Ontario faces a number of risks associated with extreme weather events.  The province has already experienced numerous storms that have resulted in significant costs for governments and insurance providers , including:

• August 19, 2005 wind, rain and flash flood event in Southern Ontario – resulting in $600m worth of damage
• June 5&6, 2010 wind and thunderstorm event in Leamington – resulting in $120m worth of damage

In addition to the monetary loss associate with extreme weather, electrical service has been compromised, resulting in service disruptions.  For example, 120,000 people lost service in a November 2005 storm and 150,000 people lost service in an August 2006 storm.

August 19th, 2005 rain and flood event, North York (Courtesy of Google Image)

As the climate changes, Ontario might experience increased intense rainfall events as well as more frequent heat waves and smog episodes.  By the 2050’s, heat related mortality could more than double within southern and central Ontario while the water level of the Great Lakes is expected to decrease, reducing hydroelectricity output by more than 1100 megawatts. To adapt to these risks, Ontario could design better structures and improve city infrastructure to address demands for summertime cooling and generate excess electricity to offset the loss in hydroelectric power. Local-level data is important in adapting public operations and providing services such as heat appropriate public services for the elderly.  The Toronto Environment Office has been working to obtain this local data for Toronto.

Though climate change poses a risk to the electricity sector, few utility providers are taking action.  A Carbon Disclosure Project survey found that though the majority of global electric utilities acknowledged exposure to climate change, only 27% indicate a ‘quantified’ analysis had been undertaken and only 6% provided evidence that climate change has been integrated into their internal corporate governance procedures. BC Hydro is one utility that has taken adaptation action within their operations, which include changes to energy and peak load patterns, relocating facilities, developing alternative water storage for nuclear facilities. Electrical utilities in Ontario could take adaptation action by:

• Conducting detailed weather-specific vulnerability assessments in each area
• Use modeling of risk scenarios to determine the best response
• Gaining a better understanding of climate related threats to the security of the system and how adaptive action will benefit

Additionally, the electricity sector would benefit from clear direction and political commitment to develop and implement climate-adapted standards.

Prepared by ZACL intern Stephanie Vanthof

1. Identify possible offset protocols – a protocol must be nominated by one of the WCI jurisdictions. The jurisdiction will establish a list of candidate protocols and make that list known to stakeholders.
2. Evaluate those protocols by expert task teams – a task team is assembled from each WCI partner jurisdiction with additional technical advice from expert advisors. Then methods for GHG quantification, reduction and monitoring are determined.
3. Get public consultation – if the prior step results in the protocol being recommended, then the protocol is posted on the WCI website, and a webinar takes place followed by 30 days in which people can submit comments on the protocol.
4. Recommend the protocol for adoption by the WCI jurisdictions – WCI partners decide whether to recommend the protocol or not. If recommended, it is available for each WCI jurisdiction to adopt following its own procedures (which may involve revising it).

This new report is designed to provided clear and robust step-by-step instructions which will allow for a more efficient offset system and encourage consistency across WCI partner jurisdictions. It will help ensure an adequate supply of low-cost, high-quality offsets for the WCI jurisdictions [1].

Background

The Western Climate Initiative is a collaboration of independent jurisdictions in North America that are working together to tackle climate change at the regional level. Partner jurisdictions have committed to implementing a cap and trade system across the region. Cap and trade is a market-based system for managing and reducing industrial greenhouse gas (GHG) emissions. The government sets a yearly cap on the tonnage of GHG emissions for each industrial facility, and those facilities that exceed their cap, must buy more allowances in the market. Those who do not exceed the cap, can bank their allowances for later use, or sell them on the market. Cap and trade is a effective and efficient way to reduce overall emissions, while rewarding greener industries. The cap and trade system can also include offsets. And offset in a cap and trade system is a reduction or removal of one ton of carbon dioxide (or CO2 equivalent) from a source outside the regulated sector (i.e. a source not subject to an emissions cap). The reduction or removal must meet certain criteria, such as the offset must be real, additional, permanent, and verifiable [2].

Ontario is committed to participating in a cap and trade system through its partnership with the Western Climate Initiative (WCI). There are currently four Canadian provinces (British Columbia, Manitoba, Ontario, and Quebec), and seven U.S. states (Arizona, California, New Mexico, Oregon, Washington, Utah, and Montana) that are considered partner jurisdictions in the WCI [3]. Currently California and Quebec are the jurisdictions with regulations in place to implement a cap and trade system. British Columbia and Ontario are following close behind. The goal of the WCI cap and trade program is to reduce GHG emissions to 15% below 2005 levels by 2020.

References:

[1] www.westernclimateinitiative.org/document-archives/Offsets-Committee-Documents/Offset-Protocol-Review-and-Recommendation-Process

[2] www.westernclimateinitiative.org/component/remository/Offsets-Committee-Documents/Offsets-System-Essential-Elements-Final-Recommendations

[3] www.ene.gov.on.ca/environment/en/category/climate_change/STDPROD_078899.html

Blog post by Cynthia Whaley

The 17^th Conference of the Parties (COP17) to the United Nations Framework on Climate Change sought to advance the implementation of the Kyoto Protocol, the Bali Action Plan, agreed to at COP13 in 2007 and the Cancun Agreements, reached at COP16 in 2010.  Some countries, including Canada, signalled disenchantment with the Kyoto Protocol since it does not require developing countries, even large emitters such as China and India, to reduce GHG emissions. Kyoto was to be a first step to show leadership by developed countries with greater historical responsibility and therefore Canada’s objections are seen as disingenuous by some.

In Durban, European negotiators wanted to create a new, legally binding treaty but language they proposed had to be softened to appease certain countries. The Durban Platform, which will be negotiated by 2015, will theoretically bind all 194 countries. The stabilization of CO2 pollution in developing countries could be essential in delaying climate change so this is a welcomed development. However, it is still unclear how much “legal force” this agreement will have or the emission goals that will be set.  Though some are referring to this as a “landmark deal”, others feel that not enough has been done.  Bill Hare, Director at Climate Action Tracker, states that “There are still no new pledges on the table and the process agreed in Durban towards raising the ambition and increasing emission reductions is uncertain in its outcome”.  The International Union for Conservation of Nature has stated that the target date of 2020 for a complete climate accord is too far away and that more urgent action is needed.

Apart from this new climate change platform, aspects of the Cancun Agreement were also strengthened, including rules for a new climate fund, the formation of an international network of technology centers, a scheme to avoid deforestation and means to increase the transparency of countries involved in reducing emissions.  Management of the Green Climate Fund, which will scale up over the next 8 years and provide $100 billion US annually to help developing countries adapt to climate change, was high on the conference agenda and further details of the fund were fleshed out, although more work is needed to fully operationalize the fund.

Canada’s role within these talks has been questioned, with the Pembina Institute stating, “Canada is coming into these talks in a very weak position and is not poised to contribute much in the way of positive solutions”.  At the Durban Conference, Canada argued that the Kyoto Protocol is not where the solution lies and had stated that it would not renew their commitment to Kyoto when it expires next year.  Instead, Canada has set a target of reducing greenhouse gas emissions by 17% over 2005 levels by 2020 and the Harper government has stated that it wants to keep targets in line with the US.  Based upon the outcome of the Durban Conference, the Minister of Environment Peter Kent is pleased with the platform and is optimistic that a new climate treaty can be reached by 2015. Even though the Platform accounted for a second commitment period under Kyoto, Canada has consistently stated it was not going to be party to a future commitment period and captured further global-interest hours upon returning from the Durban Conference, when Kent formally announced Canada’s withdrawal from the Kyoto Protocol. The Canadian Government stated that complying with the obligation to reduce emissions by 6% from 1990 levels would require billions of dollars of spending, something the Government could not support in the current economic circumstances.

We must end on a somber note: Kyoto is the first international agreement that the Government of Canada has officially withdrawn from – ever. It is unfortunate that our Government could not prioritize this agreement and find a way to continue to support it, and comply. Hopefully Canada will return to the international negotiating table in future years and show renewed ambition and leadership in constructively addressing this most pressing global issue.

Blog post by Steph Vanthof and Laura Zizzo

To address transportation in cities, Mercier defines upstream policy instruments as the state of a city before it decides on creating sustainable transportation. For example, cities in Europe, that were built long before automobiles were around tend to be rather dense with most of the buildings 6 to 7 stories high, consisting of multiple family homes, and the streets within the city are narrow. Whereas most North American cities (Los Angeles being a prime example) were built with the automobile in mind.

Downstream policy instruments are the tools for creating sustainable transportation that governments can employ. These include legislation, city planning for new construction and exerting influence on affordability. For example, in the 1950s Singapore was a poor city-state and had a high amount of motorization. It’s leaders explicitly set out to reverse their situation; they restrained vehicle ownership by installing expensive registration fees, road tolls and parking fees. They invested heavily in public transit, and they controlled land use development. Today Singapore is affluent and has one of the best transit systems in the world.

Historically, Canada’s major cities; Toronto, Montreal and Vancouver, are “moderately successful cities”, according to Mercier, citing that Toronto was the first Canadian city to build a subway in 1954. However, today Toronto has the longest average commute time compared to 19 major cities worldwide according to a study by the Toronto Board of Trade, reported on by The Toronto Star. The portion of Toronto-area residents travelling in cars to get to work is extremely high compared to other major cities. And with the municipal government recently removing the vehicle registration tax, and planning on increasing the user cost of public transit, while simultaneously decreasing public transit services, it looks like transportation in Toronto is going to get much worse before it gets better.

Many opportunities are available for cities to improve transportation to address climate change and concurrently make financial gains in productivity. As the Star article referenced above notes, in Toronto gridlock costs $5 billion in productivity losses. Extending the public transit service areas, hours, and frequency of trips, subsidizing user fares, and adding road tolls or congestion pricing, are all ways that cities can encourage more energy efficient means of transportation.

Blog Post by ZACL Intern Cyndi Whaley

From a legal perspective, there are many reasons to start dealing with climate change now, including Ontario’s emerging regulatory regime, securities guidance on environmental risks, phyiscal effects of climate change and potential civil liability in negligence and nusiance.

Professional expertise has been used to develop innovative solutions and responses to climate change and to take a role in adaptive management. Both the Chartered Institute of Management Accountants and The Prince’s Accounting for Sustainability Project believe that financial professionals have an important role in advising clients on matters related to climate change.  Their report found that 9 out of 10 senior business professionals believe that business has an important role in managing climate change and that through participation, these professionals could not only reduce risk but create new business opportunities.  However, no mention of any professional obligations in addressing climate change was made.

The importance of professional obligations are clear: since professionals should provide advice on climate-related matters based upon the best science (which requires formal training/education) and are working with clients who face great risks from climate change, it is important that these professionals be responsible for upholding a certain standard of care.  This is usually accomplished with industry-specific codes of conduct and ethics, standards of practice, policy statements, etc., but little has been done to incorporate climate change into these documents and ensure that professionals recommend ways to minimize risks associated with it.

To rectify this problem, West Coast Environmental Law suggests that professional associations address climate change by:

1. Recognizing the urgency of climate change and calling for government to act;
2. Putting in place decision-making criteria and structures to ensure that climate change plays a central role in decisions made by the professional association;
3. Encouraging or requiring members to receive education and training on the implications of climate change for their professional work;
4. Giving direction to members on best practices related to climate change;
5. Recognizing the professional obligations that their members owe to their clients and the public in relation to climate change; and
6. Cooperating with other professional associations to encourage all professionals to appropriately consider and address climate impacts.

Admittedly there are numerous challenges in modifying these professional obligations, such as the additional costs incurred by professionals in obtaining training. However, as the report states: if climate change is not addressed correctly, it  “may result in lost opportunities to reduce emissions, or lock in planning decisions that will not be flexible enough to deal with changing temperatures. Such decisions may result in harm not just to their clients, but also to the public and the environment.”

For more information please see: Professionals and Climate Change

Blog Post by ZACL Intern Steph Vanthof

The price schedule for FIT projects will be a major focus of the review. In its news release, the Ontario Power Authority stated that new prices would be developed for the FIT program to balance the interests of ratepayers with the desire to continue to encourage clean energy investments in Ontario.

There is general acknowledgement that the prices for some renewable technologies, notably solar, have decreased since the implementation of the FIT program and therefore price adjustments are likely in order. As reported by pv-magazine online The Canadian Solar Industry Association (CanSIA) admits that photovoltaic prices have fallen considerable since 2009 and is requesting clear FIT rules going forward.

The review will also look at the long-term sustainability of clean energy procurement, Ontario-based manufacturing and job creation. It will consider a range of issues such as whether new technologies should be included, local consultation and renewable approval processes.

The OPA is requesting feedback through an online survey or written submissions until December 14, 2011. More information can be found at http://Ontario.ca/FITreview

Scheduled to begin in 2013, the regulation sets a limit on the emission of carbon dioxide and other heat-trapping gases on sources responsible for 85 percent of California’s GHGs.  This translates into 360 businesses and 600 facilities that will be affected.  Cap-and-trade will incent these businesses to be judicious about GHGs – emission reduction leaders could see new revenue opportunities by selling excess allowances and heavy polluters will be required to purchase credits and/or offsets on the market when exceeding allowances.

The emissions cap is set to decline over seven years, and utilities, refiners and other large polluters will have to cut their emissions or buy allowances to pollute.  Meanwhile, the increasing demand for allowances will spur innovation and drive investment in cleaner fuels and more efficient use of energy.  Businesses will be guided by market forces and will pursue the lowest-cost options to reduce emissions.

The regulation is divided into two phases. Beginning in 2013, all major industrial sources and electricity utilities will be covered and will have to turn in allowances corresponding to their GHG emissions. In 2015, distributors of transportation fuels, natural gas and other fuels will join them under the cap. The Air Resources Board will provide the majority of allowances during the initial compliance period in a way that will reward the most efficient companies. The first auctions of 2013 allowances are slated for the end of summer/early fall next 2012.

Passed in 2006, California’s climate change law, AB 32, mandates an reduction in emissions to 1990 levels by 2020 (equivalent to a 15% reduction from business-as-usual).  The adoption and successful execution of cap-and-trade will be the key component to curbing climate change and meeting pollution reduction targets. The system’s adoption hasn’t been without setbacks.  This time last year Prop 23 threatened to suspend AB 32 altogether and in March 2011 a California judge halted cap-and-trade plans requesting California Air Resources board to consider more comprehensively public comments and alternatives to the state’s cap and trade program. Fortunately, the Golden State has taken the lead yet again on its commitment to the environment.  We applaud their efforts to date and anticipate other Western Climate Initiative members (including Quebec, British Columbia and Quebec) will follow suit.

A report released yesterday by the National Round Table on the Environment and the Economy (NRT) estimates that the financial impacts of climate change for Canada could reach billions of dollars by 2020.  The report entitled Paying the Price: The Economic Impacts of Climate Change for Canada is the first report to assess the economic consequences of the physical impacts of climate change nationally. It is the fourth report in the NRT’s Climate Prosperity series examining the economic risks and opportunities of climate change in Canada.

The study estimates that costs could reach a staggering $5 billion per year in 2020 and could rise to up to $43 billion annually by 2050.

To highlight the uncertainty at play, the study applied four scenarios using population increases, the pace of economic growth and the severity of climate change to establish a range for the looming crisis’ cost. In the extreme case, a high climate change–rapid growth situation, these costs could be at least $91 billion per year.  Under the four scenarios the report goes on to probe specific concerns for Canada including timber supply reductions, coastal flooding, and human health issues for our prosperity, place and people. Prominent findings of the report:

• Timber supplies are predicted to decrease from 1 to 5% in the 2020s to up to 23% in the 2080s, with extreme impacts in western Canada. A possible 0.4% reduction in GDP by the 2050s is predicted.
• Sea-level rise and storm surges will put coastal communities at risk exposing up to 13,000 homes to flooding by 2050 with an overall cost of up to 0.3% of Canada’s GDP annually
• Poorer air quality caused by climate change will lead to increased deaths and illnesses –  by 2050 roughly 1% of deaths in Canada will be climate change related

So what should we do to minimize these costly impacts?

The report suggests that adaptation measures such as: forest fire prevention, pest control, planting climate-resilient tree species, prohibiting flood prone areas, abandoning dwellings once flooded and installing pollution control technologies to limit ozone formation will be key to reducing the costs to Canadians over time.

Predictably the report recommends that the Government of Canada invest in more research into the economic effect of climate change on specific regions and sectors to inform public policy and adaptation measures moving forward.

With 2020 less than 10 years away, inaction will be expensive; we will feel the economic burden in our lifetimes. These groundbreaking findings dramatize the need for a range of international, national and local measures to reduce emissions and adapt to prepare Canadians for the effects of climate change.

By ZACL Business Strategy Consultant, Georgia Campbell

Reuters reports that the CFI is a world first, creating a comprehensive national scheme to regulate carbon from forestry and agriculture.

The CFI is also important as an important component of a broader package of climate laws and policies, including a carbon tax, support for renewable energy and energy efficiency.

A report on Australia’s emissions  (which are updated quarterly) can be found here.