Canadian Government to drop intensity-targets, follow US lead

Canada dropping intensity targets?

Canada dropping intensity targets?

The Canadian Government is adjusting its climate plans to more closely resemble those proposed in the US.  This summer Environment Canada is conducting a series of consultations with respect to its greenhouse gas emissions policies for heavy polluting industries and an announcement is expected in the fall outlining the new regulations. 

Climatico has learned from confidential sources that changes are likely to include a turn-around on ‘intensity targets’ which the Conservative Government has been promoting since 2007 in its widely-panned ‘Turning the Corner’ climate plan.  This reflects the US direction towards ‘cap and trade’ plans envisioned by the Waxman-Markey Bill  and now being discussed separately in the US Senate.

According to the leaked information provided to Climatico, changes in the Canadian plan are likely to include hard emissions caps for the power and oil & gas sector (a change from previously announced intensity targets, levels not yet determined).   Hard emissions caps also being discussed for the utility & electricity sector as well as the ‘EITE’ group (energy intensive, trade exposed) which includes aluminum, cement, chemicals, iron & steel, lime, gas transmission, base metal smelting, iron ore pelletizing, pulp & paper, and potash companies.

While hard emissions caps represents a welcome shift in policy away from intensity targets, what still remains unclear is how the Government will allocate pollution permits under the proposed system, and what the actual cap will be.  Information leaked to Climatico indicates that EITE industries will likely receive their permits free instead of through an auction therefore weakening the incentives to reduce emissions.   

Critically, changes to the Canadian plan will not include an adjustment of the overall ambition of emissions reductions.  Canada’s 2020 target will remain 20% reductions from 2006 levels – a target that has received substantial criticism for not reflecting the levels suggested by scientists of the IPCC for developed countries.

Furthermore, sources indicate that the proposed changes are likely to include plenty of loopholes allowing industry to weaken the climate-impact of the measures.  For example, compliance with the emissions cap could be achieved through payment into a ‘technology fund’ instead of implementing emissions reduction measures.  The level of inter-firm trading, as well as domestic and international offsets that would be allowed has also not been determined and the government is seeking input from industry on these matters.  It also remains unclear who else, aside from those being regulated will be consulted regarding these proposed changes.

With multiple meetings scheduled between Prime Minister and President Obama in the fall, the renewed discussion of a possible fall election, and the pivotal UN climate meeting in Copenhagen this December it appears the Canadian Government is trying to get its house in order on the climate front. The proposed changes to the ‘Turning the Corner’ plan start to fill the void in Canadian climate policy, but they still have a long way to go.

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  1. Milan

    Canada’s cap-and-trade regulations remain in limbo, with details unannounced. Even if they do get announced and implemented, the plan is so weak and offers so many avenues for avoiding emission reductions that it is unlikely to have a significant effect for at least a few years. By allowing firms to invest in a technology fund (which gets recycled back to them) rather than reduce emissions or buy permits from those who do, the system strips a lot of the effectiveness out of a carbon price. Given the heavy slant of the technology fund towards carbon capture and storage (CCS) technology, this represents yet another big gamble that such systems will prove cheap, safe, and effective. If not, a lot of time will have been lost for implementing safer strategies like improving energy efficiency and deploying renewables.

  2. Derek Pieper

    Great comment Milan. I totally agree. I believe the potential changes outlined in this post are only scheduled to come online in 2011 and there will be a ‘learning’ phase following implementation. Certainly it can be expected that any emissions reductions resultant from this regulatory scheme are several years away.

  3. Milan

    Published in Jeffrey Simpson’s book, the Jaccard analysis of the Conservative climate change plan is that it won’t reduce absolute emissions at all: just cause their levels to rise more slowly than they would without a plan.

    Admittedly, this analysis is based on the plan as it had been announced at that time. A system based on hard caps might do better. Even so, it seems fair to say that the plan isn’t strong enough to meet Canada’s 20% by 2020 target, even if we cheat. Ways we might cheat include buying bogus credits on international markets (such as those representing ex-Soviet emissions) or by counting contributions to the technology fund as emissions reductions, even when no reductions occur.

  4. Milan

    More on the book written by Jeffrey Simpson, Mark Jaccard, and Nic Rivers.

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