FACING CLIMATE CHANGE. Webinar Ch. 4-7 March 2, 2017, Toronto Dianne Saxe

Transcription

1 FACING CLIMATE CHANGE Webinar Ch. 4-7 March 2, 2017, Toronto Dianne Saxe

2 Who is the ECO? Impartial and independent Guardian of the Environmental Bill of Rights Watchdog on: Energy use and conservation Greenhouse gas emissions (climate) Environmental protection 2

3 Overview Webinar #1 Feb. 8 1: Urgency 2: 2014 Emissions: Official Inventory 3: Emissions: If we count everything Webinar #2 - Today 4: Cap and Trade 5: Spending the Money 6: Climate Change Action Plan 7: Knowledge + Action = Hope 3

4 4: Cap and Trade Ready, Set, Go! 4

5 Ontario is doing so much right Coal power plant closures Cap and Trade system implemented Action Plan released Climate Ready update? 5

6 Cap and Trade 1. New Climate Act and targets 2. Cap and trade basics 3. Key design choices 4. Linking: the California challenge 5. What it means for Ontario Read Our Introduction to Cap and Trade in Ontario primer! 6

7 Ontario GHG Emissions (Mt CO 2 e) New Climate Act Carbon pricing to increase fossil fuel costs Historical Business As Usual Proceeds in Greenhouse Gas Reduction Account spent as per Action Plan Reduce GHGs by 80%? 50 Targets Historical data:

8 Basic Theory Polluter Pays To reduce GHG emissions, we must put a price on them GHG polluters would emit less if they had to pay for the privilege 8

9 Carbon Tax vs Cap and Trade Carbon Tax: Gov t sets price Cap and Trade: Gov t sets cap Simpler to understand Faster to implement Lower cost GHG mitigation Doesn t include the term tax 9

10 The Cap Government issues capped number of GHG allowances Permits to pollute Emitters must submit allowances to match emissions Cap drops with time Allowances become scarce, price rises It becomes cheaper for emitters to reduce emissions $ 0.5 Allowances Over Time $$ Price Availability than to buy allowances 0 Present Future 10

11 The Critical Assumption However, it doesn t always work Price of California Carbon Allowance Futures 11

12 Emissions The Trades Some can reduce GHGs at lower cost than others For high cost emitters, more affordable to pay others to reduce GHGs Excess Emissions Allowances Excess Reductions How? Emitters buy or sell allowances or offsets in secondary market Result? Lower economic cost for GHG reductions Emissions Credit $ Emitter A Emitter B 12 Adapted from:

13 Cap and Trade Design Issues How high is the cap? How fast does the cap drop? Who needs allowances? Who must pay for them? Competitiveness and carbon leakage Stability and predictability Cost and fairness Linking 13

14 Key Evaluation Metrics? GHG emission reductions Economic efficiency/cost-effectiveness Market functioning Carbon leakage 14

15 Who Needs Allowances? Needs Allowances, Costs Passed on to Customers 100 Mt Needs Own Allowances Does Not Need Allowances 40 Mt 31 Mt Liquid Fuel and Natural Gas Distributors 80% Industry Agriculture & Waste 15

16 Who Pays, Who Doesn t? Pays for Allowances Indirectly 100 Mt >90% Free Allowances until 2020 Does Not Need Allowances 40 Mt 31 Mt Liquid Fuel and Natural Gas Distributors 80% Industry Agriculture & Waste 16

17 Ontario s Design Choices Ontario s cap and trade system is: Reasonable Appropriate for our economy Challenges: It is complicated It will take time to work Needs longer-term certainty 17

18 Linking with California and Quebec Benefits Cheaper for emitters (us) Reduce carbon leakage Market functioning Consequences Temporary outflow of Ontario cash: $250+ million to California? $250+ million less fossil fuel imports? Lock in reliance on imported allowances? Bigger, more liquid market Lower, more stable prices Lower prices Less GGRA, Action Plan funding In first years, Ontario emitters may find it cheaper to buy allowances / credits from California than to reduce emissions in Ontario 18

19 But can we count on California? California s program faces legal challenges Litigation 2016 May/August Auction failures Reauthorization after 2020 Won t get benefit from federal Clean Power Plan 19

20 Offsets Major Potential Emitters Outside Ontario Ontario Emitters within Cap Offset Credits Ontario Emitters Outside Cap Possible Offsets, e.g.: Mine methane Landfill gas ODS / refrigerants N 2 O / fertilizer Forest / afforestation Urban forests Livestock Conservation cropping Competitive? If so, can keep money and GHG reductions in Ontario Maximum? 8% of emissions (not cap) 11.4 Mt in Adapted from:

21 What will it cost you this year if you change nothing? 21 Ontario%E2%80%99s-Proposed-Cap-and-Trade-Program

22 5: Spending the Money Greenhouse Gas Reduction Account 22

23 Greenhouse Gas Reduction Account $1.8 billion per year? Mostly from everyone who buys petroleum products and natural gas Limited impact to Large Final Emitters and electricity sector (90% fossil free) $ Emission allowance auction $ Greenhouse Gas Reduction Account $ Initiatives that are reasonably likely to reduce, or support the reduction of, greenhouse gases or for related government expenditures $ Ontario Consolidated Revenue Fund Climate Change Action Plan? Dividend 23

24 Why? To reach GHG emission targets, Ontario needs major new emission reductions Cap and trade won t do it, unless carbon price is high What will? How to fund the Action Plan? Action Plan! GGRA! 24

25 What if there is a GGRA Revenue Shortfall? No methodology to prioritize GGRA expenditures if Cap and trade proceeds are lower and/or Funds have been spent on other priorities 25

26 6: Climate Change Action Plan 26

27 5 Year Action Plan More of a direction than a plan No precision in the numbers Compromise document After 44 drafts, several leaks Details being worked out after 27

28 Good Ideas That Will Take Time Land use and transit Green bank Cleantech companies Reductions: When? Where? How big? 28

29 Big Claims for 2020 Subsidizing the Global Adjustment 3 Mt Per ECO - no plausible additional reductions Renewable -Not Plausible fuel regulation 2 Mt Per ECO - plausible, requires careful regulation of environmental effects Could have high per tonne cost Industrial transformation Mt Per ECO no clear mechanism cannot quantify 29

30 Mt CO 2 eq Compliance Gap Other Action Plan Cap and Trade How will Ontario meet the 2020 target? Reductions? Offsets? California allowances? Early reduction credits? 5 0 Compliance Gap 30

31 2020 Compliance Gap Options Business As Usual Early Reductions California Allowances Carbon Price Action Plan Target Offsets 31

32 After Action Plan: Still lots to do Mitigation How to build a low-carbon economy? Adaptation What will make Ontario resilient? Many risks, opportunities and co-benefits 32

33 7: Knowledge + Action = Hope No one can do everything, but everyone can do something 33

34 Lots of Progress Encouraging international, national, and provincial progress Paris Agreement came into in force on November 4, 2016 Kigali Amendment to Montreal Protocol hydrofluorocarbons Carbon Offsetting and Reduction Scheme for International Aviation Pan-Canadian Framework Despite U.S. election 34

35 Earning Ontarians Support Chasm between what government knows and what the public understands Few understand how climate change will alter Ontario Even when presented with all the facts, most people still don t get mobilized why? 35

36 Actions Speak Louder Than Words Our government says it s dire, but doesn t act that way It s hard to see dramatic change in day-to-day conduct In most contests between trees, wildlife and asphalt, asphalt still wins Many government actions run contrary to climate action Government does not consistently show that it takes climate change seriously 36

37 And Meanwhile Subsidies for: Fossil fuel consumption Wetland destruction Crop insurance that ignores soil carbon Land-use planning that creates sprawl Road toll ban Inappropriate use of the GGRA? 2017 LTEP public consultation: LTEP covers 70%+ of Ontario GHGs All scenarios inconsistent with climate targets 37

38 Who is Leading by Example? MNRF: Resilience Plan MTO: More transit, Cycling Strategy OMAFRA: Soil Carbon/Soil Health Waterfront Toronto: Green Procurement Region of Durham: Adaptation Plan Task Force on Climate Related Risk Disclosure 38

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40 What Can I Do? Climate cannot be left entirely up to government Reduce your carbon footprint Get ready to adapt Speak up It s not too late 40

41 Questions? Download the Facing Climate Change report and the Introduction to Cap and Trade in Ontario document: eco.on.ca Contact us: 41

42 Sign up for ECO Updates eco.on.ca/about-us/get-eco-updates 42