October 9, 2018 Cap and…

October 9, 2018

Cap and Trade - Help Desk
Cap and Trade Branch
77 Wellesley Street West
10th Floor, Ferguson Block
Toronto ON M7A 2T5

Re: EBR Registry Number: 013-3738. Comments on Bill 4, Cap and Trade Cancellation Act, 2018

Dear Sir / Madam:

Thank you for the opportunity to provide feedback on Bill 4, Cap and Trade Cancellation Act, 2018.

Since the early 1970s I sincerely offer compliments to Ontario’s environment ministry for their earlier progress in improving our air, drinking water, fresh water systems, and waste management systems. And importantly for their more recent efforts in implementing climate mitigation policies, adaptation initiatives, renewable energy initiatives, and a working Cap and Trade system. The following illustrates why Bill 4, Cap and Trade Cancellation Act, 2018 is a step in the wrong direction. It makes sense to spend a small dollar today, grow the economy, and avoid huge extreme weather costs, associated insurance costs, increasing food supply costs, and other future climate impact costs... Following are six items that illustrate why 2018 Bill 4 is a step in the wrong direction, along with a final thought:

1. IPCC Special Report on the Impacts of Global Warming of 1.5oC (SR 15)
The Intergovernmental Panel on Climate Change (IPCC) released on October 8, 2018 a Special Report on the Impacts of Global Warming of 1.5oC (SR 15), outlining the climate impacts that could be avoided by keeping global temperature rise below 1.5oC compared to 2oC. The report indicated that limiting global warming to 1.5ºC would require rapid, far reaching and unprecedented changes in all aspects of society…with clear benefits to people and natural ecosystems…and ensuring a more sustainable and equitable society…for strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty. The report advised “Climate-related risks to health, livelihoods, food security, water supply, human security, and economic growth are projected to increase with global warming of 1.5°C and increase further with 2°C”. The report warned of the risks of more frequent heat waves, floods, droughts, a loss of species – and advised that global net human-caused emissions of carbon dioxide (CO2) would need to fall by about 45 percent from 2010 levels by 2030, reaching 'net zero' around 2050. Only a few years remain to have even an opportunity to keep rising temperatures below of 1.5oC. A viable climate mitigation program is essential.
Refer to: https://www.ipcc.ch/report/sr15/

2. Cap and Trade or Emissions Trading Systems (ETS) around the world
The Delphi Group collaborated with leaders from the Canadian Business Members of the Carbon Pricing Leadership Coalition (CPLC) to generate a report titled ‘The Role of Carbon Pricing in a Low-Carbon Transition’ - dated March 15, 2018. The report reflects voices from various Canadian corporate leaders representing multiple sectors. It outlines best practices for the private sector making the transition to a low-carbon economy and recommendations for the continued development of carbon policies in Canada. The report stated that Canada can act as an international example of how to build a strong climate change strategy that reduces greenhouse gas (GHG) emissions while growing gross domestic product (GDP). The report advised that ETS have been implemented or are planned in 16 countries as of the report date, including the European Union Emissions Trading System (EU ETS), China’s regional pilot markets, Republic of Korea, Japan, Brazil and New Zealand. The report included recommendations for the continued development of carbon policies. Please refer to http://delphi.ca/cplc-report/
 
A report by Canada’s Ecofiscal Commission titled ‘Clearing the Air: How Carbon Pricing Helps Canada Fight Climate Change’ – dated April 2018. It advised of a need for a more informed discussion on carbon pricing. “Done right, carbon pricing changes household and business behaviour, reduces GHG emissions, and provides an incentive for the development and adoption of the technologies that can play a key role in a low-carbon economy. In addition, the report advised that…carbon pricing will achieve these outcomes at a lower economic cost than other policies… this means that carbon pricing can support both a clean economy and a prosperous economy.” The report described various Emission Trading Systems (ETS) around the world, including in British Columbia, California, Quebec, and the UK. The ETS analyzed were mostly economically positive with no evidence that cap-and-trade has harmed growth. China has announced an ETS to commence fully in 2020. For details, refer to: https://ecofiscal.ca/reports/clearing-air-carbon-pricing-helps-canada-f…

The 2018 Nobel Memorial Prize in economic sciences was awarded to William Nordhaus and Paul Romer for their work in adapting economic theory to take better account of environmental issues and technological progress.
In his work, Nordhaus worked on integrated assessment models, i.e., the Dynamic Integrated Climate-Economy Model. He found that implementations that rely on markets with some guidance from governments – such as by instituting carbon taxes or a cap and trade system - offers the best and most economically efficient way of putting a value on that public good.
One of various sources, refer to:
https://theconversation.com/nobel-award-recognizes-how-economic-forces-…

3. Putting a Price on Carbon – the Social Cost of Carbon (SCC)
Globally, we observe that economic activity is frequently linked to climate – with more economic activity typically in areas having more favourable climates. Climate change is impacting our historically favourable climates. The Social Cost of Carbon puts an economic price estimate on the cost of carbon emissions. It adds up all the quantifiable costs and benefits of emitting one additional tonne of carbon dioxide in monetary terms.
A recent study by Katherine Ricke, et al., and published in Nature Climate Change 2018 provided an updated estimate of the social cost of carbon (SCC) by adding up individual country costs. The social cost of carbon provides justification for climate mitigation initiatives, adaptation policies and pricing. Case law documents the importance of using the social cost of carbon. Integrated Assessment Models (IAMs) were used for the calculations. The study found that the ‘Country-level social cost of carbon’ for one middle of the road scenario to be US$417 per tonne of addition carbon dioxide, based on 66% confidence intervals - with an overall range of US$177–805 per tCO2. However, moving from a middle of the road pathway / scenario to a fossil fuel dominated future, the combined country total social cost of carbon is significantly higher!
Refer to:
Ricke, K., Drouet, L., Caldeira, K. & Tavoni, M. (2018),
Country-Level Social Cost of Carbon, Nature Climate Change.
DOI: 10.1038/s41558-018-0282-y
Also refer to the Supplementary material by selecting the menu items presented:
Paper, Database Explorer, Interactive Figures, Source code, Database
Found at: https://country-level-scc.github.io/

4. New Technologies, Renewable Energy and Energy Conservation.
There are huge economic and job creation opportunities by encouraging climate mitigation, adaptation, and resilience building. Globally, clean renewable energy is experiencing significant growth, and will account for a significant portion of electrical energy production in future years. Electric cars will be common and clearly reduce the demand for fossil fuels. Based on the high cost of housing and associated monthly mortgage payments in specific urban areas, it is important to understand and budget monthly heating and cooling costs prior to making a purchase. One is better served by first having an energy audit completed. The new technologies, renewable energy, and energy conservation areas are extremely important for achieving economic growth.

5. Climate Change and Food Production in Ontario and Globally:
Following are examples of climate change impacts on food production and associated profits – documented by various global research activities:
• Examples of extreme weather events that impact crop production, yields and profitability include: heatwaves, droughts, and floods. Extreme weather events damage crops, cause soil loss, and change soil moisture content.
• Extremely hot temperatures during the flowering phase negatively impacts crop yields.
• Increasing temperatures impact our natural systems including ecosystems, biodiversity, pollination, and phenology (the timing of life-cycle events). Crop production and yields depend on various ecosystem and biodiversity resources. As our climates change, many of ecosystem services are changing. A loss of pollinators, and a loss of insects in general has major consequences for entire ecosystems including agro-ecosystems.
• Increasing temperatures above crop-specific levels also impact crop production, yields, profitability, and food security.
• Changing temperatures impact plant - soil microorganisms and soil microbe to microbe relationships.
• Both pests and disease are expected to increase as temperatures warm. Without changes, pests will be consuming yet more of our crops in the future.
• Changing climates may impact our food imports, and we have food export obligations to meet.
• In addition, increasing carbon dioxide levels may impact the nutrition levels in food.
• Globally and locally, the impacts of changing climates and increasing temperatures on various ecosystem resources and crop production as illustrated above can affect one or more of the 4 dimensions of food security (Availability, Access, Utilization, Sustainability/Stability)

6. Sustainability Goals and Reporting
Today, reporting on and meeting various sustainability goals - particularly climate impacts - are mandatory requirements for financing, and for corporations to be recommended by investment advisors. A few examples of reporting requirements include: the Ceres Global Reporting Initiative (GRI), the Carbon Disclosure Project (CDP), the Financial Stability Board Task Force on Climate-Related Financial Disclosures (FSB-TCFD), various ISO standards, and footprints. Very soon, it will be common for organizations to be routinely meeting their sustainability goals. A new industrial or Sustainability revolution is beginning – it will be worth trillions economically globally as we move to sustainable systems, operations, and practices.

Final Thought
Ontario needs to meet our international obligations, and importantly our obligations to near future generations.