GHG Accounting – Page 4 – GHG Accounting

Investors Increasingly Backing Shareholder Resolutions on Disclosure of Climate-related Risks

In the past few months, an increasing number of investors have been pushing shareholder resolutions on the risks related to carbon regulations. Ceres (a leading sustainability non-profit organization) reports that in 2017 so far, almost half of investors in fossil fuel and utility companies are backing resolutions for carbon intensive companies to undertake and disclose 2-degree scenario analysis, in order to better align their business plans with the goals of the Paris Climate Agreement and the accelerated transition to a low-carbon economy that is already underway. The following are highlights from the 2017 shareholder season so far, as reported by Ceres:

Highlights from the 2017 shareholder season include:

A historic majority vote of 62% at ExxonMobil. At ExxonMobil’s annual meeting on May 31, 2017, 62% of shareholders voted in favour of a proposal calling on the company to assess and disclose how it is preparing its business for the transition to a low-carbon future. Institutional investors with more than $5 trillion of combined assets under management co-filed the proposal, including lead-filers from the New York State Common Retirement Fund and the Church Commissioners for England.
A first evermajority vote of 57% at PPL Corp. While the company has divested much of its power generation, it has not disclosed a long range greenhouse gas reduction strategy or goals.
A 48% vote at Dominion Resources.Ceres indicates that the company appears to be relying too heavily on natural gas, which is not aligned with a 2-degree scenario, and the company ranks at or near the bottom for delivery of energy efficiency and renewable energy to customers.
A 45% vote at DTE Energy.In an encouraging development, just one week after the vote, DTE Energy Chairman and Chief Executive Gerry Anderson announced that the company would reduce carbon emissions by 80% by 2050 and close its coal plants.
A 46% vote at Southern Company. In a climate-related vote held on May 24, 2017, 46% of its shareholders asked the Southern Company to report on how it plans to align its business operations with a 2-degree global warming scenario, up from 34% last year. The company has made sizable, high risk bets on nuclear and carbon capture and storage (CCS) technologies and has not set long-range GHG reduction goals or disclosed plans for aligning its business with a 2-degree scenario.
A 50% vote at PNM Resources. While the company recently proposed a shift from coal to natural gas and renewables, it has not disclosed a long range strategy consistent with a 2-degree Scenario.
A 46% vote at Duke Energy. Duke Energy is the second largest emitter in the US, and does not have long range GHG reduction plans.
Xcel Energy agreed to disclose its long-range GHG reduction plans. This move indicates that it is well-positioned to meet the expectations of international climate goals.

Ceres analyzed the resolutions and saw an average of 45% support this year for resolutions asking companies to report regularly on the kind of impact regulations aimed at reducing carbon emissions would have on their operations. The percentage in favor is up from 21% in 2014 and 34% in 2016.

These shareholder votes send a strong message that investors are slowly sitting up and taking notice of the material financial implications of climate change. Many investors recognize that if companies take advantage of a near term weakening of regulations and make investments that are not prudent over the long time horizon that these investments demand, they risk stranding assets and potential future write-downs on financial statements.

This trend in shareholder voting is taking placing within a broader push by global institutional investors to spur action at the governmental level to fully implement the Paris Agreement. Ahead of the G20 Summit in Hamburg, 400 investors with $22 trillion in assets under management sent a clear signal that climate action is essential through support of both the Paris Agreement and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The TCFD has laid out an ambitious five-year path for full implementation of the Paris Agreement, which will depend on companies taking a leadership role to start implementing the recommendations this year.

LCA -Life Cycle Assessment

Life Cycle Assessment (LCA)
LCA is the systematic analysis of the environmental impact of fuels, products, structures and activities over their entire life cycle. A life cycle is comprised of production/construction, use/ operational, removal and disposal phases. Environmental impacts are evaluated comprehensively including the evaluation of upstream and downstream processes associated with the production (e.g. production of raw, auxiliary and operating materials) and with the disposal (e.g. waste treatment). Environmental impacts refer to all relevant extractions / removals from the environment (e.g. ores and crude oil), as well as discharges and emissions into the same (e.g. wastes and carbon dioxide) during the entire life cycle.

Life Cycle Assessment and Environmental Performance Analysis

To fully leverage sustainability as an advantage for any project, product or organisation, it is most helpful to have a comprehensive understanding of the opportunities and risks at any given point and time. In particular, this includes having the ability to assess key aspects across the operations and supply chain to determine the use of energy, raw materials, water and natural resources, as well as carbon emissions and waste. This is the only way to ensure that the end result is truly the most sustainable option.

To achieve this goal, the life-cycle analysis will consider exploring the environmental performance of the project according to criteria established in relevant good guidance practice. In addition good guidance practices will guide organisations how to communicate the results of any analysis of the environmental impact.

Relevant Standards:

ISO 14021, Environmental Labels and Declarations — Self-Declared Environmental Claims (Type II Environmental Labelling)
ISO 14025 (Type III Environmental Declarations)
ISO 14040 Environmental management — Life cycle assessment — Principles and framework
ISO 14044 Environmental management – Life cycle assessment – Requirements and guidelines
ISO 14064-1 Greenhouse gases — Part 1: Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals
Greenhouse Gas Protocol Product Life Cycle Accounting and Reporting Standard

With the results of life cycle assessments completed in accordance with good guidance practice, benefits can be achieved through:

transparent and comparable credible environmental performance information;
facilitating the selection of low energy GHG emissions options based on facts;
facilitating the evaluation of alternative product design and sourcing options, production and manufacturing methods, raw material choices, recycling and other end-of-life processes; and
facilitating the development and implementation of GHG management strategies and plans across product life cycles as well as the detection of additional efficiencies in the supply chain.

GHG Accounting conducted environmental performance and Life Cycle Analysis studies for many innovative infrastructure projects and products. Contact us today if you have any questions in this regard.

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.

ISO 14080 (In development)

The future ISO 14080 (Greenhouse gases management and related activities — Framework and principles for methodologies on climate actions), which is currently under development, will give organizations involved in climate action a framework for the development of consistent, comparable and improved methodologies that provide guidance for effective mitigation and adaptation activities, and also improve access to, and availability of, climate finance and other resources.

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:

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.
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.
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) 39^thAssembly 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.