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ECC – Interim Report – Section 2

Interim Report to the Minister of Environment

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2 NRTEE’s Approach

2.1 Organizing the Reference

In developing its overall approach, the NRTEE first organized the government’s Reference into three distinct, though related, elements: objectives, targets and pathways:

• Objectives are essentially those outcomes that Canada is trying to achieve as a nation. For GHGs they can be expressed as long-term ambient concentrations of CO2 that are set based on an understanding of how emissions ultimately adversely impact sensitive climate, ecosystem and human receptors. For GHGs, the objective is likely Canada’s share of global emissions that stabilize atmospheric concentrations of CO2 at a level that avoids “dangerous climate change”. The Reference does not specifically request advice on a GHG objective for Canada. However, the NRTEE has concluded that a clearly articulated national objective linked to stabilizing atmospheric carbon levels can help the government evaluate the likely effectiveness of possible emission reductions targets. Air pollution is a real concern to Canadians and their natural environment. For air pollutants, the overall objective is to have clean air. Objectives, while set at a national level, are best expressed as regional and local targets that will have a direct and real effect on the health of Canadians and ecosystems. The ambient air quality objectives are often specified as annual average concentrations for particulate matter and ozone.
• Targets are the emission reductions that contribute to the attainment of the objectives. These targets can differ in timing and scope.
• Pathways (or scenarios) are the preferred trajectories of emission reductions that achieve the national emission reduction targets. Policies that achieve the preferred pathway are based on a consideration of a range of factors such as environmental effectiveness, economic efficiency, political acceptability, distribution and competitiveness. Other considerations such as technology, GDP growth and structural change in the economy also influence the preferred pathway.

These elements provide the overarching framework of the NRTEE’s approach to delivering the Reference advice. A number of activities were then developed to address the work elements:

• First, the NRTEE commissioned a number of research studies for this initial work. The research covers a range of topics, including pathways for long-term reductions in emissions of GHGs and air pollutants, economic implications, co-benefits of GHG and air pollutant emission reductions, and comparative international approaches and the question of Canada’s “share” of global reductions.8 Further research studies are underway and planned for the coming months (see Section 6).
• Second, the NRTEE has engaged expert advisory groups to validate its research approach, findings, and recommendations throughout the development of its advice to the Minister. The advisory groups include individuals from industry, academia, government and non-governmental organizations.
• The NRTEE plans to discuss the research findings and its preliminary recommendations with a broader group of stakeholders in the summer and fall. While the research findings and advice are likely to be of great interest to many Canadians, time constraints will limit the extent of the NRTEE’s wider consultations in this phase.
• Finally, the findings and recommendations will be the subject of thorough review and dialogue by NRTEE members. The final report will represent a consensus of the members.

2.2 Scope of the Preliminary Analysis

The preliminary analyses on GHG and CAC targets and pathways to achieve the targets were conducted using CIMS, an integrated, energy-economy equilibrium model.9 CIMS has a detailed representation of technologies that produce goods and services throughout the economy and attempts to simulate capital stock turnover and choice between these technologies realistically. It also includes a representation of equilibrium feedbacks, such that supply and demand for energy intensive goods and services adjusts to reflect policy (or “price”).10 CIMS uses an emissions “price” in the scenario analyses. An emissions "price" is a price placed on carbon emissions through the implementation of an emissions tax and/or an emissions cap and permit trading scheme. The emissions price is the highest price required to reduce carbon to a level that achieves the medium-term and long-term objectives, but recognizes that most if not all emission reductions occur at a price that is lower. The emissions price pathways that are modeled capture the strength of a market-based price required to achieve a given level of emissions reductions. For both GHG and CAC emissions, there is substantial momentum internationally towards market-based systems, such as emissions taxes, or emissions cap and permit trading schemes. Taxes have been applied extensively in Europe to address air pollutants while emissions cap and permit trading markets are operational in both the United States and Europe for air pollutants and carbon respectively. This research is a quantitative exploration of these market-based GHG and CAC policies. The scope of the analysis is limited to “energy-related” GHG and CAC emissions. These are the emissions of GHGs (primarily CO2, but also methane and nitrous oxide) that result from the production and consumption of fossil fuels. Approximately 82% of GHG emissions in Canada originate from energy-related sources. The remaining non-energy emissions11 are beyond the scope of this study. CIMS covers nearly all CACs in Canada except those from open sources (like forest fires, soils, and dust from roads). In summary, the GHG emissions reductions modeled in CIMS can be realized through energy efficiency, fuel switching, carbon capture and storage (CCS), and overall demand reduction. Similarly, the CAC emissions reductions can occur though these actions, as well as through tailpipe controls. The full report of the modeling analysis is available.12 For GHG emission reductions, four different scenarios were evaluated, incorporating two different reduction targets (45% and 65% below 2005 levels by 2050) and two different GHG price path scenarios (“fast” and “slow”). A “fast” start implies relatively higher emissions prices in the near term and lower prices in the longer term; whereas a “slow” start implies relatively lower emissions prices in the near term and higher prices in the longer term. For CAC emissions (SOx, NOx, VOCs, and PM), reductions of 50% and 99% from 2005 levels by 2050 were initially evaluated. However, reductions of 99% were unable to be achieved in the model. Instead, targets of 50% and 80% reductions by 2050 for all the CAC emissions were analyzed. A key aspect of the government’s Regulatory Framework for Air Emissions is to address both GHG and air pollutant emission reductions in an integrated manner. Therefore, the research underway is also exploring the potential reductions that can be achieved when policies addressing both types of reductions are implemented concurrently. 8 See Appendix 1 for a list of the commissioned research studies. 9 For a full description of the CIMS model refer to “Pathways for Long-term Greenhouse Gas and Air Pollutant Emissions Reductions”. Report by J&C Nyboer and Associates for the NRTEE. April 2007. 10 See Appendix 2 for a description of the key attributes of CIMS. 11 CIMS does not include agroecosystems, the waste sector, solvent, or hydrofluorocarbon emissions. 12 Pathways for Long-term Greenhouse Gas and Air Pollutant Emissions Reductions. Report by J&C Nyboer and Associates for the NRTEE. April 2007. « Previous — Contents — Next »