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John Drexhage Director, Climate Change and Energy IISD

Exploring the Challenges and Opportunities for Establishing a North American Emissions Trading System. John Drexhage Director, Climate Change and Energy IISD. Appendix 2.1. Global Per Capita Emissions. + 38%. + 16%. + 7%. + 43%. + 38%. + 23%. + 24%. Appendix 2.1.

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John Drexhage Director, Climate Change and Energy IISD

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  1. Exploring the Challenges and Opportunities for Establishing a North American Emissions Trading System John Drexhage Director, Climate Change and Energy IISD

  2. Appendix 2.1 Global Per Capita Emissions + 38% + 16% + 7% + 43% + 38% + 23% + 24%

  3. Appendix 2.1 GHG Emissions By Province

  4. Appendix 2.2 GHG Emissions By Sector + 34% + 8% + 66% + 24% + 16% - 2% + 31% + 55%

  5. Canada’s Projected GHG Emissions: All talk and voluntary actions Business as Usual Projections 2010 Emissions 809 Mt (1999) 699 Mt Mt CO2 equivalent 1990 Emissions 607 Mt BAU Gap 238 Mt 33% above 1990 Kyoto Target 571 Mt 6% below 1990

  6. Appendix 2.1 GHG Emissions By Selected States + 38% + 16% + 7% + 24% + 38%

  7. A Challenge? Comparison of Oil Sands versus Conventional Oil Production in Canada Source: CAPP, 2007, Canadian Crude Oil Production and Supply Forecast 2006 - 2020

  8. Figure 3: US Share of Exports and Imports on the Decline

  9. ….with the very notable exception of energy…. • The United States is Canada’s major trade market for energy products, accounting for 99% ($84.8 billion) of all Canadian energy exports for 2006 – up from $50 billion in 1990 • Some with different climate change implications…. • Canada exported $36.0 billion of natural gas to the United States (100%). In volume terms, Canada accounted for more than 85% of U.S. gas imports and had a 16% share of the U.S. market. • Electricity exports, mostly sourced from hydro represented some 3.1 billion in sales. • than others: • Exports of crude oil were 1 578 000 barrels per day in 2005, valued at $29.9 billion. More than 99% of these exports were U.S.-bound. Canadian crude oil held an 11% share of the U.S. market in 2005 and accounted for more than 16% of U.S. crude imports.

  10. Linking Systems • Three broad state level/regional actions: • West Coast Initiative (Targets, etc, still under design, but likely absolute with limits on international or even inter-regional credits, but interest in technology offsets ) • RGGI (Absolute targets, limits on offsets access) • Climate Action Registry (No targets) • Provincial Actions • BC (absolute), Alberta (intensity), Quebec and Manitoba (Kyoto – absolute); with Ontario soon to come (absolute a shoo in)

  11. Federal Regulatory Framework • GHG intensity reductions of 6% per year 2007 – 2010 • 2006 baseline with 20% reductions by 2020 and 60 to 70% by 2050 • 2020 target equivalent to 150 M tonnes in absolute terms • Four compliance options: emissions reductions, Tech Fund, Trading, One-time Early Action Credit

  12. Federal Initiatives (Canada) • Conservative Plan • Regulatory Framework for Large Emitters • Integrated approach on air issues • Intensity Based – 18% by 2010; 2% per annum thereafter, and 20% absolute by 2020 • The four compliance provisions: • Technology Fund • Offsets • Credits for Early Action • Limited CDM Access for Industry

  13. Federal Regulatory Framework Offsets: • Climate Change Technology Fund (Perm or Temporary, with receding access?) • Def’n of offsets • Max. 10% of intensity target allowed to go to certain CDM credits • Next step? – linking with N.A. ETS (WCI, RGGI)? • Explore linking internationally

  14. British Colombia • Emissions target of 33% below 2007 levels by 2020 (10% below 1990 levels) • Targets for 2012 and 2016; Long term target for 2050 in development • Set to introduce legislation in late 2007 to institute hard cap on emissions, as part of WCI • Other actions/interest: • adoption of tail pipe standards • low carbon fuel standards (reduction of at least 10% in the carbon intensity -from well to wheel- of its transportation fuels by 2020 • B.C. Energy Plan: A Vision for Clean Energy Leadership (2007) emphasizes renewable energy, energy efficiency and CCS

  15. Alberta • Albertans and Climate Change: Taking Action (2002) • reduce GHG emissions intensity by 50% below 1990 levels by 2020. • completed commitments made under the 2002 plan by achieving a 15% reduction in emissions intensity between 1990 and 2002. • Climate Change and Emissions Management Amendment Act (2007) • Limits GHG emissions intensity for large emitters • (>100,000 t GHG/yr must reduce emissions intensity to 12% below facility’s average emissions intensity from 2003-2005 by end of 2007. • New facilities must reduce intensity by 2%/yr after third year of operation. • Reductions may be made via operational improvements, the purchase of offsets or contributions into a climate change Technology Fund. • Fund contribution rate is $15/tonne of greenhouse gas. • In process of renewing its Climate Change Action Plan, anticipating late 2007 release. • Provincial offset system in development

  16. Saskatchewan • Saskatchewan Energy and Climate Change Plan (2007) • Emissions stabilized by 2010 • Reduce GHG emissions by 32% from 2004 levels by 2020 • Reduce emissions by 80% from 2004 levels by 2050 • Proposes local Technology Fund & Emissions Offset Fund, aiming to ensure that benefits of compliance measures taken in province under federal regime (via offset purchases or Technology Fund contributions) remain within province

  17. Manitoba • Kyoto and Beyond: Manitoba’s Climate Change Action Plan (2002) • meet and exceed Kyoto Protocol reduction targets (6% below 1990 levels by 2012) • Plan currently being updated and expected to introduce new legislation in late 2007 • Establishing an offsets registry with CSA and Cdn Climate Exchange • Joined the WCI and Climate Registry

  18. Ontario • Ontario Action Plan on Climate Change (2007) • relaxes targets originally introduced in Ontario’s Climate Change Act. • Commits to reductions of 6% below 1990 levels by 2014 (instead of 2012), 15% below 1990 levels by 2020 (instead of 25%) and an 80% reduction from 1990 levels for 2050. • Plans to close its four remaining coal-fired power generation plants by 2014, make investments in rapid transit, double renewable energy generation and improve energy conservation measures • First jurisdiction in North America to introduce a Standard Offer Program (also know as ‘feed-in tariffs) to reduce barriers to small renewable energy generators • Supported by Ontario’s Renewable Porfolio Standards of an additional 5% renewables by 2007 and 10% by 2010.

  19. Quebec • Quebec and Climate Change: a Challenge for the Future (2006) • Reduction of 6% below 1990 levels by 2012 • Includes carbon tax involving levies on gasoline, diesel fuel, light heating oil and coal, representing a levy of about $3 to $3.50 per ton emitted. • Focuses on public transportation, renewable energy generation, energy efficiency including a new building code by 2008 by up to 25% and regulating vehicle fuel efficiency to California standards. • Supported by Using Energy to Build the Quebec of Tomorrow: Quebec Energy Strategy (2006-2015), committing to increasing renewables: 4000 MW of wind by 2015 and 4500MW of water by 2010)

  20. Prince Edward Island • A Climate Change Strategy for Prince Edward Island (2005) • Reductions to 1990 levels by 2012 and 10% below 1990 levels by 2020 (NEG/ECP CCAP) • 9 recommendations for addressing climate change focusing on renewable energy, transportation, energy efficiency, building partnerships, coastal management and land use planning, forestry, and waste management. • Supported by Energy Framework and Renewable Energy Strategy (2004) and Renewable Energy Act, mandating a Renewable Portfolio Standard of 15% for 2010.

  21. New Brunswick • Climate Change Action Plan (2007) • Reductions to 1990 levels by 2012 and 10% below 1990 levels by 2020 (NEG/ECP CCAP) • Focuses on demand-side management and renewable energy in the electricity sector and improvements in public transit, fuel efficiency and alternative fuels in the transportation sector. • Other components of note include qualifying forest management-based offsets under the federal regime, “improving” nuclear power generation and consideration of clean coal and CCS technologies.

  22. Nova Scotia • Environmental Goals and Sustainable Prosperity Act (2007) • 10% below 1990 levels by 2020 • 21 goals and commitments on renewable energy, GHG emissions, and sectoral strategies • Supported by Renewable Energy Standards Regulations (2007) mandating a portfolio of 20% renewables by 2013

  23. Newfoundland • Climate Change Action Plan (2005) • Reductions to 1990 levels by 2012 and 10% below 1990 levels by 2020 (NEG/ECP CCAP) • 40 action items including energy efficiency, a ‘house in order’ strategy for government, fuel efficiency of fishing vessels, research initiatives on carbon accounting in forestry management; • An energy plan which will support these actions is currently being prepared.

  24. Territories • Yukon: Climate Change Strategy (2006) • Builds on existing programs, activities and experience to respond to the impacts of climate change • No specific GHG targets • Northwest Territories: Greenhouse Gas Strategy (2007-2011) • Commits to lead through example by adopting a target to reduce emissions from its own operations to 10% below 2001 levels by the year 2011. • Commits the territory to establish longer-term targets beyond 2011 by undertaking another review in 2010 in recognition of an equitable approach to Canada’s international commitments • Nunavut: Nunavut Climate Change Strategy (2003) • No specific target • Commits to identify and monitor climate change impacts, and develop ways of adapting to change.

  25. Linkage Issues • Canadian provincial and federal actors all strongly interested to coordinate with US initiatives • Not as clear if this has the attention of US actors (exception of Schwarznegger?) • Clearly led from the top • Bureaucrats all scrambling around: what does it all mean and how to coordinate? • Implications for linking with EU ETS?

  26. Provincial Affiliations West Coast Initiative: • British Columbia and Manitoba members; Saskatchewan, Ontario and Quebec observers NEG-ECP • All Eastern Provinces members RGGI • All five Eastern provinces are RGGI observers; Ontario and Quebec have expressed an interest in membership The Climate Registry • British Columbia, Manitoba and Quebec are members; all provinces have committed to join TCR

  27. Canada-US Air Quality Agreement • Example of Canadian – US cooperation to address transboundary air quality • ½ of acid rain in eastern Canada comes from American sources, the cooperation of the U.S. was needed to reach the reduction targets • 1991 Canada-U.S. Air Quality Agreement • Both countries agreed to reduce emissions of SO2 and NOx, the primary precursors to acid rain • Expanded cooperative efforts to control transboundary ground-level ozone and particulate matter (PM), the primary precursors to smog

  28. Linkage Issues • Intensity vs. absolute • Stringency • Timing Provisions • Role of offsets • What and where • Price caps • Technology incentives/funds • Auctioning vs. Grandfathering • Credits for early action • Registry reporting • State/Provincial – Federal Coordination

  29. Broader Areas of Cooperation • Areas for progress: • Continental approach to energy AND climate change • Potential for regional carbon trading systems • Integrated approach on energy and climate • Trade and investment • Biofuels and energy subsidization • Transportation • Vehicular and air • Urban planning • Post 2012: Supporting a clean energy future internationally

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