A serious climate change agenda

GPC 2015 platform background paper

The climate is changing in harmful and risky ways due to our profligate use of fossil fuels. Despite this fact, the Conservative administration prefers to shoot the messengers. Political interference and budget cuts have weakened environmental protection and are interfering with the work of Canadian scientists. Our national contribution to the global effort to protect the climate, our people and our communities, is shameful.  The time is overdue for Canada to make a serious commitment to address climate change, both nationally and globally, and for the federal government to take the initiative in coordinating Canadian action and leading by example. The Council of Canadian Governments is the ideal forum to bring about constructive action for such vital initiatives. [part R] Among other things, we must put a national price on carbon, invest in green infrastructure, do more to save energy in our homes, businesses and vehicles, and implement a comprehensive adaptation strategy.

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The time is overdue for Canada to make a serious commitment to address climate change, both nationally and globally, and for the federal government to partner with the provinces and territories to coordinate implementation of a serious climate change agenda.

The Conservative government has reversed decades of albeit halting progress in responding to the climate crisis.  Having cancelled the 2005 Climate Plan when he took office in 2006, Stephen Harper further eroded global progress by withdrawing from the Kyoto Protocol. In 2009, Harper personally committed Canada to our most recent target of a 17% reduction from 2005 fossil fuel emission levels by 2020, a goal which Environment Canada projects we will miss by a long shot.

Some provinces have made progress. Ontario has invested, through its Green Energy Act, in clean energy production and jobs, and it has shut down coal-fired energy generation. British Columbia has put a price on carbon; Alberta charges some large industrial emitters for polluting the environment; and Quebec has a cap-and-trade program, which Ontario is in the process of joining.

Federal programs, where they exist, are weak and ineffective. Political interference and budget cuts have undermined our environmental protection and are interfering with the work of Canadian scientists. Our national contribution to the global effort to protect the climate, our people and our communities, is shameful.

It is time for Canada to move to the forefront of the global clean energy revolution. The single most effective step at the national level would be to establish a carbon pricing regime that puts Canada on a path to deep carbon reductions. Carbon pricing involves an economy-wide price for carbon that applies to all emitters of carbon pollution. By making producers and consumers pay for the harm caused to the environment, a national carbon price would promote environmentally benign, sustainable practices throughout the economy. It would encourage innovations in renewable energy and resource efficiency in areas which in turn would produce even more jobs than the fossil fuel industry. It would also improve the resiliency of our economy to weather global oil shocks while focusing on the reduction of the largest source of greenhouse gas (GHG) emissions.

Setting a carbon price would be far more effective in reducing GHG emissions than the complex sector-by-sector regulations that the current government has favoured. Since 2006, the government has managed to complete only the vehicle fuel efficiency regulations and a set of regulations for new coal plants that will not impact existing coal plants for decades to come. In the meantime, one of the most respected and consistent proponents of emissions pricing, the National Round Table on the Environment and the Economy, was abolished.

The Green Party’s preferred approach would be to introduce a carbon price through a Carbon Fee and Dividend system. The Carbon Fee is a science-based levy on the carbon content (global warming potential) of fossil fuels – the source of 72 % of our GHG emissions.^[1]  This would set a clear price on carbon pollution and give producers and consumers the incentive to change the technologies and habits that have resulted in global warming. Some economists suggest the fee could start at, say, $50 per ton of CO₂ in 2015, and rise by $10 a year reaching $200/tCO₂ in 2030. Clearly scheduled price increases would provide businesses and consumers with a stable and predictable price for planning and purchasing decisions. In the long run, as we shift away from fossil fuels, the carbon fee revenues will diminish to zero.

The carbon fee would only be levied on fossil fuels at source – when the coal, oil or gas comes out of the ground or crosses the border into Canada. The exact fee would vary according to the global warming potential of the different fuels.  Those paying the fee would pass the extra cost on down the business chain, which would ultimately mean higher prices to consumers for the final product. To illustrate with gas at the retail pump, prices would be higher, but you would not see a separate new charge on the bill. Similarly the carbon fee would raise the cost of fossil-fuel-based products like plastics, material, pesticides, and fertilizers, which in turn would translate into commensurately higher consumer prices. For example, clothing made of fossil-fuel-based synthetic material would be more expensive than that made of natural fibres such as bamboo, hemp, or cotton. The great benefit of the carbon fee is that both producers and consumers will have clear incentives to develop and support production processes that reduce reliance on fossil fuels. For example, local food, with low or no transportation costs subject to the carbon fee, would have a price advantage in local markets.

The Fee and Dividend system would potentially raise substantial revenues from polluters.  However, the Green Party supports returning the carbon fee revenues to the citizens of Canada in a form of fiscal recycling. This means that every dollar generated by the carbon fee would be returned to Canadians through a dividend payment.  Ideally an equal per capita dividend would be distributed to all Canadians. This initiative would also have a built-in progressive feature. For Canadians with lower incomes and those who conserved more, this equal payment would be a significantly higher percentage of their total income and greater than what they spent on goods whose prices increased because of the carbon fee: these Canadians would actually make money on the carbon dividend. Higher-income Canadians with more than average levels of energy consumption would pay out more in higher prices for goods subject to the carbon fee than they would receive in the carbon dividend.

There are a number of ways the dividend could be returned to Canadians. Every year, by law, the federal Minister of Finance would present a “Revenue Neutral Carbon Tax Plan and Report” to Parliament to set out the carbon revenues collected and recommend how to return the revenues to Canadians. For example, every adult Canadian could either receive a cheque or a reduction of their personal income taxes to offset their increased carbon costs. Lower-income individuals and families could benefit from a Refundable Climate Action Tax Credit to be paid quarterly.

The federal government should also take steps to ensure that Canadian exporters are prepared for our trading partners’ increasingly stringent foreign requirements for consistent, transparent, and visible accounting of the environmental impact of Canadian production. Conversely, the government could explore applying border adjustments on imports, consistent with World Trade Organization (WTO) rules, so that Canadians businesses did not face unfair competition from polluting jurisdictions which lacked an equal carbon fee or tax.

In supporting the return of all carbon fee revenues back to Canadians, the Green Party is committed to finding the substantial revenues required for everything from supporting green energy and infrastructure projects to a generous annual commitment to the Green Climate Fund (GCF). The Green Party believes Canadians are ready for a serious discussion of root-and-branch tax reform and vital action [Fair taxation and a liveable income][ Federal fiscal transfers with purpose: equalization, housing, childcare, PSE]. We are fully confident that the systematic elimination of tax subsidies and tax havens, and the introduction of innovative new sources of revenue such as an estate tax and a financial transactions tax will yield the revenues we need to embark on the critical collective action that we simply cannot afford not to undertake.  

The Green Party will make carbon pricing a priority item on the first agenda of the proposed Council of Canadian Governments [Governments can get along and get things done]. We are confident that bringing all levels of governments together in a constructive framework will allow us to reach a consensus on how to coordinate the various provincial and federal initiatives to build a coherent and effective national carbon pricing system – presumably this would start with an agreement on a common minimum price.

The Green Party notes that there are other proposals for a carbon pricing system being presented to Canadians.

The Liberal Party “plan” is a non-plan that places the onus for developing a carbon pricing system on the provinces. It abandons all national leadership and encourages a disturbingly complicated patchwork of different carbon pricing regimes and rules in every province which will seriously distort and impede investment across the country. Of course, any national carbon pricing system has to be fully coordinated with provincial programs like those already in place in British Columbia, Alberta and Quebec, but the Liberal Party plan does not do this and will simply result in incoherence and ineffectiveness from the perspectives of both producers and consumers.

The NDP cap-and-trade proposal would establish more specific emission reductions, but the carbon price would be regulated by a complex system of auctioning and trading pollution permits. The carbon price would therefore fluctuate unpredictably over time through the trade of pollution permits. In general, a cap-and-trade system tends to be more difficult and expensive to administer than a Carbon Fee and Dividend system.

The Report of the Ecofiscal Commission – A Practical Approach to Reducing Canada’s Greenhouse Gas Emissions – correctly acknowledges that carbon pricing is more effective as the main tool for reducing GHG emissions than the Harper Conservatives’ preference for complex and intrusive sector-by-sector regulations. However, it incorrectly argues that different provincial economic structures, energy mixes and emissions profiles preclude a national price for carbon.

The Green Party strongly believes that a national carbon pricing system and a single national price on carbon are essential if we want to get anywhere close to acceptable targets for the reduction of greenhouse gases by mid-century. A realistic economy-wide carbon price strategy is the best way to provide clear incentives to both producers and consumers to take action and reduce our dependence on fossil fuels.

Carbon pricing is the foundation for serious climate action, but it is not the only action needed for substantial decarbonization of the economy. Beyond a carbon price, we need to aggressively reduce all GHC emissions through investments in infrastructure [part I], and through a focused plan for reducing the waste of energy that is literally built into our society.  Retrofitting buildings – residential and institutional – could reduce emissions by 30% while creating employment across Canada. We need to stop subsidizing fossil fuels production and fund the public investment required to support a wide variety of measures such as energy efficiency retrofits, energy-efficient agriculture, investments in public transit, and innovation in the production of renewable energy.

The time is overdue for Canada to come up with a credible climate change agenda and participate constructively in international negotiations for a new climate agreement.

Canada must once again become a constructive leader in climate negotiations and the global efforts to combat climate change.

Enough with receiving the annual “Fossil of the Year” award at global climate discussions! In December, at the Paris conference, we will have an opportunity to rejoin the global community in taking serious action and conclude a new international climate agreement.

On May 15^th, 2015, the Harper government finally announced that Canada’s “intended nationally determined contribution” (INDCs) for Paris would be to cut emissions by 30% below 2005 levels by 2030.^[2]  Not only is this target inadequate, but no serious plan was put forward to accomplish these goals. Vague references were made to regulating methane emissions, to introducing some new rules for the chemical industries and for natural gas-fired power production, to consolidating provincial GHG emissions reductions, to purchasing offsetting carbon credits if necessary, and to counting carbon stored in forests and soils.  Regrettably, this is the all-too-common Conservative tactic of paying lip service to change through obfuscation and smoke-and-mirrors, and it brings us nowhere near our critical goal of capping the global temperature increase at the 1.5 to 2 degrees level.

The Green Party believes Canada must do much better.

The Green Party believes Canada should commit to cut greenhouse gas emissions by at least 40% below 2005 levels by 2025.  Our long-term target should be to achieve carbon neutrality by 2050, with further cuts to greenhouse gas emissions of at least 80% to 90%, compared to 1990.

The Green Party also supports making our fair share of global contributions to the Green Climate Fund to assist developing countries to address climate change. Our goal should be an annual commitment of $500 million each year beginning in 2016. 

The Green Party is very optimistic about the prospects for a serious climate change action plan once we elect a federal government committed to bringing governments and Canadians together to ensure serious progress.  Pending the establishment of a Council of Canadian Governments [Governments can get along and get things done], the federal government should convene a First Ministers Conference as soon as possible after election in October to prepare credible Canadian proposals to take to the international climate negotiations in December.

Adaptation

Even with an aggressive plan to take Canada’s economy into the 21^st century while moving toward zero dependence on fossil fuels, the interference with the climate system that has already occurred due to human activity means that we will be facing an increasingly unstable climate.  We must have a comprehensive plan for emergency preparedness in the face of more severe weather events [part N].  In addition, all sectors need to be prepared for the impacts of a changing climate.  We need, in conjunction with provinces, to implement a comprehensive adaptation strategy to prepare agriculture, forestry, the fishery, our health care systems and all vulnerable aspects of our society for the impacts of climate change we can no longer avoid [Responsible environmental stewardship for Canada and the world].