Seminar: International Climate Change Negotiations: Preserving the Global Commons
Speaker: Hon Stéphane Dion Member of Parliament, Saint-Laurent-Cartierville
Date: May 17, 2012
About the Speaker
The Honourable Stéphane Dion is the Member of Parliament for Saint-Laurent-Cartierville, a seat he has won seven times since 1996. He served as Minister of Intergovernmental Affairs between 1996 and 2003, before going on to serve as Minister of the Environment between 2004 and 2005. Elected as Leader of the Liberal Party of Canada in 2006, he campaigned in the 2008 General Election on a “Green Shift” platform emphasizing environmental action, particularly the establishment of a national carbon tax. He currently chairs the Liberal Caucus Legislative Committee, and is the Liberal Critic for Intergovernmental affairs and the Queen’s Privy Council of Canada, for Democratic Reform, for Official Languages, and for La Francophonie. Prior to his political career, Dr. Dion’s spent 12 years teaching as an assistant professor at the Université de Montréal. He holds a BA and MA from Université Laval, and a doctorate in sociology from the Institut d’Études Politiques de Paris.
About the Seminar Series
This presentation is part of an ongoing series of seminars on aspects of sustainable energy which are organized by the Carleton Research Unit in Innovation, Science and Environment (CRUISE) and the Carleton Sustainable Energy Research Centre (CSERC). The seminar series was established in 2010, and since then has covered such diverse topics as examinations of the sustainability of nuclear power, Aboriginal energy projects in Canada and their ability to catalyze action on climate change, challenges in electricity storage, and factors which lead to the BP Oil Spill in the Gulf of Mexico.
All figures stated in this document are as presented by Dr. Dion during his presentation.
Introduction: Global Situation
Human activities continue to have significant impacts upon life on Earth as populations grow and develop. The Living Planet Report, prepared by the World Wildlife Federation, seeks to quantize some of these through measurements of populations of some 2600 species. The recently released 2012 report paints a grim picture: the global living planet index indicates a drop of 28 percent since 1970. In tropical areas effects are even more pronounced, with a reduction of 61 percent. Such warning signs of severe environmental stress are likely to continue to increase; the global footprint of humanity is already believed to exceed the carrying capacity of Earth by more than 50 percent, while human populations continue to grow. Together, these figures suggest a pressing need to act on environmental concerns.
One pressing environmental concern which contributes to pressures on populations and biodiversity, and which has risen to the forefront is that of anthropogenic climate change, which is linked to have significant and wide-ranging negative environmental impacts. In order to minimize these effects its impact, current scientific consensus suggests that global warming must be limited to at most a 2.0°C increase relative to historic levels; despite this, climate projections from current trends expect a rise of at least 3.5°C, and potentially as high as 6.0°C. As a result, dramatic action is necessary in order to meet the 2.0°C target: peak greenhouse gas emissions must be reached by the year 2017, with any delays beyond this target dramatically increasing the cost and difficulty of avoiding severe climate change.
Canadian Policy Situation
Current Canadian climate policy fails to address these concerns: with a target of 17% reduction in CO2 emissions relative to 2005 levels by 2020, the current commitment is already insufficient to effect the needed magnitude of change. Worse still, even such a weak target remains a distant hope, as current projections anticipate a net 7.5% increase in emissions instead. This disparity is evident throughout current commitments: coal regulations proposed by the federal government target a 20 Mt reduction in emissions, however research suggests that to achieve the 2020 emissions target a further 178 Mt of emission reductions are necessary.
Despite these failures at the federal level, some provinces have taken positive steps of their own towards reductions in greenhouse gas emissions, such as the Western Climate Initiative (WCI), which currently includes British Columbia, Manitoba, Ontario and Quebec, as well as the state of California. Dr. Dion argues these actions, while positive, are insufficient; without federal government participation, the bargaining power necessary for international agreements is absent as well. Furthermore, the lack of federal involvement harms even provinces without commitments. In the case of Alberta, uncertainty surrounding carbon pricing resulted in TransAlta Corporation cancelling a major carbon capture and sequestration project in early 2012, which had been valued as high as $1.4 billion.
International Policy Situation – What’s the Hold Up?
International climate change negotiations hold more promise to addressing climate change and greenhouse gas emissions, but are currently in a stalemate. While agreement upon a hard emissions cap would appear to be the best method to ensure global temperature increase is held within the 2.0°C limit, such agreements have proven elusive due to the origins and distribution of emissions. Developed nations have largely reached an emissions plateau, while developing nations’ emissions continue to increase dramatically.
While both groups agree on the need to address climate change, disagreement arises in a number of areas; from the methodology of either measuring current annual emissions (a statistic for which developed nations have generally achieved stabilization) as compared to historical cumulative emissions (the sum of emissions to date which arise from the industrialization and high standard of living of developed nations); hard caps on greenhouse gas emissions, which are seen to penalize developing countries who feel that transitioning through a period of high emissions is necessary to reach the standard of living enjoyed in developed countries today. Conversely, developed countries cannot shoulder the burden of managing greenhouse gas emissions alone. For instance, even if the United States were to immediately discontinue its use of coal, the result would be a glut of coal on the market and an immediate price decrease, leading to its increased use in developing countries instead.
Past experiences in tackling specific global environmental issues offer little insight into how this situation can be remedied. The Montreal Protocol, which set controls on ozone depleting substances, is often seen as a parallel to climate change negotiations, as both environmental issues have been advanced by environmental scientists. Unfortunately, climate change negotiations are fundamentally different. Negotiations regarding ozone depleting substances were possible due to their niche role and the availability of substitutes. In comparison, carbon lies at the heart of the global economy, with over 80% of the energy system reliant on fossil fuels. The comparatively minor sacrifices made in order to remedy problems with the ozone layer pale in comparison to those that will be necessary to decarbonize the economy.
The Kyoto Protocol failed to address this facet, as well as two further issues. First, only the major emitting countries of 1990, which together represented more than 50 percent of emissions, were subject to hard targets. However at present, the former represent less than one-third of emissions; countries without hard targets have seen their emissions continue to grow dramatically, throwing the design of the protocol into question. Furthermore, given the global nature of climate change, countries which take no action receive the same benefit as those that do; given the economic impact associated with compliance, a challenging situation develops wherein each country suffers from a fear of acting unilaterally. Addressing climate change is thus firmly a global problem in need of global solutions. In this case, it is necessary to re-examine international negotiations with a focus upon finding common ground in order to increase confidence in the resulting approach.
Proposal: Carbon Pricing
As attempts to set an internationally-accepted hard cap on greenhouse gas emissions have failed, Dr. Dion proposes the use of price signals to address climate change, by setting a price on carbon. Such a system, employing carbon dioxide emissions pricing which would gradually escalate over time derived from accepted and robust scientific models, may potentially be more effective at attracting participation by both developed and developing countries, and also allay the concerns of early-adopter countries. Four key features contribute to this approach’s strength.
Price Signal
While hard caps may fail to discourage further emission reductions below the upper limit, by escalating the price of carbon dioxide emissions over time a strong economic incentive is provided which accounts for the full impacts of greenhouse gas emissions. In addition to discouraging the use of carbon-intensive activities, carbon pricing also serves to increase the relative attractiveness of competing sustainable technologies. For developed countries, Dr. Dion suggests the price per tonne of emissions at approximately $40 in 2020, increasing to $120 by 2035.
Developing Countries
Hard emissions caps prove untenable for most developing countries due to their rapid growth and industrialization. Payment per carbon unit emitted however, allows flexibility to transition while also providing an incentive to decarbonize quickly when possible. Recognizing differing situations in developing countries, pricing would begin lower at approximately $10 per tonne in 2020, progressing to $95 in 2035, with an eye to eventual convergence of rates with that of developed countries.
Domestic Revenue
In order to attract participation and compliance by governments, and to stimulate the spending necessary to transition to a low-carbon economy, all carbon tax revenue would be free to be spent by the domestic government responsible for its collection as they see fit – with the important caveat that it not be spent subsidizing fossil fuels or other carbon-intensive sectors.
Pressure to Conform
Encouraging widespread participation in the carbon tax could be achieved by means of internationally-ratified trade penalties in the form of carbon tariffs. Countries which fail to domestically enforce the carbon tax in an effort to obtain a trade advantage would see their goods suffer a tariff (equivalent to the carbon tax) upon exportation to a participating nation. Furthermore, the foreign government applying the tariff could be allowed to keep this revenue. As a result, non-participating nations would both fail to gain a competitive advantage in pricing, while also surrendering potential revenue from the carbon tax to foreign governments, who would themselves receive the benefit through tariffs.
This type of aggressive fiscal policy may prove to be the best method of initiating widespread global action on climate change; however it remains a “tough sell” politically. Even should such a system be designed and subject to international agreement, it is still subject to ratification by individual countries’ representatives in government. Difficult environmental challenges are not insurmountable, however. Past successes such as the phase out of leaded gasoline and reduction of global CFC use show that progressive action is possible. With sufficient international support to initiate international carbon pricing, success in addressing the drivers of climate change will be found too.
This précis was prepared for CSERC by Gordon Baird,
M.A. Candidate in Sustainable Energy Policy, Carleton University.