20151 Mark Jaccard Simon Fraser University Edmonton December 3, 2015 Canadian climate efforts: Is national coherence possible? Jaccard-Simon Fraser University

20152 Canada’s targets over time Prime Minister Date Target Set Target DateTarget MT CO2e Actual or Forecast MT Mulroney Chretien Harper

20153 Harper’s 2030 Paris target For COP21 (Paris) Harper set 2030 target of 30% below 2005 levels. The small print: “net-net approach” for land-use change and “production approach” for wood products target only 13% below (Rivers)

20154 Harper’s Canada * Ontario and Alberta policies are promises not yet realized. * $15 Cdn is the approximate WCI cap&trade permit floor price. * These 4 provinces comprise 85% of Canada’s population. Jaccard-Simon Fraser University ProvinceExplicit carbon price (average)Explicit carbon price (marginal) Implicit carbon price (regs) Quebec$3-5? (industry with free permits) $10? (all others) $15other policies? Ontario$3-5? (industry with free permits) $10? (all others) $15$80-120? (coal phase out) BC$30 $80-120? (0 GHG elect reg) Alberta$6-10? (industry with perform. std.) $30 (all others) $30$90? (max wind subsidy)

20155 Trudeau’s Canada From 1990 to 2015, assumption of comprehensive national policy (carbon tax, cap-and-trade, nation-wide regulations) focused on sectors of the economy rather than on provinces. TRUDEAU HAS RULED THIS OUT But has not ruled out nation-wide regulations. (vehicles? planes? appliances?, equipment?, buildings?) Remaining options: 1. Conversion of national emission cap into provincial caps. Use of carrots and sticks to ensure provincial participation and coordination. 2. Develop common carbon price across the country. Use of carrots and sticks to ensure provincial participation and coordination. 3. Let each province voluntarily decide its “fair” contribution to the national target any way it wants (the United Nations COP21 method). Jaccard-Simon Fraser University

20156 Option 1: Provincial emission caps Initial 2016 emission allocation for each province based on its average annual emissions from 2008 – Each province’s allocation declines by same annual percentage to achieve 2030 national target (whatever that is). Provinces free to achieve their allocation using any policy. Federal government encourages policy coherence (extend Que-Ont cap&trade, develop common carbon price, set common regs on vehicles, buildings, planes, electricity, etc.) Federal government develops consistent policies to prevent leakage of trade-exposed industry (exemptions, subsidies, border adjustments) Carrots and sticks? If necessary federal government: * makes funds for infrastructure (eg, transit) contingent on policy * threatens backstop national cap&trade to cover provinces that fail to join Que-Ont or to have policies with similar effectiveness. Jaccard-Simon Fraser University

20157 Option 2: Common carbon price Federal government works for a common Canadian carbon price. Federal government develops consistent policies to prevent leakage of trade-exposed industry (exemptions, subsidies, border adjustments) Option 2.1 Use carrots and sticks to get all provinces to join Que-Ont cap-and-trade and achieve common price floor of $30 by 2020 (rising thereafter at rate experts say would achieve 2030 target). Option 2.2 Use carrots and sticks to get all provinces to have carbon tax and/or cap-and-trade price floor of $30 by 2020 (rising thereafter at rate experts say would achieve 2030 target). Carrots and sticks? If necessary, federal government: * makes funds for infrastructure (eg, transit) contingent on action * threatens backstop, revenue-neutral carbon tax where explicit or implicit carbon price too low. Jaccard-Simon Fraser University

20158 Option 3: Provincial voluntarism Set national target for 13 years hence. Miss national target in 13 years. Repeat. Jaccard-Simon Fraser University

20159Jaccard-Simon Fraser University Thank you. (blog) markjaccard.com