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The “Canadian Approach” to COP21

by Purbita Sengupta

Published: November 25, 2015

In less than a week, world leaders will convene to agree on a newly binding, universal agreement at the Paris Climate Conference (COP21). In anticipation of COP21, the Canadian government has promised to bolster its participation through a “Canadian approach” which has included a First Ministers’ meeting on climate change ahead of the Conference, an open invitation to all Premiers to attend COP21 and a plan to emphasize provincial efforts to combat climate change on the global stage.

Canadian provinces have long been playing leading roles in addressing climate change, while the federal government lagged behind.

Canadian provinces have long been playing leading roles in addressing climate change, while the federal government lagged behind. A recent report by Simon Fraser University professor, Mark Jaccard, shows that in the past nine years the federal government “has implemented virtually no polices that would materially reduce emissions.” Canada will now have to catch-up to its peers with efforts to accommodate a stronger climate change framework, including through the adoption of innovative measures that will also support the economy.

So, what does the “Canadian approach” really look like? Much of the international criticism surrounding Canada’s approach to climate change has focused on the measures (or lack thereof) adopted by the federal government. But what about Canada’s provinces? How are they addressing climate change?

British Columbia (BC) and Quebec have been at the forefront of efforts to address climate change with Alberta and, to a lesser extent, Ontario slowly trailing behind.

Provincial Efforts to Tackle Greenhouse Gas Emissions

British Columbia (BC) and Quebec have been at the forefront of efforts to address climate change with Alberta and, to a lesser extent, Ontario slowly trailing behind.

BC’s policy initiatives are particularly laudable. Since 2008, the government has introduced a carbon tax that is applicable to all GHG emissions generated within the province. Currently, the tax rate is set at $30 per tonne of carbon dioxide equivalent. The government pursues a revenue-neutral carbon-pricing system, which means that the money generated from the carbon tax is reinvested to reduce other provincial taxes. This initiative is estimated to have cut $710 million in corporate income taxes and $522 million in personal income taxes for 2013/14. The BC carbon pricing system has reduced demand for gasoline in the province by 16 percent between 2008 and 2014, prompted communities to invest in clean energy projects, and reached its GHG emissions reduction target of 6 percent below 2007 levels by 2012.

Quebec, for its part, has introduced a cap-and-trade system – becoming the first jurisdiction in North America to undertake such an initiative. This system regulates businesses that emit more than 25,000 metric tonnes of carbon dioxide equivalent, requiring them to either purchase emission allowances or upgrade to clean technology. Through this initiative, the province aims to reduce GHG emissions by 67.1 metric tonne by 2020 and generate approximately $2.7 billion in added revenue. Quebec’s cap-and-trade system is affiliated with the Western Climate Initiative (WCI), a harmonised emissions-trading programme in North America, and linked to the emissions market in California, the only non-US member of the WCI. This cross-jurisdictional collaboration is expected to improve Quebec’s cap-and-trade revenue generation capacity and cut implementation cost by $386-532 million.

Alberta is also attempting to improve its policies to address climate change. The province has had a ‘partial’ carbon tax that imposed a $15-per-tonne levy on major industrial facilities when they exceeds the provincial GHG emissions reduction target, set at 12 percent. The new provincial government – which released a new climate change plan on November 22 just ahead of COP21 – will increase the carbon tax to $20 per tonne as of 2016 and $30 per tonne in 2017 with concurrent increases in emission reduction targets to 15 percent and 20 percent respectively.

Ontario, the most populated province of Canada, has been slower to respond to climate change.  Though the province made progress in the electricity sector by shutting-down all coal-fired electricity plants and replacing them with renewably energy such as hydroelectricity, it has only recently announced that it will be implementing a cap-and-trade system and joining the WCI with Quebec and California.

Room for Improvement

Though provincial initiatives are making headway in combating climate change room for further improvement remains. For example, between 2008 and 2012 BC had a progressive carbon tax system that set the tax rate to increase by $5 per tonne annually, starting at a $10-per-tonne baseline. In 2013 the provincial government discarded this system and fixed the rate to the aforementioned $30-per-tonne levy. In essence, there has been a reversal in BC’s carbon pricing policy in the past few years. Given its heavy reliance on the oil sands industry, Alberta may require more drastic measures to combat climate change. As one report points out, “because oil sands CO2 capture costs start at around $75 per tonne, even a doubling of the…carbon price to $30 per tonne…will be far from sufficient.” Additional measures, such as mandating large-scale carbon capture and storage may be needed to complement the carbon pricing system.

Federal Government Efforts on Climate Change

Despite shortcomings, Canadian provinces are still relatively progressive when compared to their federal counterpart. After informally abandoning the Kyoto Protocol, the federal government set a lower emissions standard in 2007 with a new target of 20 per cent reduction in GHG emissions from 2006 levels by the end of 2020. In 2009, the government signed the Copenhagen Accord, adjusting its emissions reduction target to a 17 per cent reduction from 2005 levels by the end of 2020. In 2011 Canada became the first signatory to officially withdraw from the Kyoto Protocol.

The current federal approach to reduce GHG emissions is a sector-by-sector regulatory approach that aims to establish emissions and product performance standards for several sectors including, among others, transportation, electricity, and oil and gas. The government has taken some initiative to reduce emissions in the transportation and electricity sectors, however no regulatory measures have been imposed on the oil and gas sector. In December 2014, the former Conservative government argued that regulating this sector would be detrimental to the economy as Canada continues to face a global decline in oil price.

In response to the federal government’s approach, the Commissioner of the Environment and Sustainable Development has, unsurprisingly, concluded that Canada will miss its Copenhagen target by 2020. Ranking ninth for overall carbon dioxide emissions and fifteenth for per capita emissions, Canada has been treading on thin ice. The federal government’s historic idleness on climate change will likely hinder Canada’s capacity to lower GHG emissions going forward.

COP21: Where does Canada Stand?

So far, there has been a clear divergence between provincial and federal measures to address climate change. BC, despite some of its shortcomings, has emerged as a provincial leader on climate change, followed by Quebec. So what does this mean for COP21?

Expertise on carbon-pricing can be harnessed to scale-up Canada’s overall competence as the country moves towards establishing a new climate change framework.

On one hand, Canada has built – albeit unevenly – some capacity to tackle climate change at sub-national levels. Expertise on carbon-pricing can be harnessed to scale-up Canada’s overall competence as the country moves towards establishing a new climate change framework. Canada’s Ecofiscal Commission, a group of economists that seek to widen ecofiscal policy discussions nationally, argues that a practical way forward would be for other provinces to also implement carbon-pricing policies that reflect individual province’s economic context.

On the other hand, the federal government’s past failures to address climate change and establish a national framework to reduce GHG emissions will pose a challenge for building future initiatives. With little to no groundwork, some institutional restructuring might be required to set up a comprehensive federal framework that has the capacity to collaborate with sub-national partners and pave the way for Canada to emerge as a climate change leader globally.

Though this path may appear demanding, it is imperative that the new government seize the moment at COP21 and vigorously pushes forward a strong Canadian agenda to tackle climate change. Echoing the Ecofiscal Commission, further delay will only increase cost. The International Energy Agency has found that “for every $1 of investment avoided in the power sector before 2020, an additional $4.3 would need to be spent after 2020 to compensate for the increased emissions.” If Canada wants to minimize this latecomer’s fee, it needs to act now and capitalize on its participation at COP21 to help develop a comprehensive climate action plan.

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