April 8, 2015

Earlier this week, Canada’s Ecofiscal Commission published a report that is now making the rounds in the media: “The Way Forward: A Practical Approach to Reducing Canada’s Greenhouse Gas Emissions”. Their conclusion? The most cost-effective, practical way for Canada to reduce its emissions is for every province to put a price on carbon. They contend that this approach would build on provincial momentum and recognize economic differences and provincial priorities. And of course it addresses the concerns that the federal government’s sector-by-sector approach to reducing emissions is insufficient.

The UN wants our number…

There’s an urgency to the report’s recommendations that is understandable. Delaying policy action is expensive – environmentally, but also economically. Three years ago, the National Round Table on the Environment and the Economy suggested that it would cost Canadians $87 billion (that’s with a “b”) more if we waited until 2020 to implement policies that could achieve deep emissions reductions by 2050 (65% below 2005 levels).


And yet the reality is that most provinces and the country as a whole are not on track to achieve our 2020 GHG reduction target, which has been set in the context of the UN-led international climate negotiations. Post-2020 goals are due to be established at the Paris conference in December, and the UN asked all countries to submit their targets by the end of March. The pressure is on.


It’s not all bad news

While the provinces have some tricky reconciling to do – oil and gas (be it conventional or unconventional) are the proverbial fuel for the economic fire in provinces like BC, Alberta, Saskatchewan, Newfoundland and New Brunswick – and these provinces have shown leadership when it comes to taking action on carbon:

  • BC has a carbon tax, currently capped at $30/tonne.
  • Quebec applies a small carbon levy to fossil fuels and participates in a cap-and-trade program with California – the biggest carbon market outside the European Union.
  • Alberta has the Specified Gas Emitters Regulation (SGER), essentially a cap-and-allowance program that permits large emitters to pay into a technology fund if they exceed their emissions intensity targets.
  • Nova Scotia has a renewable energy standard.
  • Manitoba has an emissions tax on coal and petroleum coke.


And then there’s Ontario, who, earlier this year, signaled their intention to set a price on carbon. While they are undertaking an extensive public consultation process prior to finalizing a policy, their position has been widely interpreted to mean that they will eventually join their former WCI partners, Quebec and California, in cap-and-trade.


A patchwork of policies?

The original point of the international process was to enable a top-down solution to reducing emissions, which theoretically would have been much more efficient than a patchwork of national and sub-national policies. The Ecofiscal Commission similarly recommends in its report that provinces should co-ordinate their carbon prices, but suggests that this is not essential in the short term. Action is more essential.

Although often developing their policies independently, the provinces and territories are already collaborating on a number of fronts, including working on a Canadian Energy Strategy within the auspices of the Council of the Federation. They have a series of meetings set for this year with a view to developing the strategy before the summer, and are also having a climate summit in Quebec next week to discuss their pre-Paris commitments.

What’s next?

The next few months are crunch time for provincial-federal climate talks. Watch for outcomes from next week’s provincial climate summit; for clarification on Ontario’s carbon pricing policy; and for the results of the Climate Summit of the Americas, which is being hosted by Ontario in July and is another forum in which subnational governments can collaborate on GHG reductions (and pressure their federal counterparts). It’s also worth keeping an eye on how the feds and provinces negotiate the target setting and commitment process ahead of the UN conference in December.


What do you think: Can the provinces go it alone, or does the federal government need to be part of the solution if Canada is to significantly decrease its GHG emissions?

By: Alex Carr — Senior Associate (acarr@delphi.ca)