Climate Change Framework Long On Aspiration, Short On Details

02/01/2017 12:06 EST | Updated 02/01/2017 12:08 EST

Faced with the very real prospect that the U.S. under Donald Trump would withdraw from international action on climate change, Canada's first ministers surprised us all in early December by agreeing to a "Pan-Canadian Framework on Clean Growth and Climate Change," with only Saskatchewan and Manitoba holding out.

The framework is both comprehensive and ambitious, but will it work in time for Canada to meet its Paris commitment of a 30 per cent reduction in greenhouse gases by 2030? To answer this question, we need to look more closely at some of the key elements of the framework.

First, there is a firm schedule for implementing carbon pricing (or its equivalent) in the provinces and territories, aiming at a start date of 2018 and outlining what will happen if provinces do not meet this deadline. The framework also makes provision for different approaches to reducing carbon emissions, something the premiers strongly insisted on.

justin trudeau climate

Canadian Prime Minister Justin Trudeau speaks during a press conference held on the sidelines of the Paris Agreement on climate change, April 22, 2016. (Photo: Brendan McDermid/Reuters)

As the prime minster promised before the meeting, there are penalties for non-compliance. The penalty is in effect a floor price for carbon: If a province fails to implement a carbon tax of at least $10/tonne of CO2-equivalent by 2018, the feds will impose a federal carbon tax on fossil fuels consumed in that province to make up the difference. Saskatchewan has firmly opposed this idea, which is the main reason they failed to sign.

Before the agreement was signed, there was also some pushback from B.C.. The framework stipulates that carbon prices must increase by $10 a year until they reach $30/tonne in 2020 and $50/tonne in 2022. Because B.C.'s tax is already at the $30 level, they argued successfully for an "interim assessment" in 2020 to ensure that the other provinces had reached the promised $30/tonne level by that date.

By contrast, Manitoba seem to have no objections in principle to signing, but want to use it as leverage to get a better deal with the feds on health care. This may have to wait until Premier Brian Pallister rises from his Muskoka chair in Costa Rica, probably sometime this spring...

Are there still issues to be resolved in implementing the framework? Absolutely!

This creates the potential for conflict between provinces.

First, there are significant problems in comparing the achievements of provinces using a carbon tax with those that prefer "cap and trade" -- currently only Quebec and Ontario, who are members of the Western Climate Initiative (WCI) with California. The suggested remedy for achieving "equivalency" between the two systems is to ensure that cap-and-trade provinces achieve the agreed reduction targets, irrespective of the actual price for carbon in their jurisdictions.

This creates the potential for conflict between provinces if the effective price for emissions allowances in the cap-and-trade provinces is less than that in the carbon tax provinces, i.e. if they can achieve their reductions more cheaply. This seems likely as the price level for allowances in the WCI is currently less than half of the $10/tonne proposed by the feds for the 2018 start-up.

Second, the exclusion of Saskatchewan from the agreement raises some critical questions about the fed's strategy for meeting its Paris commitments. It goes back to the argument I made in a previous blog: viz., that provinces should logically be allowed to use regulation, or just improved mitigation technologies, to achieve the federal target. Saskatchewan says they can do this by (a) using carbon capture and storage technology in the power and industrial sectors; and (b) supporting innovation to address long-term carbon mitigation needs.

Saskatchewan generates only around 10 per cent of Canadian emissions, but it's also the highest emitter on a per capita basis. So they will certainly have to be aggressive in cutting their emissions. Premier Wall claims this is a no-brainer: they can cut their 2005 power generation emissions by 40 per cent by 2030, better than the Paris target (although power accounts for only 26 per cent of Saskatchewan's total emissions). Because their approach involves major technological investments, however, it will take more time to implement, hence the aversion to paying interim penalties in pursuit of the 30 per cent goal.

In my view, Saskatchewan's argument is a reasonable one and should be accepted by the federal government, requiring only that the results be monitored periodically. If Saskatchewan doesn't meet the 2030 Paris target, or an interim target to which both parties agree, the tax should be applied retroactively (with interest!).

Finally, the framework document doesn't spell out the reduction targets individual provinces must meet to achieve the federal (Paris) target of a 30 per cent reduction by 2030. Yes, there is a whole appendix in the document outlining provincial activities as well as their voluntary targets (minus Saskatchewan and Manitoba), and there is a compelling graphic showing how different federal goals will be met through specific actions (see page 45). But there is so far no clear statement as to how provincial targets and activities will "add up" to the 30 per cent goal.

The remedy is a deceptively simple one.

Information which I provided in an earlier blog, taken from a variety of sources, suggests the current provincial targets will need to be significantly revised to meet the Paris commitment.

The remedy is a deceptively simple one: ask the provinces to re-set their targets, first by establishing a 2005 baseline (to match the federal baseline) rather than the arbitrary and varied baselines they now use. Then show what progress each province will achieve by 2020 and 2030 against this uniform baseline, and how (by what mechanisms) it will be achieved. This is the only way to ensure that progress on the 2030 goal is being measured in an objective and transparent manner.

The framework is a big step forward, to be sure; but it is long on aspiration and short on details. And it will only succeed if there is full participation and agreement on principles by all 10 provinces. At present, despite a lot of self-congratulation from the Trudeau government for making this happen, full implementation remains a distant prospect. Only time will tell if there is more to the agreement than a lot of fancy graphics and non-specific pledges from the provinces.

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