Trudeau’s $10 carbon price ‘floor’ makes history

By Tyler Hamilton - Published on Oct 05, 2016
Prime Minister Justin Trudeau delivers a speech at the start of the Paris Agreement debate in the House of Commons on Oct. 3. (Sean Kilpatrick/Canadian Press)

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Every Wednesday, climate journalist Tyler Hamilton gathers up the latest Ontario climate news and cutting-edge research on how climate change is shaping the world.

We’re only mid-way through the week climate history has already been made — twice.

First, the Trudeau government announced Monday that it is indeed going to introduce a national “floor” for the cost of carbon in 2018. The decision was anticipated, but what we didn’t know was what the floor would be and how it would evolve. We now know the cost of carbon will start at $10 per tonne in 2018 and increase by increments of $10 annually until it reaches $50 in 2022.

As Toronto Star columnist Chantel Hébert wrote, the move “marks the belated end of a federal vacuum” on climate action. Not that the Liberals didn’t try back in 2008, when then leader Stéphane Dion campaigned on his Green Shift carbon tax plan. That didn’t go so well.

But times have changed, and the current government is getting more creative. The new national price will be applied in provinces and territories that don’t have carbon-pricing programs of their own. For those that already have a carbon tax (B.C. and Alberta) or cap-and-trade program (Quebec and Ontario), it will establish minimum standards with the goal of meeting certain emissions targets. To mitigate concerns that this is a federal tax grab, Trudeau said that all revenues from carbon pricing will go back to the provinces and territories to use as they see fit — including putting the money back in taxpayers' pockets.

In fact, some economists argue it may be politically feasible for Trudeau to raise the carbon price much higher after 2022, if that money is returned to Canadians via the provinces in the form of income tax cuts. But let’s not get ahead of ourselves…

Sledgehammer, and not in the Peter Gabriel sense

The usual suspects screamed murder. Federal Conservatives characterized it as a “sledgehammer” crushing the provinces. Saskatchewan Premier Brad Wall called it a “betrayal.” Alberta Premier Rachel Notley issued an ultimatum: no pipeline approvals, no support for the federal carbon price plan. On Monday, during a meeting of federal, provincial and territorial environment ministers, representatives from Saskatchewan, Nova Scotia and Newfoundland and Labrador walked out in protest. Closer to home, Sarnia-Lambton Conservative MP Marilyn Gladu described the new carbon price “horrific” and said it will be “punishing” for Sarnia’s petrochemical industry, which is nicknamed Chemical Valley. Oh, and to no one’s surprise, the federal NDP said the Liberals hadn't gone far enough. Basically, it was politics as usual, with perhaps an extra dose of melodrama, especially considering 80 per cent of Canada’s population is already covered by some sort of provincial carbon-pricing program.

Environmental groups had mixed reactions. The International Institute of Sustainable Development in Winnipeg described Trudeau’s plan as an “important first step.” The Calgary-based Pembina Institute called it a “big positive for the country from coast to coast to coast.” Toronto-based Environmental Defence said the carbon price was set too low and “takes too long to take a bite out of Canada’s emissions.” Carbon policy wonks, meanwhile, seemed generally happy. Some of the country’s highest-profile business and civil society leaders also expressed support for the plan.

A key point to remember: the pricing plan is just one component of a larger pan-Canadian climate action plan to be released later this fall.

Historic event No. 2: Paris deal reaches critical threshold

To the surprise of many, it looks like the Paris agreement signed by 191 countries last December will come into legal force much earlier than many had expected. The rush? It appears many United Nations officials, including UN Secretary-General Ban Ki-Moon, want the treaty signed, sealed and delivered just in case Donald Trump gets elected U.S. president on November 8. It’s no secret that “The Donald” has vowed to “cancel” the agreement if elected, though it's not entirely clear that he could.

At least 55 countries that collectively produce at least 55 per cent of global greenhouse gas emissions must ratify the agreement for it to come into effect. In early September, the United States and China jointly announced their ratification. Brazil followed on September 13. This week, it got pushed over the threshold — India ratified on Monday and the European Union did so on Tuesday by an overwhelming vote. Official EU ratification will come later, and the agreement will come into force by November 7 — just in the nick of time. Meanwhile, House of Commons debate on Canadian ratification began on Monday, and Wednesday night MPs voted 207  to 81 in favour of the deal.

Green bonds slow to grow in Canada

When governments and companies want to fund major projects such as infrastructure developments, they often issue bonds as a way to access cheap capital. One growing spinoff of this market is green bonds, which are dedicated to environmentally friendly, low-carbon initiatives often related to transportation, water treatment and power generation.

About US$55 billion in green bonds have been issued around the world so far in 2016; that number is expected to reach about $100 billion by the end of the year — up a hundredfold since 2009. There’s been growth in Canada, too, but it slowed in 2015 and hasn’t kept up with global trends, according to a new report produced under the auspices of the Ottawa-based Smart Prosperity Institute.

The institute found that Canada is the world’s fifth-largest market for green bonds, with C$2.9 billion in certified green bonds issued last year. Both the federal and Ontario governments plan to invest heavily in low-carbon infrastructure over the next decade, which bodes well for green bond growth, assuming large pension funds, banks and insurance companies step up and seize the opportunity when those bonds are issued. “The market needs strong leadership now,” said Michelle Brownlee, director of policy at Sustainable Prosperity. “With leadership, 2016 can be the year Canada's green bond market really goes mainstream.”

Inuit want a larger say in Canada’s climate strategy

Canada’s Inuit community says it has been excluded from efforts to develop a climate plan for the country. “We’re on the outside looking in,” Natan Obed, president of Inuit Tapiriit Kanatami, told CBC News following release of the report “Inuit Priorities for Canada's Climate Strategy.” The hope was that the report might influence discussions when first ministers meet later this fall.

“Climate actions must be considered hand-in-glove with their links to troubling socio-economic inequities faced by Inuit,” the report maintains. “Not only are we experiencing the frontline impacts of climate change but we are also highly vulnerable to decisions that do not take into account the unique ways in which Inuit are affected by climate change.” The report lays out a series of long- and short-term recommendations, including allocation of money for Inuit-led research and funding to help mitigate climate change effects on Arctic ecosystems.

The Big Picture: Most Canadians see climate change a major economic threat

Public support for climate action appears to be growing, which should be good news for the Trudeau government. A new survey of 1,000 Canadians conducted by Nanos Research shows that two-thirds of Canadians “agree” or “somewhat agree” that having a national plan to meet climate commitments is more important that making sure all provinces and territories back that plan. As well, 62 per cent of those surveyed support the idea of imposing a minimum price on carbon across all Canadian regions. A significant majority of the public also views climate change as a major threat to Canada’s economic future. “The appetite to move forward on environmental issues is quite strong,” said Nik Nanos, chair of Nanos Research. The poll was commissioned by Clean Energy Canada, an energy and economy think tank based at Simon Fraser University. While it signals that Canadians may be ready for stronger climate action, history shows — as Ontario knows too well — that public support often begins to fade once actions hit pocketbooks.

Research Spotlight: Toxic algae, deadly bacteria a new reality for oceans?

Two reports released this past week conclude that rising ocean temperatures are putting human health and marine life at risk. The first report, authored by researchers at the University of Texas at Austin and Plymouth University, looks at the northern spread of deadly bacteria and algal blooms that have historically only been a problem in warmer waters, such as the Gulf of Mexico. Recently, for example, there have been outbreaks of one particular bacteria — called Vibrio — as far north as Alaska. The bacteria and algae release toxins that contaminate seafood and can cause severe stomach and brain damage when ingested.

Researchers aren’t sure if the diseases are actually spreading north or if they were already present and have simply become more active because of ocean warming. “What we do know is that we will need new healthcare strategies to treat these tropical pathogens where historically we have not needed to in the past,” said Camille Parmesan, a professor at Plymouth University and report co-author.

The second study, led by researchers at the University of Washington and the U.S. National Oceanic and Atmospheric Administration (NOAA), examined toxic algal blooms in the winter and spring of 2015 that spread as far as northern British Columbia because of a massive patch of warm water, nicknamed “the blob.” An organism called a diatom — specifically, pseudo-nitzschia australis — is being blamed for most of the problem. While such blooms tend to happen every three to five years, the massive size of the 2015 event concerns scientists, and is clearly connected to climate change. “This is an eye-opener for what the future may hold as ocean conditions continue to warm globally,” said co-author Kathi Lefebvre, a marine biologist at NOAA.

Chart of the week: The dazzling plunge in clean technology costs

The U.S. Department of Energy just released a 2016 update to its Revolution Now report, which looks at the state of innovation around clean energy technologies. One particular graph in the report shows how dramatically solar, wind, energy storage and LED costs have fallen since 2008. It’s a compelling demonstration of how much the market has changed over the past eight years. It’s also a reason for optimism as the world ramps up efforts to decarbonize society. Take a look:

clean energy cost reductions since 2008

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