Carbon pricing needed to meet targets

June 2, 2011, Toronto – The Environmental
Commissioner of Ontario's 2011 Greenhouse Gas Progress Report concludes that
the province’s government will not meet its greenhouse gas (GHG) targets with
its current programs. The Environmental Commissioner of Ontario, appointed by
the Legislative Assembly, monitors and reports on compliance with the
Environmental Bill of Rights, the government's progress in reducing greenhouse
gas emissions, and its actions towards achieving greater energy conservation.

"Recently released federal government
data indicate that Ontario's GHG emissions in 2009 were at the levels the
government wants to achieve by 2014," says Gord Miller, Environmental
Commissioner of Ontario. "…It is highly likely that emissions have
increased each year since 2009 with the return of economic growth. So I expect
the government will need to renew its efforts to meet its 2014 reduction
target."

The Commissioner says this highlights the
need for governments to break the link between GDP growth and GHG emissions.
Miller is convinced the best way to do this is to put a price on carbon.
"It is unfortunate the Ontario government recently announced a delay in
participating in a regional cap-and-trade system." Noting that the
industrial sector is responsible for 30% of Ontario's GHGs, Miller says,
"putting a price on carbon now will guide investment decisions, and help
families, businesses, and municipalities transition to a low-carbon
economy."

Miller is also concerned with the lack of
action in reducing emissions from the transportation sector. "The
transportation sector is responsible for almost one-third of all emissions,
making it the largest contributor of GHGs in the province" he says. The
Ontario government is cutting back programs it is using to reduce
transportation emissions. It has cancelled a tax credit for fuel-efficient
vehicles as well as the Ontario Bus Replacement Program, and frozen funding for
the Green Commercial Vehicle program. "The government needs to make a much
more concerted effort to control this large and growing source of emissions if
it hopes to meet its near- and medium-term reduction targets"

The Commissioner says the government must
also begin a serious discussion about tolls and road pricing to lessen traffic
congestion. "We have to reduce the number of single-passenger vehicle
trips in the Greater Toronto and Hamilton areas. They are already at a higher
level than in most global cities, and car traffic is expected to increase by
another 7% by 2020," he says. "Traffic congestion is more than just
an inconvenience; it imposes huge costs on the economy, the environment, and
public health."

REPORT HIGHLIGHTS

Third Annual Greenhouse Gas Progress Report

Environmental Commissioner of Ontario

Goals

As part of its 2007 Climate Change Action
Plan, the Ontario government established three targets for reducing GHG
emissions:

• 6% below 1990 GHG emission levels by 2014;
• 15% below 1990 levels by 2020; and
• 80% below 1990 levels by 2050.

Progress

In previous reports, the Environmental
Commissioner of Ontario (ECO) has expressed concern about the government's
ability to meet these GHG emission reduction targets. While laudable progress
has been made in the electricity sector with the phase-out of coal-powered
generating plants, there is a lack of correspondingly ambitious policy tools in
other large emitting sectors such as transportation and industry.

While GHG emissions measured in terms of
each dollar of economic output (i.e., emissions intensity) have decreased over
the past two decades, economic growth over the period has overwhelmed these
improvements. Future projected growth will make the targets even more difficult
to reach. According to the latest figures, Ontario's GHG emissions were 165
megatonnes (Mt) in 2009. That's about 6.5% below 1990 emissions, and if it
could be sustained, would meet the 2014 target. However, emissions are expected
to increase by an additional 23 Mt because of renewed economic growth. After
building natural gas peaking capacity, the net remaining reductions from the
coal plant closures only account for about 10 Mt, leaving a gap of 13 Mt of
further reductions to be found.

For more, see page 5 of Greenhouse Gas
Progress Report.

Tyranny of the Near Term

While the government has established
reduction targets for 2020 and 2050 as well, there are good reasons to act
quickly. The severity of future climate changes will ultimately be determined
by actions taken over the next 10 to 20 years.

Reductions made now will mean less drastic
emission cuts in the future. But there is also a risk of reaching a
"tipping point" in atmospheric GHG concentrations. Once these
concentration levels are exceeded, certain chemical processes can be triggered,
resulting in feedback cycles that drive the planet to a severely altered
climate state that is beyond human control.

For more, see pages 9 and 43 of Greenhouse
Gas Progress Report.

Routes to Success

Carbon Pricing: The government will not be
able to meet its 2014, 2020, and 2050 reduction targets until it breaks the
link between GHG emissions and economic growth. The ECO believes that carbon
pricing is a fundamental element of an effective climate change policy and can
be designed to maximize environmental benefits and minimize economic impact.
Whether in the form of a tax or an emissions-trading system, an economy-wide
carbon price is supported by a wide constituency of the public and business
community. The ECO is disappointed by the recent decision of the Ontario
government to delay its participation in a regional cap-and-trade system. This
delay means that the opportunity for industry to begin moving towards a
lower-carbon economy is stalled.

For more, see pages 6 and 22 of Greenhouse
Gas Progress Report.

Sectoral Targets: The current 2014, 2020,
and 2050 targets are not precise enough to meet mid- and long-term targets. The
government needs to establish reduction targets for emissions that come from
the transportation, industrial, residential, and commercial sectors. That will
allow it to monitor progress in the key transportation and industrial sectors,
which together produce about 60% of Ontario's GHG emissions.
For more, see page 4 of Greenhouse Gas
Progress Report.

Transportation Changes: Now that the
province is on track towards closing its coal plants, the best opportunity for
future reductions comes from transportation, which produces 35% of the
greenhouse gas in Ontario. There will be no single magic bullet: Governments will
have to look at a portfolio of policies, including land-use planning to curb
urban sprawl, and the expansion of public transit. Most importantly, it can no
longer avoid a discussion of road pricing or road-tolls. While the ECO
recognizes there are technical problems and barriers to public acceptance,
simply ignoring road pricing as a possible option does not reflect
leadership.
For more, see pages 7 and 28 of Greenhouse
Gas Progress report.

Landfill Diversion: The powerful greenhouse
gas, methane, is 72 times more potent than CO₂ in the first 20 years
after its release. The largest source of methane in Ontario is from the
decomposition of organic material in landfills. Current models significantly
overestimate the efficiency of landfill gas collection systems and thus
underestimate releases of methane into the atmosphere. The best opportunity to
reduce their contribution to GHG emissions is to keep organic waste out of
landfills, either through composting, anaerobic digestion, or thermal
conversion methods such as pyrolysis.

For more, see pages 10 and 50 of Greenhouse
Gas Progress report.

Black Carbon: Otherwise known as soot,
black carbon is produced by the incomplete combustion of diesel fuels,
biofuels, and biomass. A recent study has described it as "the second
strongest contributor to global warming." Because of its short lifespan,
the reduction of black carbon is one of the few ways to reduce the risk of
entering a near-term tipping point. Emission standards could be expanded to
older vehicles still on the road, as well as diesel equipment used in
construction and stand-by diesel generators. The nonessential burning of
agricultural waste could also be discouraged.

For more, see page 44 of Greenhouse Gas
Progress report.

Storing Carbon in the Soil: The
Intergovernmental Panel on Climate Change says improved agricultural practices
can capture close to 3 tonnes/ha/year of CO₂. This could be done
through increased use of manure and compost-based fertilizers. Other studies
have found relatively high rates of sequestration through improved pasture
practices and the growing of crops such as switchgrass and Miscanthus for energy.

For more, see page 46 of Greenhouse Gas
Progress report.

Recommendations

Establish GHG targets for each sector

The ECO recommends that the Ontario
government establish sectoral targets for GHG reduction that will allow the
government, the public, and the ECO to determine the effectiveness of current
and future plans to meet the government's overall 2014, 2020, and 2050 targets.

Move forward with putting a price on carbon

The ECO recommends that the Ontario
government establish a price on carbon as soon as possible to hasten the
transition to a low-carbon economy.

Review assumptions made around landfill gas

The ECO recommends the Ontario government
review its assumptions regarding the operational requirements and design of
landfills and their contribution to the release of fugitive methane emissions.
It should publish the results of this review.

Examine soil carbon sequestration as a
possible tool

The ECO recommends that the Ontario
government investigate and publicly report on the potential for soil carbon
sequestration as a GHG mitigation strategy.

The full report is available at www.eco.on.ca.