blog action day – what does climate change law mean for Canada?

It is officially Blog Action Day 2009… this year’s topic is climate change. Here is a general post on some thoughts for climate change law in Canada.

Climate change law in Canada (a mythical creature, never seen… lives in places called the ‘near future’, ‘the coming year’, and ‘tomorrow’), WILL come down sooner or later – i.e. meaning whenever the U.S. passes its legislation.

For everyone, it means things will be more expensive. Ya, I know… who’da thought the Harper Conservatives would end up putting in their very own ‘TAX ON EVERYTHING’?!

Consumers need to protect themselves from goods that emit carbon (either in the way they are use or in the way they were made). Gas, home heating oil, lamb from Australia, bananas from South America, cars from China … you’ll pay a lot more for these things and most other things you buy, very shortly. Take a look at what you bring into your home, what you spend your money on… make the changes you need to in order to avoid carbon costs. Eat local, burn less gas, use renewable energy like solar and geothermal… just some of the small steps that you’ll need to take to avoid carbon costs.

Industry and business will have to engage in better carbon management… identifying what elements of their supply chain and industrial processes depend on carbon and making investments today to help avoid future cost increases. They also need to be able to navigate the complicated legal and technical requirements associated with any new Canadian climate law. Lastly, they’ll need advice to construct corporate policies for effectively managing and avoiding risk from increasing carbon costs.

Governments need to be organized. What would things look like if every province had its own climate law, each different? Mayhem, that’s what it’d look like. Different carbon prices, industries moving to provinces with the easiest climate law for their sector, individual provinces entering into multi-national climate agreements without Canada… nuts. If the federal government doesn’t get itself together and come out with something that will provide some sort of consistency, some sort of cohesion that can be used to open us up to US and EU carbon markets, the divisive climate law impacts will put even further strain on our federalism. ADDED 19/10/09: Click here for an article on how oil sands companies want to ‘pass-on’ their share of reductions required under Canada’s climate change regulation.

And then there’s the government’s role in managing costs. Which is so extremely important when using a cap and trade system. With a carbon tax, everyone can see the tax applied, they can figure out what the tax applies to, they can get a good idea upfront of how much more they’ll be paying. With a cap and trade system, all that certainty goes out the window. For what reason you ask? So that industry doesn’t have to pay such a high price. What happens in a cap and trade system is this… lets assume that there are only 2 companies that make widgets, Company A pays $50,000 for carbon credits (i.e. A’s carbon costs) and Company B pays $75,000. How much added cost will A pass on to the consumer? If B has to pass on $75,000, company A will pass on something just less than $75,000. This way A maximizes profits and develops a slight competitive advantage over B. So consumers get gouged for roughly $25,000 because the always touted ‘costs savings’ brought about by a cap and trade system are NOT passed on the consumers. So… how do we correct this? The government needs to mandate corporate carbon cost reporting measures. Make industry report how much they pay in carbon costs and how much they’ve increased consumer costs as a result. Consumers need to be protected against any gouging that could occur from cap and trade… and the government is, in my mind, obligated to provide this protection given that they seem to have chosen a cap and trade system (indirect tax) as opposed the a carbon tax (direct tax).

We need to protect consumers… small businesses and families. More than anyone, they will be the group that feels the pinch from all this. They will be the ones that won’t know if they’re paying appropriate carbon costs, as intended by the government, or inflated carbon costs so that a Bay Street CEO can get a fancy bonus. They need the protection, and its time all governments began to recognize this and take steps to ensure mandatory carbon cost reporting measures are established.

border measures and north american climate change alignment

Well, we’re starting to hear again how important it is for Canada to line up its climate change approach with the United States… see here. So, as I wrote earlier, the big question will be what does this mean? It could mean a full fledged mirror of the U.S. climate law… but this is would be a sea change from what’s been considered in Canada. The U.S. is currently proposing an economy-wide type of the approach where in addition to major industry being responsible for emissions from their facilities, fuel producers and importers along with local natural gas distribution companies are also held responsible for all emissions that would occur from the combustion of the fuel or gas that they produce, import, or distribute, as the case may be. How this would be accomplished in Canada is a bit of a mystery.

But aside from a full-on copy and paste, the Canadian approach could take other avenues to aligning with U.S. climate laws. In the proposed U.S. House bill and now in the most recently proposed U.S. Senate bill, there are two approaches that the U.S. looks to be using to engage other countries. One is through emissions trading… the U.S. is proposing only to recognize emission allowances (note that ‘credits’ is not used, which would seem to eliminate the use of international offset credits) from ‘qualifying international programs’. This means that if a country’s climate law doesn’t meet the bar set by the U.S., that country’s emission allowances can’t be used for compliance by U.S. companies… taking away what might be a lot of ‘buyers’ of emission allowances. Given the emphasis that the Canadian government has put on a North American emissions trading system, see here at page 4 and here, there might be a desire to ensure Canada is a ‘qualifying international program’. The current U.S. proposals require that a qualifying international program must be run by a national government, must set an “mandatory absolute tonnage limit on greenhouse gas emissions” and must be as stringent as the program established in the United States. In plain English, for Canada this means that there would have to be a maximum limit on GHG emissions from CDN industry that is roughly the same as the United States. If not, Canadian companies would not be able to sell any Canadian emission allowances (if any are created) to U.S. buyers.

The second way the U.S. is looking to ‘engage’ other countries on climate change is through the highly publicized boarder measures. The current proposal, which only looks like it will get stronger through the Senate review, allows the imposition of border measures to goods from certain countries that haven’t met certain criteria (i.e. signed onto a international climate agreement). On their face, border measures stir up immediate fears of trade wars and WTO violations. But in certain applications they can be legitimate instruments, particularly when they take the form of border adjustment measures (i.e. levying a border charge equivalent to a domestic charge paid by domestic companies)… see here at pg. 103.  So… what do the U.S. proposals say about border measures? Well the first, and what seems to be the most overlooked point is that as it stands now, these border measures wouldn’t come into play until around 2018-2020. The second big point is that these measures will only apply to goods from emission intensive-trade exposed sectors (see here for a list of qualifying U.S. EITE sectors). The proposed provisions currently require one of three things… (1) the country of origin has signed a climate change agreement with the U.S. (and/or others) and the country has a national reduction target at least as stringent as the U.S., (2) the country of origin has signed an emission reduction agreement with the U.S. (and/or others), or (3) annual energy or emission intensity of the sector in which the good in produced is less than or equal to the U.S. sector’s energy or emission intensity.  Again, in plain English, this means that either Canada signs an international climate agreement with the U.S., Canada signs a (likely smaller) multi-lateral (or bi-lateral) emission reduction agreement with the U.S., or Canadian industries that export to the U.S. have a better energy/emission intensity than their U.S. counterparts.

So there you go… two possible areas of alignment with the U.S. (1) emission trading, and (2) border measures. Two different sets of requirements. Two different sets of outcomes. The (hopefully forthcoming) Canadian path forward on climate change will depend greatly on the approach the Canadian government chooses to move forward with for aligning with the United States. Stay tuned for more on the climate debates leading up to Copenhagen this December.

BlogCatalog

oil across lake superior

So, I’m reading some articles on the recent climate change rabble coming out of New York and I see at least two, count’em two, articles in a week from Calgary journalist Don Martin (a regular read of mine) on climate change…. here and here. Even more, I read that the U.S., despite the hard talk on the oil sands, approves a pipeline from Alberta to Wisconsin. Superior Wisconsin to be exact. What’s in Superior Wisconsin? Ya… Lake Superior. Now, I guess I never put my mind to the idea of oil tankers in Lake Superior but I’m not surprised that it goes on in the Great Lakes.  Not surprised but it definitely scares the crap out me. Can you imagine? An oil spill in the gitchee gumee? Absolutely devastating. Read more about Lake Superior here.

And to boot, I’m no fan of oil sands oil either. I bet I’ll like it less if it washes up on my beach. Past that, literally, is the Soo and St. Mary’s River. The river’s polluted enough already between the heavy industry and the municipal sewage. Navigating the rocky bottom of the river is white-knuckle at the best of times… ever more when you’re carrying a load that would stop a local ecosystem in its tracks.

Something tells me that this is a bad idea. The fresh water, the salmon runs, the whitefish, plus all mammals in the surrounding ecosystems. It would be a disaster as bad as any oil spill we’ve seen on the big oceans. This lake chews ships up…. worse than oceans given how shallow and rocky some parts are. An oil sands spill in largest freshwater lake? How’s that for headline news. I think I’ll start taking some water quality records for my shoreline this fall. Like all good environmental lawsuits… a good baseline is invaluable. You can read more about Enbridge’s Alberta Clipper pipeline here and here and here.

fall election

Well, another election is brewing in Canada… is this another dead end for Canadian climate policy? The Conservatives killed the Liberal’s Project Green when they won the 2005 election. They introduced the infamous Clean Air Act through then Minister Rona Ambrose in 2006. That was shifted when Johnny Baird took over as Minister and introduced the Turning the Corner plan in 2007. Now, with the new economy and the new administration in the US, there is a new minister and a new plan… or at least we hope there is. While nothing has been released by Jim Prentice, there are strong signals that a new climate policy is being brewed up for Copenhagen in December… here and here.

But now with the threat of an election in the Fall… and it’s only a threat right now… where does that leave Canadian climate policy? Hopefully better off… Any election discussion would be, quite frankly, more than the backroom chatter that climate discussions in this country have been relegated to over the past year. If the Conservatives win, they likely follow behind the US all the way to Copenhagen… or they’ll lead them if some groups have their way… see here. If the Liberals win… its another uncertainty. Hopefully they’ll have a strong climate policy as a main election plank… read here. The NDP will… and the Bloc will hopefully fuel the debate fire in any election that takes place ahead of Copenhagen.

Regardless of whether there’s an election this fall or not, we can expect a bit more discussion on climate policy in the month’s leading up to the big December summit. If the debates (and misinformation) in the US are any indication, the climate back-and-forth in Canada will be hitting the headlines high and hard this fall.

Looking forward to posting more… election or not. Stay tuned.

economy-wide cap and trade in canada?

Lots of talk lately about how Canada will likely line up its climate change policies and regulations with the US. And there’s good reason for this talk – alignment avoids trade issues, keeps Canadian firms competitive, and paves the way for a North American (and perhaps global) carbon market. More recently, Canada’s Minister of the Environment spoke of aligning with the US’s economy wide approach to climate regulation. This would be a sea change for Canadian climate policy and likely add a considerable amount of emissions to the regulatory coverage.

So what does economy wide mean? In the current US Bill (Waxman-Markey), in addition to major industry being responsible for emissions from their facilities, fuel producers and importers along with local natural gas distribution companies are also held responsible for all emissions that would occur from the combustion of the fuel or gas that they produce, import, or distribute, as the case may be. Regulating these companies will allow the government to capture all emissions from the end use of the fuel/gas, for example from transportation and home heating.

How will Canada achieve this? Its definately a mystery as to how the Canadian government plans on regulating climate change, particularly given the speed of changes going on in the US. Previous government policy only sought to regulate emissions that occurred at the facilities (i.e. emissions from an industrial activity or process). There has been commentary on the powers that the government would use to enact climate laws – that GHG regulations under the Canadian Environmental Protection Act, 1999 would be enacted under the federal government’s criminal law power. But would this allow the economy wide regulation that aligning with the US would require? My opinion… no.

Typically, holding one person (or company) liable for the actions of another runs afowl of the basic principles of criminal law. Trying to do this under CEPA, 1999 would no doubt ensure a healthy barrage of constitutional challenges.

But a couple of things still hang on my mind… Does the federal government HAVE to use criminal law power for regulations under CEPA, 1999? No, but the Hydro Quebec case gives the feds power to regulate substance on CEPA’s Schedule 1 (Toxic Substances) under the criminal law power. The court just doesn’t really limit the federal regulatory power to criminal law, leaving the door open to regulating environmental issues under the Peace, Order, and Good Government head of power. Regardless, the feds put greenhouse gases on the list of Toxic Substances back in 2005. Despite some arguably ‘non-criminal’ provisions of the 2008 regualtory framework (namely the Technology Investment Fund), the general feeling seems to be that regulations under the criminal law power are (or at least have been) the way forward.

One option is to use the POGG power to try and enact an new piece of legislation… one that would give the government proper authorities to properly establish and regulate a price on carbon through regulation. Given the perpetual minority government situation in Ottawa, this scenario seems a bit unlikely, though its likely the best solution.

We have to wait and see what comes of the federal government’s review of the economy wide approach. Its seems a big gamble… likely placing the country’s most important piece of environmental law in a very weak position, open to serious lawsuits and constitutional challenges by companies and others.

canada to give carbon rebates to big industry?

In what appears to be perhaps a significant alignment of Canadian policy with what has been proposed in the Waxman Markey Discussion draft, Jim Prentice, Minister of the Environment has implied that his Conservative government could follow the US lead and give rebates to industry to offset costs of climate regulation. 

Plain english explanation: When domestic companies pay for their emissions and other international competitors don’t it creates an unequal playing field. To level the field, the US is proposing to give these companies money to cover most of the cost of buying carbon allowances at auction. This will reduce the overall cost burden on these sectors, helping them maintain their competitiveness. Canada seems to be poised to do the same. 

Indepth discussion: The Waxman Markey draft, while still changing, will likely always have some form of rebates for emission intensive (high emissions per tonne of product) and trade intensive (exposed to trade competitiveness issues) sectors. For eligible sectors, the US government would provide free allowances for roughly 85% of direct (from sector activity) AND indirect (from electricity) emissions. The rebates are limited to 15% of the overall industrial cap and would be carved out of that emissions cap. 

Assuming Canada looks to move lockstep with the US on climate policies in order to avoid trade issues, it would first need develop criteria for this emission intensive/trade exposed assistance. Emission intensity (as a function of production) would be easy but there would need to be some measure of trade exposure. In the US and other jurisdictions proposing simliar rebates/free allowances, trade exposure is typically a ratio of the value of imports/exports of a sector to some measure of domestic sector activity (production, shipments).

The problem here is once you’ve identified some eligible sectors, what does Canada give them. Under the government’s current  Turning the Corner (TTC) framework, all entities would receive about 82% free allocation. But because the targets are based on emission intensity, there is no cap and no limit to the amount of free allowances given out – as production rises, so does the amount of free allowances. So is that the answer? Will eligible Canadian sectors will just get the TTC treatment? What about indirect costs/emissions? What about an overall cap on emissions?

These questions will hopefully be answered in time. But I think its safe to say, that if you’re an emission intensive, trade exposed industry in Canada (likely Iron and Steel, Oil and Gas, etc…) your going to see a simliar free allocation as set out in the TTC. If you’re not… time will tell what the government will do (keep in mind those in the US will likely need to buy most allowances at auction).

green your school

Our schools hold our most valuable resource, yet not much has been done to date on bringing green practices to mainstream school operations. But now, with recent Ontario government funding and some demonstration projects in the province, there is a growing need to understand how we can make our schools a healthier and more educational place for our children. 

Like all approaches to sustainability, first focus for students, teachers or administrators is getting a solid and well defined plan in place. The plan is the backbone of the initiatives that a school seeks to establish. From starting with a small initiative to a plan that addresses all areas of school life, schools need a clear vision and defined goals to ensure resources and benefits are maximized.

After a plan is developed and agreed to by a board of stakeholders (students, teachers, parents), initiatives can be rolled out as set out in the plan. Results should be monitored to give everyone involved a picture of how well an initiative is working (or not).  Its important to remember that the plan is a living document – if things are a miss, initiatives should be added, revamped,  or removed to respond  to recorded results and impacts. 

There a variety of measures that students, teachers, and officials can implement to green their school, and there are endless degrees of engagement that a school can take on. From establishing extra-curricular green courses or renewable energy projects to simple recycling and resource conservation, with the help of a well developed and well defined plan, schools can have a tailored and dynamic green strategy to help ensure a clean, healthy, and educational environment for our children’s second home.

municipal sustainability

What are northern Ontario communities (and small towns everywhere for that matter) doing to ensure they survive and flourish in the 21st century? A lot of things are done ad hoc. And not to fault municipal leaders, the situations that they sometimes find themselves in are not easy – having to place sparse funds across an increasingly broad set of responsibilities. With the recent amendments to the Ontario Municipal Act, municipal leaders find themselves thrust into the front lines of environmental protection and sustainable development. 

The issue is that these new areas of municipal focus are inherently complex and require attention and detail that most nothern municipal leaders cannot practically provide. It takes a strong and dedicated understanding of legal, technical, and policy elements to effectively address municipal environmental issues. A starting point for any municipal leader is a plan. The Green Municipal Fund will provide communities with 50% of the costs of developing a plan. And the dividends it can provide in terms of establishing sustainable municipal development are endless. A proper framework and plan for municipal sustainability can effectively organize and maximize environmental initiatives and resources, creating secure green jobs and a clean environment for our northern cities and towns.

Our communities are in such a unique position to take advantage of Ontario’s emerging green economy. For most of the 20th century, our cities and towns relied on one or two natural resource based industries to sustain the local economy. Now, more than ever, we are realizing the need for a diversified economy and sustainable jobs. The new economy can help diversify our job base while helping us clean up and revolutionize the natural resource based industries that drive our region, our province, and our country.

US EPA endangerment finding released

The EPA announced today their final proposed GHG endangerment finding. This finding would allow the regulation of GHGs under multiple areas of Clean Air Act – with some saying that the finding would go too far in the CAA, forcing the government to regulate buildings and homes. The technical findings are set out here.

This finding will push the climate change debate even futher in the US. Here in Canada, the listing of GHGs on Schedule 1 of the Canadian Environmental Protection Act, 1999 (which occured back in September 2005) is settled (for now) and this gives the Canadian government authority to regulate GHGs under the CEPA. 

Check out the EPA news release here. The proposal will now move to public comment where it will no doubt spark a lot of debate.