Erick Lachapelle talks about efforts at developing a national carbon price framework at the federal level, implementation challenges, and the prospects for carbon pricing in the future. October, 2017.
Transcript:
Well good morning and
welcome everyone I hope everyone has
something to drink something to eat and
welcome to the 2nd event of our fall close
up Speaker Series I'm very regular faculty
member here the Ford School and director
of close of the Center for local state and
urban policy I do want to draw your
attention to the fact that we will be
having a number of additional events in
the coming weeks and over one are related
to a book launch a new book on the Clean
Air Act a subject especially relevant for
issues of environmental policy climate
considerations in the United States
given Thompson from the University of
Virginia and the Virginia apology for
her unique role of being an academic but
also in a direct role over seeing air
quality issues related to the Clean Air
Act in the Commonwealth of Virginia for
about 10 years has a book link to her
experience and she will be here talking
about that on November 1 followed on
November 6th by Christopher Thomas
the former Michigan elections director
it's elections are invariably a central
issue for state and local governments
certainly in Michigan and
our Michigan public policy survey a major
project of the Ford school close up
is looking at some of those topics in in
Michigan as well so those are should be 2
timely events and we encourage you to put
those onto your schedule today we want to
turn to a very important environmental
topic and venture beyond
our normal comfort zone which is
the United States anyone with interests
in climate knows that there have been
significant shifts in the United States
related to national policy or
federal policy on climate change.
The reaction of the United States
government to the Paris Accords and lots
of uncertainty about what that means for
a future a future federal role in carbon
pricing other areas of climate policy much
less what happens to states and localities
there is invariably though opportunity
to learn from other federal system.
Those and is of course impossible to think
of a federal system that from an American
but also a Michigan perspective has more
relevance than our neighbors involved
Ontario Quebec and candidate behind and
so I'm really delighted to welcome her
pal from the University of Montreal Eric
is a political scientist at Montreal's and
I've had the great privilege of working
with him for a number of years I think
of our public opinion work
comparative political analysis and
we actually partner on some of our survey
work or are trying increasingly to ask
them the same questions in Canada through
Erik's work as we've been asking in the US
and ask how do people who live in
provinces compare with states in the life.
Of the reaction to Paris and the reaction
to the latest shifts in the U.S.
have not gone unnoticed in the U.S.
but also Canada and they arrive at a point
where the Canadian engagement on these
issues a federal system with some formal
central power of enormous power on issues
of energy and environment that tend to be
delegated constitutionally and politically
to provinces really kicks in and
makes this a very very interesting
question going forward if you provinces
that actually partner closely with the
U.S. Other states not much like the U.S.
there are some different sponsors that
we're beginning to see in the Canadian
case I don't really know of any other
scholar who's put together the package of
engagement on public opinion and politics
of federal policy on these issues in
Canada as our speaker today and
so please join me in welcoming
actually back to University of Michigan
after a pause of a number of years Erica.
Thanks very.
So Thanks Parry and
thanks everyone for being here today
just to be clear though I am from Canada
but I'm not here to accept any immigration
papers into our countries so what to
make that clear right off the get go.
So just a few years ago.
Barry alluded to this
the world celebrated this.
Signing of the Paris accord
an international agreement
signed by $196.00 parties committed
who committed to limiting
capping the global surface
temperature rise to 2 degrees and
taking measures that are consistent with
pursuing a cap of $1.00 degrees Celsius
since then close to $100.00 signatories to
that agreement indicated that they are or
are that they have or are considering
carbon pricing as a way of achieving
those emissions reductions that they
agreed to in Paris but as the world now
moves towards implementation on these
commitments a number of questions arise so
for instance we know that carbon
pricing is at least in theory
a very elegant simple solution
to reducing greenhouse gas
emissions we want less screen else gas
emissions let's put a price on this and
encourage our incentivize be behavioral
change that's going to reduce
these emissions on the other hand
political scientists like Barry myself and
others have covered that this is actually
a little bit more complicated politically
when it comes time for implementation so
in this context the Canadian
case I think is a really
interesting case study for US and
Canada for others around the world
to look at how governments
might actually go about implementing
carbon pricing why well as Barry alluded
to $4.00 provinces in Canada so
far actually have carbon
pricing implemented in their jurisdictions
British Columbia has a carbon tax
to come back government has a system
of cap and trade which actually.
Worked within close collaboration with the
California government with a link carbon
market with California Ontario is now on
board with a similar carbon market and
Alberta of all places has
a has now has a carbon tax
on fuels of $20.00 per tonne so
there's a lot go.
Going on in terms of carbon pricing in
Canada and most recently the federal
government has announced a policy
of trying to pan Canadian framework
that is implementing a minimum
price across Canada for
all provinces and that's my talk
will focus on that policy today so
there's a lot going on in Canada and
I think it's a really insightful case for
looking at these sorts of issues
need this quicker here so
the outline of my talk I just want to
situate the Canadian case because I'm sure
not everyone is familiar with
the intricacies of Canadian federalism and
I think it's really important to
understand some of the politics that I'll
be talking about today it's
really important to understand
idiosyncrasies of the Canadian case I
want to situate the Canadian case and
get everyone up to speed on that and
I'd like to follow that with a very.
High level description but an important
one of Canada's approach to climate change
policy in the post Paris era and again
I'll be speaking a lot about that pan
Canadian framework that a alluded to
earlier then I'd like to talk about how we
got there right how did we get from
you know this very elegant idea and
how did we overcome some of the political
obstacles to carbon pricing or how are we
trying to I was Canada trying to overcome
some of those political obstacles and
then importantly I want to look at
the future prospects of this policy.
So to start Barry tells me you might
not all be familiar with Canada so
I want to start with.
Where in the world is Canada so can you
tell me on this map where Canada is
as you might as you might guess it we're
right up here above the United States now
this is significant it's not just a joke
this is actually significant because as
the Northern nation Canada has
already warmed by about $1.00 degrees
Celsius which is about 2 point almost
that's about 2 times the global average
if you look in northern Canada.
Average surface temperature has
increased by 2.2 degrees Celsius or
almost 4 degrees Fahrenheit that's
this is this is the warming that's already
occurred in Canada Canada is actually
very vulnerable to climate change there's
a bit of a debate about the extent to
which the Canadian economy might actually
benefit from some warming in terms of
agricultural yields except for a but
it's clearly the case that Canada
is already feeling some of the effects
of climate change Canada is
also geographically large as you can see I
know Americans don't like to hear this but
we're actually bigger than you in terms
of sheer landmass smaller However in
terms of population but this too is
significant because Canada's geography and
its climate help to explain why we're
relatively dependent on fossil fuels for
things like heating moving around and
that sort of thing so just in
terms of context I think it's important
to situate Canada on the map here.
Now let's see if you can
spot Canada on this chart
that's ignore the left panel
the left panel is only looking at
global greenhouse gas emissions between
increase in the level of greenhouse
absolute emissions in the world but in
terms of Canada's share of those emissions
you really got to squint to see Canada so
we see China at the top responsible for
about a quarter of green.
Gas Emissions us about 15 percent
I'm rounding the numbers here
Canada barely cracks the top 10 and if you
look at Canada share of global greenhouse
gas emissions that's less than 2
percent this is important because
it's played into some of the narrative so
some of the people that
don't want to have strict climate policy
in Canada often point to this number and
often cite this number as saying well you
know what Canada is only responsible for
we do really doesn't matter if the U.S.
and China aren't on board now China is on
board in the Paris accord but as you know
the United States is not this kind of
argumentation is still is still present in
Canadian political debates the U.S. is not
there were only responsible for $1.00 of
global emissions what can really what can
we really do with a drop in the bucket.
But counter the counter to that others
are going to point to Canada's per capita
emissions and here you see that Canada
is actually an important player.
In terms of per capita emissions
the average Canadian emits about $25.00
tons of C O 2 equivalent per year
that's about 4 times the national of the
world average that you see here right so
on a per capita basis the average
Canadian is actually quite responsible.
For.
You know we contribute to this problem and
while some of these
while these relatively high perch capita
emissions can be explained by some of
the things I learned to earlier like our
geography and that can of this climate.
Another important aspect is Canada
actually is a very important producer
of fossil fuels we're in the top 10 for
coal oil and natural gas and
this might be surprising to some that
Canada is actually the 4th largest
oil producer in the world ahead of places
like Iraq United Arab Emirates and
Iran so I'm sure some of you
didn't actually know this but
this is an important aspect of
the political economy aspect because.
We actually Canadian some some regions
in Canada some companies in Canada some
workers in Canada actually profit from
the fossil fossil fuel production which is
an important aspect of an important cause
of global greenhouse gas emissions so
that makes the action on climate
change in Canada a little bit tricky
Now this next slide prevent presents
Another important feature of the Canadian
case and this is actually kind of
shared with the United States right so
Canada is is it's
the highly regional nature
of the emissions profile in Canada so
what we're showing here is that.
Basic Canadian geography
there are 10 provinces OK And
we have 3 territories in the north and
if you look across the provinces and
territories you're going to see
a very different emissions profile so
the numbers here are actually per
capita emissions per province and
Per Protagoras Henri and what we
see here is and it's color coded so
the darker reds are going to be higher
per capita emissions and the lighter and
I'm a little bit colorblind with
the yellows and greens and red so
I'm going to say this is
yellow a paler color.
Indicates lower per capita emissions so
what you see here is that
the the emissions are really concentrated
in 2 provinces this is Alberta here and
this is catch one here 60 tons of C O 2
equivalent per person in these
regions that's an astronomical figure.
If you if we're thinking about the world
average being somewhere about 5.
Another thing I wanted to point out here
is that so so places like Alberta and
says Catch On which are highly dependent
on their economies are highly dependent
on fossil fuel production oil production
almost about a quarter of G.D.P. in some
of these places rely on him directly and
directly fossil fuel production.
They have an economic stake in
the status quo it's also the case that
a carbon price a national carbon
price equivalent across the board
is going to have a different
incidence on places like Alberta so
a 10 dollar carbon tax is going to be more
significant for Alberta than it is going
to be for somewhere in Quebec or
a place other places where greenhouse gas
emissions are less intense something else
I wanted to mention with this slide are is
that the these provinces the oil producing
regions of Canada they're landlocked.
So if they want to sell their products and
get their products to market and
actually increase production and
increase production of their fossil fuels
which they're interested in
doing they need pipelines so
I'm sure you're all familiar with
the famous debate over the Keystone X.L.
which was nixed by President Obama trump
is kind of breathing some new life
into that proposal one option
is to ship Canadian oil
down through to refineries in
Texas another option is to build.
Extend pipelines and refurbish pipelines.
On the west coast and then.
Bankers can then bring that to the market
and there's also talk of the Energy East
pipeline which would cross 4 provinces or
Outside of Canada to the east now
this is a highly controversial and
highly salient and
I'll be alluding to this later but
I just wanted to mention the economic
stakes involved for these promises.
Which again makes action on
climate change politically tricky.
These are just and I'm finishing
up my background but I think it's
really important to get a sense of where
emissions have been going since 1990 S.
So we have a sense of who's kind
of relatively more polluting and
who's less polluting in Canada than
there's a quite a bit of a difference.
But generally Canada has overall emissions
have increased by about 20 percent since
we had commitments that Kyoto and
that sort of a thing of minus
we've actually increased
emissions by 20 percent and but
this is highly variable across
the different regions and provinces so
the 2 largest provinces we have 2 really
big provinces here in terms of absolute So
these are absolute emissions
the top blue line is Alberta and
we see that the emissions in this province
have been increasing substantially since
producer of greenhouse gases
in the country on a completely different
trajectory emissions have been
decreasing quite a bit actually minus
the increase in Alberta I'm sure you
can all guess is the increase in
fossil fuel production in this area and
in this province the reason for
the decrease in Ontario we see that in
which roughly corresponds to
the economic recession of 2008 but
it's actually I'm sure the recession
had something to do with it but
there was one decision to phase out of
coal fired power generation in Ontario
which removed 40 megatons from Canada's
annual greenhouse gas emissions
profile which is the single largest
reduction in greenhouse gas emissions
in North America on the continent that's
one decision so that explains why
in Terrio has has decreased if you look at
the other provinces I just want to note
that in somewhere in British Columbia
we see an increase and insists cap.
Sean we see an increase.
Of.
British Columbia is important because
British Columbia although it was looks
relatively green here it's green because
it produces electricity almost 100
mostly from hydro electricity but
it's also an important producer of
fossil fuels coal in particular and
increasingly national natural gas but
a lot of these fossil fuels are exploited
and they're not burned inside
the province so that's why it's
relatively we'll say green on that slide
OK back to my quiz OK
show of hands who's more powerful
the prime minister of Canada Trudeau or
President Trump So
who says Trump is more powerful
I know he's got small hands but he's got
a he's got quite the military backing and
then Trudeau right here looks like I
actually look like a train boxer there
actually this is kind of
Canadian politics want to one but
it's crucially important to understand
some of the specificities of the Canadian
case Canada is a parliamentary
democracy which means that.
In contrast to the US presidential
system of checks and balances
a parliamentary democracy fuses the
executive and the legislative function.
That means that the prime
minister controls his cabinet and
the cabinet controls the legislative
assembly so it's very easy once a prime
minister has control over the House of
Commons over the legislative assembly
that person prime minister can do a lot
of things that the president can't do
OK there's a there's a lot less checks and
balances in the Canadian system than in
the American one so thank God there's no
you don't have a parliamentary democracy
in the United States but this gives
enormous power to our Prime Minister.
But it also gives enormous power right
the principle of responsible government
the principles of Parliament to do
a parliamentary democracy extend to
the provinces so that means that within
their respective spheres of jurisdiction
provinces also have a high degree
our provincial Premier's leaders and
provinces also have a high degree of
political power so in order to kind of
complete my little background of Canadian
politics when I won I wanted to so
we know that the prime ministers and
pre-marriage are very powerful within
their respective areas of jurisdiction but
what are those spheres of jurisdiction so
the Canadian Constitution divides
power between the federal and
provincial governments as follows
The federal government is responsible for
a lot of things but
in terms of climate policy
what's most salient is
international treaty negotiations
the federal government has the sole
authority to sign international treaties.
Interprovincial and international trade
is also a prerogative of the federal
government cross jurisdiction all
pipelines and fiscal measures fiscal
measures will be important because when we
talk about carbon taxation that's one of
the few leavers actually that the federal
government one of the few important
leverage that the federal government has
in terms of climate policy turning to
the provincial governments now one of
the big differences between Canada and
the United States by
the way is the mineral
mineral rights property regimes right
in the United States subsurface
mineral rights are owned by landowners
in Canada subsurface mineral rights
are owned by the provinces in terms of
their management of the ownership except.
That gives provinces enormous.
Control over an important source
of greenhouse gas emissions
provinces are also responsible for things
like transportation buildings land use
agriculture a lot of the least
important leavers of climate policy
actually fall within provincial hense So
this creates a situation of
interdependence right the federal
government sets can set international
climate targets at international
treaties as much as it wants but
it's dependent on the provinces to help
implement policies that are going to
realize those emissions reductions
converse Lee provinces although provinces
did attend the Paris agreement that was
more symbolic than anything else provinces
can't set can they can't play a former
role in international negotiations so
they rely on the federal government
to represent their interests at
the negotiating table this relationship
of interdependence climate federalism
This is why climate change
in Canada is fundamentally
a federalism issue in Canada and that's
what my talk will be about today and just
maybe the last point here the environment
is one of these weird things because when
the Canadian Constitution was written they
were really thinking about environment and
environmental policy right the environment
is a shared jurisdiction with
the federal government which
again really renders climate
policy making complex in
the Canadian system this is
the history of climate change
policy at the federal level.
In Canada since about 990 and I wrote
that I could spend quite a bit of time
on this going through the different action
plans and this sort of thing but I think
the important thing to take away from
this from this chart is Canada is very
rich very good at setting international
targets greenhouse gas reduction targets.
G 7 Rio in 19081902
an important reduction here
the World Conference on the changing
atmosphere and Serrano another target was
set the Kyoto target of minus 6
percent relative to 1911 was.
Over a period spanning I think 2006 to
happened to emissions so Canada's really
good at setting targets but dismal at
meeting them and that has to do with what
I had mentioned earlier because getting
the provinces on board has proven to be
really difficult getting all the problems
is on board singing the same tune having
provinces implement the policies required
to get to these stats of emissions
reductions hasn't always been easy.
So that's that that was then and
this is now.
This is what Canada's climate policy looks
like today in one picture sunny ways.
Sure you've all heard of Justin Trudeau
our Perhaps you've heard of our new prime
minister Justin Trudeau who was elected
in the October 25th one and a historic
landslide victory it's actually the 1st
Canadian Dynasty it's the 1st father son
his father was a Canadian prime minister
an important Canadian Prime Minister.
Earlier in.
A few decades ago.
Importantly though.
Justin Trudeau in his election
in his during that campaign in
it's it's in the platform but
it's like on page $32.00 the 1st time
climate change is mentioned is on like
page $32.00 carbon pricing
was mentioned once but
the 1st thing he did when he won when he
took power $1.00 of the 1st things he did
was he rebranded Environment Canada right
the government agency responsible for
environmental regulation federally
he rebranded Environment Canada
environment and climate change Canada
then in November December he shows
up in Paris Canada is back my
friends he start he wants to play he
Canada reengages with the international
community you may not know this but
in 2011 Canada actually was one of the few
countries that actually was in Kyoto and
repudiated Kyoto and
actually got out of Kyoto in 2011
Canada disengaged from the international
efforts to reduce greenhouse gas emissions
with Trudeau Canada's back Canada was one
of the 1st industrialized countries to
formally endorse the $1.00 degrees Celsius
target that is now in the Paris accord.
And in December 26th
Ian The Canadian 1st ministers
minus the sketch one negotiated and
adopted what's known as
the pan Canadian framework on
climate change on clean growth and
climate change so what is the pan
Canadian framework on clean growth and
climate change this is a policy document
it's a it's more of a framework
than anything it's not actually it
hasn't actually been implemented yet
some very important nuance nevertheless
it's a policy document that
was negotiated in December 26th seen with
the agreement so something that we've I
think never had in Canada before with the
agreement of all the provinces except this
catch on with the notable exception of
the schedule but still pretty remarkable.
It's extremely vague however in
terms of funding sources and
implementation schedules but it includes
an impressive array of policy areas and
Policy Priorities that Canada is saying
we're putting forward that provinces have
agreed to in terms of putting emphasis
on to realize the emissions reductions
agreed to in Paris so some of these and
I don't have the list.
It's a huge less anything
from coal phase out by 2030
phasing out fossil fuel subsidies by 2025.
increasing the number of 0
emission vehicles on the road.
Emissions new emissions performance
standards for light and
heavy duty vehicles it's
got everything land use.
Public transit it's you know
it reads everything but
the kitchen sink is really in there but
again very vague on funding sources very
vague on implementation schedules but
the one thing that has captured
the attention of most people in Canada and
I'd say internationally as well is this
commitment to a national carbon price.
So that's his point here so
the 1st point is that this is
a climate policy package and
it's quite a carbon price is is introduced
within this broader framework but
the national carbon price is an important
pillar within this national framework and
this carbon price pillar has
a few important characteristics
right the 1st thing is that Canada wants
a common price across the country.
By 2800 which is just around the corner
as you can imagine as you can see.
It's based on it's actually really
flexible 2 systems that should actually
say 3 systems the official wording
is that it's 2 systems but
it's actually 3 systems so
what this means is that
jurisdictions can implement an explicit
price based instrument I.E.
a carbon tax equivalent to the federal
minimum requirement of the carbon price
floor that increases over time all
mention that that's a separate point or
are they can implement a carbon
market right a carbon cap and
trade market that is consistent
with emissions reductions that
would get you the same reductions
of an equivalent carbon tax or
this is where I say it's a 3
system not a 2 system approach.
A hybrid system is also acceptable
right a hybrid system being a tax
on the consumption of fossil fuels and
an emissions trading market for
large final emitters that
emission over a certain threshold
it's actually 3 system so that's why
I say it's flexible in the sense of
we want to price we don't
care how you do it OK.
Let us legislated
increases in stringency So
the in the policy document in provinces
agreed to this minus the Scotch one it
starts off at $10.00 per tonne in 2018
increasing by 10 dollars each year
up till 2020 until it reaches
$50.00 per tonne in 2022.
I'll talk a little bit about what that
means for gas prices a little bit later.
Next point revenues remain in
the jurisdiction of origin this is really
interesting right this is one of the most
interesting features of the policy so
the government has said this is going to
be revenue neutral from the perspective of
the federal government.
Right every dollar collected as part of
carbon pricing in the different carbon
price jurisdictions will go back to will
remain in the jurisdiction with when they
were collected note that it says
jurisdiction and not province OK Initially
this was interpreted as hope the federal
government will impose a price on certain
provinces it will take the money it
will give the money back to the province
it's almost like a gift to the province
right you can claim credit for
the money and that what you do with
the money and you can avoid the blame and
say it's true those carbon tax or
auto was carbon tax but
actually upon further reading and
upon further debate we've realized that
it's actually this was a very judicious
use of the word jurisdiction because
the what the government does with the with
the money it collects is still up for
debate they might actually give the money
back to rebate checks back to Canadians
living in the problem so it will be
returned in the jurisdiction from which it
was raised without kind of bypassing
going to the provincial government.
There's a 5 year review on
a reporting system to see
to kind of ratchet things up over time.
Now the federal carbon price backstop
OK So this is this is a backstop
it's a minimum requirement that all
provinces must meet by 2018 otherwise
the federal government will go in there
and implement the carbon price for you.
OK And that's what upsets certain
governments it's composed of
this federal carbon price backstop is
composed of $2.00 key elements a carbon
Levy applied to fossil fuels and
an output based pricing system for
industrial facilities this was actually
modeled after the Alberta policy which
was implemented by the recent N.D.P.
government in 2017 will probably
return to that later on in my remarks both
elements will apply in a jurisdiction that
does not have a carbon pricing system in
place the backstop will also supplement or
top up systems that did not fully meet the
benchmark and the implementation timing
the government was expecting to introduce
legislation this fall right I said it's
the legislation hasn't been introduced it
was expected to introduce legislation this
fall the latest is that that's probably
going to be delayed they're still
in negotiation with some of the provinces
that are kind of deciding how they
are going to respond to this and the
output pace output based pricing system
will not come into effect before January
it's I think it's more than a proposal but
there are some open questions and
some significant questions that remain and
the rest of my talk we'll look at that but
before I get into that I wanted to mention
why this policy is fascinating for
a number of reasons.
First the policy is interesting in
that the flexibility of the instrument
allows provinces like
British Columbia Alberta and
Terrio in québec to keep their
existing policies right.
And for the provinces other provinces to
pursue carbon pricing that makes sense for
them this was a huge issue behind closed
doors the true government actually wanted
a carbon tax in all provinces and
places like the Bakken and Terrio resisted
saying you know what we already have
a carbon market Thank you very much and if
that's the way we have a right to choose
the way to price emissions in our in our
province the policy also raises all kinds
of questions regarding the equivalency and
relative stringency of provincial carbon
pricing across the Canadian provinces
right so
as you as I will mention in a 2nd the B.C.
carbon tax presently is
that $30.00 per tonne.
Carbon permits are trading and
come back at about $15.00 per tonne so
about half of that that's
created quite a debate.
The seas upset the British Columbia has
been upset that they're paying $30.00 per
tonne and we're carbon is selling
at half the time half the price
across across the cross the country and
then come back turns around and
says well if we can reduce emissions
cheaper Who are you to say
we should have a carbon tax right so
it's very delicate very sensitive very
important political debates happening in
Canada right now around these issues.
Really quickly I just wanted to show
you this is modeling from the Canadian
government that shows these
are the projected emissions
as of December 26th 18 to
A bit of a decline at 2025 with the pan
Canadian framework measures here
the projects projected emissions 05567
megatons a significant decrease but
won't get it get quite get Canada
to its target of $523.00 megatons
which is a 30 percent reduction
relative to 2005 levels by 2030 so
even with this policy which
is still highly uncertain
politically controversial where
it is still not quite there
in terms of getting to emissions
reductions agreed to in Paris.
So how did we get here.
I don't have time and
I like to know how I'm doing for time but.
OK I see a 25th Great thanks so
how do we get here so
I just I don't want to take away from
what we've seen in the past year 2 years
it's a remarkable progress from where we
were just a few years ago the fact that
you know 9 Canadian provinces have
signed up on this the fact that
we that this is looks to be moving
forward I think is remarkable
progress in just a short amount
of time but at the same time and
in order to understand this progress
we need to understand kind of where
how we got here I don't want to spend too
much time on this but this comes from.
Actually very coauthored chapter
Barry Debbie dual who's a former
post-doc here and I wrote a few years
ago and it looks at kind of the ebbs and
flows in terms of federal and provincial
leadership on the climate change issue and
I'm not going to I won't walk you
through everything but just to say that
in the you know when climate change 1st
appeared on government agendas there
was no significant policy right there was
a lot of target setting as you saw but
no significant policy was made
in 1095 to about 2001 this
corresponds to the Kyoto negotiations and
this was a period of contested federalism
so the the back story is
apparently the province's had
agreed to a 0 percent
reduction commitment for
Kyoto then Prime Minister Chretien
who got wind
of the European Union's
target of minus 8 percent and
Bill Clinton's target of I think it was
minus 5 percent correct me if I'm wrong
some thereabouts Trudeau not sure shot
that CA who was the prime minister at
the time actually a lame duck prime
minister at the time because he was
being pushed literally being pushed out
of office because he was being there
he was there for so long.
He unilaterally instructed
Canadian negotiators
to set the target at minus 6 percent.
The provinces were blindsided very
upset that this happened comeback was
the only province by the way that wanted
a more ambitious target all the other
provinces said 0 percent is perfectly fine
with us especially on the oil producing
promises that set off a period of
history and Canadian climate policy
that we can characterize as contested
federalism because the provinces were so
upset that they didn't want to implement
that so the implementation became
a huge issue we had commitments and
Kyoto but all kinds of interprovincial
bickering intergovernmental bickering so
that's off a really.
Kind of a dark era and
Canadian climate policy development
in 2002 to 2005 new government
just got things out of there
in about 2003 replaced by Paul Martin in
the same political party the liberals
Stephane Dion who was then the Environment
Minister had proposed a national cap and
trade program they were gearing up for its
launch but then an election happened and
the conservative power came
into party which kicked off
an era of very low federal and
gauge of and climate change politics and
set the stage for
high provincial leadership in.
In climate policy development So
what happened was during
this period Alberta was one of
the 1st provinces to move in terms of
developing a specified gasometers
regulation so this was an intensity
targets which intensity targets are in
emissions per unit of production for
about $100.00 entities in the province
the compliance options were to purchase
offsets if you didn't meet that target or
you could pay $15.00 to a technology fund
which most of them actually did because
that technology fund would be recycled
back into the pockets of industry or
you could use previously generated
emissions performance credits that were
gained by beating that intensity tard.
Right.
Back $2071.00 of the 1st jurisdictions
I think the 1st jurisdiction in
North America to implement a very modest
carbon tax $3.00 per ton representing just
about one cent per liter at the pump never
the less so this was primarily a fiscal
measure intended to raise money through
the event of also new metal fall vassal it
would all of these proceeds would go
into a green fund which would then fund
kickbacks climate change mitigation and
adaptation measures.
Now at present but
now those policies no longer exist anymore
what we have are carbon prices
fixed carbon prices in B.C.
and Alberta and
carbon markets in Quebec and
Ontario so these are the 4
jurisdictions with carbon pricing
I'll get to this in a 2nd this just
concentrate on the lefthand for a 2nd.
So in British Columbia the 2nd
jurisdiction maybe the 1st or
a section of North America to have
a comprehensive carbon tax and
not just a carbon price not just a tax
on fuel and fuel distributors but
actually a tax on all a comprehensive
tax on most fossil fuels
on all fossil fuels in the province that
is at $30.00 per tonne since 2012 right it
was introduced at $10.00 per tonne
in 2008 increased 232012 since then
it's been frozen the Alberta carbon Levy
just introduced in 2017 it replaced or
it will replace the specified gas emitters
regulation it starts off with a $20.00 per
tonne carbon tax on the consumption
of fuels since 2017
this is really Nixon in China
this is right Alberta is that red
province that produces a lot of
fossil fuels a new N.D.P. So
a left of center government elected in
Implementing this important policy which
is highly controversial in that province.
To back has a functioning carbon
market since $2013.00 and
Ontario since 2017 also
is now auctioning credits
in a carbon market that is expected
to link with come back and.
And California this panel here I
just want to say just how important.
Cross national collaboration was in the
development especially in the comeback in
Ontario carbon market so I'm sure you've
heard of you're more familiar with
California than you are with the Canadian
cases California is an important.
Incubator I guess of
climate policy ideas and
a thing from the emissions standards for
vehicles which they fused into Canada
adopted 1st by come back then by the
federal government this idea of cap and
trade the Western climate change
initiative not really Western because you
have some eastern provinces here
that are actually California is
trading partner right now for in the
carbon market is a Canadian province and
it was developed together collaboratively
so the United States policy in
the United States especially policy in
California has had an important impact
on the the development of climate
policy in Canada at the time and
I think British Columbia I don't know what
the status are but they were observers
they were supposed to implement a carbon
market they went with the carbon tax and
since then carbon markets are not really
on the table in British Columbia but
Ontario has now since become a partner
with a functioning market and
out Manitoba status is still
kind of up in the air.
So we have very few examples of.
We have very few examples of political
dynasties in Canada so allow me to indulge
a little bit of one of my interpretations
of why Trudeau has kind of gone ahead and
implemented this carbon price recall that
it wasn't talked about during the election
right but once he's in power clearly
climate change is a top priority issue for
the Trudeau government right to me this
is an indication that Justin Trudeau is
motivated primarily by good policy
as opposed to good politics
if it was good politics he would have been
talking about this during the election
during the election campaign but no
this is more of an issue this is I think
Trudeau believes that this is important
this is an important issue and
he wants to move forward on this
question another interpretation so
good policy motives but there's this
other interpretation and that's
this legacy issue so a little bit of
history and this is this is a little bit.
I think it's really
interesting Trudeau's father
implemented the national energy program in
one that was in place in Canada between
was a very
controversial measure it was
implemented in the context of.
A contraction of global oil supply of
rising prices throughout the $1970.00 is
right they will pickle a crisis and
the United States transitioning
from the world's largest oil
producer to a net importer of oil.
Pierre Elliott Trudeau just I'm sure
those father saw this as an opportunity
to kind of put Canada on the map and
he wanted to nationalize energy per.
The oil industry and Canada wanted to take
back some of the ownership that was being
you know a lot of American companies at
the time were involved in oil extraction
and development in Alberta so
Trudeau Trudeau SR
developed this policy that was highly
controversial of nationalizing the energy
production in Canada and was hated for
it in the West absolutely hated for
it cause it kind of stoked sentiments of
Western alienation gave rise to a movement
in Western Canada the West wants out
let the eastern bastards freeze in
the dark this is our energy so there
is this one interpretation that Trudeau
he wants this he's really motivated
by good policy motives but
at the same time he wants to avoid
repeating the legacy of his father so
what's he to do this is so
Trudeau now want.
Recently that your own
government approved pipelines
the Tkinter Morgan pipeline and
bridge pipeline to export or
to move all from Alberta to the west
coast in British Columbia and
this is kind of you know Bill McKibben
who's going to be here this week
has written that trolls are climate
policy hypocrite right at least Trump
he's he doesn't talk out of both sides
of his mouth Trudeau on the other hand
wants action on climate change wants to
reduce greenhouse gas emissions but all of
a sudden he's approving pipelines right
there is a bit of a contradiction there.
Which leads So my interpretation of this
is that you know Trudeau wants a carbon
price but he doesn't want to he wants to
avoid the feelings of Western alienation
and imposing too much costs on Alberta so
this is just.
So there's this idea that by linking
these 2 controversies pipelines are very
controversial in Canada carbon pricing
is very controversial in Canada but for
different reasons pipelines are loved by
Western Canadians conservative Canadians
who also hate climate policy people
green Canadians however it's
the opposite they hate pipelines but
they love climate policy commitments
Trudeau is developing a really risky
strategy here race trying to find some
kind of a compromise and see if pipelines
might be a pathway to consensus so
the slide here is showing some some data
from Abbott from Abacus data which is
a research group in Canada looking at
views on so this is kind of a crosstab
looking at views of Prime Minister
Trudeau's carbon price is that a good idea
is that acceptable idea is a bad idea and
we see that of those who think that
Trudeau's carbon price is a good
idea 46 percent approve a pipeline.
And of those that think Trudeau's
policy is a bad idea Welp support for.
Support for a pipeline is that 52
percent so there's this idea that
by having a pipeline maybe we
can kind of increase support for
carbon pricing in Canada I think
it's a risky strategy because
I think you might end up you risk allien
ating both sides of especially your base.
So.
That's in a nutshell.
What Canada's approach
to climate policy is and
how we got there right it's a story about
Canadian federalism It's a story about
trying to find strike compromises between
the different interests of a regionally.
Heterogeneous.
Federation now what are the future
prospects of this policy I see at
least 3 major challenges going forward and
the 1st as you might expect begins here.
The Trudeau government was was expecting
Clinton to win as most people I think
were.
Now they face the prospect of you know and
these policies were already
being developed before.
The election the United States all
of a sudden Trump gets power in
the White House which raises the question
can we really go ahead with these
pretty ambitious policies in Canada
there's always been a debate
in Canada with respect to what
is Canada's room for maneuver to
what extent can Canada have a policy that
is independent of the United States and
why is this such an issue it's because
of this notion this relationship between
Canada and the United States the trade
relationship in a very important to highly
interwoven economically interdependent
economies I have the stats here
about 80 percent of Canada's exports in
exports go to the United States
right converse Lee I think
it's about $52.00 U.S.
exports to Canada represent
only 18 percent of U.S.
exports OK So this is a highly asymmetric.
Interdependent relationship between
Canon the United States and
there are voices in Canada that all have
always said Canada can't get too much
out of this of step with its most
important trading partner lest it become
lose international competitiveness in
its international markets right so
we would Pino In other words we're going
to penalize Canadian export others
to the United States
manufacturing energy and
energy exporters if we're going to
make Canadian products more expensive
while the United States doesn't
have these sorts of policies so
there's this idea that Canada can't
go ahead with these policies with
given the current climate and
context in the United States and
if you look at the will so
this raises the question of what role U.S.
policy should play in Canadian climate
policy this is some public opinion data
that that asked the following question
is asked respondents to choose between 2
options Canada should hold off on carbon
pricing to avoid having a competitive
disadvantage with the United States
that's in blue and or
what the U.S. does shouldn't matter Canada
should implement carbon pricing now so
I've only put the numbers so
it's all numbers should equal 100
I only put the numbers here for
the blue and what you see is overall 55 or
so so the opinions are really divided on
this question overall Canadian 55 percent
of Canadians think Canada should
hold off so there's this idea that
Canadians are relatively cool
to the idea of being too far out
of step with the United States so this
is challenge number one for Trudeau and
if you look across regions look at look
at Albertans this catch on 65 percent of
people living in Alberta and surprisingly
don't want to get don't want Canada to
be too much out of step with its
most important trading partner.
But I would argue that
the main obstacle for
the pan Canadian framework on
climate change is less international
less what's going on in
the United States and more a domestic
political economy story something that
I've alluded to throughout my talk so
these are some of the provincial reactions
to Trudeau's carbon price British Columbia
story back in Ontario were immediately on
board saying yes this is a good thing.
Of course right they have a carbon price
they want other jurisdictions in Canada to
have a carbon price their carbon price
happens to be lower than other provinces
so there's no issue there as well with
this important caviar qualification that
almost immediately the Premier's of these
saying yeah this is good policy but
you know what we're not getting rid of our
carbon market we're not going
to switching to a carbon tax so
there is that some qualification
there British Columbia supports
the federal protests but
raise the question of equivalency in terms
of stringency as I mentioned this earlier
the $30.00 per ton carbon tax in B.C.
How do we square that with
the $15.00 per tonne credits
selling in the Bakken Ontario cap and
trade market so
there's an issue there which has sparked
a whole debate about stringency and
equivalency which is ongoing today and
is a challenge Alberta.
Has required has is on board they have
a carbon price and they're going to be
replacing the specified gasometers
regulation soon with a performance based
intensity based system similar to what
the pan Canadian framework has but
the Alberta is actually requiring approval
for a federal development so here's
a quote from Premier Rachel not only this
has to be concurrent with a pipeline
an ambitious public policy move like this
even as worthwhile as this needs to be
built on top of a fundamentally healthy
economic foundation and a new pipeline is
what will give that not only to Alberta
but to the rest of Canada importantly.
This argumentation is how not lead
justified or sold her carbon price to.
I guess somewhat resistent
public in Alberta.
Interestingly.
I won't get too far into it but
interestingly some of the some of the ways
that the Alberta has justified their
carbon price in terms of market access so
I'm sure you're familiar with the bait
you know of dirty oil we don't want
tar sands oil from Alberta they're not
doing anything in terms of climate policy
this is you know this is a carbon bomb the
idea is that if Alberta has a carbon price
then they can buy back a little bit more
legitimacy on the international stage and
kind of protect their access to
markets their export markets by saying
yes we are a producer of oil but
we also have strict common policy at home
take our oil you can use our oil
without feeling too bad about it.
Other provinces Manitoba are relatively
small province neighboring.
Ontario has delayed its signature of
the pan Canadian framework and asked for
more federal funding for
public health sector so here we get
another kind of a linking across issues
but it's always saying you know what we're
open to your carbon pricing regime but
what about those health care transfers.
This is catch on has opposed carbon
pricing outright saying that carbon
pricing is not in the interest of
the people of this catch on not in
the interest of its economy and will
disproportionately hurt its energy sector
which is already reeling from oil proly
prices this is probably the reaction you'd
expect from Alberta as well but not with
someone like Rachel not who was in power
who's a left of center government
that's open to this idea of
having a carbon price using that
money to modernize the economy.
Build a new green economy and
also protect access to markets have the
social license I guess you could call it.
Now the Atlantic provinces Nova Scotia
New Brunswick New Finland and P.D.I.
are all developing carbon pricing policies
and I don't want to get into the nitty
gritty because this gets technical really
quick but there are some issues here right
so Nova Scotia just last week
I think released its plans for
its carbon markets wants to go cap in
the cap of the route of cap and trade but
there are huge issues here
in terms of equivalency
this is actually what's really holding
up the implementation of legislation or
the the introduction of legislation in
the House of Commons this fall it might
still be introduced but there's a lot more
negotiations happening as we speak so
this to me is the real challenge
right it's less Trump and
what's happening in the United States
because let's be honest there are things
happening in the United States
despite from California just recently.
Extended its its cap and trade legislation
there's a lot of things going on in
the United States that bode well for
climate policy in North America I
guess one could say the real
challenge is I think these domestic
political economy issues across provinces.
What about.
Public opinion so there are 3 options for
governments and I'll try to wrap up quick
because I want to keep times for questions
but there are 3 basic options for
for governments write one you
can come up with your own or
continue to implement your own plan to put
a price on carbon or you could do nothing
and let the federal plan take effect
that's the federal backstop right
the federal government will impose
a carbon price for you or you can fight
the implementation of a federal carbon
tax this sounds familiar by the way.
C.P.P. right clean power plan
different options for it but
I just wanted to highlight where
the different carbon price jurisdictions
the public of these different
carbon price jurisdictions stand so
if you look in British Columbia
the moral category says let's
continue with our tax cut back and
trade market so far so good but
if you look at Alberta let's fight
the implementation of a carbon tax and
similarly in Ontario the model
category here so that's a majority but
close to a majority here is even
in Ontario there is actually quite
quite a bit of support for fighting
implementation of the federal P.C.F..
Another key challenge
will the province's with
carbon prices actually survive upcoming
elections we have elections coming up
provincial elections coming up in.
Ontario come back and
Alberta we just had elections in British
Columbia Christie Clark lost power but
was replaced by an N.D.P.
Green coalition Don't worry
the carbon compact isn't going anywhere
OK in British Columbia so that but
these 3 other provinces where
elections are relatively imminent.
Right are all very vulnerable so Kathleen
wins approval ratings are a dismal
polls as I was preparing for
this talk she has the lowest approval
ratings in I forget how many years now and
I think in the last 14 years for
an Ontario premier 76 percent
of people in Ontario say it's time for
a change and that sentiment it's time for
a new government she's not
doing too well the good news is
her main opposition the conservative party
actually supports carbon pricing but
not a carbon market they support
a revenue neutral carbon tax so
while the end Terrio policy is up in
the air carbon pricing I don't think is
particularly vulnerable
let's move on to Alberta
this is well let's move to cut back
because cutbacks a little bit easier so
quickly office is actually not doing too
well either 32 percent approval rating.
Recently just those in
the cab on the way here.
While on my way to
the airport to come here.
The results of a byelection in
Quebec City were happened and
the liberals who also Party lost power
in a riding that they've held for
the last 14 or 20 years something
like that too they see a Q party
which is the only party that kind of.
If anybody is going to oppose
carbon pricing it's that party so
while you know byelection aren't
excellent predictors of electoral support
they do provide some indication of the way
the winds are blowing and it's not looking
too good for the come back liberal liberal
government at the time we speak but
I still think that the back policy
about carbon price is pretty
is pretty solid because there tend there's
actually more or less a consensus and
to back that carbon pricing and
action on climate change is good so so
the real question is in Alberta right
the heavy fossil fuel producing
province Rachel not Leigh is not doing
too well in the polls 28 percent
approval rating it's fallen ever
since I have the graphs in my extra
slides it's been on a downward decline
ever since the carbon price was announced.
So she's not doing too well but
fundamentally what's really going to
matter I think for Rachel not Lee's
electoral fortunes any the the longevity
of the carbon price in
Alberta is her ability to get
a pipeline through her the ability
to get a point if Rachel not only
gets the pipeline then her argumentation
that we can have a pipeline and
we can have carbon pricing and
everybody can be happy.
Whoa kind of bear fruit.
The last thing I'd say though and
this is pretty important
the federal government modeled
their policy their backstop.
With the Alberta model it's a price on
fossil fuels with an intensity based.
Performance based story with
a performance based system for
large final emitters that's
exactly what Rachel not Lee has.
Developed the out the Alberta government
has developed if she loses power and
the conservatives remove the policy or
are.
Trash the policy the federal government
under the P.C.F. can go then go and
impose a sensible more or less
the same policy and all is not lost so
there's this idea of which I
think is a very forward looking.
Was pretty smart by the federal
government so I'm going to I'm going to
conclude with this with this slide this
is some of our polling that we've done.
And we looked at support for
Trudeau's carbon price with no costs
pacified at the $0.02 per liter which
corresponds to a $10.00 per tonne and the.
$0.11 per liter which corresponds to
a $50.00 per tonne and what we see is you
know as you increase the price per
tonne the opposition increases
this is that's generally So there's
actually quite a bit of support for
a carbon price in the abstract but once
you talk about the impact even a $2.00
cent per liter impact at the pump you're
decreasing support by about 10 percent and
by about another 15 percent at 11 cents
amongst Liberal Party of Canada supporters
even higher carbon tax support but
once you you know at a $50.00
per tonne which is the government's
policy in 2022 you're out about 505050
percent support 40 that is that 40
percent 40 percent opposition and
then the rest are undecided so
it's pretty the visit of even within
the Liberal Party of Canada supporters so
that's something to keep in mind that to
look at over the monitor over time OK So
just to conclude.
What I want to say what kind
of lessons can we draw but
what kind of things emerge out of this.
Out of this story of carbon pricing in
Canada Well the 1st thing I want to point
out is the role of horizontal and
vertical diffusion.
From bottom up to top down federalism so
there's you know the provinces during
that period of of innovation that I had
talked about during that period of federal
disengagement and provincial engagement
actually created their own carbon pricing
and that actually really influenced.
The federal government's approach to
carbon pricing that we have today.
Other influences on provincial carbon
pricing actually came from here
the united states especially California
but in other places as well and
there is the like there is the possibility
of a trump effect but it but
Trudeau looks like he's dug in his heels
and he's going to resist any potential
Trump effect the one of the paths to
coordinated carbon pricing in federal
systems this is a key is probably
one of the fundamental questions and
the Canadian case identifies 2
potential pathways there may be more
in determining the minimum standards
as we've seen with the P.C.F.
a 2nd potential pathway is the scope for
provinces to lead is there scope for
provinces to lead a coordinated response.
W C I Alex A back on Terrio
collaboration on cap and
trade now potentially moving to the
Atlantic provinces where they seem to be
wanting to integrate a regional cap and
trade market for the Atlantic provinces so
there's never so despite the fact that
the federal government seems to be.
Determining the minimum standards
nevertheless seems to be some capacity for
provinces to Nevertheless contribute
to a core native carbon pricing
system in a federal system.
Last 2 points I couldn't help
while preparing this talk about
parallels with the clean power plant
which I'm sure you're probably even more
familiar with than I am I haven't followed
it too much but you know this idea of
the federal government setting minimum
requirements with which states must.
Comply otherwise the federal
government will step in the E.P.A.
In this case would step in to regulate for
the states just it strikes me as a really
interesting parallel and a really
interesting comparison so for your term
papers you might want to maybe think about
looking at Canada and I'd be interested in
feeling any questions you might have or
helping you out in that regard but
one of the key differences is also.
They limited flexibility of the price
floor so whereas the the clean power plan
was very kind of agnostic on the means
of how to meet the requirement
of the emissions reduction
the federal government the P.C.F.
framework actually is a little bit more
stringent in saying they they want to fix
the price at $10.00 per tonne let's say
and that's what you and that actually
makes equivalency more of a challenge so
that that I think is an important piece.
Of the equation finally the political
economy of implementation fascinating
questions that arise when looking
at the Canadian case I think
the same issues arise when
looking at the American case.
Can consensus through compromise and
compensation be achieved right so
Waksman Mark is a good case of this right
that the $300.00 extra pages that nobody
read before it went to Congress
this idea that we can kind of
broker our way find
compromises cut back room deals
is that a way to consensus and
if so do the distributional
politics approach which which that kind
of compromise and compensation embodies
that lead us directly to a lowest
common denominator approach
watering things down through these
compromises in order to get the minimum.
Coalition the minimum coalition to kind
of get these things through I think is
an important question so this is a very
legitimate question terms of looking at
does the distributional politics
approach get us to where we need to be
what are the potential implications of
that approach so that concludes my talk I
think we have 4 and 10 minutes for
for a question the Nats are and
I'll be happy to take your your
comments and questions thanks.