Canada’s Approach to Tackling Climate Change John M R Stone Carleton University Ottawa, Canada

The Challenge  Canada’s Kyoto target is a 6% reduction in 1990 emissions (roughly 590 Mt CO 2 eq.) by  The difference between Canada’s business-as-usual projections of emissions and its Kyoto target is now estimated to be at least 270 Mt CO 2 eq. - some 45% above Kyoto target).  Overall energy efficiency has improved by 13% since  Emissions have increased mainly because of larger than expected growth in the economy and in fossil fuel productions (particularly oil sands).  Much greater efforts clearly required.

MT CO 2 - equivalent Mt or 45% 560 Kyoto target six percent below 1990 level Forecast Business-as-Usual Scenario

Some History  Canada has ratified the UN/FCCC and the Kyoto Protocol (one of the last acts of PM Jean Chretian).  Since 1998 the government has made incremental investments in climate change totaling some $Cdn 3.7 billion (a little less than half has been spent).  There have been several audits of these investments by Treasury Board, Auditor General of Canada and others (the results have been disappointing).  The government is undertaking a full review of existing programs.  Canadians have become cynical about climate change (a wait and see approach).

Project Green A Plan for Honouring Canada’s Kyoto Commitment  Announced in the federal government budget in  Recognizes the need for a long-term approach to the threat of climate change:  transform the Canadian society and economy,  maintain technological and economic growth,  achieve sustainability.  Includes:  The Climate Fund  The Partnership Fund  Renewable Energy  Continuation of some existing Programs  Estimates of program potential are optimistic.

Large Final Emitters  Oil, gas, electricity generation, mining and manufacturing account for roughly 50% of Canadian emissions.  Previous approach using covenants back-stopped by legislation proved to be inadequate.  Cost to industry will be capped at $Cdn15 per tonne CO 2 (honouring previous commitment).  New system will cover some 700 companies and is to achieve 45 Mt CO 2 reductions.  Emission intensity approach: fixed process emissions receive a zero percent target; al other emissions are to be reduced by 15% maximum.  In-house reductions, purchases from other companies, domestic off-sets, international “green” credits and  technology investments (for expected post-2012 emission reductions) limited to 9Mt CO 2,  Greenhouse Gas Technology Investment Fund.  Notice to use Canadian Environmental Protection Act has been gazetted  GHG’s to be added to list of controlled substances  Act created primarily to control “toxic” substances (communications issue).  Further consultations underway; unlikely to be in place by COP-11.

The Climate Fund  Purpose: To create a permanent institution for the purchase of emission reduction and removal credits on behalf of the government of Canada.  Minister of Environment will have authority to recognize eligible projects that go beyond BAU practices:  agricultural soil carbon enhancement;  improved forest management practices  more energy efficient urban and property development;  LFE’s that have surplus credits;……..  Government will purchase credits in a competitive process and retire them (credits can also be sold elsewhere).  Fund will invest in advance purchase of emission reductions from large strategic projects (where costs are expected to decline over time).  Fund will invest in internationally recognized “green” projects (through the CDM for example) – no “hot air” and majority of reductions in Canada.  Fund will have minimum of $Cdn 1 billion over five years and is expected to yield Mt CO 2 annually.  CEO now appointed.

Partnership Fund  Partnerships with Provinces and Territories as well as with private sector.  Projects that are important to both orders of government:  clean coal;  carbon dioxide capture and storage;  electricity infrastructure;  Inter-modal transport;………  Initially, $Cdn 250 million over five years and expected to yield some MT CO 2 annually.

Renewable Energy  Wind Power Production Incentive:  budget quadrupled to $Cdn20 million over 5 years;  target of additional 4000 MW  Renewable Power Production Incentive:  investment of $Cdn 97 million over 5 years;  target of additional 150 MW;  small hydro, biomass, tidal power;…….  tax measures (such as capital cost allowances) will also encourage co- generation, energy efficiency.  Expected to achieve some 15 Mt CO 2 reductions annually.

Post-2012 Regimes Canadian Views  Canada is now preparing for its Chairmanship of COP-11/MOP –1 in Montreal  Montreal Declaration (and Article 3.9)  Minister Dion’s Three I’s for Montreal Declaration:  Implement (the Kyoto Protocol…)  Improve (the CDM and address shortcomings of Kyoto…)  Innovate (new approaches to post-2012 regime).  Six key elements:  Canadian discussion paper

Six Key Elements  Environmental Effectiveness  long-term framework and targets, real reductions, contribute to other environmental objectives, guided by science;  Broader Participation  allows for broadest participation, includes largest emitters, sectoral approach;  Sustainability  contribute to development goals of all countries, consistent with economic growth, mobilize private investment;  Strong Global Market  maximizes market forces, international carbon market;  Technology  deployment of existing technology, development of new transformative technologies, technology agreements, common standards;  Adaptation  mechanisms to assist developing countries, new funds, linkage to mitigation, other stresses, not just developing countries.

System of Global Sectoral Strategies  attempt to integrate six elements…  targets for each sector (not necessarily emissions, technology agreements)…  shift the focus to markets and away from country targets (more open access)…  competitiveness and technology orientation…  multiple points of entry…  global investment funds (ODA, technology, adaptation)…  details still being developed

Some Considerations  Canadian credibility in providing leadership (emission record, lack of carbon market,...)  Legacy of Montreal – what should it be?  Parallel initiatives (UN/FCCC, G-8, Asia-Pacific partnership,…) – integrating ideas and processes…  Global sectoral strategies – how will they work?  Importance of the market  Mainstreaming climate change into development and security (less environment-centric – see Article 3)  Future role of terrestrial carbon sinks  Role of science – evolution of IPCC