Category: Green News

Climate Policy Innovation: California Considers a New Approach Post-2020 – The End of the Offsets System?

With the introduction of Senate Bill SB 775 (California Global Warming Solutions Act of 2006: Market-based Compliance Mechanisms) into the California Senate on May 2, 2017, California is innovating on climate policy once again. Although it has a long journey to complete before becoming law, SB 775 is significant because it would completely revamp California’s cap and trade system once the current program ends in 2020.  Under SB 775, the key features of California’s proposed new system are as follows:

  • The cap and trade system would be completely overhauled with a new program commencing on January 1, 2021; no allowances and offsets from the current system would be transferred over.
  • All allowances under the proposed new program would be auctioned, meaning that no allowances will be allocated for free. Further, no offsets will be permitted for use as a compliance mechanism.
  • A price collar would be established in 2021, with the price floor starting at US $20 and a price ceiling of US $30 (the initial auction price would be set at US $30 per allowance). The price floor would rise at $5 per year plus inflation; while the price ceiling would rise at US $10 per year plus inflation. The proposed program is designed to operate in perpetuity, so in the absence of amendments to the program, the price ceiling could exceed US $300 by 2050.
  • A broad revenue structure would be established to allocate revenue into three programs: (1) California Climate Dividend Program, which will rebate revenue on a per-capita basis; (2) public infrastructure investments and investments in disadvantaged communities; and (3) climate and clean energy research and development.
  • The new cap-and-trade program will not link to any other jurisdiction until that jurisdiction has a minimum carbon price that is equal to or greater than California’s. Also, the Governor must be satisfied that the linkage will not adversely impact California dividends.
  • The proposed cap-and-trade program would impose a border adjustment tax on imports based on their carbon intensity, which would be administered by a newly created Economic Competitiveness Assurance Program. The border adjustment tax would seek to ensure that in-state industry is not unduly impacted by California’s carbon pricing regime. In the event that a border adjustment tax is reduced or eliminated following a legal decision, SB 775 provides a safety net for California businesses in the event the border adjustment tax is reduced or eliminated following a legal challenge. In particular, free allowances, would be made available to eligible companies for the purpose of maintaining economic parity between producers of carbon intensive goods that are subject to the cap and trade system and those who produce or sell similar products that are not.

The introduction of SB 775 comes on the heels of Bill SB 584, which was introduced in February 2017 and calls for 100% of the state’s electricity to come from renewable sources by 2045. Bill SB 32, which was passed in 2016, establishes an ambitious emissions reduction target for 2030 – i.e. beyond the current emissions reduction target of returning to 1990 emission levels by 2020, SB 32 mandates a reduction of an additional 40% in emissions by 2030.

The passage of SB 775 in its current form will no doubt have implications for the existing cap and trade programs in Québec and Ontario. Since 2014, California’s cap and trade program has been linked to Québec’s emissions trading system and Ontario is expected to link to both California and Québec’s cap-and-trade programs in 2018. Since any jurisdiction looking to link with California’s program from post-2020 would first need to match the state’s level of carbon pricing, Québec and Ontario may have limited incentive to link to California from 2021, since California’s minimum carbon price in 2021 will already be close to or exceed the carbon pricing requirements of the Canadian federal government (starting in 2018, provinces and territories are expected to implement a carbon price of CAD $10, which will increase by $10 per year until it reaches CAD $50 in 2022). SB 775 is now undergoing review by the Committee on Environmental Quality, after which it will be sent to the state Senate and then on to the state Assembly, before it is sent back fro reconciliation. California Governor Jerry Brown has asked for reauthorization of the cap and trade program by July 2017.

Pan-Canadian Framework is effective – More Provinces act – A review of provincial level Climate Change Action in Atlantic Canada

Since the signing of the Vancouver Declaration on Clean Growth and Climate Change in March 2017 and in the lead-up to the release of the Pan-Canadian Framework on Clean Growth and Climate Change (December 2017) (the “Framework”), the Atlantic provinces have been taking steps to update their climate change action plans and implement policies to meet the requirements of the Framework, including the need to implement carbon pricing (whether in the form of a carbon tax or cap and trade system) in 2018. Below is a round up of the latest climate change policy developments from the Maritimes.

 New Brunswick

New Brunswick released its new climate change action plan – Transitioning to a Low-carbon Economy – in December 2016. The plan sets out more than 100 action items to combat climate change including plans to make government carbon neutral by 2030, implementation of energy efficiency programs, phase-out of coal as a source of electricity, and the establishment of a price on carbon that will meet requirements under the Framework. The Nova Scotia government has said that proceeds from the province’s carbon pricing regime will be directed to a dedicated fund for climate change initiatives.

Nova Scotia

A large proportion of Nova Scotia’s greenhouse gas (GHG) emissions come from the electricity sector and as a result, the province’s emission reduction strategy has focused mainly on electricity emissions. In particular, in 2009, Nova Scotia imposed a GHG reduction requirement of 25% by 2020 to support the transition away from coal. Following the province’s adoption of the Framework in December 2016, the Nova Scotia government said that it will implement a cap and trade program which will cover approximately 90% of Nova Scotia’s GHG emissions. As part of the development of the province’s cap and trade program, Nova Scotia Environment has released a discussion paper entitled Nova Scotia Cap and Trade Program Design Options. Since Nova Scotia does not wish to see the transfer of emissions in or out of the province, it has no plans to link with a cap-and-trade program in any other jurisdiction at this time. Nova Scotia Environment will be accepting comments on the discussion paper until March 31, 2017.

Prince Edward Island

Prince Edward Island (PEI) is in the process of developing strategies for both mitigation and adaptation measures. Last year, PEI launched a process to develop a 2016 Provincial Climate Change Mitigation Strategy, which resulted in the release of PEI’s Climate Change Mitigation Strategy Discussion Document in July 2016. Following public consultations, a draft report – Recommendations for a 2016 Provincial Climate Change Mitigation Strategy – was released in October 2016.  While the report does not articulate the type of carbon pricing that PEI will implement, it does acknowledge that a vast majority of respondents in the consultation process indicated their support for a carbon-pricing model that is revenue neutral. The draft recommendations report will be further refined before it is finalized. PEI’s mitigation strategy is being developed first, in parallel with a new energy strategy that is focused on sustainable energy policies that support energy efficiency, renewable energy, and economic growth. A second draft of PEI’s 2016 Provincial Energy Strategy was released in June 2016 and sets out action items to be pursued over the next 5 to 10 year period in the following areas: (i) energy efficiency and conservation; (ii) electricity generation; (iii) energy storage; (iv) biomass; (v) transportation; and (vi) cross-sectoral initiatives. Implementation steps will be announced following the finalization of the strategy.

Newfoundland & Labrador

In June 2016, Newfoundland & Labrador passed the Management of Greenhouse Gas Act, which establishes a legislative framework for reducing GHG emissions by industrial emitters (i.e. industrial facilities emitting 15,000 tonnes of carbon dioxide equivalent (CO2e) per year). The legislation requires two years of emissions monitoring that will help establish reduction targets for large industrial facilities (i.e. those emitting 25,000 tonnes of CO2e per year). The legislation requires facilities meeting the 15,000 tonne threshold to submit annual GHG reports. Further, the legislation establishes a compliance fund that will support the development of emissions reduction technologies. In particular, the fund will provide companies with flexibility in achieving emissions reductions at a lower cost, while supporting emission reduction projects. A third party has been retained to help develop Newfoundland & Labrador’s first carbon offset protocols that will focus on energy efficiency, fuel switching and renewable energy projects. Finally, the province announced in February 2017 that the Office of Climate Change now operates within the Executive Council.

Canadian Government sets internal emissions reduction target and establishes Centre for Greening Government – Walking the Talk

The Pan-Canadian Framework on Clean Growth and Climate Change (the Framework, released in December 2016) recognizes that while governments are directly responsible for a relatively small share of Canada’s emissions (about 0.6%), there is an opportunity for them to lead by example. A number of provinces are already demonstrating leadership, including through carbon neutral policies. For example, British Columbia’s (BC) public sector has successfully achieved carbon neutrality each year since 2010. Over the past 6 years, schools, post-secondary institutions, government offices, Crown corporations, and hospitals have reduced a total of 4.3 million tonnes of emissions through improvements to their operations and investments of $51.4 million in offset projects. BC was the first, and continues to be the only, carbon neutral jurisdiction in North America. Municipalities are also recognized as essential partners in emission reduction efforts – how cities develop and operate have an important impact on energy use, and therefore GHG emissions.

The Framework sets out an approach to government leadership, which includes (1) setting ambitious targets; (2) cutting emissions from government buildings and fleets; and (3) scaling up clean procurement.

To play its part, the federal government has announced that it will reduce its own greenhouse gas (GHG) emissions by 40% by 2030. In support of this goal, the Honourable Scott Brison, President of the Treasury Board, announced the creation of the Centre for Greening Government (the Centre) at the Treasury Board of Canada Secretariat in November 2016. The Centre will track the Government of Canada’s emissions centrally and coordinate efforts across government departments in order to ensure that the government’s objectives are met. Progress on emission reductions will be achieved by strategic investments in infrastructure and vehicle fleets, green procurement, and support for clean technology. Already, the federal government announced $2.1 billion in Budget 2016 towards repairs and retrofits to a wide range of government buildings, and to the greening of government operations.

The Centre’s work is rooted in the following Government of Canada commitments:

The Centre engages in the following government-wide activities:

  • analyzing and reporting;
  • providing policy and operational support;
  • setting requirements for federal organizations to deliver results and achieve performance goals; and
  • establishing communities of practice to identify best practices and lessons learned in greening actions from federal partners and provincial, territorial and other jurisdictions.

The federal government has indicated that it will immediately begin by aligning the way it measures GHG emissions with international standards to provide an accurate picture to measure the government’s progress.

The Centre is also working in close partnership with Environment and Climate Change Canada to further to goals of the 2016-2019 Federal Sustainable Development Strategy (FSDS), which was tabled in Parliament in October 2016. The Centre is the lead for Goal 2 of the FSDS: Low-carbon government.

Canada Moves Climate Change File Forward with Pan-Canadian Framework on Clean Growth and Climate Change

Canada wrapped up an eventful year 2016 on its climate change file. On the heels of the meeting of First Ministers in March 2016 (which resulted in the Vancouver Declaration), the federal government signed the Paris Agreement when it was opened for signature on 22 April 2016. Efforts continued on developing a pan-Canadian climate change strategy, which culminated in the announcement of a pan-Canadian carbon price on 3 October 2016, ratification of the Paris Agreement on 5 October 2016 and the release of the Pan-Canadian Framework on Clean Growth and Climate Change (the Framework) by the First Ministers’ following their meeting on 9 December 2016. Notably, Saskatchewan was the only province which declined to adopt the Framework.

The Framework is based on the principles set out in the Vancouver Declaration, which outlined a collaborative approach to meet or exceed Canada’s 2030 target of 30% below 2005 levels of greenhouse (GHG) emissions and enable sustainable growth, while recognizing the need for fair and flexible approaches to support the diversity of provincial and territorial economies. The Framework has four main pillars:

  • Pricing carbon pollution – an efficient way to reduce emissions, drive innovation, and encourage people and businesses to pollute less;
  • Complementary measures to further reduce emissions across the economy – such measures can address market barriers where pricing alone is insufficient or not timely enough to reduce emissions in the pre-2030 timeframe;
  • Measures to adapt to the impacts of climate change and build resilience – this will help to ensure that infrastructure and communities are adequately prepared for climate risks such as floods, wildfires, droughts and extreme weather events, particularly in Indigenous, northern, coastal and remote communities; and
  • Actions to accelerate innovation, support clean technology, and create jobs – by positioning Canada as a global leader in clean technology, Canada will remain internationally competitive and new jobs will be created across the country.

The Framework builds on provincial and territorial efforts to reduce GHG emissions and sets out actions under each of the Framework’s pillars. These actions include:

  • developing new building codes to ensure that buildings use less energy, thus saving money for households and businesses;
  • deploying more electric charging stations to support zero-emitting vehicles, which is an integral part of the future of transportation;
  • expanding clean electricity systems, promoting inter-ties, and using smart-grid technologies to phase out the reliance on coal, make more efficient use of existing power supplies, and ensure a greater use of renewable energy;
  • reducing methane emissions from the oil and gas sector;
  • protecting and enhancing carbon stored in forested lands, wetlands and agricultural lands; and
  • driving significant reductions in emissions from government operations.

To promote clean growth, the federal government (in collaboration with the provinces and territories) will be investing in green infrastructure, public transit, and clean technology and innovation, as well as promoting efforts to reduce the reliance of remote and northern communities on diesel by connecting them to electricity grids and implementing renewable energy systems.

Provincial and territorial officials have been tasked with implementing the Framework and will report back to the First Ministers within a year, and annually thereafter. Federal and provincial/territorial governments will also work together to establish a review of carbon pricing, including an assessment of stringency and effectiveness, which will be completed by early 2022; an interim report will be completed in 2020, which will assess approaches and best practices to address the competitiveness of emissions intensive, trade exposed (EITE) sectors. As noted above, the federal government announced a pan-Canadian carbon price in October 2016, which establishes a minimum price of $10 per tonne of carbon dioxide equivalent (CO2e) in 2018, increasing by $10 each year until the carbon price reaches $50 per tonne of CO2e by 2022.  Pricing will be based on GHG emissions and applied to a broad set of sources; at a minimum, carbon pricing should apply to substantively the same sources as BC’s carbon tax. Provinces and territories must implement carbon pricing in their jurisdictions by 2018, either in the form of a carbon tax or a cap-and-trade system. Where a jurisdiction fails to meet the carbon price benchmark, the federal government will introduce a carbon pricing system into such jurisdiction and return the revenues to it.  Further, provinces with cap-and-trade need (i) a 2030 emissions reduction target, and (ii) declining annual caps to at least 2022 that correspond, at a minimum, to the projected emissions reductions resulting from the carbon price that year in price-based systems.

As the provinces and territories work to implement the Framework, all levels of government will need to seek input from subject matter experts and stakeholders to ensure informed decision making and the use of best practices. Stay tuned for further developments.

 

 

Setting our sights on 2050: Canada announces Mid-Century Long-Term Low-Greenhouse Gas Development Strategy at COP 22

At COP 22 in Marrakech, Morocco, federal Minister of Environment and Climate Change, Catherine McKenna, announced Canada’s Mid-Century Long-Term Low-Greenhouse Gas Development Strategy (the Strategy). As one of the first countries to release a long-term greenhouse gas (GHG) strategy focused on 2050, the Strategy describes various pathways for innovative and creative solutions consistent with the Paris Agreement’s goal of holding the global average ‎temperature rise to well below 2 °C, while pursuing efforts to limit the temperature increase to 1.5 °C. In particular, the Strategy considers an emissions abatement pathway consistent with net emissions falling by 80% in 2050 from 2005 levels.

The federal government acknowledges that in order to achieve emission reductions in line with this goal will require substantial effort on the part of all Canadians, with a fundamental restructuring of multiple sectors of the economy. Cost-effective abatement opportunities will need to be realized from virtually every greenhouse gas emissions source and activity. In the energy sector, this will include enhanced energy efficiency and conservation, finding cleaner ways to produce and store electricity, and switching towards non-emitting electricity or other low-GHG alternatives.

The Strategy notes that the risks of inaction are threefold:

  1. Ongoing emissions of anthropogenic GHG will cause atmospheric concentrations to continue to rise, leading to higher global average temperatures and a cascade of related impacts, including increases in severe weather, and rising sea level.
  2. Failure to act now means that costs will likely rise in the future as the required pace of decarbonisation increases. This raises the probability of misallocation of investment and infrastructure, as well as stranded assets.
  3. As the world moves to address climate change, Canada should not be left behind in the emerging global markets for clean energy and related goods and services.

The Strategy identifies the following key messages:

  • Most Canadians recognise the need to mitigate climate change and limit the increase in the global average temperature, but the magnitude of the challenge is less well understood, with a requirement for very deep emissions cuts from every sector by mid-century.
  • Mitigating greenhouse gas emissions is necessary to avoid the increasing threat presented by climate change. Benefits of action to reduce climate risk will outweigh costs and the international community is moving towards low-greenhouse gas economies. A particular focus on short-lived climate pollutants is also required if we are to stay below the 1.5°C – 2°C temperature goal.
  • Canada has worked closely with the United States and Mexico in the development of this report. Our continental partners have also described ambitious mitigation action by 2050 in their respective strategies.
  • Encouraging international efforts, including reducing emissions in other countries will be key to the global response.
  • Working collaboratively with Indigenous peoples by supporting their ongoing implementation of climate change initiatives will be key. Consultations with Indigenous communities must respect the constitutional, legal, and international obligations that Canada has for its Indigenous peoples.
  • The Strategy will help inform the pan-Canadian framework for clean growth and climate change.

In addition, the Strategy identifies a number of building blocks that could provide the foundation for Canada’s long-term climate change mitigation strategy:

  • Cities are home to 70% of the world’s energy related carbon dioxide emissions. Canadian cities host 80% of the national population, compared to 62% sixty years ago. With a continuing trend in urbanization for the upcoming decades, cities across Canada cannot afford to wait to increase climate change mitigation and adaptation efforts.
  • Canada’s forests and lands will continue to play an important role in sequestering substantial amounts of carbon dioxide from the atmosphere. This sequestration can be augmented through policies and measures that better manage our forests and forest products. Without consideration of the global land sector, the 1.5 to 2°C temperature goal will be very hard to achieve.
  • Energy efficiency and demand side management are key to achieving deep GHG reductions. Efficiency gains are also key enablers of electrification technologies and consumer savings.
  • Electrification has been identified as an essential step in all deep GHG mitigation analyses. The electrification of end-use applications that are currently using fossil fuels is fundamental, e.g. using electricity to power certain cars, trucks, building appliances and heating systems, and energy requirements for some industries.
  • Concurrent trends towards decarbonization of the electricity generating sector are needed. Electricity generation in Canada is already more than 80% non-emitting, with a trend towards non-emitting generation expected to continue, including through increased government action.
  • Some sectors such as heavy industries, marine transportation, some heavy freight transportation, and aviation could move to lower or low-carbon fuels such as second generation biofuels or hydrogen. Alternatively, new and emerging technologies in synthetic hydrocarbons or energy storage would be needed.
  • Abatement of non-carbon dioxide greenhouse gases, such as methane and hydrofluorocarbons, is a priority given their high global warming potentials. Reductions of these pollutants can often help slow the rate of near-term warming and contribute to achievement of the global temperature goal. Although black carbon is not classified as a greenhouse gas, it has strong global warming effects that must also be addressed.
  • Innovation will also be crucial. A sustainable energy transition is possible with currently deployed or near-commercial technologies, but the long-term transition will be eased with the near-term accelerated deployment of clean energy options, or the development of more innovative technologies. The private sector has an important role to play in this respect including spurring investment and innovation towards low GHG alternatives. Carbon pricing will be an important element to achieving this objective.
  • Collaboration with provinces and territories, Indigenous peoples, municipalities, business and other stakeholders will be essential to Canada’s long-term success in enabling clean growth, reducing emissions and seizing the opportunities of the low-carbon global economy.

Dealing with climate change will ultimately require net-zero anthropogenic greenhouse gas emissions over the course of this century. The Strategy document concludes by noting that Canada will need to fundamentally transform all economic sectors, especially patterns of energy production and consumption.

Carbon Offsetting and Reduction Scheme for International Aviation

Since the adoption of the Kyoto Protocol in 1997, ICAO has been under increasing pressure to produce a plan to reduce emissions from aviation. Notably, aviation emissions were excluded from the Paris Agreement. On 6 October 2016, a deal was reached by 191 countries at the Plenary Session of the International Civil Aviation Organization’s (ICAO) 39th Assembly to manage carbon dioxide (CO2) emissions from international aviation through a new global market-based measure known as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). With the adoption of CORSIA, the aviation industry is signaling its intent to shoulder its responsibility for emission reductions by mitigating GHG emissions from its sector.

CORSIA, which is designed to complement the basket of mitigation measures the air transport community is already pursuing to reduce CO2 emissions from international aviation (including technical and operational improvements and advances in the production and use of sustainable alternative fuels for aviation), will commence with a pilot phase from 2021 through 2023. Starting from 2021, airlines that opt in to the scheme will have to purchase offsets to balance their emissions growth above 2020 levels. More than 65 countries representing over 85% of global air traffic have said they will participate from the beginning. The pilot phase will be followed by a first phase from 2024 through 2026. Participation in both of the pilot and first phases will be voluntary and the next phase from 2027 to 2035 would see all states on board. Some exemptions were accepted for Least Developed Countries (LDCs), Small Island Developing States (SIDS), Landlocked Developing Countries (LLDCs) and States with very low levels of international aviation activity. The scheme will be reviewed every three years.

In 2010, the aviation industry had agreed on an aspirational goal to cap its emissions after 2020, so that future growth would be carbon neutral. IATA reported that aviation in 2015 emitted 781 million tonnes of CO2, meaning that if it was a country, it would be the world’s sixth largest emitter. Since the industry is expected to grow at an average rate of around 5% per year over the next two decades, it will need to find ways to significantly increase its efficiency or balance its own emissions through emissions reductions in other sectors.

Curbing Global Consumption of HFCs

On 15 October 2016, 197 countries struck a landmark deal to reduce the emissions of hydrofluorocarbons (HFCs), a category of highly potent greenhouse gases (GHG). It is anticipated that this agreement could prevent up to 0.5 degrees Celsius of global warming by the end of this century. The amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer that was endorsed in Kigali is considered to be the single largest contribution the world has made towards keeping the global temperature rise “well below 2 degrees Celsius”, a target agreed at the Paris climate conference in 2015.

HFCs, currently the world’s fastest growing GHG, are commonly used in refrigeration and air conditioning as substitutes for ozone-depleting substances. According to the United Nations, emissions from HFCs are increasing by up to 10% each year as global demand for cooling, particularly in developing countries with a fast-expanding middle class and hot climates, grows rapidly. The Kigali amendment provides that developed countries will start to phase down HFCs by 2019. Developing countries will follow with a freeze of HFC consumption levels in 2024, with some countries freezing consumption in 2028. By the late 2040s, all countries are expected to consume no more than 15-20% of their respective baselines.

Countries also agreed to provide adequate financing for HFCs reduction, the cost of which is estimated at billions of dollars globally. The exact amount of additional funding will be agreed at the next meeting in 2017. While alternatives to HFCs with a smaller impact on the climate are available (such as ammonia or carbon dioxide), they remain more expensive than HFCs.  As a result, grants for research and development of affordable alternatives to HFCs will be the most immediate priority for countries to pursue.

 

Canadian Federal Government Announces Minimum Carbon Price for Provinces to Meet

On October 3, 2016, Prime Minister Trudeau announced that the federal government will set a minimum price on carbon starting at $10 per tonne in 2018, and increasing by $10 per year for the next four years until it reaches $50 per tonne by 2022. Each province will be required to implement carbon pricing in its jurisdiction within two years – whether in the form of a carbon tax or a cap-and-trade system – which must meet the federal minimum price. Otherwise, the federal government will impose a tax that makes up the difference and return the revenue to the province. In addition, provincial emission reduction goals for reducing emissions must be at least as stringent as federal targets. Currently, Canada’s four biggest provinces – Ontario, Quebec, Alberta and British Columbia – have carbon pricing plans in place.

The Prime Minister said he will convene a first ministers’ meeting on December 8 with the aim of concluding a pan-Canadian climate plan, which would include carbon pricing and other measures.

 

British Columbia releases long-awaited Climate Leadership Plan

On August 19, 2016, the BC government released its long-awaited Climate Leadership Plan, which updates the province’s earlier Climate Action Plan (2008). The plan follows the release of the government-appointed Climate Leadership Team’s (CLT) recommendations in November 2015 and sets out 21 actions to reduce emissions across five areas: (1) natural gas, (2) transportation, (3) forestry and agriculture, (4) communities and built environment, and (5) public sector.

The CLT had made 32 recommendations including, among others, the establishment of a mid-term 2030 greenhouse gas emissions reduction target and a reduction in the provincial sales tax from 7% to 6%, which would be offset by an increase in the carbon tax by $10 per year commencing in July 2018.  While the Climate Leadership Plan has been informed by some of the recommendations made by CLT and feedback received from the public and stakeholders, the plan focuses on actions that will enable BC to achieve its legislated target of reducing emissions 80% below 2007 levels by 2050. In so doing, the Climate Leadership Plan bypasses BC’s 2020 target of achieving a reduction in GHG emissions of 33% below 2007 levels. The BC government has declined to set a mid-term target and will keep the province’s revenue neutral carbon tax at $30 per tonne until the federal government’s approach to carbon pricing is revealed.

The key actions in the Climate Leadership Plan include the following:

Communities & Built Environment

  • Working together with local governments to refresh the Climate Action Charter, with a particular focus on: (i) growth near major transit corridors for large urban communities; (ii) increasing the use of decision support tools that provide the information needed to create more resilient green infrastructure; and (iii) strengthening the ability of communities to adapt to the impacts of climate change.
  • Amending regulations to promote more energy efficient buildings.
  • Creating a waste-to-resource strategy to reduce waste sent to landfill and establishing a food waste prevention target of 30% and increasing organics diverted from landfills to 90%.

Public Sector

  • Promoting the use of low carbon and renewable materials in public sector buildings.
  • Mandating the creation of 10-year emission reduction and adaptation plans for provincial public sector operations.

Transportation

  • Increasing the requirements for BC’s Low Carbon Fuel Standard to 15% by 2030 (it currently requires a reduction in the carbon intensity of transportation fuels by 10% by 2020 (relative to 2010)).
  • Amending regulations to encourage emission reductions in transportation by allowing utilities to double the total pool of incentives available to convert commercial fleets to natural gas, when the new incentives go towards vehicles using 100% natural gas.
  • Expanding support for zero emission vehicle charging stations in buildings through the Clean Energy Vehicle program.

Forestry & Agriculture

  • Rehabilitating under-productive forests, recovering more wood fibre, and avoiding emissions from burning slash; these actions will be taken through the new Forest Carbon Initiative, which will seek to increase the rate of replanting and fiber recovery by 20,000 hectares per year.

Industry & Utilities

  • Developing new energy efficiency standards for gas-fired boilers.
  • Facilitating projects that will help fuel marine vessels and commercial vehicles with natural gas.

Natural Gas

  • Developing a strategy to reduce upstream methane emissions, including targets for reducing fugitive and vented emissions from extraction and processing infrastructure (built before January 1, 2015) by 45% by 2025.
  • Investing in infrastructure to develop upstream electrification of several projects, including the Peace Region Electricity Supply Project, North Montney Power Supply Project and others.

The BC government has said that the Climate Leadership Plan is a living document that will be further updated over the coming year. The plan will likely be updated to reflect federal climate change policy developments once the working groups that were established at the First Ministers’ meeting in March 2016 report back in October 2016 (working groups were established to study (a) clean technology, innovation and jobs, (b) carbon pricing mechanisms, (c) mitigation opportunities, and (d) adaptation and climate resilience).

Ontario Introduces Draft Climate Change Legislation and Supporting Cap & Trade Regulation

To facilitate the implementation of its cap and trade program, Ontario has introduced framework climate change legislation and a supporting cap and trade regulation. The Climate Change Mitigation and Low Carbon Economy Act (the Act) legislates Ontario’s greenhouse gas (GHG) emissions targets, requires the publication of a climate change action plan, and establishes the framework rules for the cap and trade program, as well as the rules for managing the proceeds from the cap and trade program. Ontario has also introduced a draft regulation setting out the details of the cap and trade program, which will cover industries, institutions, electricity generators, and suppliers and distributors of heating fuels that emit 25,000 tonnes of GHG emissions per year or more, as well as suppliers and distributors of transportation fuels that distribute 200 litres of fuel per year or more. The program would also cover entities that import electricity and fuels in to Ontario. Under the cap and trade program, which will come into force on January 1, 2017, 82% of the province’s total GHG emissions will be covered. To create a robust offset credit program in Ontario, a separate offsets regulation will be drafted under the climate change legislation later in 2016.

Overview of the Climate Change Mitigation and Low Carbon Economy Act
The proposed Act looks to:

  • Make Ontario’s greenhouse gas reduction targets legally binding – the following targets have been established: 15% below 1990 levels by 2020, 37% below 1990 levels by 2030 and 80% below 1990 levels by 2050.
  • Formally direct all cap and trade auction proceeds to a new Greenhouse Gas Reduction Account that would fund green projects to reduce emissions.
  • Ensure transparency by requiring an annual public report on funds flowing in and out of the Greenhouse Gas Reduction Account, including a description of funded initiatives and their alignment with climate change action plans.
  • Provide a legal framework for the cap and trade program.
  • Provide a framework for reviewing and increasing targets, as well as establishing additional interim targets.
  • Allow for transitional allowances to large industrial emitters which would be phased out over a period of time.
  • Require the government to prepare and implement a climate change action plan for achieving these targets, with progress reports and a review of the plan at least every five years.

Overview of Draft Cap and Trade Regulation
In connection with the proposed cap and trade program, the Ministry of Environment and Climate Change (MOECC) has posted a regulatory proposal for a cap and trade regulation, which includes an appendix presenting detailed technical information for the distribution of allowances to eligible capped emitters for the first compliance period, details related to early reduction credits, and an overview of complementary amendments for the reporting regulation and incorporated guideline to support implementation of the cap and trade program.
Ontario is planning to set a cap on emissions for each year of the first compliance period that will start in 2017 and last through 2020; the cap would be set based on the emissions that are forecast for each of those four years. The cap would translate into the total number of emissions allowances that would be made available for covered sectors through auctioning and free-of-charge allocation. Under the program, regulated emitters will be required to hold a sufficient number of allowances to cover their annual emissions.
Between 2017 and 2020, the economy-wide cap is expected to decline at a rate of 4.17% each year to meet Ontario’s 2020 emissions reduction target. The heating and transportation fuel sector and industries will face cap declines. However, the sector-specific cap for the electricity generation sector will remain unchanged from year to year in recognition of the emission reductions that the sector has already undertaken with the closure of coal-fired power plants.
In order to provide transitional support for emissions intensive and trade exposed industries, Ontario plans to allocate emissions allowances free of charge to a broad range of industries including cement, lime and steel. This is aimed at reducing the risk of “carbon leakage”, or the relocation of local industries to other jurisdictions with less stringent environmental standards or no carbon pricing policy. Ontario will review the allocation of allowances at the end of the first compliance period in 2020. The coverage of electricity and fuel imports in the program seek to provide a level playing field for Ontario’s electricity generation and fuels sectors. The government has also indicated that it will consider additional actions to prevent carbon leakage, including border carbon adjustments.
To facilitate compliance, covered sectors would also have the option of funding emissions reductions in non-covered sectors, such as agriculture, through the purchase of offset credits. The government will establish the criteria for creating offset credits that are real, permanent and quantifiable. Furthermore, emitters that have voluntarily taken early and verifiable action to reduce GHG emissions would be rewarded through one-time early reduction credits. Smaller emitters with annual emissions of between 10,000 and 25,000 tonnes would have the choice of opting into the cap-and-trade program and have access to the free allocation of allowances.
The cap and trade proposal has been posted for a 45 day public review and comments may be submitted to MOECC by April 10, 2016.

Revised GHG Reporting Guideline
MOECC has also issued a revised Guideline for Greenhouse Gas Emissions Reporting. To support the proposed cap and trade program, MOECC is now proposing to revoke the Greenhouse Gas Emissions Reporting Regulation (O.Reg. 452/09) and replace it with a new greenhouse gas reporting regulation and incorporated Guideline under the Act. Proposed changes will include:

  • Requirements to report production and other process related information;
  • Provisions to allow facilities with emissions between 10,000 and 25,000 tonnes to opt-in;
  • Clarifications on measurement requirements and reporting of biomass types; and
  • Refinements to the Regulation and Guideline to facilitate implementation of the Cap and Trade Regulation.