A n O ve r v i e w o f O t h e r J u r i s d i c t i o n a l A p p ro a c h e s t o C a r b o n A P A S C a r b o n S u m m i t.

Transcription

1 A n O ve r v i e w o f O t h e r J u r i s d i c t i o n a l A p p ro a c h e s t o C a r b o n A P A S C a r b o n S u m m i t July 13, 2017

2 Overview The Global Landscape Canadian Approaches CFA s Action Global negotiations, foreign approaches to pricing carbon and offsets. A patchwork of policies, prices and engagement with the agriculture sector. Policy development, advocacy and lobbying.

3 The Global Landscape

4 The Paris Agreement UNFCCC COP 21 Different from past climate change negotiations as each country was asked to come up with their own targets and contributions to reduce GHG emissions. Canada s target: 30% below 2005 levels by The Agreement includes provisions for emissions trading, but details are still being worked out. The Agreement addressed the need to safeguard food security and agricultural production. 90% of countries included agriculture as part of their solution. The U.S. has signaled its intention to withdraw, but other nations commitments remain strong.

5 France launches 4 by 1000 initiative A 4% increase of carbon in soils not only creates more fertile soils, but would account for all new carbon released to the atmosphere. Focuses on management activities and technological solutions, many of which are already in place in Canada. To demonstrate that agricultural soils are crucial for food security and climate change solutions.

6 World Business Council on Sustainable Development supports climate smart agriculture I n c r e a s i n g l y b u s i n e s s i s t a k i n g l e a d e r s h i p r o l e s i n r e d u c i n g G H G e m i s s i o n s.

7 Carbon Prices Worldwide I n U S D 42 Countries have implemented a carbon price. Plus other subnational jurisdictions. Equaling 14.6% of global GHG emissions. Increasing support from countries and economists that carbon pricing is the cheapest approach to reduce economy-wide emissions. Sweden: $126 Switzerland: $84 Finland: $62-66 France: $33 BC: $23 UK: $22 Slovenia: $18 Quebec, Ontario: $14 New Zealand: $12 Beijing: $8 Shenzhen: $5 Colombia: $5 Estonia: $2 Mexico: $1-3 Ukraine: $1

8 Offset Protocols The forestry sector is more further advanced through consensus in international negotiations and projects that recognize carbon sinks and afforestation. International focus for many years was on REDD and REDD+ programs (Reduce Emissions from Deforestation and Degradation). Within the international negotiations, agriculture remains stuck in a side discussion on whether to include mitigation or focus solely on adaptation. Agricultural offset protocols were developed in Canada and have been implemented in Alberta with few other examples. California, Ontario and Quebec are now developing and implementing agricultural offsets that will be traded.

9 Canadian Approaches

10 Canadian Approaches The Pan Canadian Framework on Clean Growth and Climate Change (December 2016) approach used to develop how Canada would deliver on its international commitments. Supported by 4 F/P/T Working Groups Saskatchewan and Manitoba did not sign. Carbon pricing is a key component of the Framework. The carbon pricing backstop technical paper comment period closed two weeks ago. New supporting legislation for implementation expected in the fall.

11 Why the Focus on Carbon Pricing? A market signal to reduce emissions. The costs meant to be passed on to the consumer to change purchasing decisions. 80% of Canadians live with carbon pricing: BC, AB, ON, QC. Liberal provincial governments and Alberta had already implemented or designed a carbon price. Provinces design their own systems: carbon tax, cap and trade, or a hybrid. All other provinces with the exception of SK, have indicated that they will adopt some form of carbon pricing, TBD. From the beginning the federal government was clear provinces would lead program development and allocate revenues as they see fit. Biological emissions are not covered.

12 Current Carbon Prices 2017 prices: Alberta $20 for consumers, $30 for emitters BC $30 Ontario Approximately $18 Quebec Approximately $18 The minimum price set at $10 per tonne in 2018, rising $10 per year to $50 per tonne by Alberta s will be $30 in 2018 Ontario and Quebec will be set by the market Other provinces and territories have different systems in development, few concrete details announced.

13 Offsets Relevant to Agriculture Agriculturally relevant offsets in Alberta: Conservation Cropping Nitrous Oxide Emissions Reduction (fertilizer management) Dairy Beef (Low-Residual Feed Intake, reduced age of harvest and emissions from fed cattle) Micro-Generation Biomass Biogas Efficiency Since 2002 Alberta producers and aggregators have received $170 million through offsets. Some have estimated with greater adoption of these protocols, it could be close to $100 million/year.

14 Offsets Relevant to Agriculture Ontario and Quebec have 13 under development including: Fertilizer management Livestock Organic waste digestion Organic waste management Grasslands Conservation cropping Forest Afforestation Quebec has one in place: Biogas capture

15 Agricultural Offset Protocols Challenges: Ensuring the early adopters are recognized. Administrative burden on producers: time, complicated process, low compensation, verification. Portion that aggregators receive. Competition with other industries for funding and to market a sizeable offset. Is it worth your time? Opportunities: Combining multiple offsets through a single process. Companies are now starting to integrate offsets into their service stream, reducing administrative burden to producers. Enabling offsets across borders.

16 GHGs in Agriculture

17 Mt CO2 eq Canadian Farmers Contribution to Climate Change Agricultural GHG Emissions, 2014 In Canada, Agriculture Produces 8% of the Greenhouse Gas Emissions (GHGs). Often expressed in CO2 equivalents, carbon dioxide emissions actually represents the least amount of GHG emissions from farming. The majority are biological in nature and represent gases more potent than CO2. 70% of Canada s N 2 0 emissions 27% of Canada s CH 4 emissions Globally, the agricultural sector is 24% of emissions On-Farm Fuel Use 14 Mt Crop Production 22 Mt Livestock Production 37 Mt Landuse Change -8.4 Mt

18 Source: Agriculture and Agri-Food Canada and Environment and Climate Change Canada Canadian agricultural emissions dropped 4% (2 megaton CO2 Equivalent).

19 Output of major grains and oilseeds and emissions from crop production, 1991 = Output of major grains and oilseeds Emissions related to crop production Source: Agriculture and Agri-Food Canada and Environment and Climate Change Canada

20 Source: Agriculture and Agri-Food Canada and Environment and Climate Change Canada

21 Specific Mitigation Opportunities The FPT Working Group found limited options to reduce emissions in agriculture compared to other sectors Policy Tool Reduced methane from cattle (dietary changes/ reduced age at harvest) Conversion of marginal land from annual crops to permanent cover Estimated Range of Emissions Reductions in 2030 Estimated Cost per Tonne <1-2 Mt $0-$50 or $50-$100, depending on policy option <1 Mt $0-$50 Increase planting of nitrogenfixing crops, pulses and forages <1 Mt $0-$100 Increase adoption of zero-till <1 1 Mt $0-$50 Manure management technologies <1 Mt >$250 Precision fertilizer application Up to 1 Mt $0-$50 or $50-$100, depending on policy design and level of ambition

22 CFA s Action

23 International Engagement Member of the World Farmers Organisation s (WFO) Climate Change Working Group. Developed an updated climate change policy for WFO. Regularly contributes to policy positions and statements for international meetings. Member of the North American Alliance for Climate Smart Agriculture. Accredited to UNFCCC and regularly participates in climate change negotiations.

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25 Climate Change National Engagement Emphasizing Adaptation and Agriculture as Providing Solutions CFA provided multiple submissions to the PCF. Participated in stakeholder engagement sessions for each of the four FPT Working Groups. Submission to the Carbon Pricing Backstop Technical Paper. Involved in other sustainability initiatives, including: National Environmental Farm Plan Canadian Roundtable on Sustainable Beef Canadian Roundtable on Sustainable Crops Leading a Carbon Pricing Committee to update CFA s policy, coordinate positions across producer organizations and develop government relations strategy.

26 CFA s positions Speaking about carbon intensity rather than absolute emissions is a better starting position for agriculture. Climate policy must not create a perverse disincentive for food production. All on-farm fuel use must be exempt from carbon pricing, including natural gas and propane. Offsets can work, but they need to be designed to encourage adoption. Environment Ministries need to develop a better understanding of agriculture. Business as usual is not the same thing as in other industries. Agriculture is part of the solution and investments in innovation and the bioeconomy are needed. Increased investments to support producers to adapt to climate change and build resilience must also be included.

27 Opportunities from current approach Financial opportunities for producers likely to be mixed. Offset protocols where they have been established have brought significant administrative costs so that not all producers see value in participating in the program, even if they qualify. But it is a made-in Canada approach that has room to expand. Scale impacts the ability to participate in offsets. Cost-shared incentives will require upfront costs from producers. Rebates require cash management throughout the year until the cheque arrives. Good opportunity to maintain tax exemption for on-farm fuel use. Increased investments in energy efficiency could drive down cost for some inputs. Agricultural products will continue to replace fossil-fuel derived products within supply chains. Investments in the bioeconomy will translate to more revenue opportunities from waste products and purpose-grown feedstock, but this will take time.

28 Challenges from the Current Carbon Pricing Approach Fails to acknowledge agricultural producers unique situation. Managers of carbon and nitrogen cycles with a need to respond to market and weather conditions. Position as price takers in the market. Global and domestic competitiveness leading to carbon leakage. If production or processing is relocated to other jurisdictions to lower production costs, Canada takes the economic impacts yet global emissions do not decline despite domestic climate policy. Patchwork of implementation strategies from one province to another. Different opportunities for producers to benefit from carbon markets and different compensation formulas depending on the province one is in. Potentially different offset protocols and even potential for protocols that producers could access. Incentive vs. regulatory approaches. How will the revenues generated be allocated?

29 Some Conclusions Provinces and Territories have significant discretion in implementing carbon pricing and action on climate change as long as the federal minimum is met. Exemptions and rebates to compensate producers from costs of carbon pricing are possible, but require making the case to governments and competing with other industries. Offset protocols could provide a new but small revenue stream. AAFC and a number of provinces are looking to the next policy framework to implement support for climate change mitigation and adaptation. Brings costshared funding, but potentially at the expense of other programs. Any exemptions or compensation for agriculture are agreed upon at the provincial level. Determining the potential costs and opportunities for producers still depends on program details in most cases. Addressing higher costs of production and competitiveness, especially for some commodities is required.

30 Current CFA Climate Change Policy Carbon Tax A carbon tax will create competitive disadvantage for Canadian producers. Agriculture should be exempted until measures are in place to make it revenue neutral for farmers: More income for costs incurred while producing EG&S: A domestic carbon market enabling agriculture to trade offset credits for carbon mitigation. Incentives for producers to invest in green technology and practices. Expand and continue to develop carbon offset protocols. Rebate system acknowledging competitive risk of producers competing with those not under carbon pricing. Tax regimes that account for increased costs that a carbon tax places on producers

31 Current CFA Climate Change Policy Cap and Trade A domestic or continent-wide carbon market will include: Cap on regulated industries to create a market for all offset credits. Aggregation of agricultural carbon credits to create blocks. Transparent development of a wide range of offset protocols developed with producer input that provide all sectors and commodities in Canada with an opportunity to reduce emissions or sequester carbon.

32 Current CFA Climate Change Policy Cap and Trade Offset Protocols Offset protocols should ensure: Verification is effective and quick. Variation in regional growing conditions, techniques, regulations and policies are addressed. Administration of system is transparent and cost-effective and there are no barriers to producers participation. Risk of sink reversals are not managed with a liability period or temporary credits that would reduce value. The full value offset credit should be provided to producers who adopted mitigation technologies and practices prior to development of the carbon market.

33 Drew Black Director of Environment and Science Policy ext