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Annual Report 2008-2009 – The Year in Review

POLICY AND RESEARCH PROGRAMS

The Round Table strives to ensure its policy and research activities are directly relevant to Canada’s national interest.

The Round Table offers an opportunity for our stakeholders togather and share in the development of effective insights and understanding. Through its research and analysis the Round Table is a catalyst for innovative, effective public policy in sustainability. The NRTEE offers independent advice to governments on how best to address the challenges and seize the opportunities associated with creating a sustainable, twenty-first century economy for Canadians.

Over the 2008-2009 fiscal year, the NRTEE has focused its attention on a number of critical issues and research areas:

• Ambient air quality standards for Canada;
• Climate change;
• Energy efficiency;
• Northern infrastructure, and adaptation to our changing climate;
• Water sustainability and Canada’s natural resource sectors; and,
• The NRTEE’s role in reviewing the Government of Canada’s implementation of the Kyoto Protocol.

We released five reports in 2008-2009 related to our work. We held nineteen consultation meetings across the country on various issues. We also held a major forum on climate change to mark the Round Table’s 20^th anniversary.

Developing Ambient Air Quality Objectives for Canada

In the fall of 2006, the federal government asked the NRTEE to provide advice on national ambient air quality objectives for particulate matter (PM) and ozone for the medium- (2020-2025) and long-term (2050). This request for advice was part of a broader reference to the Round Table on climate change and clean air. The Round Table’s climate change advice was delivered in 2008 with the publication of Getting to 2050: Canada’s Transition to a Low-emission Future.

From the outset of its research, the NRTEE concluded that providing advice on specific numerical air quality objectives would require a level of expertise and time commitment beyond the scope and timeline of the government’s formal request. The NRTEE therefore concluded that its best value-added advice would be to focus on the purpose of ambient air quality objectives and the process of setting them. The NRTEE research focused not on recommending specific quantitative standards or objectives, but instead on providing advice with respect to the process of setting national objectives.

The NRTEE’s report, Developing Ambient Air Quality Objectives for Canada laid out a framework in which governments might create an effective system to regulate ambient air quality. That framework included three key principles:

1. National long-term objectives need to be supported by the establishment of medium-term regulatory standards.
2. The Government of Canada should take the lead in developing national objectives.
3. An independent science-based process is required to develop national standards based on the best international data and experience. The process would involve the provinces, territories and municipalities.

A copy of Developing Ambient Air Quality Objectives for Canada can be found at: http://www.nrt-trn.ca/eng/publications/ambient-air-report/ambient-air.pdf

Climate Change

Th roughout the fiscal year the NRTEE conducted significant new research into how to address greenhouse gas emissions in Canada and meet the government’s goals towards combating climate change. This work built on our successful 2008 report, Getting to 2050: Canada’s Transition to a Low-emission Future.

The report concluded that an economy-wide price on carbon was the most cost-effective way to achieve deep, long-term emission reductions. Our next phase of research considered how best to establish a unified carbon pricing policy for Canada that would meet Canada’s environmental goals at least economic cost. It was published in April, 2009, entitled Achieving 2050: A Carbon Pricing Policy for Canada, and consisted of an advisory report and a technical backgrounder. The NRTEE’s research included wide consultation with stakeholders, on-going input from an Expert Advisory Committee, a review of global experiences, and the creation of new economic modelling and analysis.

Our report concluded:

• An economy-wide carbon price signal is the most effective way to achieve the Government of Canada’s medium- and long-term emission reduction targets.
• That price signal should take the form of an economy-wide cap-and-trade system that unifies carbon prices across all jurisdictions and emissions and prepares us for international linkages with our major trading partners.
• An effective carbon pricing policy needs to find a balance between certainty and adaptability – it should be certain enough to transmit a clear, long-term price signal to the economy to encourage technology and change behaviour, yet adaptable to circumstances and future learning.
• Technology development and deployment, along with the electrification of the energy system, is central to emission reductions and is stimulated through an economy-wide carbon price signal.
• Complementary regulatory and technology policies in the transportation, buildings, oil and gas, and agricultural sectors are required to ensure broad-based emission reductions.
• New federal/provincial/territorial governance mechanisms and processes should be put in place.

Copies of the report and information on the research process can be found at: http://www.nrt-trn.ca/eng/publications/carbon-pricing/carbon-pricing-eng.php

NRTEE’s 20^th Anniversary Forum

On October 30, 2008, the NRTEE marked its 20^th anniversary by hosting a unique roundtable forum with leading Canadian sustainability experts, advocates and practitioners entitled “Securing Canada’s Future in a Climate-Changing World”. The Forum format consisted of three moderated roundtable sessions focusing on how climate change was impacting Canada’s economic and environmental security through the lenses of three themes: Canada’s ecosystems, its energy economy, and our Arctic environment.

The Forum objectives included engaging the roundtable participants to identify:

• The priority climate change issues facing Canada for each round table theme;
• Current policy gaps and potential policy solutions for addressing these issues; and,
• Implications for policy development and governance.

To feed the discussion and outline the key issues, the NRTEE commissioned a number of commentaries by widely respected experts and key opinion leaders on each of the three themes.¹ The commentaries were published along with a Forum Guide, setting out the key issues, and were made widely available on the Round Table’s website. A real-time audience survey was conducted over the course of the Forum’s deliberations to get input from all attending.

The Forum served as an opportunity to convene Canada’s leading thinkers on the environment and the economy and raise awareness of current and emerging challenges arising from the effect of climate change on Canada’s environment, economy, and Arctic. Discussions formed the groundwork for a forward climate policy research agenda for Canada which the Round Table released in the next fiscal year (June, 2009) called Climate Forward.

More information and all documents on the Forum can be found at: http://www.nrt-trn.ca/eng/news-media/events/other/20th-anniversary/20th-anniversary.php

1 The commentaries were provided by: Dr. Roger Gibbons, Preston Manning, Mel Cappe, Stephen Williams, Dr. David Keith, Peter Robinson, David Runnalls (and others at the international institute for sustainable development), Thomas Homer-Dixon, and Ian Church

Geared for Change: Energy Efficiency in Canada’s Commercial Building Sector

In January 2009, the NRTEE released with Sustainable Development Technology Canada (SDTC) a joint report entitled Geared for Change: Energy Efficiency in Canada’s Commercial Building Sector. This collaborative research linked the NRTEE’s policy advisory role and convening power with SDTC’s proven “clean tech” expertise and market knowledge. It proposes a policy pathway to promote energy efficiency within the commercial building sector, and recommends ways to overcome barriers to the deployment of technology that would reduce greenhouse gas emissions.

The NRTEE and SDTC outlined a suite of fifteen policy recommendations grouped in four broad categories:

• Implement an economy-wide price signal;
• Incorporate command and control regulations;
• Use a variety of subsidies to overcome financial risks; and,
• Promote voluntary actions and information resources.

Canada’s commercial building sector is a significant energy user and producer of carbon emissions. It accounts for 14% of end-use energy consumption and 13% of the country’s carbon emissions. Energy efficient technologies exist that could reduce costs to businesses and consumers while reducing the environmental impact of this major economic sector. But these technologies are not being taken up, with the result that energy use and carbon emissions continue to grow.

From January to March 2009, the NRTEE and SDTC held outreach sessions in Toronto, Halifax, Montreal, and Vancouver on the report. Each of these sessions were hosted by a partner local organization, with guest speakers invited to give a regional and local context to the report recommendations. The purpose of the sessions was to communicate the research findings and build local networks to promote action for increasing energy efficiency in commercial buildings. Participants engaged with presenters, allowing for an opportunity to increase understanding of relevant issues and policy options. Invitees ranged from the public and private sectors, academia and non-government organizations.

The effectiveness of these outreach activities was clearly demonstrated by a significant increase in report downloads surrounding each event. This pattern of release followed by engagement has become the NRTEE’s normal pattern of outreach. Over 2,064 downloads of the report (to March 31, 2009) occurred.

The Geared for Change report can be downloaded from the NRTEE website at: http://www.nrt-trn.ca/eng/publications/commercial-buildings/commercial-buildings.php

Adaptation of Northern Infrastructure to Climate Change

The impacts of climate change are already evident across Canada’s North and could intensify over the next decades regardless of successes in reducing future global emissions of greenhouse gases (GHGs). Many of these changes will result in direct impacts to ecosystems, human infrastructure, and to our economies, safety and well-being.

Initiated in June 2006, the purpose of this NRTEE program is to examine the influence of Canadian public policy on how our communities and economic sectors plan for and manage the effects of climate change. The program focuses on exploring public policy options for improving the management of climate change risks in respect of northern physical infrastructure. This recognizes the unique vulnerability of Canada’s North, to the impacts of climate change. Northern physical infrastructure is especially vulnerable, since it was often developed in the special context of an extreme climate, making it extremely vulnerable to change. This infrastructure must adapt effectively to the new reality to ensure sustainable regional development and to safeguard national security and safety.

Specifically, the program is evaluating how key mechanisms within existing policy areas might be adjusted, strengthened or restructured to recognize that the impacts of climate change are a serious risk. The NRTEE decided to examine disaster management; codes, standards and related instruments; and insurance as three areas in which public policy could play an enabling role in ‘mainstreaming’ climate change risks as part of the management of northern physical infrastructure.

Significant data, information, and stakeholder views were collected as part of the program. The research process included three study teams, each focused on one approach to risk management.

The NRTEE also commissioned research on the role of governments in adaptation, and legal liability as a barrier or driver of adaptation. Input from northern stakeholders and technical experts was a key part of the research process, in some cases, involving travel to northern communities. Overall, the NRTEE involved close to 100 stakeholders in the research process.

The NRTEE will make recommendations relating to the three policy areas examined, highlighting barriers and opportunities to proactively build the resilience of northern infrastructure and related services to a changing climate. The report will be released in the fall of 2009.

Information on the program and its activities can be found at: http://www.nrt-trn.ca/eng/issues/programs/adaptation/adaptation.php

Water Sustainability and Canada’s Natural Resource Sectors

In Fall 2008, the NRTEE launched a program on Water Sustainability and Canada’s Natural Resource Sectors. The program is designed to examine the relationship between the energy, mining, forestry and agriculture sectors and water sustainability, how water is used by these sectors, how it contributes to their economic livelihood, and how we can ensure the sustainability of this resource in the future. One key element in the program is the expected changes in supply, availability and distribution flowing from climate change.

Phase I (which ended in March 2009) developed clear objectives and a research framework for the program.

In order to achieve this, the NRTEE held a multi-stakeholder workshop on February 24, 2009. Among the participants were industry sector leaders, representatives of governments, academics, leaders of non-government organizations, Aboriginal peoples, and civil society. Their input was vital in setting the direction of the program’s work. A report on the conclusions and directions from this forum called “Charting a Path” is publicly available on our website.

In addition, a Sub-Committee on Water comprising members of the NRTEE was created to allow for additional involvement and guidance in the program. This group is complemented by an Expert Advisory Committee (EAC), made up of leading Canadian water experts. The EAC and the NRTEE Sub-Committee will be in place over the course of the Program to provide ongoing advice.

Information on the Water Sustainability and Canada’s Natural Resource Sectors can be found at: http://www.nrt-trn.ca/eng/issues/programs/water/water.php

Kyoto Protocol Implementation Act

The Kyoto Protocol Implementation Act (KPIA) was passed by Parliament in June 2007. It calls on Canada to meet its international commitment under the Kyoto Protocol by reducing greenhouse gas emissions to 6 per cent below 1990 levels by 2012.

Every year, the government must prepare a Climate Change Plan describing the measures and policies it enacted to ensure that Canada meets its obligations under the Kyoto Protocol. This plan must also detail the expected emission reductions resulting from the government’s measures and policies.

Subsection 10(1) of the Act requires the NRTEE to:

1. Undertake research and gather information and analyses on the Plan or statement in the context of sustainable development; and
2. Advise the Minister on issues that are within its purpose, including the following:
   1. The likelihood that each of the proposed measures or regulations will achieve the emission reductions projected in the Plan or statement;
   2. The likelihood that the proposed measures or regulations will enable Canada to meet its obligations under Article 3, paragraph 1, of the Kyoto Protocol, and
   3. Any other matters that the Round Table considers relevant.

The NRTEE undertook the required analysis to comply with our obligations under KPIA and our findings were provided in a report to the Minister of the Environment in July, 2008. The NRTEE offered the following conclusions in its report:

• Overall, the 2008 KPIA Plan was a more transparent and more accurate representation of projected emission reductions. In particular, the Plan was improved through use of integrated modelling approaches.
• While the 2008 Plan showed substantial improvement, some methodological issues may still contribute to an overestimation of emission reductions, particularly in the assessment of individual policies or programs.
• With respect to the realization of Canada’s Kyoto commitments, we concluded that the Plan will likely not allow Canada to meet those commitments. However, we also suggested that including longer-term forecasts would allow for a more complete picture of the effectiveness of climate policy measures.

The 2008 NRTEE KPIA Response also recommended:

• That evaluation of policies also focus on the longer term and progress toward the government’s targets;
• That the integrated modelling be extended to assess incremental effects of individual policies;
• That updates to the most current reference case be well documented and not be combined with reporting under the KPIA;
• That emission reductions attributed to the technology fund be accounted for in the year they are to occur rather than the year in which contributions to the fund are made;
• That future integrated modelling account for all potential offsets to minimize likely rebound and free-rider effects;
• That only the impacts of announced and reasonably expected provincial actions be included in the modelling for the KPIA plan; and,
• That forecasting techniques used continue to strive to meet international best practices in forecasting techniques and governance.

Copies of the report and information on the research process can be found at: http://www.nrt-trn.ca/eng/issues/programs/KPIA/KPIA.php

GHG Emissions Forecasting: Learning from International Best Practices

In July 2008, the NRTEE released a report entitled: Greenhouse Gas Emissions Forecasting: Learning from International Best Practices. This report was released in tandem with our 2008 Response to our obligations under the KPIA.

This report builds on key concerns highlighted by the Round Table in its 2007 Response to its obligations under the Kyoto Protocol Implementation Act (2007 KPIA Response). Chief among those concerns were differing and inconsistent forecasting methods used among various federal departments to describe the greenhouse gas (GHG) emission reductions accruing from a particular policy measure or initiative, leading to issues of additionality, free ridership, rebound effect, and policy interaction effects.

Based on these concerns, the NRTEE felt it would be useful for the federal government if international best practices could be identified and highlighted in the forecasting of emission reductions resulting from government policies, from both a methodological and a governance perspective.

Key findings and recommendations from the analysis contained in the report include the following:

From a methodological perspective:

• Hybrid energy-economy models are more effective in producing accurate GHG emissions forecasts as they integrate the strengths of both the traditional bottom-up and top-down approaches to modelling emissions forecasts.
• The use of a consistent baseline from year-to-year (including baseline data), assumptions, and conditions across the board is fundamental to ensure emissions forecasts can be accurately compared from year to year.
• The use of consistent and agreed definitions of terms and concepts, such as for free ridership and additionality, across government departments involved in forecasting would ensure greater transparency of emissions forecasts and facilitate assessment of the forecasts’ accuracy.
• There is need for an international perspective in the model so that it can respond appropriately to world events (since in most cases, Canada is a price taker for both commodities and energy, and a primary trader of goods and energy). Canada is acting in concert with other countries on climate policy and its forecasting approaches need to reflect this reality.

From a governance perspective:

• Use of an independent forecasting agency is preferable to provide more accurate and transparent emissions forecasts for consideration by government policy makers, external analysts, and Parliamentarians and to facilitate ongoing audit and evaluation.
• Multi-source emissions forecasting from a group of individual government departments can be accurate, but works best both when centrally coordinated and with independent authority by the central coordinating department or agency to question other departmental forecasts.
• Regular independent reviews, audits and evaluations of government forecasts and forecasting methods by a third-party agency or process helps ensure accuracy of forecasts and that forecasting methodologies are up-to-date and robust.
• Forecasting must be sufficiently resourced and financed by governments to ensure data is up to date and most recent improvements in forecasting methodologies are incorporated for the benefit of policy makers taking decisions based on these forecasts.
• Regular, ongoing evaluation of past forecasts for accuracy and effectiveness is necessary to ensure continuous improvement of government forecasting methodologies and approaches.
• Ensure transparency and clarity with respect to key assumptions and methods.

Copies of the report and information on the research process can be found at: http://www.nrt-trn.ca/eng/issues/programs/KPIA/KPIA.php