Canada: the year past and the battle over carbon pricing in the year ahead

The Energy Mix Yearbook Review for 2018 is undoubtedly the most thorough and informed review of 2018 climate issues for Canadians.  It compiles its newsletter coverage of 2018 stories and adds context and analysis, as well as a multitude of links to further reading.  The sections of exceptional interest include “Jobs and Just Transition: Renewables and Efficiency Jobs Surge while Fossil Employment Sags “; “Fossils go for Broke”  and “Canada’s Contradiction: Low-Carbon Leader or Perpetual Petro-State?”  .  Other, briefer overviews for Canada include “State of Play 2018”  from EcoJustice, highlighting legal issues;  “ 10 wins for Canadian energy and climate action in 2018: Year in review” with a positive slant from the Pembina Institute (Dec. 20) ; and from the Council of Canadians 2018 in Review: Offshore drilling (December 21),  a chronology from Atlantic Canada.

On December 20, easily overlooked because of the holiday season,  Environment and Climate Change Canada published five separate review reports.  Clean Canada:  Protecting the Environment and Growing our Economy   is a snapshot of Canada’s federal climate action policies and expenditures, and seems intended for a wide popular audience.  Second Annual Synthesis Report regarding the Pan-Canadian Framework on Clean Growth and Climate Action   (French version here )  is a more detailed accounting of the policies and programs by the federal and provincial governments in 2018, organized in chapters relating to carbon pricing, complementary measures (buildings, transportation, electricity, agriculture, etc.); adaptation and resilience; clean technology and innovation and jobs; reporting and oversight; federal engagement and partnership with Indigenous people .  2018 Canada’s Greenhouse Gas and Air Pollutant Emissions Projections Report  (French version here ) provides, again,  a policy overview but its main purpose is to continue the series of annual reports (since 2011) of detailed emissions data for economic sector and  geographic region. It also includes emissions projections to 2030 under two different scenarios – (spoiler alert: oil and gas will be Canada’s leading source of emissions, followed by transportation and heavy industry).

Other substantial reports published on December 20 will form the basis for consultations in 2019.  The new draft for the Federal Sustainable Development Strategy 2019 to 2022 will inform a public consultation until April 2, 2019. (The companion 2018 Progress Report on the Federal Sustainable Development Strategy  evaluates the 2016 to 2019 strategy goals and the activities of  41 federal departments and agencies.)

The final Clean Fuel Standard Regulatory Design Paper focuses on the liquid fuels regulations, with comments requested by February 1, 2019. The draft regulation is scheduled to be published in 2019 and a final regulation by 2020, bringing to an end a complex consultation process that began in 2016 (summarized by WCR  in January 2018).  The Clean Fuel Standard will apply to the full life cycle of all fuels, gasoline and diesel, aviation fuel, natural gas for heating, and metallurgical coal, and has been called the single most important policy tool to achieve Canada’s emissions reductions target for 2030.

And finally, a regulatory proposal relating to the most publicized issue for 2019: carbon pricing.  Next Steps in Implementing the Federal Pollution Pricing System for Large Industry (the “Output Based Pricing System”)  was released on December 20, and carries  a deadline for public comments of February 15, 2019. The Output Based Pricing System registration system went live on November 1, 2018, with reporting and verification requirements starting on January 1, 2019.

The coming battles over Carbon tax in 2019:   As Prime Minister Justin Trudeau announced in late October 2018,  the federal government has not backed down on its determination to impose a carbon pricing policy across all Canadian jurisdictions in 2019, despite resistance and constitutional challenges led by the premiers of Saskatchewan and Ontario.  In some provinces – British Columbia , Alberta , Quebec  – established carbon pricing systems continue; in Nova Scotia , Prince Edward Island , Newfoundland and Labrador –  newly approved systems which meet the government’s benchmarks under the Pan-Canadian Framework will begin.   In the other provinces who have opposed the federal plan – Manitoba , Saskatchewan , New Brunswick and Ontario  –  the federal backstop fuel charge will be imposed starting in April 2019, sweetened by a “Climate Action Incentive”,  whereby all carbon revenue collected by the federal government will go directly back to people in the provinces from which it was generated.  The Annex of the Second Annual Synthesis Report of the Pan-Canadian Framework  provides up to date summaries for the situation in each province.

Public opinion supports the government’s carbon tax actions, though barely, according to polling made public by Global News on January 3 . Based on a November 9 internal poll conducted for the Liberal party, 46 per cent supported and 44 per cent opposed the plan  in Saskatchewan and Manitoba ; in Ontario, 43 per cent were in support and 32 per cent opposed. Nationally, support was at 47 per cent and opposition was at 29 per cent, with women more supportive than men.

Recently, one article appeared in the labour press, supporting carbon pricing:  “Pricing carbon first step to tackling climate change” in CUPE’s Economy at Work newsletter (Jan. 2).  The mainstream press has been far more active, with general support for a carbon tax: for example,  an editorial in  the Globe and Mail newspaper is titled: “ Do you want a carbon tax, or do you want to be lied to? “(Dec. 26) . The editorial is critical of the Ontario government’s Ontario Carbon Trust proposal, about which it states:  “One emerging conservative alternative to carbon pricing is working with business to spur the development of green technology. What that usually means is taxpayers giving subsidies to business.… “Ontario’s Progressive Conservatives ….say they will dish out $400-million on a “Carbon Trust” that will collaborate with industry on emissions cuts. They can rail against carbon pricing all they want; spending taxpayer money has the same effect on pocketbooks as asking consumers to pay more.”

The Canadian Chamber of Commerce was also widely cited as supporting a carbon tax, to the extent that they issued a press release on December 17 2018, clarifying their position:  “While some of the [media] coverage notes the Chamber’s support for carbon pricing, it neglects to include that the support is contingent upon significant caveats. The report calls for government to take concrete steps to reduce the overall regulatory burden on businesses in Canada, and to return the revenues from the carbon tax to business to help them lower their carbon emissions and their energy costs.”  The report referred to, outlining the full arguments, is   A Competitive Transition: How smarter climate policy can help Canada lead the way to a low carbon economy, which was published in December 2018.

Take it to the Courts!  Saskatchewan filed its challenge to the constitutionality of the federal price on carbon pollution in April 2018; the Saskatchewan Court of Appeal announced that it will hear the case in February 13 and 14, 2019, and released the lengthly list of intervenors which it has allowed to appear.  Intervenors include the provinces  of Ontario and New Brunswick on the side of Saskatchewan, and the province of British Columbia on the side of the federal government; other intervenors include the Canadian Public Health AssociationEcoJustice, representing the David Suzuki Foundation and the Athabasca Chipewyan First Nation; and the Council of Canadians , as part of a  group of seven other civil society groups, including the National Farmers Union and  Climate Justice Saskatoon.

A separate case  was filed by the Government of Ontario and will be heard by the Ontario Court of Appeal in April 2019.  The full list of intervenors, as well as the court filings by the Ontario government, appear at the Court of Appeal website here . British Columbia and New Brunswick have also applied for intervenor status in this case.

How will the courts decide?   “Courts should not have to decide climate change policy” appeared on December 21  in Policy Options,  with a discussion of the carbon pricing cases as well as the recent litigation by Quebec’s ENvironnement JEUnesse . Co-authors Nathalie Chalifour and Jason Maclean  argue that “only a collaborative  approach to policy-making is capable of delivering the kinds of rapid, forward-looking and systemic changes in how industries and societies function that are necessary to avoid the most catastrophic consequences of climate change. Litigation, by contrast, is necessarily reactive and typically divisive, time-consuming and influenced by the incremental development of legal precedent.”  Regarding the provincial carbon tax challenges, they state that “the federal Greenhouse Gas Pollution Pricing Act is an example par excellence of cooperative federalism.”…. “There’s little doubt that the courts will confirm the federal government’s jurisdictional authority to regulate GHG emissions. They may even decide that the Constitution obliges the government to take more serious climate action.”

A complex road is ahead, as indicated by a C.D. Howe Institute Memo published in October 2018:   “Federal carbon-pricing backstop is new constitutional territory”.

 

New Ontario Environment Plan steps backwards on emission reduction ambitions

On November 29, the Ontario government of Doug Ford released its promised climate change proposals in a new report, called Preserving and Protecting our Environment for Future Generations: A Made-In-Ontario Environment Plan. The government will  continue consultation, with public submissions accepted here until January 28 2019,  and  pledges to establish an Advisory Panel on Climate Change.  The major focus of the plan is to establish a Carbon Trust of $400 million over four years, which includes a $50 million ‘reverse auction,’ through which the government will fund private sector clean technology proposals.  It commits to an 8% emissions reduction over the next 12 years, a much less ambitious target than that of the previous Liberal government.  Reaction has been almost universally negative, as compiled by Climate Action Network Canada and by the CBC in “Ontario Climate change plan includes fund to help big polluters reduce emissions”  (Nov. 29) .  The Ecofiscal Commission offers a detailed critique and assessment in “Up in the Air” ;  the Pembina Institute  states  “The plan weakens Ontario’s carbon pollution reduction targets by 27 per cent…. The plan released today contains mainly aspirational statements and plans to make plans.”

Green party 2018 leaping into the futureThe Ontario Green Party calls the Ford government plan a Litter Reduction Plan, not a climate plan . The Green Party’s own Climate Plan, Leaping into the future: A comprehensive strategy for reducing Ontario’s emissions, was released on November 15, and sets a  100% carbon neutral by 2050 target, and a return to carbon pricing.

 

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”.

Activists force consultation re Ontario’s cap and trade policy as Environment Commissioner pans government’s actions to date

Ontario commissioner Report-Cover-In the annual Greenhouse Gas Reduction Progress Report for 2018, titled Climate Action in Ontario: what’s next? , the Environmental Commissioner of Ontario has published a blunt critique of the Conservative government’s actions to date.

As was widely reported, the  government in Ontario (among other actions) tried to dismantle the province’s cap and trade program after its election, introducing  Bill 4, the Cap and Trade Cancellation Act, 2018  on July 25 .  The Environmental Commissioner wrote:

 “Unfortunately, cap and trade was both complex and poorly communicated; for some, its costs were more obvious than its benefits. Today, cap and trade, the low-carbon programs that it funded, and 752 renewable energy projects have all been swept away, with nothing in their place. The government’s proposed replacement, the Cap and Trade Cancellation Act (Bill 4), currently lacks most of the features of a good climate law.…. There is no perfect answer, but the best international model for long-term consistency is the United Kingdom’s Climate Change Act. The U.K. Parliament sets legally binding long-term emission limits, plus five-year carbon budgets 12 years in advance, based on non-partisan, expert advice and reporting. Ontario should do the same.”

The Commissioner’s report includes appendices, including Appendix B: Revenue from cap and trade: What was it used for?

On September 11, environmental activists filed a lawsuit against Bill 4, alleging that it violates the Ontario Environmental Bill of Rights because no public consultations were held on the  matter.  On the same day, a notice appeared in the Environmental Registry,  allowing  for comments online or in writing, until October 11.    EcoJustice, one of the groups behind the lawsuit, (along with Greenpeace  and the University of Ottawa) has posted a summary of all these developments on September 25 in “Let Premier Ford know where you stand on climate action”, urging comments.

Jumping in to this debate:  Canadians for Clean Prosperity, which commissioned a study to examine the costs and benefits of carbon “costs” (e.g. fuel and household heating) in Ontario, Saskatchewan, and Alberta, in the event that the federal carbon price backstop is triggered in 2019.  The author, Dave Sawyer of EnviroEconomics, concludes that most households, regardless of income, would receive more money through rebates than they would pay out through a carbon price, assuming that all fees are rebated to consumers.   The report summary is here ; the formal report is  Federal Carbon Price Impacts on Households in Alberta, Saskatchewan and Ontario  .  An economist’s (Brendan Frank) explanation of the EnviroEconomics report appears in an  EcoFiscal Commission blog “How carbon dividends affect incentives (hint: they don’t)”  (Sept. 26).

Ford government sued by Greenpeace for cancellation of cap and trade without consultation

Doug FordUpdated September 11:

On September 11, CBC News broke the news that “Greenpeace suing Ontario government over cancellation of cap-and-trade program” The lawsuit was filed  in Ontario Superior Court by EcoJustice and the University of Ottawa’s Ecojustice Environmental Law Clinic.  It asks the Court to quash the legislation, on the grounds that the Conservative government “unlawfully failed” to hold public consultations before cancelling  the program, as required by Ontario’s Environmental Bill of Rights. An expedited hearing on the matter has been granted and scheduled for September 21.  The EcoJustice press release of September 11 is here .

At issue is Bill 4, The Cap and Trade Cancellation Act, 2018 , introduced in July to honour a campaign pledge to repeal Ontario’s cap and trade program, authorized through the Climate Change Mitigation and Low-carbon Economy Act, 2016  of the previous Wynne government.  Yet as the National Observer  reported on August  15, “Ontario legislature adjourns without adopting Ford government bill to cancel cap and trade” .  The article also compiles expert opinion and reaction to the move, and notes  that the government will be expected to propose new greenhouse gas emissions reduction targets when the Ontario legislature returns for its fall sitting on Sept. 24.

In “Ford government does U-turn, expands electric vehicle rebates for Tesla buyers”  (Aug. 31), CBC reports on another Court case involving the rookie Ford government.  The Court ruled against the government and in favour of  Tesla, which had claimed that it had been discriminated against when the government discontinued electric and hybrid vehicle sales incentives.   The CBC quotes Sara Singh, an Ontario NDP MP, who stated in August:  “This is likely only the first of many decisions against the Ford government’s decision to rip up hundreds of cap-and-trade and green energy contracts.” The Huffington Post compiled a list the legal actions against the government, on a variety of fronts, on Sept. 5.

Others who have weighed in on Ford’s climate and energy policies: Climate Action Network, along with 37 signatories,  sent an Open Letter to Premier Ford  on August 8.  It documents the heat and fire emergencies throughout the province in the summer of 2018, and calls for a public commitment, along with a detailed plan,  to achieve Ontario’s existing legislated emissions reduction goals.  Environmental Defence maintains an online petition calling for similar action.

Regarding Ford’s cuts to renewable energy programs: A widely-cited article appeared in Forbes magazine: “Ontario’s Economic Investment Outlook Dims With New Government Energy Actions”  (Aug. 13)   (and was re-posted by the Pembina Institute )  stating:  “In one fell swoop Ontario’s government has dramatically slashed a source of funding for clean transportation infrastructure to help consumers lower travel costs, erased hundreds of clean energy projects to help consumers reduce electricity costs, dimmed the prospects for jobs and economic growth from clean tech industries, and took a major step backwards in making the province an attractive climate for business and investment today – and into the future.”