Mandatory Emissions Trading Scheme for China

China’s Ministry of Finance has announced a plan to launch a mandatory national emissions trading scheme sometime between 2017 and 2020. The country has chosen seven regions where carbon market pilots will begin in the meantime. Eleven regions across China have been conducting pollution trading pilots since 2007, partly modelled after the EU emissions trading scheme. While pilots to date have focussed on carbon dioxide (CO2), the national scheme is expected to include sulphur dioxide (SO2) and nitrous oxide (NOx) as well. One billion metric tonnes of CO2 will be covered under the pilot programs, smaller only than the EU emissions trading scheme.

See “China aims to launch pollution permit market within 3 years” from Reuters at: http://in.reuters.com/article/2014/03/24/china-pollution-idINL4N0ML1OU20140324. By 2020, China has pledged to cut its greenhouse gas emissions per unit of GDP by 40 to 45 percent from 2005 levels.

EU Proposes New Emissions Targets for 2030, Weak Regulation of Fracking, and No Extension to the European Fuel Quality Directive

After hard-fought negotiations, the members of the European Union finally agreed on January 22 to a compromise Framework proposal to cut greenhouse gas emissions by 40% by 2030, compared with 1990 levels, and a goal of producing 27% of all energy from renewable sources by 2030. The European carbon emissions trading system (EUTS) will be reformed, and the goal of improving energy efficiency by 25% by 2030 will be an “indicative target”, not legally binding. Fracking will also be governed by non-binding recommendations rather than regulation. Most significantly for Canada, the Fuel Quality Directive will not be renewed after its expiry in 2020 – a move away from the support of biofuels, and which might allow for Alberta oil to enter the European fuel supply chain. The Canadian government has lobbied actively for such a change.  

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See “EU May Scrap Green Fuel Law in Boon for Tar Sands Industry” at Inside Climate News http://insideclimatenews.org/content/eu-may-scrap-green-fuel-law-boon-tar-sands-industry, and for background, the Natural Resources Defense Council blog, Canadian Tar Sands Exports to Europe could Grow from a Trickle to a Flood Undermining Europe’s Climate Goals (Jan. 2014) at: http://switchboard.nrdc.org/blogs/aswift/canadian_tar_sands_exports_to.html

The European Council will consider the framework proposals at its spring meeting in March.

From the EU Commissioner on Climate Action: “…The details of the framework will now have to be agreed, but the direction for Europe has been set. If all other regions were equally ambitious about tackling climate change, the world would be in significantly better shape.” Read the analysis from The Guardian (U.K.)(Jan.22) at: http://www.theguardian.com/environment/2014/jan/22/eu-carbon-emissions-climate-deal-2030 and the New York Times (Jan. 22) at: http://www.nytimes.com/2014/01/23/business/international/european-union-lowers-ambitions-on-renewable-energy.html?hp. The press release, with links to official documents, is at the European Commission website at: http://europa.eu/rapid/press-release_IP-14-54_en.htm.

Environmental groups disagree with the positive spin: according to the Friends of the Earth Europe, the negotiators “…seem to have fallen for the old-think industry spin that there must be a trade-off between climate action and economic recovery. This position completely ignores the huge financial cost of dealing with the impacts of climate change and the €500 billion the EU is spending every year on oil and gas imports”. (at: https://www.foeeurope.org/2030_climate_energy_plan_220114). About fracking, the FOE had this to say: “… attempts to regulate the fracking industry have been undermined by heavy corporate lobbying and pressure from certain member states intent on fracking their lands.” … “With the heavy support from José Manuel Barroso, the United Kingdom, Poland, and Romania have all played a leading role in undermining shale gas legislation, with allies Hungary, Lithuania, Czech Republic and Slovakia.” See https://www.foeeurope.org/shale_gas_framework_220114. An article in The Guardian (Jan. 14) offers a detailed analysis of the significant role played by the U.K. to weaken the fracking regulations (see at: http://www.theguardian.com/environment/2014/jan/14/uk-defeats-european-bid-fracking-regulations).

Pipeline Politics from Ontario’s Point of View

The Politics of Pipelines: Ontario’s Stake in Canada’s Pipeline Debate, was released on November 12 by University of Toronto-based Mowat Centre, taking a climate change policy perspective on the issue of pipeline development and its impact on Ontario. It says that provinces who don’t necessarily receive adequate economic benefit from the oil sands are obligated to contribute to the nationwide effort to reduce greenhouse gases, and recommends either a national carbon tax or a cap and trade policy to satisfy the “polluter pays” principle. The report does note that local and First Nations communities across Canada will likely benefit from an increase in construction, maintenance, and management jobs, as well spin-off projects near pipeline routes. However, manufacturing sectors may suffer from inflated exchange rates and Dutch Disease. In Ontario, the conversion of the Line 9 gas pipeline to oil sands bitumen would decrease the capacity of the natural gas sector and may increase the consumer cost, while taxpayers would be forced to fund equalization payments.

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The Politics of Pipelines: Ontario’s Stake in Canada’s Pipeline Debate is at: http://mowatcentre.ca/research-topic-mowat.php?mowatResearchID=96

Quebec and California Link Carbon Markets

On October 1, the governments of Quebec and California announced an agreement outlining the steps and procedures to fully harmonize and integrate the cap-and-trade programs of their two jurisdictions, effective January 1, 2014. It is hoped that this will be a model for more such partnerships. “The sale of emission allowances will generate at least $ 2.5 billion in revenue by 2020 in Quebec. These funds will be fully reinvested in initiatives to fight climate change, including facilitating the conversion to renewable energy, promoting energy efficiency, improving industrial processes and preparing Quebec society to adapt to the impacts of climate change. The electrification of transportation is another major project on which our government will labour over the coming months”, said Minister Yves-François Blanchet. See the Quebec government press release at: http://communiques.gouv.qc.ca/gouvqc/communiques/GPQE/Octobre2013/01/c6398.html, and “Carbon Market: Quebec and California Link Their Respective Cap And Trade Programs” (Oct. 1) in GlobeAdvisor at:https://secure.globeadvisor.com/servlet/ArticleNews/story/CNW/20131001/C6398

 

European Emissions Trading System

The European Emissions Trading System faces a future of conflict and further negotiation after April 16th, when the European Parliament rejected a Commission proposal to improve the system by removing the current oversupply of emissions permits.  See coverage by Reuters at http://www.reuters.com/article/2013/04/16/eu-ets-vote-idUSL5N0D337720130416  ; The Guardian at http://www.guardian.co.uk/environment/2013/apr/17/europe-climate-chief-vow-save-emissions-trading , and the New York Times OpEd  (May 7) , “A Carbon System Worth Saving”, at http://www.nytimes.com/2013/05/07/opinion/europes-carbon-trading-system.html  .