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

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

 

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.

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.

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).