Climate Change in Canada: The policy and politics Matt Horne
Director, Climate Change Program February 8, 2012
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Overview Background The federal government response The
provincial government response Where does Canada go from here
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Federal / Provincial Jurisdiction
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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)
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Canadas Greenhouse gas emissions (millions of tonnes CO2e)
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Greenhouse gas emissions (millions tonnes CO2e in 2009)
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Greenhouse gas emissions (change 1990 to 2009 in millions of
tonnes)
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The federal government response: inaction Source: Nic Rivers,
University of Ottawa
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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
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Provincial leadership filling the void
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Targets starting to be backed by policies B.C.s carbon tax and
ban on coal-fired generation Ontarios feed-in-tariff and coal
phase-out Quebec cap-and-trade
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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
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Canadian perspectives on carbon pricing Source:
http://www.environics.ca/reference-library Additional carbon tax
polling: http://www.pembina.org/pub/2233
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Where is Canada in 2012? The positive steps weve seen shouldnt
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
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
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19902009 20202050 An illustration of tension: Albertas
projected emissions Evidenced in debates about: pipeline proposals,
low carbon fuel standards, a national energy strategy, a national
climate policy
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Where does Canada go from here? Will the provinces 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 cant ignore?
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
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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.
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Carbon pricing 101 Carbon taxCap-and-trade Setting the priceSet
by governmentCombination of number of allowances, offsets, price
floors and ceilings Setting the coverageUp to about 80% of Canadian
emissions Direct coverage up to about 80% with remaining 20%
potentially through offsets Potential problemsGaps 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 usesDetermined by government
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A Comparison of Canadas two carbon pricing systems B.C.s Carbon
TaxAlbertas SGER Price- $30 per tonne- $15 per tonne (maximum)
Percentage of economy covered - 77%- 50% Problems- 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