Sending the wrong message!
In the closely guarded industry consultations, Environment Canada officials suggest the new climate change regime will provide incentives for voluntary emissions reductions and flexible compliance mechanisms to allow companies to use verifiable offsets to meet their reduction obligations. Under the plan, companies must cut emissions intensity to 26 percent below 2006 levels by 2016.
Companies that already have acted to reduce emissions may be eligible for ‘early action credits’ provided these reductions took place between 1992 and 2006; involved a process or facility improvement; are verifiable through auditable evidence; and are incremental.
But early action credits will be limited to 15 mega tonnes of emission reductions system wide, and will only apply against further reductions. This is “a good balance to recognize past action and future needs,” said Environment Minister John Baird to members of the Standing Committee on Environment and Sustainable Development on May 29th.
These credits may provide some minor relief for early actors, but those companies will still be required to make significant emissions intensity reductions, and after three years will be on equal footing with the laggards that made no efforts to reduce emissions in the previous ten years.
The problem is, for industries such as forestry that have already made substantial investments to reduce their emissions, further cuts will be incrementally more expensive. In fact, industry observers are quick to point out that the costs associated with early efforts to reduce GHG emissions, in many cases, are far in excess of the suggested $15/per tonne of CO2 equivalent that firms will be forced to pay for exceeding their target. Limiting the one-time credit for verified early actions between 1992 and 2006 to 15 Mt (with no more than 5 Mt in any one year) is a classic example of too little too late.
This whole system reinforces the belief in industry of the ‘first mover disadvantage’. By acting early, you pay more and get fewer benefits. The longer you wait for policy, the lower the price you will pay – talk about sending the wrong message.,
There is a simple rule in policy making that goes something like ‘tax what you don’t want and reward what you do want.” By failing to give proper recognition of very real and verifiable emissions cuts voluntarily undertaken by key sectors such as forestry, manufacturing and construction, the government is sending the opposite message
While the details of emission reduction accounting can be mind numbing and complex, the issues involved are not rocket science. The federal government deserves credit for actually laying out a plan to deal with climate change and emissions reductions and for setting out to put in place the infrastructure to implement it. But credit must also be given to those who did not wait for successive federal governments to make up their mind and who actually invested considerable amounts of money to make the changes needed to reduce emissions.
Shifting the base year of reductions accounting to 2006 and limiting the amount of pre-2006 early action credits means that companies that actually reduced emissions will not be rewarded for their efforts nor allowed to carry forward reduction credits that are either realistic in value or sufficient in volume.
This violates another cardinal rule of policy making, which suggests that the only thing worse than a mixed message, is a wrong message.