Climate Change Coming to a province near you. Pan-Canadian Redux

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Ah, you don’t believe

we’re on the eve

of destruction

Barry McGuire

For climate change, now might be the time to believe in case you have any doubts. NASA recently recorded CO2 to be at 408 parts per million. The previous high came in at 300 ppm over 300,000 years ago. We have to look back 3 million years to see carbon levels comparable to today. But then, temperatures were about 2 degrees higher than pre-industrial time and sea levels were about 15-25 metres higher than today. If the climate acted like the stock market, then 300,000 years ago compares to 1929 stock market levels before the crash and the present compares to dot-com market valuation levels. The point being that the repercussions of those lofty levels lingered for years afterwards. Climate wise, we can anticipate several centuries before things start to normalize again.

We will likely zoom right past those ancient levels. If you have doubts, then the UN has some good peer reviewed studies indicating that things may be a bit worse than they seem. http://www.ipcc.ch/

I mentioned the increasing carbon levels to give a sense of scale of what appears to be occurring. Personkind always tends to push problems off into the future in order to avoid the present cost. This became the constant theme since the early eighties when countries could not reach a conclusion on how to deal with the increasing carbon in the atmosphere. Back then, there seemed to be a great deal of confidence that we would be able to innovate to create cost effective solutions to the problem in the distant future. Moreover, that distant future is suddenly here. A cost effective solution may have been true had we been working on the problem a bit more, but subsidies for new less carbon intensive technologies have waxed and waned. We pushed back even further the practical application of the innovations we should have started back in the 90s.

The climate change issue came onto the science scene several decades ago. The world finally managed to agree on the United Nations Framework Convention on Climate Change back in 1992 after many attempts of trying to do something. This framework provided for the implementation through the Kyoto Protocol. Canada finally dropped out of the protocol seeing that we would not meet our stated obligations mainly due to dithering by the governments at the time. In any event, without China or the USA signing on, the protocol would not finally solve the problem of rising carbon emissions.

With the 2015 Paris Agreement, most of world again agreed on the need to do something. Albeit on a non-binding basis. Here the Canadian government agreed to decrease emissions 30% below 2005 levels by 2030. Canada stepped up with the pan-Canadian Framework and later the Greenhouse Gas Pollution Pricing Act. The framework uses carbon pricing, complimentary climate actions, adaptation and innovation to address the problem

Economists generally agree that adding a price to carbon can be the most effective and efficient way to reduce emissions as opposed to command and control regulation. This price signal assists in the modification of behaviours as businesses and individuals slide towards less carbon intensive behaviours. Some economists now wonder if carbon pricing may not be the panacea everyone hoped. So far, the end objective of stopping the increase in carbon emissions has not yet occurred as hoped.

The federal GHG Act provides a backstop approach in that the Act only applies if a province did not pass a similar piece of legislation that would allow the federal government to reach its objectives under the Paris Agreement. To avoid the federal backstop, any provincial system should then obtain the same level of reductions as would have been achieved under the federal system.

The GHG Act charges regulated emitters for excess carbon emissions at a rate of $20 per tonne in 2019 and this rate increases annually to $50 per tonne.

Ontario used to have about the best carbon pricing policy in Canada. Their cap and trade program integrated nicely with the Western Climate Initiative with California and Quebec.

Doug Ford promised to rid Ontario of this tax, which it never really had in the first place, but semantics aside, he intends to contest the federal government’s jurisdiction in applying a carbon tax. Again, the GHG Act uses ‘charge’, but even more semantics. Residents in Ontario shall live in interesting times for the next few years. Ontario joined Saskatchewan’s challenge to the carbon tax, and Ontario commenced its own challenge. Most legal scholars feel the challenge will not succeed and the other provinces declined to join in. However, since politicians do keep their promises, Ford will bring all available resources to this event, which may proceed at a receding glacial pace.

In the meantime, the Ontario government took a number of steps to dismantle the existing system starting with stating that emission allowances can no longer be traded. Although businesses purchased $2.8 billion in credits, Ontario does not anticipate reimbursing businesses anywhere near that amount. After all, businesses operated during this time. Any funds allocated to purchase unused emission reduction credits might add to incremental greenhouse gases (go up in smoke, so to speak). They have also canceled any future rebates on their clean technology programs and other innovation technology. They recently passed legislation allowing them to cap compensation for the cancellation of the White Pines windfarm program.

As of January 2019, the federal GHG Act will start to apply to apply to all provinces that do not have comparable legislation in order to reduce their emissions within the province. Ford opened the door to the carbon charge himself instead of the homegrown policy. This does allow him the luxury of pointing to how the federal government is now imposing this carbon charge and it is out of the hands of the province. The province can take all the benefits and none of the blame as the federal government then returns the carbon charge funds back to the various provinces. If Ontario simply returns the funds back to those incurring the cost, then the entire carbon-pricing concept can get lost.

Ontario will now face a higher carbon charge of $20 per tonne increasing to $50 tonne rather than the $18 tonne in 2016 dollars as suggested by Ontario’s policy analysts. The Ontario government would appear to be bringing in more revenue with less effort on their side. At least they fought the good fight and can sit back and allow the revenues to pour in. The federal government’s $420 million transfer to Ontario under the Low Carbon Economy Leadership fund may in jeopardy since the feds do not appreciate where Ontario is leading.

Carbon pricing maybe too little too late as climate change incidents start to accelerate. Ontario just recently announced that it will introduce a regulatory plan for reducing greenhouse gases in the province, but they will not commit to hitting the federal government’s targets. This lack of commitment allows the federal charge to start January 1^st. Perhaps Ontario’s $1 beer will alleviate the heat and take everyone’s minds off their ever-increasing climate related problems.