The Trudeau government is rolling back carbon-pricing guidelines for some large industrial polluters due to concerns about international competitiveness.
Environment Canada on Thursday released updated draft regulations for the government’s new output-based pricing system (OBPS) for carbon emissions from large industrial facilities, which will operate much like a traditional cap-and-trade program, with operators required to secure credits to pollute, but eligible to sell unused ones for a profit.
Most of the 38 industrial activities covered by the draft regulations face a standard test of 80 per cent of the sector’s weighted-average emissions intensity. This means most large polluters only have to pay the carbon fee on 20 per cent of their emissions.
However, Environment Canada said it had increased the threshold for cement and lime producers to 95 per cent and 90 per cent for petrochemical manufacturers, because the sectors face higher risks of “competitiveness impacts.” The ministry also warned that the sectors stand a greater risk of companies relocating to countries with less stringent climate policies.
Addressing reporters on Thursday at the National Press Theatre, Environment Minister Catherine McKenna said the draft regulations set a “world-class” standard that will drive down emissions, spur investment in clean technology, and ensure Canadians are “competitive internationally.”
The deadline for comment on the draft regulations is Feb. 15, 2019. Environment Canada says it wants the final regulations published in the spring, though they’ll be made retroactive to Jan. 1, 2019. All proceeds from the OBPS will be returned to the jurisdiction of origin.
On Thursday, the ministry also released the first phase of regulations that are part of the government’s clean-fuel standard, the intent of which is to reduce carbon emissions from fuel by 30 million tonnes annually by 2030.
The regulatory design paper introduced by Environment Canada proposes an 11 per cent reduction in emissions from gas, diesel and other liquid fossil fuels by 2030. The idea is the regulation will encourage investment in lowering emissions throughout the fossil fuel production and supply chain, as well as spur greater adoption and use of renewable and low-carbon alternatives.
“This policy is one the largest emission-reduction policies in our Canadian climate plan. It will reduce pollution equivalent by getting a third of the cars off the road using cleaner fuels,” McKenna said, noting that transportation is responsible for a quarter of Canada’s emissions.
She also claimed the regulation would be a “huge economic boost,” and create 31,000 jobs for skilled workers and support farmers who grow the grain that can be turned into renewable fuels.
The federal Conservatives warned the new fuel standard would “dramatically” increase operating costs in the oil and gas industry and hurt Canadian competitiveness.
In a joint statement, Tory environment critic Ed Fast and the party’s natural resources critic, Shannon Stubbs, said the new regulations would “raise the cost of everything, from groceries to putting gas in the car,” and force oil producers to pay $230 for every tonne of greenhouse gas they reduce.
“This job-killing scheme is unprecedented anywhere in the world, as it applies to all fuel sources, including fuel used for manufacturing and home heating,” the MPs said.
“For wealthy Liberals like Justin Trudeau, paying more at the pump is not a big deal, but it will have a real impact on hard-working families in Canada.”
Comments from the public on the paper are open until the end of January, with the final regulations expected to be published in mid-2019. Draft regulations for solid and gaseous fuel streams are expected in the fall of 2020.
Environment Canada also published new projections showing how Canada can meet its 2030 Paris Climate Agreement emission targets, though the largest banked reductions are credited to unspecified new innovations. While the ministry is forecasting a 47-million megatonne reduction in emissions from the oil and gas sector, it’s crediting a 79-million megatonne decline to “unmodelled measures and future reductions,” such as public transit, clean innovation and new technology investments, and future government policies.