Recommendations Concerning Greenhouse Gas Reduction Strategies

STATEMENT TO THE MINISTERS OF ENVIRONMENT AND ENERGY

from
Canadian Global Change Program Board of the Royal Society of Canada
and the
Canadian Climate Program Board

anada was among the first of over 135 countries to ratify the Framework Convention on Climate Change, whose objective is to stabilize atmospheric concentrations of greenhouse gases at a level that would prevent dangerous anthropogenic interference with the climate system. Stabilizing atmospheric concentrations of greenhouse gases, even at well above current levels, will require that global emissions are reduced significantly below today's rate.

There is now strong scientific evidence that the greenhouse gas emissions resulting from human actions will affect the climate system. There is also some scientific evidence that the current warming of the global atmosphere is being caused by these human actions. The Second Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), currently in preparation, confirms these findings and the document Implications for Canada of Recent IPCC Reports An Overview outlines specifically what they mean for Canada.¹

As an interim step, developed countries, including Canada committed themselves to aim to limit their emissions in 2000 to their 1990 level. The first Conference of the Parties to the Convention adopted the Berlin mandate to negotiate a protocol for further limits on greenhouse gas emissions beyond 2000. Canada has yet to agree upon a plan that would achieve its interim target for 2000.

The Canadian Climate Program Board and the Canadian Global Change Program Board affirm to the Ministers of Energy and the Ministers of the Environment that it is both desirable and feasible for the governments of Canada to take further actions on climate change. We urge the governments to take effective actions, including:

adoption of measures that will stabilize emissions of greenhouse gases at 1990 levels by 2000. The report of the Forecast Working Group (FWG) prepared for ministers offers options for achieving this target. Other studies also suggest that it is feasible. Limiting greenhouse gas emissions will generate indirect environmental and economic benefits. Even without counting these indirect benefits, the impact on the economy of the options proposed by the FWG is negligible. Further delay in initiating actions to limit greenhouse gas emissions will increase the difficulty and cost of achieving the interim target of stabilization.
developing a strategy to achieve further reductions beyond 2000. Further reductions will require actions beyond the energy efficiency measures that will dominate the recommended emission reduction strategies for the next five years. This next level of action will likely include restructuring of the transportation system, fuel switching and development of renewable energy, especially in electricity generation, and use of economic instruments to encourage emission reductions. Many of these initiatives can only be implemented economically as the nation's capital stock is replaced, so action must begin soon to have a measurable impact on emissions a decade or more in the future.

¹ Canadian Climate Program Board and Canadian Global Change Program, Implications for Canada of Recent IPCC Assessment Reports - An Overview, Canadian Climate Program Board, Ottawa, October 1995.

Canadian Climate Program Board and the Canadian Global Change Program

The Canadian Global Change Program was founded in 1985 under the auspices of the Royal Society of Canada to bring together scientists and other specialists from many disciplines in the sciences and humanities to plan interdisciplinary research, assess the significance of this research in the policy context, and communicate the implications to its target audiences. The Canadian Global Change Program is characterized by its independent, non-governmental status, its combination of the natural and human dimensions of global change, its access to worldwide networks of collaborating organizations, its emphasis on global issues that have relevance to Canada, and its access to Canadian and international capability that can be brought to bear on these issues.

The Canadian Climate Program Board was established in 1979 to provide governments and individuals with the best possible advice on climate science and on the impact of climate on economic and social concerns, as well as its effects on natural ecosystems and resources. The Canadian Climate Program Board has set the following goals for the multi-partner program in Canada:

to develop the ability to predict climate and climate change,
to assess the impact of human activities on the climate of Canada,
to assess the socio-economic impacts of probable climate futures,
to improve applications of climate information to Canada's economy,
to assist in maintaining appropriate liaison with the World Climate Program, and
to assist in coordinating systematic measurements of the climate system.

The COGGER Panel found that stabilization of greenhouse gas (GHG) emissions at 1990 levels by 2000 is feasible but policy action is required

In 1992, the Canadian Global Change Program and the Canadian Climate Program Board assembled a panel of experts to review available studies of Canadian Options for Greenhouse Gas Emission Reduction (COGGER). The COGGER panel concluded that:

"it appears to be feasible and cost-effective to achieve Canada's interim target of stabilization of GHG emissions at 1990 levels by 2000 and to achieve an absolute reduction of about 20% by 2010." ²

The panel also noted, however, that the potential for improved energy efficiency and fuel switching needed to achieve this result would not come about by itself and, "government policy will be required to make it happen."²

The policies necessary to achieve these emissions reductions have not yet been implemented. Further delays in implementing appropriate policies will mean more lost opportunities and make achievement of Canada's commitment under the Framework Convention on Climate Change more difficult and expensive.

For example, some of the emissions reductions underlying the COGGER panel conclusion depend on the adoption of more efficient technologies when equipment is installed or replaced. Limited action since 1993 means that two years of opportunities have been lost.³

² The Royal Society of Canada, Canadian Options for Greenhouse Gas Emission Reduction (COGGER), Final Report of the COGGER Panel, Canadian Global Change Program, Ottawa, September 1993.
³ This delay is even more significant when considering that past experiences in controlling other pollutants, such as sulphur dioxide, have shown that the actual costs are often much less than initial predictions as long as industry is given reasonable time to develop and implement new technologies.

The report of the Forecast Working Group, despite overlooking some significant measures, indicates that stabilization can be achieved without adverse economic impacts

The report of the Forecast Working Group⁴ indicates that "in the event that all of the measures were included in the analysis, Canada would likely be able to achieve stabilization" with the actions included in modelling scenario 4 or 5.⁵

The report of the Forecast Working Group overlooks some measures that could reduce greenhouse gas emissions at relatively low cost, and be implemented by 2000. Such measures include co-firing coal fired generating stations with natural gas, more aggressive measures in the transportation sector, and mandatory implementation of energy-efficiency measures in government buildings.⁶

A study of the economic impacts of greenhouse gas emission reduction scenarios finds that "the overall size of the Canadian economy, and its growth, are unlikely to be significantly changed by [these] initiatives."⁷ This conclusion applies to all of the scenarios because the costs are matched by savings due to reduced energy use in each case.

The report of the Forecast Working Group confirms the conclusion of the COGGER panel; the interim target for 2000 can be achieved without overall economic disruption. Negative impacts will occur in certain regions and economic sectors which may or may not be directly compensated for by positive impacts. The specific measures needed to achieve the target under either modelling scenario 4 or 5 are clearly identified in the report. Implementation of the measures proposed under either of these scenarios should not preclude additional actions to achieve the interim target and further reductions beyond 2000. Ways to offset negative economic impacts at the sectoral and regional levels should also be explored.

⁴ The National Air Issues Coordinating Committee tasked the Climate Change Task Group (CCTG), a multi-stakeholder group, with the development of a National Action Program to enable Canada to reach its climate change goals. The CCTG charged the Measures Working Group with preparing a list of measures which could be included in Canada's National Action Program. Responsibility for assessing the effectiveness of various measures in reducing greenhouse gas emissions, and their economic implications, was delegated to the Forecast Working Group. The Forecast Working Group membership included representatives from federal and provincial departments of energy and the environment, industry associations, environmental groups, and an oil company.
⁵ Forecast Working Group of the National Air Issues Coordinating Mechanism, "Microeconomic and Environmental Assessment of Climate Change," April 1995, page VII. The CCTG grouped approximately 80 measures into five modelling scenarios categorized by their level of market intervention. Scenario 4 is identified as the one requiring the highest level of market intervention and scenario 5 is described as a stand alone, more `aggressive' package of measures. For a detailed description see pages 56 and 57 of the same report.
⁶ The only initiative listed for government buildings is measure 2.8, the Federal Buildings Initiative, a voluntary measure to improve the energy efficiency of federal buildings.
⁷Informetrica Limited, "Impact of GHG Initiatives on the National and Provincial Economies," Ottawa, April 1995, Volume 1, page 1.

Studies in Europe indicate that limiting greenhouse gas emissions yield substantial indirect economic and environmental benefits

Studies for Norway, the United Kingdom and some other countries have found that the indirect economic and environmental benefits of actions to limit greenhouse gas emissions amount to 30% or more of the direct cost of the measures.⁸ The Canadian Global Change Program has initiated a study of the indirect environmental benefits of measures to limit greenhouse gas emissions in Canada. That work is expected to be completed early in 1996.

The report of the Forecast Working Group recognizes some of the indirect environmental benefits, but does not incorporate them into its analyses. The measures analyzed for modeling scenarios 4 and 5 reduce greenhouse gas emissions (measured in CO₂ equivalents) by 6.0% and 7.9% from projected levels in 2000 respectively. These measures would also reduce emissions of SO₂ by 1.8% to 2.8%, NOx by 2.8% to 3.3%, and VOCs by 4.3% to 4.5% in 2000. If larger reductions of CO₂-equivalent emissions are achieved through these scenarios, these indirect benefits would increase proportionally. However, since the indirect benefits appear to be relatively high in the transportation sector, a strategy to reduce CO₂-equivalent emissions by this sector could in fact increase the indirect benefits significantly.

Reducing emissions of these and other pollutants will benefit Canadians through improved health and reduced damage to crops, forests, buildings, water bodies and materials.

⁸ K. Alfsen, H. Birkelund and M. Aaserud, Secondary Benefits of the EC Carbon/Energy Tax, Research Department Discussion Paper No. 104, Statistics Norway, Oslo, 1993 and T. Barker, Secondary Benefits of Greenhouse Gas Abatement: The Effects of a UK Carbon/Energy Tax on Air Pollution, Energy Environment Economy Modelling Discussion Paper No. 4, Department of Applied Economics, University of Cambridge, 1993.

Plan for emissions reductions beyond 2000

Reductions in emissions of greenhouse gases are likely to be required as a result of negotiations under the Berlin mandate. Canada should begin planning for such reductions so that future targets can be achieved in the most cost-effective manner. Reductions of greenhouse gas emissions after 2000 are likely to involve both additional energy efficiency measures and a variety of new initiatives. Such initiatives will likely include:

restructuring of the transportation system and land use planning. The recent Transportation and Climate Change Collaborative sponsored by the Ontario Round Table on Economy and Environment and the National Round Table on the Environment and the Economy developed a sustainable transportation strategy that would reduce greenhouse gas emissions from that sector in the long run.
fuel switching and development of renewable energy, especially in electricity generation.
use of economic instruments to manage greenhouse gas emissions. Well designed economic instruments, such as emissions fees and tradeable permits, allow environmental goals to be achieved at lower cost.⁹ These approaches to environmental management are new to Canada. It will take time before they can be implemented in a manner that allows them to make a significant contribution to future reductions of greenhouse gas emissions.
additional energy efficiency measures in the industrial, commercial and residential sectors. and
measures to reduce non-energy emissions, such as limiting methane emissions from landfill sites, and enhancing carbon dioxide sinks, such as forests.

Many of these initiatives can only be implemented economically as the capital stock is replaced, so action must begin soon to have a measurable impact on emissions a decade or more in the future.

In addition, Canada's portfolio of actions, looking to the future, should include:

increased support for research and development on renewable energy and energy efficiency to have appropriate technologies available over the coming decades and participate in a growing global market for such technologies.
research to improve projections of climate changes in Canada and their impacts, in part to help Canada design effective adaptation measures.
the continuing development of Canada's ability to assess the benefits and impacts (both direct and indirect) of new or existing greenhouse gas reduction strategies.
promotion of attitudinal changes which would lead to reduced consumption in general and more specifically of energy.

⁹ When evaluating the economic effects of emissions fees the assumption of revenue neutrality is very important and the manner in which the revenues are recycled is critical. Using the revenues to reduce existing distortionary taxes can stimulate economic growth as well as reduce emissions of greenhouse gases and other pollutants.