On April 26, 2007, the Minister of the Environment, John Baird, introduced the Conservative Government’s new strategy for climate change and air pollution: Turning the Corner: An Action Plan to Reduce Greenhouse Gases and Air Pollution. The Plan focuses on four main areas: industrial emissions, transportation, consumer and commercial products and indoor air quality.
The government’s agenda aims to promote investment in green technology and innovation that will lead to long-term economic benefits, energy efficiency, international competitiveness and tangible environmental and health benefits. The government’s goal is to achieve a reduction from current emissions levels beginning in 2012.
To achieve these goals, the government plans to:
- set mandatory reduction targets on all major greenhouse gas producing industries to achieve an absolute reduction of 150 megatonnes by 2020. This would result in a reduction of approximately 20% from today’s levels;
- impose targets on industry so that air pollution from industry is cut in half by 2015;
- regulate fuel efficiency of vehicles and engines based on a North American standard;
- strengthen energy efficiency standards for energy-using products and increase the range of energy-efficient products; and
- improve indoor air quality by regulating harmful products.
To date the government has only provided a relatively generalized description of how it intends to implement the Plan in a document (also released on April 26, 2007) entitled: Regulatory Framework for Air Emissions.
TARGETING INDUSTRIAL AIR EMISSIONS
Under the Regulatory Framework for Air Emissions, the government proposes, for the first time, to set mandatory reduction targets for major industries that produce greenhouse gases and air pollutants.
Affected industries include: electricity generation produced by combustion; forest products (including pulp and paper and wood products); oil and gas (including upstream oil and gas, downstream petroleum, oil sands, and natural gas pipelines); smelting and refining (including aluminum, alumina and base metal smelting); some mining (including iron and steel; iron ore pelletizing, potash); and cement, lime and chemical producers.
Regulatory Framework for Greenhouse Gas Emissions
The reduction targets to be set under the Regulatory Framework are intensity-based reductions. Facilities existing in 2006 will be required to cut their greenhouse gas emissions for each unit of production by 18% by 2010. This represents an average reduction in emission intensity of 6% every year between 2007 and 2010. Companies will then be required to reduce emission intensity by 2% for each year thereafter.
New facilities using cleaner fuels and technologies will be granted a three-year grace period to enable the facilities to reach full production and establish initial emissions levels. New facilities will be held to a clean fuel standard and must meet a 2% improvement each year after the three years have passed.
Fixed process emissions will be exempted from these targets. Fixed process emissions are those that are tied to production and for which there is currently no alternative technology to reduce them. The only way to reduce these emissions would be to reduce production.
The government expects its strategy to achieve a reduction in greenhouse gases beginning in Canada by 2010, and by 2012 at the latest. This takes into account the expected growth in the economy. The plan is structured to achieve a reduction in Canada’s total greenhouse gas emissions from 2006 levels by 20% by 2020, and by 60% to 70% by 2050.
To enable cost-effectiveness and flexibility, companies will have a choice of the following five methods to meet their reduction targets:
In-house reductions: These include improving energy efficiency and energy management systems, or investing in emissions reducing technologies such as carbon capture and storage.
Contributions to a technology fund: Companies may meet part of their regulatory obligations by contributing to a technology fund that will make investments in technologies to reduce greenhouse gas emissions now and in the future across industry and regions. Technological advancement and innovation are seen as critical to achieving deep, long-term reductions in greenhouse gas emissions.
Domestic emissions trading system: Companies whose emissions are reduced to below their target will receive credits to sell to other companies who have not met their target, or to be saved for future use. Emissions trading will initially be domestic but the government will consider future linkages with emissions trading systems in the U.S. and Mexico. The system is in the process of being set up. Trading will be limited in areas with poor air quality to maintain a minimum level of local or regional air quality.
Offsets: Through the domestic emissions trading mechanism, companies could acquire offset credits by purchasing emissions reductions from activities that are not regulated (agricultural emissions are an example). This provides an incentive for other economic sectors to contribute to greenhouse gas reductions.
Access to the Kyoto Protocol’s Clean Development Mechanism: Although it is unclear how this system will work if Canada is not in compliance with the Kyoto Protocol, this international trading system is aimed at reducing global emissions by providing foreign assistance on projects in developing countries.
Early Action Credit: The government will provide a one-time credit to companies that have taken verified early action to reduce greenhouse gas emissions between 1992 and 2006. They will be eligible for credit towards their regulatory obligations. Credit will represent a maximum of 15 megatonnes of carbon dioxide across industry.
Regulatory Framework for Air Pollutant Emissions
The government aims to reduce air pollutant emissions by 55% of 2006 emission levels by as early as 2012.
The new plan will set national emissions caps for the four main industrial air pollutants commonly associated with smog and acid rain: nitrogen oxides (40% reduction), sulphur oxides (55%), volatile organic compounds (45%) and particulate matter (20%). Caps will also be set for air pollutants such as mercury from electricity produced by combustion and base metal smelting, and benzene emissions from the refining, natural gas, and iron and steel sectors.
The plan will dictate the maximum level of annual pollution that a specific industry can emit. National caps will be determined by adding together all sectoral caps for each pollutant, while accounting for the expected growth of each sector.
Allocation of emissions targets for industries and specific facilities will be determined as the regulations develop, to be finalized by fall 2007. They will come into force between 2012 and 2015 to allow time for industry to make necessary arrangements.
Companies may choose how to meet air pollutant reduction targets. They have two options:
In-house reductions through changes to processes or by investing in new emission reducing equipment or technologies.
Participation in a Canada-wide emissions trading system for sulphur oxides (SOx) and nitrogen oxides (NOx). The rules and administration of this trading system, including the use of offsets are to be determined. Trading will be restricted in areas that have poor air quality to help maintain a level of local or regional air quality.
The government plans to finalize the air pollutant regulatory framework by fall 2007, begin publication of draft regulations by spring 2008, and to finalize all regulations by 2010.
The government proposes to ensure compliance with the new regulations by way of penalty provisions in the Canadian Environmental Protection Act, 1999. Failure by regulated companies to meet any of the requirements set out by the Act or its regulations will be an offence.
ACTION ON OTHER SOURCES OF AIR POLLUTION
The government also promises to take additional measures to reduce air emissions in other sectors. Other aspects of the government’s environmental agenda include the ecoENERGY Initiatives, the eco-Transport Strategy, support for public transit, renewable fuel and investment initiatives, and a federal trust fund.
Transportation accounts for over one-quarter of greenhouse gases and air pollutants in Canada. Beginning with the 2011 model year, the goal is to reduce emissions from cars, trucks and planes. The government intends to establish a Clean Auto Pact with the United States to set regulatory standards. It also intends to align its regulations of other vehicles and engines with the standards set by the United States Environmental Protection Agency.
CONSUMER AND COMMERCIAL PRODUCTS
Energy efficiency standards will be strengthened for energy-using products, the range of energy efficient products will be increased, and performance standards for energy using products will be tightened by 2010. The government has also announced that it will phase out the use of incandescent light bulbs by 2012.
The government plans to amend regulations under the Energy Efficiency Act to create new performance standards for 20 products which are unregulated, such as commercial boilers and clothes washers, and to increase regulation on 10 currently regulated products, such as dishwashers and dehumidifiers.
INDOOR AIR QUALITY
The government will also work to improve the quality of indoor air by regulating some paints, cleaners and other products that contain smog-causing volatile organic compounds or harmful contaminants. Indoor air makes up approximately 90% of the air we breathe and the United States Environmental Protection Agency has placed indoor air in the top five environmental risks to public health.
While the Conservative Government claims its plan will set one of the world’s most stringent set of regulations on greenhouse gases and air pollutants, making Canada a "clean energy superpower," others have expressed concern that it is severely inadequate to address the environmental issues facing Canada. Mr. Gore has gone so far as to call it a "fraud."