Wednesday, September 24, 2008

Developing a national climate policy

Last year, the UN Human Development Program released a report on how climate change will effect international development and global inequality. The report includes several case studies of industrial nations - including Canada (written by yours truly) and the US - and their progress, if any, towards "carbon neutral" growth.

Here are the general findings of the Canada case study. Implicit in this excerpt is the need for a price on carbon, established via either cap-and-trade, suggested at the time by all parties at the time the report was assemble, or a carbon tax, a political third rail until the introduction of the Green Shift:

Over the past fifteen years, Canada has failed to control growing GHG emissions despite a number of policy pronouncements. With a rapidly growing economy, grounded in oil and gas, and a growing population, achieving carbon neutral growth in Canada appears to be a formidable challenge. However, one should not forget that Canada is a highly educated and innovative nation with a strong history of promoting peace, equality, international development and global environmental protection. Canada also has a strong national interest in mitigating climate change which may already be impacting forestry and its Arctic peoples. A recent example is temperature-driven northward spread of the mountain pine beetle in British Columbia and Alberta that has devastated the Canadian forestry industry and forced the federal government to change its policy on including forests in the national carbon emissions budget.

Canada could achieve carbon neutral growth by shifting the national attention to improving energy efficiency, reducing emissions from energy production and developing new low-carbon technologies. The National Roundtable on the Environment and the Economy, an independent advisory body for the federal government, reports that Canada could achieve a 60% reduction in energy-related emissions 2050 through energy efficiency measures and new technologies in energy production. In addition to reducing Canada’s emissions burden, setting the country on this path would also address growing concerns about air quality and produce expertise and technology that could be exported to the world. A plan based on the following five themes would place Canada on the path towards long-term reductions in emissions without sacrificing economic development.

1. Strong leadership from the federal government: Following on the recommendations of Auditor General, Canada’s climate change effort should be centralized, ideally in the Prime Minister’s Office. This could ease integration of emissions reduction goals into all government operations, including energy, environment and international development, and reduce the territorial disputes between government departments and the provinces that inhibited past federal efforts. Though the provincial emissions reduction policies are promising, due to the breakdown of powers and taxation in the federalist system, the federal government must take the lead on implementation of carbon capture and storage technology in the energy sector, automotive fuel efficiency and funding public transit

2. Leverage existing policies. Despite years of relative inactivity on emissions reduction, many useful policy levers do exist. For example, the implementation plan can take advantage of: i) the Canadian Environmental Protection Act for regulating air pollutants, ii) the Energy Efficiency Act for setting residential, commercial and industrial standards, iii) the Wind Power Production Initiative for a framework for a renewable energy portfolio standards, iv) the Income Tax Act for expanding capital cost allowances for energy efficient construction and reducing capital cost allowances for development in the oil sands. Existing municipal and provincial policy initiatives and renewable portfolio standards can help introduce the appropriate forms of renewable energy – like hydro in Quebec, Manitoba and British Columbia, and wind in Alberta, Saskatchewan and Manitoba – into each region’s electricity mix.

3. Address the large final emitters (LFEs). To date, no government to has shown willingness to address the LFEs, responsible for almost half of Canada’s emissions. A clear policy signal from the federal government would direct capital investment and provide incentives for companies to develop new technologies. The most effective option may be the proposed cap-and-trade system that features hard emissions targets by sector, limited purchase of domestic and international offsets and the development of a national green investment fund. It would take advantage of existing market forces, provide financial opportunities for Canadian industry and fuel spending in research and development.

4. Empower communities. Canadian cities have shown the ability to reduce emissions through control over urban planning, public transit, energy purchases and building codes. Infrastructure funding from higher levels of government can be directed to proven initiatives like tax credits for retrofitting buildings, mortgage assistance for energy efficiency improvements, expanded public transit, vehicle and road restrictions, waste reduction and landfill gas capture, electricity co-generation and development of renewable energy sources.

5. Promote new technology. Reducing emissions from the oil and gas sector and the transportation sector will depend on technological development, some of which will occur outside the country. Federal policy and infrastructure funding will be needed to promote the development of carbon capture and storage technology to reduce emissions from the oil sands. Although Canada has little direct control over vehicle technology, joining the initiatives by some U.S. states to place limits of carbon emissions from passenger vehicles, and direct U.S. attention to the often overlooked issue of truck fuel efficiency, would expedite the shift to more fuels efficient vehicles.

The shift in national attentions must happen soon to meet a long-term the suggested emissions target. With almost $100 billion in investments in development planned for the next 15 years in the oil and gas sector alone, Canada risks increasing its global atmospheric burden. A binding, long-term federal emissions policy and implementation plan is crucial to encouraging sustainable investment by the private sector, especially in the oil and gas sector.

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