SUBMISSION TO THE MINISTRY…

SUBMISSION TO THE MINISTRY OF THE ENVIRONMENT AND CLIMATE CHANGE REGARDING THE CAP AND TRADE CANCELLATION ACT (BILL 4)

Executive Summary

In 2016 the Ontario Liberal Government passed the Climate Change Mitigation and Low-carbon Economy Act that launched the Cap and Trade Program. In July 2018 the new Conservative Government revoked the Act. On September 11, 2018, Bill 4, Cap and Trade Cancellation Act, 2018, was posted to Ontario’s Environmental Registry for public comment by the Ministry of the Environment and Climate Change, now the Ministry of Environment, Conservation and Parks. This is a submission to comment on Bill 4. It addresses concerns surrounding 1. Compensation, and the broader economic implications of leaving the cap and trade market; 2. Federal backstop of a carbon tax; and 3. Foreseeable damage to Canada’s international reputation. Each section argues that the costs of repealing the cap and trade program outweigh the benefits. On the economy there will be lost revenue, and the time Doug Ford is spending to fight against the imposition of a carbon tax is argued to be unnecessary and unproductive. Any resulting legal battle will also be costly, as legal opinion has determined that the federal government has the right to impose a nation-wide carbon tax. Most salient, however, is the damage the repeal, and Ford’s general stance on environmental issues and climate change, will have on Canada’s reputation within the international community. Canada has established itself very early on, in the decades before climate change and environmental issues were on the international agenda, as a climate leader. Canada has set a precedent for climate leadership that the international community expects it to fulfil, and subnational governments have a key role to play in maintaining that expectation. It is noted that Bill 4 establishes a requirement for Ontario’s Minister of Environment, Conservation and Parks to prepare a climate change plan that includes targets for reducing Ontario’s greenhouse gas emissions. It is also noted, however, that no deadline was given for such a plan to be produced. A plan to develop a plan at an unspecified date in the future equates to no plan in the present. This is far out of alignment with Canada’s international environmental commitments under the UN Framework Convention on Climate Change. For these reasons, the authors strongly recommend that the current Ontario government should not implement Bill 4.

Introduction

Under the 2015 Paris Agreement, Canada committed to keep the global average temperature “well below” 2C and to “pursue[…] efforts to limit the temperature increase to 1.5C above pre-industrial levels” (Paris Agreement, 2015). To this end, former Ontario premier Kathleen Wynne implemented the Climate Change Mitigation and Low-carbon Economy Act in 2016. The Act explicitly acknowledged the UN Framework Convention on Climate Change (UNFCCC) goal to stabilize greenhouse gas emissions. In line with the polluter pays principle, it established a cap and trade system in Ontario to achieve this goal, becoming the third jurisdiction in a cross-border, regional carbon market with Quebec and California. This system has been controversial and, as it has been framed as a carbon tax, has been unpopular. As such, in the 2018 Ontario provincial elections, one of the key campaign promises of Doug Ford and the Conservative Party was the repeal of this legislation. Following Ford’s victory, on July 25, 2018, Bill 4, Cap and Trade Cancellation Act, was introduced. According to Ontario’s new Minister of Environment, Conservation and Parks, Rod Phillips, “Ontario’s carbon tax era is over (Ontario Newsroom, 2018).”

Although required by the Environmental Bill of Rights of Ontario, Bill 4 was not initially placed on the Environmental Registry of Ontario for public comment. In response, the international non-governmental organization Greenpeace launched litigation against the Government of Ontario (Stewart, 2018). On September 11, 2018, Bill 4 was uploaded to the Registry for public comment. This document is a direct response to the proposed Bill 4. It summarizes the comments and concerns regarding the legislation and its implications for Ontario.

We have identified three primary concerns with the proposed Cap and Trade Cancellation Act. First, implementation of Bill 4 poses significant risk of negative economic impacts, including lost revenue and funding for various provincial initiatives, lost compensation to those who participated in the cap and trade system and the costs of potential litigation that may follow from the cancellation, as seen in the Tesla v. Ontario (2018) case. Second, we consider the federal carbon tax backstop, outlined in the Pan-Canadian Framework on Clean Growth and Climate Change (Canada, 2016). We argue that the removal of the cap and trade system that will trigger the imposition of the federal tax is unnecessary and harmful to both the environment and economy. Third, and most salient, Bill 4, by way of posing an obstacle to Canada’s ability to implement its international climate commitments, risks damaging Canada’s reputation and thus relations abroad.

Part I: Economic Costs

Prime Minister Justin Trudeau was elected on a platform that supported a carbon tax. Trudeau stated that his government would impose a carbon tax on every province that did not have one in place or an equivalent carbon pricing scheme in place. (Government of Canada, n.d.). Ontario was not going to be affected by this decision, as it was already part of a cap and trade market with Quebec and California. However, upon winning the 2018 Ontario election, Premier Doug Ford has proposed to pull Ontario out of the market, as stipulated in Bill 4. This is not only ecologically, but also economically, unsound decision-making.

In order to combat climate change and lower pollution, Ontario has taken a number of steps, including ones that intend to work towards the internalization of the environmental impacts of production. For instance, it has invested $325 million into the Green Investment Fund that supports the functions of the cap and trade program (Ontario, 2016). The cap and trade program was projected to generate $1.9 billion in revenue for Ontario annually. The revenue was set to be re-invested in projects to reduce greenhouse gas emissions and effects, such as green public transportation, electric cars and infrastructure. It is noted that the cap and trade program was projected to have an initial cost of $13 more per month for the average Ontarian household. This small increase comes from heating and fuel for cars. This sum is even smaller than for homes which are not heated through coal-fired electricity. However, since the projected $1.9 billion was to be reinvested in clean energy, the cap and trade program would save Ontarians money overall, as the lowering of dependence on fossil fuels would lessen the impact of the cap and trade program on households. Moreover, there is potential to follow the example of British Columbia, which reduced income taxes to ensure individuals, especially low-income individuals, were not subject to a greater financial burden.

Indeed, according to the 2018 Environmental Commissioner of Ontario report, paying more now means paying much less later. The report quotes studies made in the UK that show that for every dollar spent investing in mitigating climate change, $6 will be saved in the future. The initial $13 monthly increase per household from the cap and trade program saves these households from spending an extra $78 per month. Thus, in the end, the average household will be saving $65 every month. The cap and trade program is thus affordable and economical. And as Ontario will be subject to a carbon tax regardless, as, according to legal opinion (MacPherson, 2017), it is in the federal government’s jurisdictional rights to impose one, time would be better spent implementing the existing carbon pricing scheme in Ontario to continue generating revenue for the province. Doing so would also have important environmental and health benefits, which in turn would have economic benefits, as the existing climate plan seeks to produce 214 terawatts of carbonless electricity per hour. Moreover, if the Ford government’s true intention is to ensure a strong economy, it stands to reason that it would not halt the financial benefits the cap and trade program promises, or that it would have an equivalent carbon pricing plan in place.

In contrast, however, Ontario’s minister of environment, conservation and parks, Rod Phillips, claims that the cancellation of the cap and trade program will lower gas prices by $0.10 and save households $260 per year (Ontario Newsroom 2018). This is significantly more than the $13 monthly ($156 per year) increase projected by the cap and trade report, which also included the change in gas prices. How Phillips reached the $260 per year is unclear. In addition, even if the $260 claim can be verified, Phillips has overlooked key considerations, namely the 6:1 future financial gains. If the average household indeed saves $260 per year from the cancellation, then they could potentially be expected to pay more per year to $1,560 more per year in the near future in order to compensate for today’s lack of action. Further, as previously mentioned, stopping the cap and trade program simply means that Ontario will be subject to a carbon tax regardless. Furthermore, Phillips also announced that the government would be closing the Green Ontario Fund, which means that the $325 million already invested will simply be lost.

As mentioned, the cap and trade program was predicted to bring in $1.9 billion per year. It is on track to do so. From April 2017 to June 2018, Ontario sold $2,873,158,143.54 in auction (Ontario, 2018). Shawn McCarthy (2018), writing in the Globe and Mail, strongly criticized Phillips. He denounced that from the $2.9 billion given to the government by Ontarian companies, only a negligible amount will actually be reimbursed. Furthermore, there were also market traders which had bought around $67 million in allowances. Phillips does not consider it necessary to reimburse these “spectators.’’ Already, there are companies that are preparing to legislate against the Ford government in order to try to get back the money they have invested. Finally, McCarthy also warned that there might be a chance that Quebec and California might initiate their own lawsuits against Ontario for the loss of money imposed on them.

Thus the economics of Bill 4 look grim. The Ford government intends to revoke a regulation that was projected to bring in $1.9 billion per year. Ontario companies will lose $2.9 billion in investments, market traders will lose $67 million and the Green Ontario Fund will lose $325 million. Proponents of Bill 4 argue that it will save the average household $260 per year, while ignoring that it will increase their bills by up to $1,560 per year. Bill 4 opens up the chance of Ontario being sued from all the companies and market traders that participated in the cap and trade program, as well as Quebec and California, and completely ignores the fact that a federal carbon tax will still be imposed on Ontario. Thus there is legitimate concern that repealing the cap and trade program without having an equivalent substitute will result in a net negative loss of income, and, at the least, provide insignificant benefits.

Part II: The Federal Backstop of a Carbon Tax

This section argues that the repeal of the Climate Change Mitigation and Low-Carbon Economy Act, 2016, unnecessarily and effectively cancels out both economic and environmental benefits to the province. It observes that the federal government most likely has jurisdiction over the imposition of a nation-wide carbon tax, and that replacing Ontario’s existing cap and trade program with the federal carbon tax does not provide additional benefits to Ontario.

The Pan-Canadian Framework on Clean Growth and Climate Change seeks to impose a gradually increasing carbon tax on any province or territory that does not have their own carbon pricing strategy in place by 2019. It stresses the importance of collaborating with the province’s themselves, because, as stated in the Vancouver Declaration on Clean Growth and Climate Change (2016), each province/territory has a diverse set of circumstances and a unique economic composition that makes one sweeping general carbon tax undesirable and much less effective. The Framework emphasizes the role of the provinces as being the early leaders in combating climate change, and reaffirms its commitment to grant provinces the flexibility to design their own carbon policies, with financial support from the federal government. The federal backstop was thus intended to be a last resort. By repealing the Climate Change Mitigation and Low-carbon Economy Act and having no replacement plan in place to mitigate emissions, the current government is not acting in good faith and is forcing the federal government to implement a tax. Given the economic benefits of the cap and trade program outlined in the previous section, the motivation for such a repeal appears political. This is highly irresponsible and short-sighted as it pauses the economic and environmental benefits the cap and trade program is producing while the province waits for the federal carbon tax to be triggered.

Since the provincial government is nearer to the individual voters than the federal government, it much more closely reflects the wants and needs of Ontarians. Therefore, the choices of the provincial government are expected to resemble the unique perspective of Ontario’s citizenry with regards to the economy, climate change and a host of other issues. Moreover, subnational governments in Canada have an important, and a jurisdictional, role in environmental governance. Thus the federal government sought to ensure provinces had the right to formulate their own carbon pricing programs. In essence, this problem represents the dichotomy between a bottom-up versus top-down approach to climate policy. This submission is advocating that, in this case, a bottom-up approach would be preferable because this allows subnational governments to develop mitigation measures that are based on their individual economic and institutional capacities, which has been shown to be highly effective when used in combination with federal oversight and reporting (Rayner, 2010). Indeed, this is one reason why the Framework is an effective, if imperfect, piece of environmental policy, as it combined both the bottom-up and top-down approaches. However, by neglecting in the duty to manage provincial affairs, the Ford government is inviting a strictly top-down approach that may not be suited for Ontario’s economy, or even target the right areas, thereby making it much less effective overall (Environment Commissioner of Ontario, 2018).

Another major shortcoming of Bill 4 is that it lacks any of the features of effective climate law. Its sole purpose is to dismantle the previous policy, and it contains no guidelines on statutory emissions targets, no pathway to achieve targets, no requirement for reporting and no streams of revenue to fund green initiatives (Environment Commissioner of Ontario, 2018). All of this important regulatory framework from the previous legislation is completely lost, with no adequate alternative put into place. This is highly irresponsible. While Bill 4 states that there will eventually be new targets established and a new climate action plan introduced, these will not be enshrined in law like the previous framework and will thus be much less significant and subject to change by the government. Another issue with the inadequate substitute proposed by Bill 4 is that it will prevent the provincial government from sharing in the revenue generated by the federal carbon tax. With Ontario no longer participating in the Pan-Canadian Framework and with no alternative to the cap and trade system in place, the federal government has stated that the funds generated will be instead distributed directly to Ontarians in the form of a carbon dividend cheque (Environment Commissioner of Ontario, 2018). This locks the provincial government out of a substantial source of income that could have been used for infrastructure and other efficiency projects. Therefore, it is indeed in the best interest of both the Ford government and the people of Ontario that a strong, effective carbon pricing law is enacted in the province, in order to benefit from this federal backstop that has been provoked by Bill 4.

Part III: Doug’s Damage to Canada’s Global Reputation

This section argues that Canada has established itself over four decades as a leader in the global governance of climate change. This includes on the development of the international environmental legal regime and the principles that underpin it. It argues that, given Canada’s historical leadership role in shaping this regime, the international community expects Canada to continue to lead here and that a breach of this expectation will cause harm to Canada’s international reputation. It argues that in order for Canada to maintain a positive image, subnational governments within Canada have an equivalent responsibility to act in such a way as to support the established perception of Canada as an advocate for climate action by way of, at the very least, not hindering Canada’s effective compliance with the international environmental agreements to which it has a legal, and a moral, obligation to adhere to.

This argument is developed first by giving a condensed historical review of Canada’s leadership role in the development of the global governance of climate change, focusing on the relevant legal instruments. It highlights key legal principles seen here as most applicable to the repeal of the Climate Change Mitigation and Low-Carbon Economy Act 2016. It makes reference to Canada’s participation in other international fora, focusing on the Group of Seven (G7), in order to demonstrate Canada’s early, consistent and public advocacy for environmental protection and emissions reductions beyond the UN system. Second, it provides supporting examples to show that the Government of Ontario’s actions effectively acknowledge that it does not operate in a silo but rather views itself as an important player in an increasingly interconnected and globalized world, and that as such it assumes responsibility to act in good faith and as a constructive member of the international community, representing Canadian interests. Inherent to this conclusion is the assumption that the repeal with no replacement plan proposed by the current Ontario premier Doug Ford is unconstructive and a hindrance to Canada’s effective compliance with its international climate commitments and obligations and thus unduly risks damaging Canada’s reputation within the global community.

Canada’s Established Role in the International Climate Change Regime

Since the second wave of the environmental movement, in the 1970s, Canada has acted as more than just a sideline observer in international environmental relations. Indeed, prominent Canadian Maurice Strong was instrumental in the success of the 1972 Stockholm Conference on the Human Environment, where 113 governments, representing the global south and north, gathered (Meakin, 1992.). Strong, born in Manitoba, Canada, is credited with being a “founding father” of the international environmental regime (Saul, 2015). The UN requested Strong to be the first head of the UN Environment Programme (UNEP), established at Stockholm. Upon Strong’s passing in 2015, UNEP released a statement titled “The World Mourns One of its Greats: Maurice Strong Dies, His Legacy Lives On” (UNEP, 2015).

This legacy is captured in the Declaration that was produced at the Stockholm Conference, which laid out 26 “common principles to inspire and guide the peoples of the world in the preservation and enhancement of the human environment” (UN, 1972). Having come in the wake of a wave of decolonization in the 1960s, Principle 1 of the Declaration reinforced the principle of state sovereignty and the right of non-interference in the internal affairs of nation-states. Principle 2 introduced the concept of intra- and intergenerational equity. Principle 9 emphasized “accelerated development through the transfer of substantial quantities of financial and technological assistance” as the best solution for “under-development and natural disasters,” thus opening the door for the sustainable development concept. Principle 9 also laid the foundation for the polluter pays concept in its recognition that industrialized countries should take on financial responsibility for the sustainable development of developing countries. Principle 21 again reinforced the state sovereignty principle, but went further by extending a responsibility to states “to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction.” Principle 22 flowed from Principle 21, committing states to further develop international law to include liability and compensation in the case of “environmental damages caused by activities within the jurisdiction or control of such States to areas beyond their jurisdiction.” Principle 24 emphasized that these and other matters regarding environmental protection “should be handled in a cooperative spirit.”

At Stockholm, Canada was one of only four countries that committed voluntary financing to the newly established Global Environment Fund under UNEP, demonstrating in action its support for Principle 9 (UN, 1972a). Here Canada announced a financial commitment of between $5 and $7.5 million. This was the highest contribution made, with Australia pledging $2.5 million over five years, the Netherlands pledging up to $1.5 million, and Germany pledging DM 100,000 (Stockholm, 1972).

Throughout the next decade, in the 1980s, Canada continued to advocate for these principles within other fora, with the G7 serving as a key focal point. The G7 was created in 1975 and has held annual summits since. Canada has attended every G7 summit since 1976, and has hosted six. At the first G7 summit Canada hosted, in 1981 in Montebello, Quebec, Canada secured the following consensus statement in the declaration: “In shaping our longterm economic policies, care should be taken to preserve the environment and the resource base of our planet” (G7, 1981). At the second summit Canada hosted, in 1988 in Toronto, Ontario, the environment was given a stand-alone section of three paragraphs (G7, 1988; Kirton and Kokotsis, 2015). Here the concept of sustainable development and acting in a spirit of cooperation was endorsed. The G7 encouraged the signing of the Montreal Protocol on Substances that Deplete the Ozone Layer, and it was acknowledged that “global climate change…required priority attention” (G7, 1988).The G7 also called for the creation of an intergovernmental panel on climate change and welcomed the Conference on the Changing Atmosphere, that would be held in Toronto in June 1988 (G7, 1988). The Conference resulted in the creation of the Intergovernmental Panel on Climate Change (IPCC), under the auspices of the World Meteorological Organization and UNEP. The IPCC has become the world’s preeminent source of climate modelling and knowledge, informing the science underlying international climate treaties (IPCC, n.d.).

At the 1992 Earth Summit in Rio de Janeiro (the Earth Summit), Canada continued to actively contribute to the global governance of climate change, again under the leadership of Maurice Strong who presided over the meeting as Secretary-General (UNCED, 1997). Ahead of the Earth Summit, Canadian prime minister Brian Mulroney, made several financial contributions, including the replenishment of UNEP’s Global Environment Fund (Kirton and Kokotsis, 2015). Two years prior to the Earth Summit, Canada pioneered a target to stabilize its greenhouse gas emissions that was subsequently adopted the 1992 UNFCCC signatories. The target was to stabilize emissions by 2000 relative to 1990 levels (Winfield and Scanga, 2017). Canada was among the first countries to sign onto the UNFCCC, and Mulroney has been credited with convincing U.S. president George Bush Sr. to participate in the negotiations and to sign the agreement (Winfield and Scanga, 2017).

During the negotiations for the 1997 Kyoto Protocol, Canada’s commitment to the UNFCCC regime and its principles continued. Canada, under Prime Minister Jean Chretien, enhanced its previous pledge and ambitiously committed to cut greenhouse gas emissions by 6% relative to 1990 levels by 2008-2012, the first commitment period under Kyoto. Chretien had discussed this before the UN meeting in the G7 forum (Winfield and Scanga, 2017). At Kyoto, the polluter pays principle was advanced. Article 17 of the Kyoto Protocol established for the first time the concept of emissions trading (Kyoto Protocol, 1998). It states:

“The Conference of the Parties shall define the relevant principles, modalities, rules and guidelines, in particular for verification, reporting and accountability for emissions trading. The Parties included in Annex B may participate in emissions trading for the purposes of fulfilling their commitments under Article 3. Any such trading shall be supplemental to domestic actions for the purpose of meeting quantified emission limitation and reduction commitments under that Article” (Kyoto Protocol, 1998).

Canada ratified the Kyoto Protocol in 2002, in spite of internal federal-provincial conflict. Two years later, under a new federal government led by Paul Martin, an emissions trading scheme was proposed under the Canadian Environmental Protection Act (Winfield and Scanga, 2017).

Between 2006 and 2015, Canada’s positions on environmental protection and climate change shifted under the leadership of Prime Minister Stephen Harper, with significant rollbacks in domestic environmental legislation and in Canada’s international obligations (Winfield and Scanga, 2017). On the international front, in 2011 Harper pulled Canada out of the Kyoto Protocol. The reaction to these rollbacks strongly suggest that this period in Canadian environmental governance was an anomaly in Canadian history. Indeed, lack of federal leadership on the environment led to an increase in subnational activity on climate action, including the cap-and-trade market between California, Quebec and Ontario (Winfield and Scanga, 2017). Moreover, Canada’s withdrawal from Kyoto drew international condemnation and a “Lifetime Unachievement” award for the least constructive country from the international non-governmental organization Climate Action Network (2013).

This pullback period ended with the election in 2015 of Justin Trudeau as Canada’s new prime minister. Trudeau won on a platform that explicitly supported climate action and Canada’s return to international environmental leadership. The 2015 Liberal platform, A Real Change: A New Plan for a Strong Middle Class, stated that if elected Trudeau’s government would “provide national leadership and join with the provinces and territories to take action on climate change, put a price on carbon, and reduce carbon pollution” (Liberal Party of Canada, 2015). Trudeau won a majority of seats on this platform (CBC News, 2015). Since taking office, the new government has resumed Canada’s leadership in international environmental negotiations. At the 21st Conference of the Parties to the UN in December 2015, Canada advocated strongly for the Paris Agreement to strive for an increase in the global average temperature to no more than 1.5C above pre-industrial levels. The move was lauded by the global community (Prystupa, 2015).

Do no harm

Canada’s international leadership is exemplified in its advocacy, consistently and over time, for the principle of state responsibility, that flows from the principle of state sovereignty, to do no harm.

Canada has explicitly endorsed Principle 21 of the Stockholm Declaration, that, as highlighted above, reinforces state sovereignty while introducing states’ responsibilities to ensure activities within their borders do not negatively impact those beyond their borders. Principle 21 thus recognizes that environmental pollutants do not recognize artificial man-made borders and that human activities must be managed in order to prevent the spread and consequent harm of pollutants. Canada expressed strong support for the Stockholm Declaration as a whole, stating in the negotiations that “the Declaration was more than an inspirational message or an educational tool: it represented the first essential step in developing international environmental law” (Stockholm, 1972).

The spirit and intent of Principle 21 is to do no foreseeable harm. Canada has strongly advocated for this principle beyond the international environmental regime. This is most evident in Canada’s advocacy for the responsibility to protect (R2P) principle, advanced by Canada’s former Minister of Foreign Affairs Lloyd Axworthy (Savage, 2013). R2P allows for interference in a states’ internal affairs in instances of genocide, war crimes, ethnic cleansing and crimes against humanity (Rock, Cappe, Wilson et. at, 2017). While R2P was put forward and is applied in a human rights context, the underlying principle is to practice precaution and to prevent unnecessary harm. The campaign for R2P has seen much success. In 2005, 150 heads of state and government endorsed the R2P principle.

Canada thus supports the spirit and intent to do no harm to the extent that it has advocated, successfully, for an exception to the rule of non-interference in another states’ affairs.
Moreover, as outlined in a summary of the Trail Smelter Arbitration case (United States v. Canada), Canada has not questioned the flipside of this principle of state responsibility to use states’ territory in a way that does not damage the environment of another territory (Currie, Forcese, Harrington et. al, 2014). In Responsibility of States in International Law (1928, p. 80), Professor Eagleton writes: “A State owes at all times a duty to protect other States against injurious acts by individuals from within its jurisdiction (Currie, Forcese, Harrington et. al, 2014).

Thus failure to practice this principle at home could reasonably be expected to cause damage to Canada’s reputation.

Subnational Responsibility

In today’s globalized world, subnational actors have gained greater relevance in decision making. This extends to the international level, where civil society groups have expanded. For example in the G7 and Group of 20 (G20) clubs, the number of civil society groups meeting with and making recommendations to the G7 and G20 heads of state has expanded. Digitalization is allowing for the connection of global cities in an unprecedented way. The C40 (Cities 40), a data-driven organization connecting over 90 megacities around the world, was created to mobilize climate action (C40, n.d.). C40 represents over 650 million people globally. In North America, when a lack of climate leadership at the federal level emerged, subnational governments have responded to fill in the governance gap. The Western Climate Initiative (WCI) was established in 2007 by five U.S. states. It’s primary goal was to monitor and reduce greenhouse gas emissions, primarily by establishing a cross-border regional cap-and-trade market. In 2008, four Canadian provinces, including Ontario, joined. Although the WCI collapsed, its legacy of a cross-border carbon market survived with the creation of the cap and trade program between California, British Columbia and Ontario (Winfield and Scanga, 2017). Increased subnational activity in Canada to advance climate action and to comply with Canada’s international environmental obligations thus came during an era of environmental regulatory rollback under the Harper administration. More recently, in response to U.S. president Donald Trump’s announcement in June 2015 to withdraw the U.S. from the Paris Agreement, subnational governments united and announced they would continue to comply with the U.S.’ commitments under the Agreement. The United States’ Climate Alliance, formed by the governors of New York, California and Washington, is committed to achieving the U.S. goal under the Paris Agreement to reduce emissions by at least 26% relative to 2005 levels. The three states represent 68 million people and account for 10% of U.S. greenhouse gas emissions (New York Press Office, 2017).

Subnational governments thus play an important representative role for the countries within which they are located. Ontario, whose economy is comparable to smaller European countries, such as Switzerland, is no exception. This is particularly true given Ontario’s ability to attract international attention to Canada as well as the positioning of itself as an important player on the international stage. Ontario’s ability to attract international attention was seen very prominently when Rob Ford was mayor of Toronto from 2010-14. Ford attracted the global media’s attention for his direct and controversial views and language on issues surrounding drugs and race. In 2009, Ontario premier Dalton McGuinty’s introduction of the Green Energy and Green Economy Act, attracted the attention, and ire, of the European Union and Japan, which filed a complaint with the World Trade Organization (WTO) claiming discrimination against foreign companies.

Additionally, Ontario has institutionalized itself as a constructive and willing player in international affairs. Ontario’s Office of International Relations and Protocol describes itself as the primary point of contact for at least 100 foreign governments (Ontario, n.d.). In 2015, Premier Kathleen Wynne represented Ontario during the Paris Agreement negotiations at COP 21 as a member of a large Canadian delegation. Ontario’s official website states that Wynne’s role at COP 21 was to “promote Ontario’s subnational leadership in fighting climate change and expand the province’s relationships with other jurisdictions” (Ontario Newsroom, 2015). To this end, at COP 21 Ontario signed a Pan-American Statement on Climate Change, along with 23 other jurisdictions across Canada and the United States.

It is therefore evident that Ontario, sees and has established itself as a representative of Canada beyond Canadian borders. From this right to engage in international diplomatic relations and flowing from Ontario’s practice of such diplomacy, comes a duty to represent Canada responsibly. Responsible representation means acting in such a way as to avoid injury to Canada’s reputation and thus its relations with the international community. Given that Canada is expected to comply with its international environmental agreements, as established in the previous section, Ontario has the responsibility to govern in such a way that does not, at the very least, jeopardize Canada’s ability to comply with its international obligations, which in turn, would likely damage Canada’s reputation in the global community.

Repealing the Climate Change Mitigation and Low-Carbon Economy Act and the cap and trade program it established, with no replacement plan in place, raises strong doubts that Ontario is not hindering Canada’s compliance with its international environmental commitments to mitigate greenhouse gas emissions. The recent awarding of the 2018 Nobel Peace Prize to two prominent economists, William Nordhaus and Paul Romer, for their work on carbon pricing suggests a growing validation of the polluter pays principle. The Organisation for Economic Co-operation has observed growing momentum for carbon pricing schemes, with at least 40 governments having adopted some form of carbon pricing (Plumer, 2018). Moreover, British Columbia’s implementation of both a cap and trade and a carbon tax has resulted in a reduction in B.C.’s emissions, while also achieving economic growth (BC, n.d.; Jang, 2017). The current federal government was elected partly for its positions to return Canada to its traditional leadership role on the environment. It won on a campaign to implement a nation-wide carbon tax (Liberal Party of Canada, 2015). It is therefore reasonable to assume that a full-stop rejection of carbon pricing by a province that has assumed a significant degree of international diplomatic responsibility would result in significant risk of damage to Canada’s international reputation.

It is noted that Bill 4 includes a provision that mandates the environment minister to develop a replacement plan. This is, however, not enough given the urgency of the climate change problem, most recently expressed in the IPCC’s most recent report (IPCC, 2018). A plan to develop a plan at an unspecified date in the future equates to no plan in the present. Ontario is thus not acting responsibly or in good faith as a representative of Canada’s interests. In effect, Bill 4, and its lack of a substitute, serves as an obstacle to Canada’s realization of its commitment under the Paris Agreement, and runs counter to the expectations the international community has of Canada.

Conclusion

This submission has outlined several concerns over the repeal of the cap and trade program in Ontario. First, repealing the cap and trade program will incur economic losses. There has already been significant investments in various green projects, demonstrating the efficiency of the cap and trade program. Should Bill 4 pass, this investment will be wasted. Indeed, the cap and trade program was projected to generate significant revenue for Ontarians. Moreover, the money that companies have already spent to get carbon permits will not be given back. This could signal to companies that they should take their business elsewhere.

Second, Canada has pledged to lower its carbon footprint, as highlighted in the Pan-Canadian Framework on Clean Growth and Climate Change. The federal government has attempted to promote provincial independence in realizing the emissions reduction goals that are laid out in the Framework. However, it is also committed to imposing a blanket carbon tax should a province not have an equivalent plan in place. Thus Ontario is instigating a political battle that, in the end, will most likely result in a carbon pricing scheme in Ontario. In the meantime, emissions in Ontario may rise as no replacement plan is immediately available.

Third, Canada has established itself very early on, in the decades before climate change and environmental issues were on the international agenda, and before there existed the scientific certainty there exists now, as a climate leader. It has demonstrated this by hosting the very summits that created the existing international environmental regime. It has done so across Party lines, with both Liberals and Conservatives advancing international environmental principles, including, but not limited to, the polluter pays principle and Principle 21 of the Stockholm Declaration. Canada has been instrumental in establishing the galaxy of legal instruments that now exist to control various environmental pollutants and emissions. This has led to an expectation by Canada’s peers across the globe for Canadian leadership on environmental issues. This expectation is evident in the international community’s strong condemnation of Canada’s rollback of environmental regulations and support for the Kyoto Protocol between 2006 and 2015. If Canada had not set a precedent of climate leadership, the international community would not have been so out-spoken about the actions Canada took under Harper’s leadership. It is clear, however, in the condemnation of Canada during this period that such precedent and expectations had indeed been established, and that these expectation were broken. Moreover, favour could not have been regained under the subsequent government elected in 2015 had such an expectation for real action on climate change not existed.

Subnational governments have a key role to play in environmental governance and by extension in upholding the national governments’ established efforts to responsibly manage activities within its borders in adherence with international environmental legal principles and commitments. The repeal of Ontario’s Climate Change Mitigation and Low-Carbon Economy Act and the cap-and-trade program it established, without a replacement plan, is, or can be reasonably expected to be perceived by the international community, as doing harm to Canada’s established reputation. Canada’s repeated commitment to do no harm, seen in international law and relations broadly, reinforces this argument. At the very least, the rejection of any carbon pricing scheme and no plan to mitigate emissions, serves to hinder Canada’s ability to effectively implement the Paris Agreement and thus poses a foreseeable risk to Canada’s reputation and its relations with the international community.

The planet is in a state of crisis. Ontario must not slow Canada’s ability to implement its international obligations. It must have a plan in place now — not later — to address the climate change emergency humanity finds itself in.

References

Bill 4 (2016). An Act respecting the preparation of a climate change plan, providing for the wind down of the cap and trade program and repealing the Climate Change Mitigation and Low-carbon Economy Act, 2016. Retrieved from https://www.ola.org/sites/default/files/node-files/bill/document/pdf/20…

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