Download Where is Canada in 2012? - CEEN 525

Climate Change in Canada:
The policy and politics
Matt Horne
Director, Climate Change Program
February 8, 2012
Overview
• Background
• The federal government response
• The provincial government response
• Where does Canada go from here
Federal / Provincial Jurisdiction
The economics of climate change
• The costs of solving the problem are real, but
manageable (2 to 3% of GDP)
• The costs of inaction are steeper (5 to 25% of
GDP without accounting for social/env costs)
Canada’s Greenhouse gas emissions
(millions of tonnes CO2e)
800
700
600
500
400
300
200
100
-
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Greenhouse gas emissions
(millions tonnes CO2e in 2009)
Canada
Alberta
Ontario
Quebec
Saskatchewan
British Columbia
Nova Scotia
Manitoba
New Brunswick
Newfoundland
Prince Edward Island
Yukon, NWT & Nunavut
-
100
200
300
400
500
600
700
800
Greenhouse gas emissions
(change 1990 to 2009 in
millions of tonnes)
Canada
Alberta
Ontario
Quebec
Saskatchewan
British Columbia
Nova Scotia
Manitoba
New Brunswick
Newfoundland
Prince Edward Island
Yukon, NWT & Nunavut
-20
-
20
40
60
80
100
120
TTC
AP200 CCPC
PG
600
NAPCC
GP
G7, Rio (1992)
●
Kyoto (1997)
●
WCCA (1988)
200
400
●
Historic emissions Projected emissions
0
Canadian darkgreenhouse gas emissions (Mt CO2e)
800
The federal government
response: inaction
1990
1995
2000
2005
2010
Source: Nic Rivers, University of Ottawa
Some reasons/excuses
for the inaction
• Disconnect between problem and solutions
• Lack of willingness to pay
• Lack of interest/belief in the problem
• The need to harmonize with the U.S.
• Opposition from provinces and industry
Provincial leadership filling the void
250,000
Quebec
Ontario
200,000
B.C.
150,000
100,000
50,000
1990
1995
2000
2005
2010
2015
2020
Targets starting to be
backed by policies
• B.C.’s carbon tax and ban on coal-fired
generation
• Ontario’s feed-in-tariff and coal phase-out
• Quebec cap-and-trade
Different interpretations of
provincial leadership
• “A race to the top will help the country”
• “The patchwork approach is inefficient”
• “Canadians can live with strong policies”
Canadian perspectives on
carbon pricing
Source: http://www.environics.ca/reference-library
Additional carbon tax polling: http://www.pembina.org/pub/2233
Where is Canada in 2012?
• The positive steps we’ve seen shouldn’t mask the
scale of challenge still facing the country
• The level of national ambition is still inadequate
• The collective policy response still falls short of stated
ambition
• Serious federal/provincial fault lines still exist
Details: http://www.unep.org/publications/contents/pub_details_search.asp?ID=6227
• The level of national ambition is still inadequate
• The collective policy response still falls short of
stated ambition
• Serious federal/provincial fault lines still exist
For more information: http://www.pembina.org/blog/561
An illustration of tension:
Alberta’s projected emissions
MB NB NL
NS 3% 3% 1%
3%
MB NB NL
NS
3% 3% 2%
3%
AB
29%
BC
9%
SK
7%
NS
3%
BC
9%
ON
30%
1990
NL
1%
Rest of
Canada
BC
7%
AB
34%
AB
40%
SK
9%
SK
11%
QC
14%
MB NB
3% 2%
QC
12%
Alberta
QC
11%
ON
24%
2009
ON
24%
2020
2050
Evidenced in debates about: pipeline proposals, low carbon fuel
standards, a national energy strategy, a national climate policy
Where does Canada go from
here?
• Will the province’s continue to advance policies?
• Will the federal government start taking serious action?
• Will tensions around oil exports increase?
• Will international pressure increase?
• Will Canadians make climate change an issue politicians
can’t ignore?
Thank you
Matt Horne
[email protected]
604.874.8558 x 223
Carbon pricing 101
• Why price carbon:
• Our decisions about energy have not historically considered
the resulting contribution to climate change
• The sources of the problem are widespread and not easily
matched with command and control regulations
• Economic efficiency is maximized because emitters
undertake the least expensive emission reductions
• Two main approaches to pricing carbon:
• Carbon taxes
• Cap-and-trade systems
Carbon pricing 101
• Some questions to enable an apples-to-apples
comparison between approaches:
• What is the price and how does it get set?
The higher the price, the stronger the incentive to reduce emissions.
• How broadly is the price applied?
The broader the coverage, the more opportunities to encourage reductions.
• What are the potential problems/loopholes?
Loopholes undermine effectiveness and public support.
• How much revenue is raised and how is it used?
No magic formula, but revenue is an important tool for dealing with equity
concerns and making investments in projects that reduce emissions.
Carbon pricing 101
Setting the price
Carbon tax
Cap-and-trade
Set by government
Combination of number of
allowances, offsets, price floors
and ceilings
Setting the coverage Up to about 80% of Canadian Direct coverage up to about
emissions
80% with remaining 20%
potentially through offsets
Potential problems
Gaps in coverage and
different rates
Gaps in coverage, low-quality
offsets, over allocation, free
allocation
Determining
revenue raised by
government
Tax rate multiplied by
emissions covered by tax
Depends on how allowances are
distributed and how many
offsets are allowed
Revenue uses
Determined by government
Determined by government
A Comparison of Canada’s two
carbon pricing systems
B.C.’s Carbon Tax
Alberta’s SGER
Price
- $30 per tonne
- $15 per tonne (maximum)
Percentage of
economy covered
- 77%
- 50%
Problems
- Non-combustion emissions
- Non-combustion emissions
- Non-additional offsets
- No impact on production
Revenue
- $1.2 billion per year for tax
cuts and low-income tax
credits
- $74 million per year for GHG
reduction projects
For more information: http://www.pembina.org/blog/607