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Erick Lachapelle: Pricing carbon in a post-Paris, Trump era

October 4, 2017 1:08:00
Kaltura Video

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 qu├ębec 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.