Download 2017-03-27 Climate Citizens Lobby v2

FACING CLIMATE CHANGE
March 27, 2017
Citizens’ Climate Lobby
Nancy Palardy, Senior Manager Climate Change
Overview
1: Who is the ECO?
2. Why we are so passionate about climate
change
3. What Ontario is doing
2
Who is the ECO?
• Independent Officer of the
Legislative Assembly
• Guardian of the Environmental
Bill of Rights, 1993
• Watchdog on:
• Greenhouse gas emissions in
Ontario
• Energy conservation
• Environmental protection
3
Reports on Various Issues
ENERGY CONSERVATION
CLIMATE
ENVIRONMENT
4
Why are we so passionate
about climate change
5
Your colleagues may know
• 97% of climate scientists agree:
• Climate change is:
• Human-caused
• Serious
• Caused mostly by greenhouse gases in the atmosphere that
keep solar heat from escaping
• Primary GHG is CO2 from fossil fuels
• Real
6
But do they know?
• Climate change is:
•
•
•
•
Here now and moving fast (last 12 months are “off the charts”)
$ Trillions financial opportunity and threat
Immense impact on environment and people
Huge implications for Ontario infrastructure and economy
• We’re running out of time
7
Highest ever CO2 emissions
On our
watch:
2015
emissions
63% higher
than 1990
8
Source: Global Carbon Project, Carbon Budget 2016
Where does the CO2 go? (2006-2015)
16.4 GtCO2/yr
44%
34.1 GtCO2/yr
91%
Sources = Sinks
31%
11.6 GtCO2/yr
9%
3.5 GtCO2/yr
26%
9.7 GtCO2/yr
Source: CDIAC; NOAA-ESRL; Houghton et al 2012; Giglio et al 2013; Le Quéré et al 2016; Global Carbon Budget 2016
9
Highest Air CO2 in (Human) History
• Humans until 1750
• 1750
• 1860
• 1988
• 2016
180 - 280
278
280
350
406 ppm
• Now permanently above 400 ppm
• Trapping extra heat
Source: National Oceanic and Atmospheric
Administration, Trends in Atmospheric
Carbon Dioxide at Mauna Loa Observatory (full
record), 2016.
10
Not just CO2
• ~50% more
heat than
CO2 alone
• Methane
• Nitrous oxide
• Refrigerants
11
Source: National Oceanic and Atmospheric Administration, The NOAA Annual
Greenhouse Gas Index (AGGI), 2016.
Highest temperatures in human history
12
Only 1% of the Heat in the Air
Source: National Aeronautics and Space Administration, Earth Observatory: 2010 Features – Global
Warming, 2010.
13
93% of the Extra Heat is in Oceans, Lakes
Warmer water takes up more space
Source: BBC, Behaviour of matter: Expansion and contraction,
2014.
Source: Intergovernmental Panel on Climate Change, Chapter 3: Observations: Oceans in Climate
Change 2013: The Physical Science Basis (contribution of Working Group 1 to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change), 2013.
14
4% of the Heat to Ice
15
Higher Sea Levels, Wilder Storms
16
20th Century “Normal” is Gone
17
Source: National Oceanic and Atmospheric Administration, Climate Change – Global Temperature
More Extreme Temperatures
Deviation from mean 1951-1980 climate
18
http://www.columbia.edu/~mhs119/PerceptionsAndDice/
Ontario Warming Faster Than Average
• Ontario frost-free season
increasing by 1-13 days
each decade
• Warming differs by region
• Latitude, topography, water
19
Source: LAMPS Climate Change Group, Ontario Frost Free Season Changes Analysis
Ontario: When, not if
• Milder winters
• Ice roads, winter sports, snow
cover
• Wetter springs, faster melts
• Hotter, drier summers
• Storms, floods, droughts
• Forest fire
• Invasive species
20
2016 Drought
Conditions as of July 31, 2016
21
Catastrophic Insured Losses - Canada
Fort McMurray Fire,
Windsor Floods
Alberta and Toronto Floods
Eastern Ice Storm
Ontario Wind and Rain
Quebec Floods
22
Source: Insurance Bureau of Canada, Lapo Calamai
Ontario: When, not if
• Health impacts, e.g. more:
• Infectious diseases
• Extreme weather events
• Extreme heat
• Poor air quality
• Water stress
23
How Much Worse? Depends on Emissions
24
Source: Laboratory of Mathematical Parallel Systems (LAMPS) at York University, Temperature Change for 1900 to 2100
relative to 1986-2005 from AR5 CMIP5 subset, 2016.
And they are still growing
Source: BP 2016; Jackson et al 2015;
Global Carbon Budget 2016
25
What else have we unleashed?
• Permafrost
• Soil carbon loss
• Forest die-back
• Ocean current changes
• Loss of sea ice
• What would a tipping point look like?
26
Global Sea Ice
27
Is it too late?
• We are in for big changes
• There is still a little time to have an impact on what’s coming
• Our choices, right now, matter
28
What is Ontario doing?
29
Ontario is doing so much right
Coal power plant closures
Price on carbon
Climate Change Action Plan
Climate Ready update (adaptation)
30
Though still a long way to go
31
Cap and Trade
Ready, Set, Go!
32
New Climate Act
250
Ontario GHG Emissions (Mt CO2e)
• Carbon pricing to increase
fossil fuel costs
• Proceeds in Greenhouse Gas
Reduction Account spent as per
Action Plan
• Enshrined targets into law
• Reduce GHGs by 80%?
Historical
200
Business As Usual
150
100
50
0
1990
Targets
2010
2030
Historical data: http://unfccc.int/national_reports/annex_i_ghg_inventories/national_inventories_submissions/items/9492.php
2050
33
Basic Theory – Polluter Pays
• To reduce GHG emissions, we must put a price on them
• GHG polluters would emit less if they had to pay for the privilege
• For polluters to take action and make investments, they need policy
stability and predictability
34
Recommendation:
Ontario should follow the UK
example and set legally binding
carbon budgets well in advance,
within which a cap and trade
program would operate.
35
Carbon Tax vs Cap and Trade
Carbon Tax:
Cap and Trade:
Gov’t sets price
Gov’t sets cap
Simpler to
understand
Lower cost
GHG
mitigation
Faster to
implement
Doesn’t
include the
term tax
36
The Cap
• Government issues capped
number of GHG allowances
Allowances Over Time
2.5
• Permits to pollute
• Emitters must submit
allowances to match emissions
• Cap drops with time
• Allowances become scarce,
price rises
• It becomes cheaper for
emitters to reduce emissions
than to buy allowances
Price
2
1.5
Availability
1
$
$$
0.5
0
Present
Future
37
The Trades
• How? Emitters buy or sell
allowances or offsets in
secondary market
• Result? Lower economic cost
for GHG reductions
Excess
Emissions
Allowances
Emissions
• Some can reduce GHGs at
lower cost than others
• For high cost emitters, more
affordable to pay others to
reduce GHGs
Excess
Reductions
Emissions Credit
$
Emitter A
Adapted from: http://wpmedia.ottawacitizen.com/2015/07/0725_cap_and_trade.jpg?quality=55&strip=all
Emitter B
38
Cap and Trade Design Issues
How high is the cap?
How fast does the cap
drop?
Who needs
allowances?
Who must pay for
them?
Competitiveness and
carbon leakage
Stability and
predictability
Cost and fairness
Linking
39
Key Evaluation Metrics?
GHG emission reductions
Economic efficiency/cost-effectiveness
Market functioning
Carbon leakage
40
Who Needs Allowances?
Needs Allowances, Costs Passed on to Customers
100 Mt
Liquid Fuel and Natural Gas
Distributors
Needs Own
Allowances
40 Mt
80% Industry
Does Not
Need
Allowances
31 Mt
Agriculture &
Waste
41
Who Pays, Who Doesn’t?
>90% Free
Allowances until
2020
Pays for Allowances Indirectly
100 Mt
Liquid Fuel and Natural Gas
Distributors
40 Mt
80% Industry
Does Not
Need
Allowances
31 Mt
Agriculture &
Waste
42
Recommendation:
Ontario should be more transparent
about which entities are receiving
free allowances, and why.
43
Ontario’s Design Choices
Ontario’s cap and
trade system is:
• Reasonable
• Appropriate for our economy
Challenges:
• It is complicated
• It will take time to work
• Needs longer-term certainty
44
Linking with California and Quebec
Benefits
• Cheaper for emitters (us)
• Reduce carbon leakage
• Market functioning
Bigger,
more liquid
market
Lower,
more
stable
prices
Consequences
• Temporary outflow of Ontario cash:
• $250+ million to California?
• $250+ million less fossil fuel imports?
• Lock in reliance on imported
allowances?
Lower
prices
Less GGRA,
Action Plan
funding
In first years, Ontario emitters may find it cheaper to buy allowances / credits
from California than to reduce emissions in Ontario
45
But can we count on California?
• California’s program faces legal
challenges
• Litigation
• 2016 May/August Auction failures
• Reauthorization after 2020
• Won’t get benefit from federal
Clean Power Plan
46
Recommendation:
Ontario needs a contingency plan for
the possibility that California’s cap and
trade program may not continue to
operate in its present form, and/or may
not be reauthorized after 2020.
47
Offsets – Major Potential
• Possible Offsets, e.g.:
•
•
•
•
•
•
•
•
Ontario Emitters
within Cap
• Competitive?
Offset Credits
Emitters Outside
Ontario
Mine methane
Landfill gas
ODS / refrigerants
N2O / fertilizer
Forest / afforestation
Urban forests
Livestock
Conservation cropping…
Ontario Emitters
Outside Cap
• If so, can keep money and GHG
reductions in Ontario
• Maximum?
• 8% of emissions (not cap)
• 11.4 Mt in 2020
48
Adapted from: https://openknowledge.worldbank.org/bitstream/handle/10986/23874/ETP.pdf?sequence=11&isAllowed=y
Recommendation:
The government must prioritize the
approval of offset protocols to
enable the creation of a timely and
ample supply of high quality
Ontario offsets.
49
What will it cost if you change nothing?
50
http://www.enviroeconomics.org/single-post/2016/05/17/Impact-Modelling-and-Analysis-ofOntario%E2%80%99s-Proposed-Cap-and-Trade-Program
Spending the Money
Greenhouse Gas Reduction Account
51
Greenhouse Gas Reduction Account
• $1.8 billion per year?
• Mostly from everyone who buys petroleum products and natural gas
• Limited impact to Large Final Emitters and electricity sector (90% fossil free)
$
Emission allowance
auction
$
Dividend
$
Greenhouse Gas
Reduction Account
Ontario Consolidated
Revenue Fund
$
Initiatives “that are
reasonably likely to
reduce, or support the
reduction of,
greenhouse gases” or
for related government
expenditures
Climate Change Action
Plan?
52
Climate Change Action Plan
53
5 Year “Action Plan”
• More of a direction than a plan
• No precision in the numbers
• Compromise document
• After 44 drafts, several leaks
• Details being worked out after
54
Good Ideas That Will Take Time
• Land use and transit
• Green bank
• Cleantech companies
• Reductions:
• When?
• Where?
• How big?
55
Big Claims for 2020
• Subsidizing the Global Adjustment – 3 Mt
• Per ECO - no plausible additional reductions
-Not Plausible
• Renewable
fuel regulation – 2 Mt
• Per ECO - plausible, requires careful regulation of environmental effects
• Could have high per tonne cost
• Industrial transformation - 2.5 Mt
• Per ECO - no clear mechanism; cannot quantify
56
Compliance Gap
30
25
Mt CO2eq
20
Other
Action Plan
Cap and Trade
15
10
How will Ontario meet the 2020
target?
• Reductions?
• Offsets?
• California allowances?
• Early reduction credits?
5
0
Compliance Gap
57
After Action Plan: Still lots to do
• Mitigation
• How to build a low-carbon economy?
• Adaptation
• What will make Ontario resilient?
• Many risks, opportunities and co-benefits
58
Knowledge + Action = Hope
No one can do everything, but everyone can do something
59
Lots of Progress
• Encouraging international, national, and provincial progress
• Paris Agreement – came into in force on November 4, 2016
• Kigali Amendment to Montreal Protocol – hydrofluorocarbons
• Carbon Offsetting and Reduction Scheme for International Aviation
• Pan-Canadian Framework
• Despite U.S. election and recent news…
60
What Can I Do?
• Climate cannot be left entirely up to government
Reduce your carbon footprint (food, transportation, building, travel)
Get ready to adapt
Speak up and speak out (both to politicians and friends)
Put your money where your mouth is (consumption and investments)
• It’s not too late
61
Questions?
Download the Facing Climate Change report
and the Introduction to Cap and Trade in Ontario document: eco.on.ca
Contact us: [email protected]
62