tax than in the baseline; 33% reduction in carbon dioxide emissions from baseline conditions; 13,000 premature deaths avoided because of improved air quality. The report was prepared for the Citizen’s Climate Lobby by consultants Regional Economic Models (REMI) and Synapse Energy Economics.
Models and research about carbon taxes may assume higher prominence as the U.S. business community becomes more and more open about discussing the possibility.

In an OpEd in the New York Times on June 21, Former U.S. Secretary of the Treasury, Hank Paulsen, a Republican, states that climate change is the challenge of our times and “The solution can be a fundamentally conservative one that will empower the marketplace to find the most efficient response. We can do this by putting a price on emissions of carbon dioxide — a carbon tax…. Putting a price on emissions will create incentives to develop new, cleaner energy technologies.“ Paulsen, along with former New York Mayor Michael Bloomberg and billionaire Tom Steyer, founded a business-oriented research initiative called Risky Business. Their high profile report is scheduled to be released on June 24, and will expand on the themes of Paulesen`s OpEd: the urgency of action and the risks of delay in fighting climate change.

LINKS:
The Economic, Climate, Fiscal, Power, and Demographic Impact of a National Fee-and-Dividend Carbon Tax is at http://citizensclimatelobby.org/wp-content/uploads/2014/06/REMI-carbon-tax-report-62141.pdf
“The Coming Climate Crash“ in New York Times OpEd (June 21) is at http://www.nytimes.com/2014/06/22/opinion/sunday/lessons-for-climate-change-in-the-2008-recession.html?ref=opinion
Risky Business website is at http://riskybusiness.org/

Carbon Taxes and the Need for Social License

Especially timely, given the June 17th Northern Gateway decision, is a recent report by the Canada West Foundation about the concept and means to achieve “social license”, and a Pembina Institute blog which reviews it. Pembina provides this definition: “Social license is generally considered to exist when the perceptions, opinions, and beliefs held by a local population regarding a development allow for the ongoing public approval of the related activity.” The Canada West Foundation, an advocate for Western development, states: that … “A positive brand will only endure if it is based on solid and constantly improving performance at the local level.” The author calls for industry to lead a systematic effort to engage supporters in communities affected by resource development, and calls on government to be involved with “public policy, legislation and regulation needed to sustain progress”. Regarding a carbon tax, for example, he states: “The net benefit/cost might well be positive for resource industries since a stable carbon management regime would add to policy stability and social legitimacy.”

LINKS:
From The Ground Up: Earning Public Support for Resource Development (May 27) from Canada West Foundation at http://cwf.ca/pdf-docs/publications/From%20the%20Ground%20Up%20Report%20v9.pdf.
The Costs of Losing Social License (June 6) at Pembina Institute at http://www.pembina.org/blog/the-costs-of-losing-social-licence.

BC Budget Announces Tax on LNG, Silent on Carbon Price

On February 18th, British Columbia tabled a provincial budget that touts its Liquified Natural Gas (LNG) development plans and offers some highly anticipated clarification on the sector’s tax structure.

Proposed taxation will include a 7% levy on the liquefaction process (the most emissions-intensive part of the process), which will take effect after capital costs are recovered. Until then, companies will pay only 1.5%. While companies argue the tax may render B.C. LNG uncompetitive, Sustainable Prosperity argues that the rate will likely be lower in practice. Adding to the confusion over just how much revenue will accrue to the province is uncertainty about future LNG prices, and whether the existing carbon tax will apply.

The budget did not address the expected impacts on B.C.’s emissions reductions wellhead-to-waterline-022014targets. According to Sustainable Prosperity, five proposed LNG plants will emit 73 megatons of carbon alone, along with emissions from fracking, transportation, combustion, and any additional plants. In a new report, the Pembina Institute argues that the jobs and revenue figures published by the government would require five to seven LNG terminals, which it claims could put B.C. LNG emissions on par with oil sands emissions by 2020.

While the budget rolls back public spending overall, it also includes an expansion of the provincial Carbon Neutral Capital Program (CNCP) which will draw the health and post-secondary education sectors into an existing scheme to establish a carbon-neutral school system. CNCP collects $25 per ton of greenhouse gas emissions from participating sectors, which is then invested in low-carbon capital upgrades.

See the B.C. Budget and Fiscal Plan, along with highlights and backgrounders, at: http://bcbudget.gov.bc.ca/2014/default.htm. For reaction, see “Carbon regime missing in action in BC’s new LNG tax regime” from Sustainable Prosperity at: http://www.sustainableprosperity.ca/blogpost87; “B.C. Budget 2014: About that LNG Prosperity Fund” Blog from Marc Lee of the Canadian Centre for Policy Alternatives at: http://rabble.ca/blogs/bloggers/policynote/2014/02/bc-budget-2014-about-lng-prosperity-fund. Also see Wellhead to Waterline: Opportunities to Limit Greenhouse Gas Emissions from B.C.’s Proposed LNG Industry from the Pembina Institute at: http://www.pembina.org/pub/2524.

Carbon Pricing is Gaining Acceptance Among U.S. Businesses

A New York Times article reports that at least 29 companies are incorporating a price on carbon into their long-term financial plans.  The list of companies includes many with ties to the Republican Party: ExxonMobil, Walmart, American Electric Power, Microsoft, General Electric, Walt Disney, ConAgra Foods, Wells Fargo, DuPont, Duke Energy, Google and Delta Air Lines. The article focuses on the political divide that this development  represents, and concludes that: “The divide, between conservative groups that are fighting against government regulation and oil companies that are planning for it as a practical business decision, echoes a deeper rift in the party, as business-friendly establishment Republicans clash with the Tea Party.”  The article is based on a report by environmental data company CDP. See “Large Companies Prepared to pay Price on Carbon” in the New York Times at: http://www.nytimes.com/2013/12/05/business/energy-environment/large-companies-prepared-to-pay-price-on-carbon.html?nl=todaysheadlines&emc=edit_th_20131205&_r=0

UN COP-19 underway in Warsaw from November 11-22

The first week of the UN COP19 proceeded with a sombre air following the devastation of Typhoon Haiyan in the Philippines. Despite this, talks faced significant difficulties as Japan announced a reduction to its emission targets and Australia declared its decision to axe the country’s carbon tax.

Canada has come under criticism for applauding Australia and encouraging other countries to follow suit. The WWF condemned Canada for undermining progress at the talks, while NDP Environment Critic Megan Leslie asserted that “the Conservatives are still asleep at the wheel” in a statement issued November 13th.

Delegates from Warsaw have indicated that the new accord will likely abandon the international treaty model of past agreements and instead resemble a “patchwork” of national emissions reduction targets that are governed by domestic law. COP19 is seen as a precursor to the more important international conference in Paris in 2015.

See the speeches and documentation from COP19 at the UNFCC website at: http://unfccc.int/2860.php; See WWF condemns Canada at: http://www.wwf.eu/index.cfm?212403/WWF-condemns-Japan-Australia-Canada-undermining-progress-climate-talks, and the NDP statement on Canada at COP19 at: http://www.ndp.ca/news/statement-ndp-cop19-united-nations-framework-convention-climate-change.

Carbon Tax a Casualty of Australian Election

Public dislike for the carbon tax was a key issue in the recent Australian election, which saw the victory of the Liberal Party under Tony Abbott. A key plank in Abbott’s platform was to scrap the carbon tax, which has become his first order of business. He has also announced the abolition of the country’s independent climate change commission, and scrapping of a fund to support green technology. See Abbott Government begins Process to Repeal Carbon Tax at the Australian Broadcasting Corporation website at: http://www.abc.net.au/news/2013-09-09/abbott-carbon-tax/4945330, and Tony Abbott sworn in as Australia Prime Minister at the BBC-Asia website at: http://www.bbc.co.uk/news/world-asia-24121938

British Columbia Carbon Tax Held Up as a Model for Canada

After four years of experience with a carbon tax, British Columbia’s per capita consumption of fuels subject to the tax has declined by 19% compared to the rest of Canada, while its economy has kept pace, according to analysis by Stuart Elgie and Jessica McClay at the University of Ottawa. The authors credit its success to the tax shift design – that is, the increase in carbon taxes is matched by an equivalent reduction in personal and business income taxes. Read “B.C.’s Carbon Tax is working Well after Four Years (Attention Ottawa)” in Canadian Public Policy (August 2013) at: http://economics.ca/cgi/jab?journal=cpp&view=v39s2/CPPv39s2p001.pdf.

The Business Case for Adaptation

A report published by WWF and the Carbon Disclosure Project of New York is directed to the business community, and argues that a 2020 “science-based” emissions reduction target can be reached profitably in steps of 3% per year reductions. The report strikes an urgent note, emphasizing the benefits of the “latent cost savings” of energy efficiency, and quantifying the costs of extreme weather and the necessity of pricing of carbon emissions. The 3% Solution: Driving Profits through Carbon Reduction is at: https://www.cdproject.net/CDPResults/3-percent-solution-report.pdf

The Effects of Carbon Tax, and an Upward Revision of the Social Cost of Carbon

The U.S. Congressional Budget Office released a study on May 22 which reviews the existing literature on the economic impacts of a carbon tax, and explores three options for using the revenues from the tax: to reduce budget deficits, to decrease existing marginal tax rates, or to offset the costs to the most affected groups of people. Read: Effects of a Carbon Tax on the Economy and the Environment at: http://www.cbo.gov/publication/44223 or for a more detailed study of the effects on employment, see the May 2010 CBO Briefing Report How Policies to Reduce Greenhouse Gas Emissions Could Affect Employment at: http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/105xx/doc10564/05-05-capandtrade_brief.pdf. The 2013 CBO study discusses various studies which estimate the social cost of carbon – the value used by governments (including Canada’s) to assess the benefits and costs of the reduction of greenhouse gas emissions.

An important new report released by the U.S. Government in June revises the “official” U.S. social cost of carbon substantially, by between 50 – 60%. The first regulation to use this new SCC will be the U.S. emission standard for microwaves; it has also been recommended for use by the State Department in its consideration of the impact of the Keystone Pipeline. Read: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis – by the U.S. Interagency Working Group on the Social Cost of Carbon Under Executive Order 12866 at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria_2013_update.pdf, and for background, see the U.S. Environmental Protection Agency article at: http://www.epa.gov/climatechange/EPAactivities/economics/scc.html

 

Positions of B.C. Political Parties on Climate Change Issues and Green Jobs

British Columbia holds its provincial election on May 14th.  The Pembina Institute has released a comparison of the positions of the political parties on four election issues related to climate change: liquefied natural gas (LNG), oil pipelines, the carbon tax and green jobs. They find that the Green Party is the only one who would take the province forward on all four issues, and goes the furthest in proposals for green job creation – with enhanced venture capital funding programs for the clean tech sector, as well as encouragement of energy efficiency and renewable energy.  Only the Conservatives have no proposals re green job creation.   The Conservatives, Liberals and NDP are all in support of significant LNG expansion, yet the Pembina authors state that “any necessary next steps in lowering emissions will be overwhelmed by the emissions from extracting, processing and liquefying natural gas if LNG development is allowed to significantly expand in B.C.”

LINKS

Climate change and the 2013 British Columbia election by Matt Horne, Josha MacNab & Kevin Sauvé is available at http://www.pembina.org/media-release/2449 .

“B.C.’s political climate is shifting: Why talk of ‘jobs vs. environment’ no longer holds water” by Eric Doherty (May 10) at Rabble.ca at http://rabble.ca/news/2013/05/bcs-political-climate-shifting-why-talk-jobs-vs-environment-no-longer-holds-water

Party Platforms:  Green Party: Jobs in a New Economy is at http://www.greenparty.bc.ca/jobs_in_new_economy ; NDP platform is at http://www.bcndp.ca/plan  ; Liberals’ at http://www.bcliberals.com/news/in-the-news/ourPlan ; Conservatives’ at http://www.bcconservative.ca/ .

The Tyee Election Hook (dedicated to election coverage)  is at http://thetyee.ca/Blogs/TheHook/

For results:  go to CBC B.C. Election 2013 website at http://www.cbc.ca/news/canada/bcvotes2013/

Carbon Management in Canada: Can we Revive a Civil Debate?

On April 17th in Ottawa, the think tank Canada 2020 convened a meeting “because of our concern over the disintegration of constructive debate about carbon management at a national level in Canada. The current deadlock is not good for our country, our democracy or for our planet.”  With a goal “to begin to define a constructive and positive course of action”, presentations were made Jean Charest, (former Liberal Premier of Quebec), Elizabeth May (Leader of Canada’s Green Party), Kathryn Harrison (UBC professor), Eric Newell, (former CEO of  Syncrude), and Bob Inglis, (former Republican member of the U.S. Congress).

The background paper on which discussion was based, Why would Canadians Buy Carbon Pricing?  is at http://canada2020.ca/wp-content/uploads/2013/04/Canada-2020-Background-Paper-Carbon-Pricing-April-2013.pdf. It provides an overview of the current provincial mechanisms and concludes that the B.C. Carbon tax offers the best model for a national policy. The event website at http://canada2020.ca/event/the-canada-we-want-carbon-pricing/  provides links to all documents and to videos of each presenter.

U.S. Proposals to Encourage Large-scale Wind Power

The costs and benefits of developing a commercial-scale offshore wind industry in the United States are explored in a report released on February 28. Policy recommendations are: accelerate the existing “Smart from the Start” program, enact the proposed Incentivizing Offshore Wind Power Act; establish a carbon tax, and roll back fossil fuel subsidies. Making the Economic Case for Offshore Wind was commissioned by the Center for American Progress, the Clean Energy States Alliance, the Sierra Club, and the U.S. Offshore Wind Collaborative, and conducted by the Brattle Group, a consulting firm based in Cambridge, Massachusetts. Read it at:  http://www.americanprogress.org/issues/green/report/2013/02/28/54988/making-the-economic-case-for-offshore-wind/