Canada’s climate challenge: 1 out of 3 ain’t good enough.

Canada needs to offer up more than easy soundbites and appeals to Nature editorials to move from a climate change laggard to a leader. Today, Canada re-affirmed its position that it would not be signing on to a new commitment period for the Kyoto protocol, and you can count me among those who expect an announcement later this month that Canada is withdrawing from the Kyoto protocol in general.    The question which remains is, “what now?”

Today in the House of Commons, Conservative MP after Conservative MP detailed the government’s commitment to putting the policies in place to meet their pledge to reduce emissions to 17% below 2005 levels by 2020. Even if that proves to be the case, I fear it will not be good enough to move Canada from laggard to leader in the eyes of both international observers and more importantly Canadians. In order to do that, I think there are three elements on which Canada needs to deliver, and meeting our targets is just one of the three.

I’ve written more than a few blog posts on the challenge of meeting Canada’s 607 Mt (or 17% below 2005) emissions target by 2020.  There is, in my mind, no question that these are stringent targets – some of the most stringent in the world if you judge based on the actions which would be required to meet them.   If you look at economic modeling done for the David Suzuki Foundation and the Pembina Institute, you’ll see that meeting these targets would require the equivalent of a $100/ton carbon price – a policy which leads firms and individuals to undertake any emissions reduction opportunity which costs them less than $100/ton.  If you want to start exempting sectors from your policy, or applying less stringent policies in certain sectors, you’ll need stronger policies in others to get to 607Mt b 2020.  If you compare that to the stringency of climate-specific policies required to meet targets in other jurisdictions, meeting Canada’s targets will be a daunting challenge.  That said, simply saying, “this is hard for us,” isn’t going to capture any hearts and minds, and it certainly isn’t going to change the conversation about climate policy globally.

The global conversation around climate policy has been, to a large degree, defined by the actions of the EU.  They have been successful because their targets and actions meet the following simple checklist

1. Policies put in place domestically are likely to achieve promised results;
2. Results can be easily measured and verified;
3. If the rest of the world achieved comparable results to those to which we’ve committed, global goals would be met.

The EU 2 degrees C brochure makes the case for #3, as shown in the Figure below. In order to reach a 450ppm stabilization, and maintain a 50% chance of keeping global climate change impacts below 2 degrees C, emissions in industrialized countries should be cut by 30% relative to 1990 by 2020 and by 85% relative to 1990 by 2050.  Developing countries should be allowed a different trajectory in which their emissions continue to grow through to 2020, then return to 1990 levels or slightly below by 2050.  We see these reductions described by every environmental group and opposition party in Canada as science-based targets for industrialized countries.

To Europe’s credit, they have put the policies in place to meet this target domestically, or at least to give themselves a chance to meet it.  They also benefit from circumstances – most importantly low population growth and the collapse of post-communist economies in Europe – which make these targets easier to achieve domestically than they would be for other countries.  Their economies also have lower emissions per capita to begin with, given a history of high energy taxes, but this doesn’t necessarily make it easier to achieve their goals as much of this was also in  place before 1990.

So, let’s check off the first and third elements on the list – Europe is going to meet (or at least come close to meeting) their targets, and if the rest of the world did what they’re doing, then we’d have a good chance at meeting global goals. They even have the bonus of letting developing countries off the hook for the first while as part of their plan.  The final piece of the puzzle is verification.  Reductions (or growth) in emissions relative to 1990 are easy to measure as countries are required, under the terms of the UNFCC, to file greenhouse gas inventory data. If I want to know who has done what since 1990, all I have to do is look here.  Presto! You’ve got a globally credible combination of policies, targets, and a measure of effort.

So, how does this work for Canada?  Well, at first blush it’s easy to say that it doesn’t. Canada’s target, 17% below 2005 levels by 2020, amounts to a pledge to reduce emissions to 3% above 1990 levels (our 1900 emissions were 592 Mt).  Using the EU metric, we aren’t pulling our weight at all.  Further to that, if all the industrialized countries followed Canada’s proposed path instead of the EU’s, emissions would be 6 or 7 billion tons of CO2 per year higher and increasing – not exactly heading in the right direction to meet the 2 degrees C target.

So, can you reconcile Canada’s position with global goals on climate change?  Absolutely, but the answer lies in looking at actions rather than outcomes.  I mentioned earlier that Canada’s targets were so stringent that, in order to meet them, we’d have to implement policies which  either required or incented firms and individuals to implement all emissions reduction activities which cost less than $100/ton by 2020. What if we thought about global effort on this dimension, or even effort in industrialized countries?

Thinking about actions rather than outcomes changes the game.  If you look at the most recent report of the International Energy Agency, the 2011 World Energy Outlook, they lay out a policy pathway for their 450ppm scenario – the scenario which they say equates to a 50/50 chance of keeping global climate change below 2 degrees C.  Their policies define a pathway to 2020 based on carbon price equivalents, or shadow values, which measure the stringency of regulations on a common footing with carbon taxes or cap-and-trade policies by looking at the net costs imposed on firms.  Most importantly, they impose similar actions rather than similar reductions on all industrialized countries.  Their pathway?  Make sure that all emissions reduction opportunities costing less than about $40/ton in industrialized countries are realized by 2020, and all of those costing less than $120/ton are realized by 2050.  That policy pathway is nowhere near as stringent as that which would be required to meet Canada’s targets by 2020 – so maybe we aren’t on the wrong path after all.

What are the next steps to a globally credible climate policy for Canada?  Well, we’ve got to get past the first item on the list – we need to impose the policies to meet our targets, and they will have to be stringent policies to get us there.  Second, we’ll need to propose a way to compare effort across jurisdictions.  If we’re taking a sector-by-sector regulatory approach, how do you benchmark that against an emissions trading system in the EU or a carbon tax in Australia?  The answer is that you measure shadow values, which is not easy in the least. If we can’t do this, we’ll be measured on someone else’s benchmark, and our actions will look weak. Finally, we’ll need to propose a plan for the developing countries to fit in to this measure.  The IEA plan has a lower implied cost of carbon, which might be delivered through financed emissions reductions rather than through regulation.

If we can accomplish these elements, or even drive some progress in them, we’d have a new framework for climate policy which will work much better than the current Kyoto framework for Canada, Australia, and the US. Further, since it doesn’t involve setting explicit emissions caps in an elaborate global pie-dividing contest, it will likely be easier to get developing countries on board.  The opportunity is there for Canada to actually lead on this file rather than just talking about it.  Count me among those who’d like to see us take it.