Josephine V. Yam

Is Canada Ready for the 2015 Paris Climate Change Conference?

At the 2015 Canadian Association of Environmental Law Societies Conference held at the University of Calgary last week, I presented a brief overview of global, Canadian and provincial developments in carbon pricing and greenhouse gas reduction policies.  One of the questions I sought to address was whether Canada can be expected to have a strong, ambitious national carbon pricing policy in time for the Paris climate change conference in December 2015.

Indeed, the Paris climate conference has been touted as the "world’s last best chance to reach an agreement on cutting carbon emissions."  As successor to the Kyoto Protocol, the international climate change treaty that emerges from Paris will consolidate all the Intended Nationally Determined Contributions (INDCs) of more than 190 developed and developing countries.  The INDCs are countries’ plans that articulate their greenhouse gas (GHGs) reduction targets and how these will be achieved, including the possible use of market-based mechanisms such as emissions trading and carbon taxes.

“Ambitious but achievable” are adjectives that the 
Guardian used to describe the upcoming Paris international climate treaty. Why? Last November 2014 in China, U.S. President. Barack Obama & China President Xi Jinping forged a historic deal that their countries, the two largest emitters in the world, would commit to significantly reduce their GHGs. For the U.S., Obama committed to cutting its GHGs between 26% and 28% by 2025 over the 2005 baseline period. For China, Xi Jinping committed to peaking its GHG emissions by 2030. China is also poised to officially launch a national emissions trading market in 2016. Not to be outdone, the European Union, which has the largest emissions trading scheme in the world with 30 countries participating, also committed to cutting its GHGs by 40% by the year 2030 using a 1990 baseline. Interestingly, even Pope Francis is scheduled to issue an encyclical this year to encourage his 1.2 billion Catholic followers to take action on climate change because it is a moral responsibility.

With bold, significant steps by the U.S., China and the European Union, the question arises: Will Canada follow suit and forge ahead with a strong, ambitious national climate policy in time for the Paris climate conference?  To address this question, it may be helpful to recall Canada’s historical record on the climate file.

In 1997, Canada made a binding commitment under the Kyoto Protocol to reduce its GHGs by 6% below 1990 levels by 2012. In 2011, Canada withdrew from the Kyoto Protocol because it had already emitted 30% more above its Kyoto obligation.  If Canada fulfilled its Kyoto obligation, the government claimed that it would cost Canada $14 billion or about $1,600 for every Canadian family.

Because the federal government knew that Canada would fail in its 2012 Kyoto obligation, as early as 2009, it committed the country to a non-binding commitment to reduce its GHGs by 17% below 2005 levels under the Copenhagen Accord.  As of 2014, however, Canada has already missed its Copenhagen target by 122 megatonnes of CO2e.

Given Canada’s dismal record of keeping its climate reduction obligations, it appears that Canada is not poised to emerge with a strong, ambitious national carbon pricing policy at the Paris climate conference. This conclusion is buttressed by Prime Minister Stephen Harper who 
avowed: “It’s not that we don’t seek to deal with climate change, but we seek to deal with it in a way that will protect and enhance our ability to create jobs and growth, not destroy jobs and growth.”

To fill in this void on federal climate policy, several provinces have gone ahead and established their own carbon pricing schemes. Alberta has its emissions intensity trading scheme, being the first jurisdiction to legislate on reducing GHGs in North America. British Columbia has a revenue-neutral carbon tax scheme, which has won praise from the OECD and the World Bank. Quebec has a cap-and-trade scheme which is linked with California’s scheme through the Western Climate Initiative. Ontario has cut its emissions by 6% below 1990 levels and will soon be implementing either a cap-and-trade scheme or a carbon tax this year.

But there is still time for Canada to act. It should seize this rare opportunity to repair its poor climate change reputation by joining the 
74 national governments that the World Bank has reported as supporting a strong carbon price. In doing so, Canada can manifest its climate leadership in time for the Paris climate conference. However, this can only happen if the Canadian government can muster within itself the strong political will and courage to do so.

Sustainable Development: Intersection of Economy & Environment

It is crucial that you get the attention of the "people who hold the purse strings", namely Finance Ministers, if you want countries to strategically move towards sustainable development, said Rachel Kyte, World Bank VP for Sustainable Development, In her blog "Why Finance Ministers Care About Climate Change & Sustainable Development",

She said that climate change was front and centre of discussions among the world's Finance Ministers at their annual World Bank/IMF Spring Meeting in Washington this weekend. Climate change "isn’t just an environmental challenge, it’s a fundamental threat to economic development and the fight against poverty... If the world does not take bold action now, a disastrously warming planet threatens to put prosperity out of reach for millions and roll back decades of development."

Fortunately, there has been great progress around the world in the fight against climate change. For example, an increasing number of countries have or are in the process of establishing their carbon markets to link with each other and put a price on carbon. This market-based approach will effectively help drive greenhouse gas emissions (GHGs) down and spur clean energy investments. Through the Partnership for Market Readiness (PMR) established by the World Bank, countries around the world explore innovative and cost-efficient ways to drive down GHGs while building financial flows.

Indeed, it is crucial to have had that discussion among the Finance Ministers, to discuss with them that the fight against climate change is a win-win proposition for both their countries' valuable environments and value-based economies.

5 Steps for Business-friendly Climate Agenda

Eric Pooley provides five steps that President Obama should take to address climate change in his second term. In his Harvard Business Review article, “A Business-Friendly Climate Agenda for Obama's Second Term”, Pooley outlines how the president can fulfill his promise to ensure that America "isn't threatened by the destructive power of a warming planet". He emphasizes that the following 5 steps can only be successful with the active support and participation of private industry.

1. Feed the conversation. President Obama can start by simply by talking about the issue and helping Americans see the relationship between emissions, climate change and extreme weather. This conversation is crucial as it engages the voices from private industry, including insurance companies, pension funds, banks and small business. To be politically viable, climate solutions must be economically sustainable.

2. Reduce climate accelerants. President Obama can take immediate steps to reduce potent greenhouse gases other than carbon, such as methane and fluorinated gases used in refrigerants and industrial applications. Although carbon is most ubiquitous, these substances are "climate accelerants", which means that they accelerate global warming the same way gasoline fuels a fire.

3. Start a clean energy race. President Obama can reduce subsidies for fossil fuels, continue tax credits for renewable energy while increasing R&D funding. Congress should pass national clean energy standards, which would require states to get more energy from renewables. Obama should also encourage private capital to invest in low-carbon energy by removing barriers to investments in efficiency and renewables.

4. Use the Clean Air Act. President Obama should use the Clean Air Act to reduce greenhouse gas emissions, under authority confirmed by the U.S. Supreme Court in Massachusetts v. EPA. This means vigorously defending the clean-air rules that his administration has already put in place, including the historic higher fuel economy standards for new cars and trucks and restrictions on the emission of mercury and other toxic air pollution for power plants. His administration should also set CO2 emission standards for new and existing power plants through flexible and economically efficient approaches.

5. Put a price on carbon. President Obama should heed the call of economists from across the political spectrum that believe that the most economically efficient way to cut carbon pollution is by imposing a price via a carbon tax or through cap and trade. Either would be a powerful incentive to produce cleaner power and could be accompanied by lower taxes on labor or capital, easing the impact on working families and business. As the U.S. moves toward a fiscal cliff, there is slew of discussions in Washington about raising revenue through a carbon fee. It could be in the form of a carbon tax starting at $20 per metric ton and rising at 6% a year that could raise $154 billion by 2021.

Norway Sets One of World’s Highest Carbon Tax Rates

The International Herald Tribune recently reported that Norway is set to almost double its CO2 tax rate for offshore oil and gas production beginning in January 2013. Indeed, the Norwegian government is setting one of the highest carbon tax rates in the world by increasing the CO2 tax rate from 210 Norwegian Krone (about €28) to 410 Krone (about €55) per ton of CO2. A substantial part of the newly generated tax revenue will go into the government’s investments in clean energy, the environment and public transportation.

Many have lauded Norway’s sharp increase in carbon taxes for energy producers as exemplary. “The higher the tax, the more aggressive a signal the government is going to send about the need to lower carbon emissions,” said Janet Milne, a director of the Vermont Law School’s Environmental Tax Policy Institute. “You have to get fairly high carbon tax rates in order to get a significant long-term change in behavior,” she said.

“The EU prefers a system that taxes more of what we burn and less of what we earn. If we want to consume less energy, we need a smarter way of taxing,” said Isaac Valero-Ladron, the EU Spokesman for Climate Action.

According to the Australian Climate Commission, by 2013, 33 countries and 18 states and provinces (referred to as "sub-national jurisdictions") will have some sort of levy associated with the emission of CO2.