March, 2017
Dave Sawyer, EnviroEconomics.org |
[email protected]
Dr. Chris Bataille, IDDRI & SFU |
[email protected]
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Taking Stock of Canada’s Decarbonization Aspirations With the Paris Climate Agreement behind us, • Pan-Canadian Framework. • Mid-century Low Emission Development Plan.
A good time to take stock of our GHG trajectories, 1. Does Canada have the policy architecture to cost-effectively increase GHG ambition?
2. What are the priority opportunities to improve policy cohesion and efficiency? Modeling to forecast long-term progress to 2030 and beyond.
Sawyer and Bataille
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Canada’s NDC and Deep Decarbonization NDC is lower bound for 1.5dC Expediency matters NDC -30%/05 2030
• Delay? Reductions get progressively harder. • Carbon costs rise exponentially.
2dC NDC transition 1.5dC NDC transition 1.5dC fast transition
R&D & innovation critical • Heavy industry and liquid fuels critical. • Weak global tech spillovers given light policy touch globally Major omissions • Land use and net negative technologies.
Sawyer and Bataille
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Scalable Architecture to Deeper Decarbonization? pre-PCF Policies •
BC Ctax, LCFS
•
AB SGER > Climate Leadership Plan •
$30 Ctax/OBA; methane, oil sands 100 Mt cap
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SK Boundary Dam CCS, SK 50% renewable power standard
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ON coal ELEC ban, WCI
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QC WCI
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NS RPS (and now C&T)
•
Waste regs in provinces
Federal •
Coal regs; vehicle & efficiency standards
•
Methane oil & gas regs.
QC and ON true-up 22 to 25 Mt in 2020
73 Mt in 2030
Sawyer and Bataille
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Scalable Architecture? Post-PCF Policies NDC 2030 pathway = 523 Mt: 1. Pre-PCF policy = 694 Mt by 2030, Considerable effort by most provinces. 2. Contribution of ON/PQ caps important = 592 Mt. Gap to ON/PQ 2030 targets filled by domestic offsets, new policy, backstopped by WCI. • Federal carbon price exemption recognizes international tradeable units via WCI linking. 3. Pan-Canadian Framework = Gap is 29 Mt • Carbon price, flat at $50 after 2022. • HFC and coal regulations • Low Carbon Fuel Standard
Sawyer and Bataille
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Yes, Canada’s fragmented GHG policy is scalable to increased ambition Three common design features across policy patchwork increases feasibility: 1. Efficient and broad-based carbon pricing now our national baseline. • NDC gap closed with 70 Mt ITMOs, federal floor to $150 in 2030 (+$12 per year + inflation after 2022). 2. Performance regulations act like carbon pricing, at least for transport and buildings. • Current tightening rates for buildings, cars and methane close to high ambition scenario. 3. Maintaining competitiveness and fairness embedded in design, increasing acceptability. • With scale of the decarbonization challenge, costs rise fast even with efficient policy. Continued fracture over if CDN should tax, trade or regulate towards increased GHG ambition. • Arguments are academic, can’t rapidly unwind provincial programs under unified ideal. • With bottom-up architecture set, effort needed to focus on aligning costs (as in federal floor) and cohesive climate governance.
Sawyer and Bataille
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Priority Opportunities: Build carbon bridges at home , Carbon bridges at home increases policy cohesion, reducing need for global unit backstopping • Nationally linked cap and trade for large emitters with OBA improves policy efficiency and effectiveness. • By extension, a nationally aligned domestic offset system would also help. • Efficiency. Carbon price to close NDC is ~36% lower with domestic heavy emitter trade. • $150 tonne w/ current policies, WCI true-up & no linking.
• $96 tonne w/ linked domestic trade, OBA. • Effectiveness. Heavy emitters domestic trading, OBA delivers significantly more reductions. • With $150 tonne price under patchwork, unified system delivers 90 Mt more. With unified domestic policy architecture, global tradeable units could increase ambition or reduce domestic effort for NDC compliance. • Solid foundation to align trading systems for heavy emitters in AB, ON and PQ. • Systems developing in MB, SK, N&L, NS and NB.
Sawyer and Bataille
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Priority opportunities to improve cohesion and efficiency? Short-term priorities to improve policy cohesion: • Keep carbon prices real, indexed to inflation like pensions, maintains long-term price signal. • Expand carbon price coverage, reduce exclusions such as marked fuels, process & fugitives.
• Build carbon bridges at home. High cost provincial mitigation “islands” reduce need for ITMOs or higher cost regulations. • Short-term risks in vehicles and fuels remain. Vehicle efficiency regulations slow to bite & carbon price low. Add low oil prices, and GHG “bounce risk” significant. • A low carbon fuel standard has promise, but caution needed due to policy overlaps. Governance matters as much as policy development. Collaboration and cohesion are priorities.
Sawyer and Bataille
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