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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

 

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.”

Updated: Keeping up with COP23 in Bonn – what should Canadians know? what should workers know?

As anyone who reads the news must know by now, much of the  world’s climate change community has assembled for the 23rd annual “Conference of the Parties” (COP) in Bonn, Germany – from November 6 to 17. Following the flood of daily press releases and tweets from official meetings, side events, and protests can be overwhelming. Here are some helpful sources of events – most of which also provide Facebook and Twitter updates:  official COP23 press releases and documents in English  and in French ; Climate Action Network-International (CAN-I) daily coverage in English  and French . The International Institute for Sustainable Development formal  COP23 coverage of negotiations and side events , with more spontaneous  news at their  Climate-L site.  The official Canadian government statement of what Canada hopes to achieve at COP23 is here, and the government website for Environment and Climate Change Canada produces updates in English and French . Minister McKenna’s Twitter feed @ec_minister  is a fuller record of Canadian activity  .

Gil McKeown Just Transition at COP23

CLC Side Event re Just Transition at COP23, Nov. 13 2017

For more opinion and analysis, follow  Climate Action Network- Canada newservice CanRaction , which  produced a November 9 issue: “Paris Implementation Depends on a Just Transition for Fossil Fuel Workers” .  The National Observer has reported on Canadian activity from COP23 here .  Follow trade union updates via Twitter at #unions4climate  – the only way to find out about side events such as the Canadian Labour Congress event re #Just Transition on November 13.  Follow the flood of tweets from all points of view at #COP23.  For the progressive U.S. presence, follow #wearestillin on Twitter or visit the We are Still In website.

The meetings, although in Bonn, are officially hosted by Fiji, and will be governed by the principle of “talanoa” –  described by the Prime Minister of Fiji as “ a process of inclusive, participatory and transparent dialogue that builds empathy and leads to decision-making for the collective good.”  This aspiration for transparency and consultation will be applied to the key points of contention:  1).  “the “ratchet” – the means by which the national Paris pledges for emissions reduction will be increased in future years,  ( referred to in UN-speak as the “facilitative dialogue”; and 2).  Issues of adaptation and financing (with adaptation now being re-phrased as “resilience”).  As the first COP meeting since the Paris Agreement, the Bonn talks must begin to build the formal implementation structure – referred to as “The Paris Rulebook.”   For context, read:  “The COP23 climate change summit in Bonn and why it matters” in The Guardian ( a very quick overview laden to links with more information), or “Bonn climate talks must go further than Paris pledges to succeed”  .  The Heinrich Boll Foundation has published a very complete discussion, which includes the topics of human rights, just transition, and gender climate change, in The Fiji UN Climate Summit 2017, COP23: what is at stake in Bonn?  .

Below are a few documents relevant to Canada and working people:

Climate Action Network Canada Brief to the COP23 Meetings:  This policy paper specifies goals from the Canadian point of view, including #4, explicitly about Just Transition:  “Canada should work to ensure that global pursuits for just transition and decent work have a prominent place in relevant components of the Paris work programme as well as FD2018. Just transition for workers should be maintained as a permanent theme within the forum on response measures under the Paris Agreement. It is critical to have a dedicated technical space, where good practice or challenging situations can be presented and debated and then find a reflection in the work programme. Future work on this issue should be recommended to SBI/SBSTA as the Paris work programme is developed and implemented. As FD2018 invites parties to enhance NDCs, Canada should incorporate just transition commitments into its NDC and encourage other parties to do the same. NDCs supported by zero-carbon development roadmaps are critical for building a longterm vision for transforming our economy, as well as for driving sustainable investments. Factoring-in employment and just transition will align them with broader social priorities in each country.”

The ITUC Frontlines Briefing Climate Justice: COP 23 Special Edition. The International Trade Union Confederation (ITUC) is leading a delegation of 130 trade union members from 40 countries at COP, and posting updates from the meetings at  #unions4climate on Twitter. The  COP 23 Special Edition  (which includes special note of  the Columbia Institute Jobs for Tomorrow – Canada’s Building Trades and Net Zero Emissions report ) fleshes out the top-level statement of  3 Trade Union Demands for COP23  : “• Raise ambition and realise the job-creation potential of climate action; • Deliver on climate finance and support the most vulnerable• Commit to securing a just transition for workers and their communities. ”

Disclosure of Climate-related Financial Information: Time for Canada to Act  a Policy Brief by the Centre for International Governance Innovation: presented at COP 23 and urging strong implementation of the recommendations of the Task Force on Climate-related Financial Disclosures. It  provides a plan on how to integrate climate change into existing risk management and disclosure practices in Canada.

We Mean Business Blog:   Watch this blog for news and press releases representing the views and policies of the We Mean Business coalition, which represents over 620 multinational companies which support a low carbon transition.  Making the Paris Vision a Reality summarizes their policy goals.

UNEP The Emissions Gap Report 2017 . This 8th edition by the UNEP underlines the urgency and scale of the task at COP23 by stating that currently pledged emissions reductions, even if met, would result in  no more than a third of the emission reductions needed.  “If the climate targets in the Paris Agreement are to remain credible and achievable, all countries will need to contribute to significantly enhancing their national ambitions, augmenting their national policy efforts in accordance with respective capabilities and different circumstances, and ensuring full accounting of subnational action.”   The UNEP reviews recent studies to score the countries which are on track to meet their 2030 NDC targets – Brazil, China, India and Russia.  Those “likely to require further action in order to meet their NDCs, according to government and independent estimates” include Canada, along with  Argentina, Australia, the European Union, Indonesia, Japan, Mexico, South Africa, the Republic of Korea and the United States. Much of the UNEP report is based on data  from The Climate Action Tracker ; the New York Times interactive summary also relies on the Climate Action Tracker in the November 6 article, “Here’s how far the world is from meeting its climate targets” .

United States Fourth National Climate Assessment . Most attention went to the surprise that the Trump administration didn’t suppress this report , which represents a comprehensive, authoritative documentation of climate change science worldwide, with an emphasis on U.S. statistics and experience . It was released by the U.S. government, and in direct opposition to the Trump administration stance,  stated:  “This assessment concludes, based on extensive evidence, that it is extremely likely that human activities, especially emissions of greenhouse gases, are the dominant cause of the observed warming since the mid-20th century. For the warming over the last century, there is no convincing alternative explanation supported by the extent of the observational evidence.”

B.C. Climate Solutions and Clean Growth Advisory Council established to guide provincial policy

BC Advisory CouncilOn October 23 , the British Columbia Government announced the appointment of  the Climate Solutions and Clean Growth Advisory Council, to “provide advice to government on actions and policies that can contribute to carbon pollution reductions and optimize opportunities for sustainable economic development and job creation. This includes working with industry and the federal government to address the competitiveness of emissions-intensive trade-exposed sectors, to help them reduce their emissions and continue to thrive economically.”  The formal Terms of Reference are here .   “B.C. Government sets up Climate Council”  in the Climate Examiner provides a  good summary:   “The new body is not intended to craft an entirely new climate change strategy for the nascent government, but rather advise on how to build on the previous climate team’s work, particularly with respect to decarbonizing the major sources of emissions in the province: transport, industry and buildings, the minister said. In addition, the council will offer advice on how to achieve a new mid-term emissions reduction target of 40 percent by 2030, legislation for which is to be introduced next spring.”

The Advisory Council is a permanent group comprised of  22 members, some of whom advised the Liberal governments’ 2016 Climate Leadership Plan;  members are appointed for two year, renewable terms.  The Co-Chairs are Merran Smith, Executive Director, Clean Energy Canada and Marcia Smith, Senior Vice-President of Sustainability and External Affairs, Teck Resources Limited. A full list of members is available –    notably, it includes Lee Loftus, Executive Director of the British Columbia and Yukon Territory Building and Construction Trades Council, (a partner organization with the Adapting Canadian Work and Workplaces to Respond to Climate Change (ACW) project);  Gavin McGarrigle, BC Area director, Unifor; and  D.J. Pohl, president, Fraser Valley Labour Council.  Academic and activist members Nancy Olewiler, Professor, School of Public Policy, Simon Fraser University; Judith Sayers, Adjunct Professor, University of Victoria; Sybil Seitzinger, Executive Director, Pacific Institute for Climate Solutions, University of Victoria; Michelle Molnar, Environmental Economist, David Suzuki Foundation; and  Karen Tam Wu, Acting Director, Pembina Institute.