$2 Billion Low-Carbon Economy Fund announced, but Saskatchewan headed in a different direction

On June 15, Canada’s  Federal Environment and Climate Minister announced  details of the  government’s five-year, $2-billion Low Carbon Economy Fund , to support the goals of  the  Pan-Canadian Framework on Clean Growth and Climate Change.  The Low Carbon Economy Fund consists of two parts: the larger, Leadership Fund of  $1.4 billion, for projects proposed by  provinces and territories that have signed on  Pan-Canadian Framework , and the Low Carbon Economy Challenge, which  will be launched in fall 2017,  to support projects submitted by all provinces and territories, municipalities, Indigenous governments and organizations, businesses and both not-for-profit and for-profit organizations.  As described in “’Only fair’: McKenna on excluding Saskatchewan, Manitoba from $2B carbon fund” , Manitoba and Saskatchewan must sign on to the Pan-Canadian Framework by December 2017 to be eligible to receive any funding .

geothermalA CBC report summarizes the response by Saskatchewan Premier Brad Wall – who states, “”If this fund, which Saskatchewan taxpayers have helped create, is really about reducing carbon emissions, how does withholding those funds for green initiatives in Saskatchewan help that objective?”  Saskatchewan objects to the carbon tax mandate of the Pan-Canadian Framework, and has directed its climate change fight to carbon capture and storage, and more recently, Canada’s first geothermal power plant.  The press release from SaskPower regarding the geothermal power purchase agreement is here. Read  this article from DeSmog blog for a wide-ranging description of Saskatchewan’s energy policy and the announcement of its geothermal plant.

Federal government releases “Backstop” policies for provinces not already pricing carbon – Comment period open till June 30

As part of the Pan-Canadian Framework on Clean Growth and Climate Change, the federal government had outlined the  Pan-Canadian Approach to Pricing Carbon Pollution,  a national carbon pricing system with mandatory benchmarks for each province.  Most provinces, representing 97% of the population, already have, or are in the process of designing, their own systems – British Columbia, Alberta, Ontario, Quebec, and Nova Scotia (in process).   On May 18, the Government of Canada addressed the remaining 3%  – most notably in the province of Saskatchewan –  with the release of its Technical Paper on the Federal Carbon Pricing Backstop .

The “Backstop” refers to the fact that the policies  will only apply to provinces that do not have a carbon pricing system of their own  in place by 2018.  The proposal is composed of two parts:  a levy on fossil fuels, and a cap and trade system,  patterned after Alberta’s output-based allocation system, to price pollution from industry.  The levy system would include solid, liquid and gaseous fossil fuels: gasoline, diesel fuel, natural gas, coal and coke – and notably, aviation fuel.  Rates would initially be set for 2018 to 2022, progressing with $10 per tonne increments annually from $10 per tonne of CO2-equivalent (CO2e) in 2018 to $50 per tonne in 2022.  The federal commits to  return direct revenues from the carbon levy to the jurisdiction of origin, but there is flexibility about how the provinces can redirect that revenue.

UPDATE:  The EcoFiscal Commission released a helpful blog post on May 24: Explaining Output-Based Allocations (OBAs),  with a promise of a further explainer about the pitfalls of OBAs, to be released soon.

Public comments about the proposals are accepted until June 30, 2017, at Carbonpricing-tarificationcarbone@canada.ca and will be used to design the final carbon system and enabling legislation and regulations.  A sampling of reaction (below)  gives the government high marks for protecting Canadian competitiveness while reducing emissions.

“Is Canada’s carbon-pricing policy striking the right balance?” (May 18) in the Globe and Mail is a general affirmation of the federal proposals by three experts from varied points of view: Christopher Ragan (Chair of the Ecofiscal Commission), Peter Robinson (CEO of the David Suzuki Foundation), and  Steve Williams ( CEO of Suncor Energy).  A business response, in a press release from  TD Economics, covers similar ground: “ Feds Stick to their carbon- pricing guns” (May 18).  It states: “Botton Line: Carbon pricing is the most efficient way of reducing emissions, and today’s announcement should help Canada achieve meaningful emissions reductions. However, follow-through post-2022 will be crucial to achieving the 2030 target. The details of the carbon pricing backstop strike a good balance, providing clear incentives for emissions reduction while taking competitiveness issues into account, recognizing that a large industrial base cannot be “turned on a dime” and will continue to face competition from non-carbon priced jurisdictions.”

From environmental advocacy groups : In “Five things to know about Ottawa’s carbon pricing plan” , Clean Energy Canada highlights the similarities of the Alberta and Saskatchewan economies, and commends the output-based credit system, saying “there’s no question that a made-in-Alberta approach will also fit Saskatchewan’s economy very well.”  Clean Energy notes that the open question of distribution of revenues will cause much future debate, as will working out the details of the allocations for heavy industry, due by 2019.

The Pembina Institute response, “Ottawa taking carbon pricing cues from provinces”  also commends the output-based allocation system, and concludes:  “It’s worth taking a moment to celebrate how far we’ve come as a country – in large part due to the vision and ambition of provincial premiers – and to reflect on how to maintain this momentum despite choppy international waters.”

The elephant is the room that everyone is talking about is the anticipated court challenge from the government of Saskatchewan, whose Premier Brad Wall has stated that the federal government lacks the constitutional authority to enact a federal carbon price, and who likened  the Technical paper to “a ransom note.”   The Globe and Mail summarizes the tension in “Ottawa, Saskatchewan brace for battle over carbon pricing” .  The Pembina Institute has published a  Q& A interview with Professor Nathalie Chalifour of the University of Ottawa, who also wrote  “The feds have every legal right to set a carbon price” in October 2016 in iPolitics .

Saskatchewan’s preferred route to emissions reduction was clearly laid out in its White Paper on Climate Change released in October 2016, which states: “We should be focusing our efforts on innovation and adaptation, not taxation” – “innovation” largely meaning Saskatchewan’s investment in carbon capture and storage.  And while CBC reports  that Saskatchewan environmental groups are backing the federal Technical paper, there is widespread support for the Premier’s opposition.  According to a CBC report in March, the  Saskatchewan Taxpayers Federation,  the Saskatchewan Heavy Construction Association, and the United Steelworkers Local 5890, sent Prime Minister Trudeau a  joint letter outlining how a federal carbon tax would hurt Western Canada.  In  a CBC report on May 19, ‘You can’t buy a Prius and move dirt’: Critics say carbon tax will punish industry , those two industry groups make the case that  “there aren’t green alternatives for building roads, hauling trailers and working with heavy machinery.”

 

 

Canadian government announces a phase-out of “traditional” coal-fired electricity by 2030

On November 21, the federal Environment Minister announced  that the four remaining provinces with coal-fired electricity  (Alberta, Saskatchewan, New Brunswick, and Nova Scotia) must  speed up the their emissions reduction targets. All traditional coal-fired units (i.e. those without carbon capture and storage)  will be required to meet a performance standard of 420 tonnes of carbon dioxide per gigawatt hour by no later than 2030, and performance standards must be developed  for new units to ensure they are built using efficient technology.  Details are set out in a Backgrounder  .  To allow for flexibility, Equivalency Agreements can be negotiated under the Canadian Environmental Protection Act , and both Nova Scotia and Saskatchewan are pursuing such agreements.  Nova Scotia, which announced  on November 21 that  it would  implement a cap and trade system which would  meet or exceed the federal emissions reduction target , will be allowed to continue to use coal in high-demand winter months even after 2030, (with no  specific date set yet for full compliance) .  Saskatchewan, which relies heavily on carbon capture and sequestration technology to meet its recent emissions reduction plan, is “displeased”  about the coal phase-out plan, according to a CBC report .  Alberta has already announced its own plans   for a coal phase-out by 2030, promising  support for workers and communities.  See the “Liberals present plan to phase out coal-powered electricity by 2030” CBC (Nov. 21) for a good overview.

 What does this mean for coal workers?  Currently, coal-fired power  generated at 35 plants represents over 70% of emissions in Canada’s electricity sector, but provides  only 11% of our  electricity.  The coal industry employs approximately 42,000 direct and indirect workers.   In “Canada’s rejection of coal will clear the air but impact workers and power bills” , the CBC (Nov. 22) examines the likely higher  electricity bills in store for consumers, and  the likely job losses.  The CBC article quotes Warren Mabee, a researcher with the Adapting Canadian Work and Workplaces to Climate Change project and the associate director of the Queen’s Institute for Energy and Environmental Policy: he states that many workers in coal mines will be laid off  “while others will shift to extracting metallurgical coal, which is used in the steel-making process.”  It is important to note that the government press release explicitly promises:“ The Government of Canada will work with provinces and labour organizations to ensure workers affected by the accelerated phase-out of traditional coal power are involved in a successful transition to the low-carbon economy of the future.”

Much of the government’s motivation for its initiative comes down to the health benefits of removing pollutants of coal-fired electricity – carbon dioxide, sulphur dioxide, nitrous oxide, mercury and other heavy metals .  The Pembina Institute, along with the Canadian Association of Physicians for the Environment, Canadian Public Health Association   and others, released   Out with the coal, In with the new: National benefits of an accelerated phase-out of coal-fired power  on November 21.  The report estimates that a  national coal phase-out by 2030 would prevent  1,008 premature deaths, 871 ER visits, and health outcomes valued at nearly $5 billion (including health and lower productivity costs) between 2015 and 2035.  The Pembina Institute reacted to the government announcement, calling it “timely” and “necessary .  Clean Energy Canada responded with  Quitting coal will drive clean growth and cut pollution.   BlueGreen Canada, which includes the United Steelworkers union, recently published the  Job Growth in Clean Energy report, which recognizes the world-wide decline of the coal industry, and states that, “if properly supported now, Alberta’s renewable energy sector will create enough jobs to absorb the coal labour force”.

Saskatchewan backs CCS and Nuclear power in its Climate Change Plan

The White Paper on Climate Change released by Saskatchewan Premier Brad Wall on October 18  makes 13 recommendations in the hopes of redirecting the national conversation away from a national carbon pricing policy, as introduced by Prime Minister Trudeau on October 3. A CBC report headlined one of the proposals, to  “redeploy” $2.65 billion in federal funds for developing countries to invest in clean technologies,  but the real story is that Saskatchewan’s White Paper continues to  reject the national carbon pricing scheme, advocating instead for  innovative technology such as next-generation carbon capture and storage (CCS), and nuclear power.   The Climate Examiner from PICS provides a thorough summary of the White Paper   .  Climate Justice Saskatoon’s reaction calls for carbon pricing and technological solutions together,  and the Pembina Institute states that Premier Wall is out of step with climate reality by remaining outside the fold of provincial support for carbon pricing .

The  Saskatchewan’s Boundary Dam Carbon Capture and Storage project which Premier Wall  holds up as his solution is the world’s first large-scale application of carbon capture technology in a power plant, according to a profile in the Smart Prosperity newsletter (October 13).  SaskWind, a community-owned wind and solar project,  released a report in March 2015  which concluded that Boundary Dam generated losses of over of $1-billion, which Saskatchewan’s  electricity consumers must pay for.  The Boundary Dam website provides its own statistics.

Mapping the power of the Oil and Gas Industry in Canada

The Canadian Centre for Policy Alternatives (B.C.) announced a new initiative, funded by a $2.5 million partnership grant from the Social Sciences and Humanities Research Council of Canada on November 12, 2015.  Mapping the Power of the Carbon-Extractive Corporate Resource Sector will bring together “researchers, civil society organizations, and Indigenous participants to study the oil, gas and coal industries in British Columbia, Alberta and Saskatchewan.” The goal of the 6-year project is to identify the major corporate interests in the fossil fuel sector, and uncover their influence in policy decisions.