Transcript Brand Launch - Canadian Bar Association

THE KYOTO PROTOCOL AND CANADA
CBA National Environmental , Energy and Resources
Law Section/Department of Justice Annual Meeting
October 22, 2004
Ottawa Ontario
Gray E. Taylor
[email protected]
1 First Canadian Place, 44th Floor
Toronto, ON M5X 1B1
Ph: 416 863 5533 Fax: 416 863 0871
www.dwpv.com
FRAMEWORK CONVENTION ON CLIMATE
CHANGE - 1992
• FCCC resulted from:
• Scientific evidence
• UN initiative
• Experience from Vienna Convention on Protecting the Ozone Layer (1985) and the
Montreal Protocol (1987 FCCC signed by 154 countries at Rio de Janiero
Earth Summit in 1992
• FCCC in force March, 1994
• Ratified by all major countries including, US, Canada, EU, Japan, Russia,
China and India
• Goals included return by 2000 to 1990 GHS emission levels for developed
countries (including countries with “economies in transition”))
2
KEY PRINCIPLES OF FCCC
• Stabilization of GHG concentrations at non-dangerous levels
• Actions to be
• based on equity
• in accordance with common but differentiated responsibilities
• in accordance with respective capabilities
• Leadership by developed countries
• Consideration of developing countries to avoid disproportionate or abnormal
burden or adverse effects of climate change
• Cost effective (but precautionary) policies and measures
• “Sustainable Development” goal
• No disguised trade restrictions
3
KYOTO PROTOCOL
•
objective at the first Conference of the Parties in 1995 (COP1) in Berlin was to
move to numerical, binding protocol (“Berlin Mandate”)
•
agreed December, 1997 but not in effect
•
numerical limits (“caps”) on developed country GHG emissions for 2008-2012
(see Annex B attached)
•
GHGs are CO2, methane, nitrous oxide, hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs) and sulphur hexafluoride (SF6)
•
non-compliance “penalties”
•
Kyoto Mechanisms
4
CAPS
ANNEX B
Party Quantified Emission Limitation or Reduction
Commitment (% of base year period)
Australia 108
Austria 92
Belgium 92
Hungary* 94
Iceland 110
Ireland 92
Portugal 92
Romania * 92
Russian
Bulgaria* 92
Canada 94
Croatia* 95
Czech Republic* 92
Italy 92
Japan 94
Latvia * 92
Liechtenstein 92
Federation* 100
Slovakia* 92
Slovenia* 92
Spain 92
Denmark 92
Estonia* 92
European Community 92
Finland 92
France 92
Lithuania * 92
Luxembourg 92
Monaco 92
Netherlands 92
New Zealand 100
Sweden 92
Switzerland 92
Ukraine* 100
United Kingdom
92
Germany 92
Norway 101
United States 93
Greece 92
Poland * 94
* Countries that are undergoing the process of transition to a market economy.
5
KYOTO PROTOCOL – RATIFICATION
To be effective, requires ratification by 55 developed countries with 55%
of the 1990 CO2 (not GHG) emission
US is 36.1% of 1990 CO2 emissions
• US not willing to ratify
•
Australia is 2.1%
• unlikely to ratify
•
Canada is 3.3%
• ratified (December, 2002)
•
Currently 43.9% of 1990 CO2 emissions have ratified
• Russia is 17.4%
43.9%
+17.4%
61.3% > 55%
6
KYOTO MECHANISMS
1) Emissions Trading*
(*see next slide)
•
Countries can sell unneeded AAUs
• Primarily “economies in transition” (Russia,
Ukraine, Poland, etc. have “hot air”)
• Other countries may trade too
•
Rely on other Kyoto Mechanisms
• Rely on buying later
•
•
Rely on domestic reductions
Reserve requirement
7
Inter-Country Emissions Trading
Over
achievement
Target
Excess
Cancelled
excess
Emission Levels
Cancelled over
achievement
Country A Country B
Before Emissions Trade
Country B
Country A
After Emissions Trade
Assume
Country A’s cost to reduce excess is $100
Country B’s cost to overachieve by same amount is $60
Trade results in $40 savings which Country A and Country B can share
8
KYOTO MECHANISMS
2) Joint Implementation (“JI”)
•
projects in developed country parties that reduce
GHG emissions
• generate Emission Reduction Units (“ERUs”)
• host country converts into AAU’s,
CERs or
RMUs) and assigns to another party or
authorized participant*
9
KYOTO MECHANISMS
3) Clean Development Mechanism (“CDM”)
•
projects in developing countries that reduce GHG
emissions against baseline
• “baseline” is “what would have happened without
project”
• generates Certified Emission Reductions
(“CERs”) that can be sold to developed country
parties or authorized participants*
• sustainable development goals
10
WHAT “KYOTO” MEANS
•
•
•
Allocation to developed country parties of “permits” to emit GHGs
First Commitment Period is 5 years (2008 – 2012)
Kyoto Registry
• 5 x “cap”
• allocated in Assigned Amount Units (AAUs)
• Cap is Annex B % x 1990 GHG emissions
• Total GHG emissions in First Commitment Period
• cannot exceed AAU’s
•
UNLESS
• country uses the Kyoto Mechanisms
• Total GHG emissions to be less in total than all AAUs + CERs +
ERUs + RMUs
11
KYOTO MECHANISMS
• Private entities can participate directly in Kyoto
Mechanisms if authorized by a party
• Canada can authorize participation of
• Canadian subsidiaries of US companies
• entities from other countries
• Provinces and cities
• NGOs
• but Canada will be responsible for ensuring each such
entity’s participation complies with Kyoto
12
Canada’s Kyoto Challenge
Projection
Mt CO2 equivalent
850
2010
Emissions
809 Mt
800
750
700
650
Business as Usual
(1999)
705 Mt
1990
Emissions
607 Mt
BAU Gap
238 Mt or 30%
600
Kyoto Target
571 Mt
550
500
1990
1995
2000
2005
2010
2015
2020
Source: Canadian Climate Change Secretariat, January 2002
13
CURRENT FEDERAL PLAN
Total Need
240 million metric tonnes (Mt) of C02 equivalent reductions per year
Sources
1)
Previous Canadian government initiatives (50 Mt) and sinks (30 Mt)=
total 80 Mt
•
Both are suspect as to total
2)
New Action
total 100 Mt
•
Consumers
20 Mt
•
Domestic Emissions
Trading System
55 Mt
(sectoral, large final emitters)
•
Targeted measures
•
Renewables
11 Mt
•
Fugitive emissions
and SME
initiatives
5 Mt
•
Agriculture, Forestry and Municipal 20 Mt-28 Mt
•
Government International Purchases of
GHG Reduction Credits
10 Mt
3)
Remainder
to be determined (or Clean Energy Exports?)
60 Mt
14
LARGE FINAL EMITTERS (LFEs)
• 55 Mt/yr of reductions required under Canadian Climate
Change Plan
• Domestic Covenants
• Sectoral reductions of approximately 15% from recent intensity
levels
• Sectors: thermal electricity, oil and gas, mining and manufacturing
• LFEs to be assisted by:
• Domestic emissions trading *
(* see next slide)
• Access to offsets (agricultural, forestry and perhaps landfills and
others)
• Access to international permits
• thus LFEs will purchase CERs and ERUs and perhaps AAUs
15
Closed Market Inter-Company
Emissions Trading
Over
achievement
Target
Cancelled
excess
Emission Levels
Excess
Cancelled
over
achievement
Company A
Company B
Before Emissions Trade
Company A
Company B
After Emissions Trade
Assume
Company A’s cost to reduce excess is $100
Company B’s cost to overachieve by same amount is $60
Trade results in $40 savings which Company A and Company B can share
16
Open Market Emissions Trading
(i.e. “Offsets” Used)
Cancelled
excess
Reduction No
Longer
Available
Baseline
Baseline
Target
Emission Levels
Reduction
Excess
Company A
Project X
Before Emissions Trade
Company A
Project X
After Emissions Trade
Assume
Company A’s cost to reduce excess is $100
Company B’s cost to overachieve by same amount is $60
Trade results in $40 savings which Company A and Company B can share
17
CANADA’S INTERNATIONAL
PURCHASING OF KYOTO CREDITS
• $15 million investment in Prototype Carbon Fund and more
millions into the Biocarbon Fund and Community Development
Carbon Fund
• Climate Change Plan
• Consider purchase of a minimum of 10 Mt/yr of “international permits”
with priority to permits from CDM/JI projects
• Collaborate with Canadian companies by “pooling” private sector and
government expertise and purchasing power
• AAU purchases by Canada (not private sector) to be “greened”
18
NATIONAL UNITY
Will Alberta or other Provinces challenge constitutionality of Kyoto?
19
Gray E. Taylor
[email protected]
1 First Canadian Place, 44th Floor
Toronto, ON M5X 1B1
Ph: 416 863 5533 Fax: 416 863 0871
www.dwpv.com