For so long it was so easy to do nothing. Canada could say it was harmonizing its greenhouse gas (GHG) policy with the United States, which was mired in partisan wrangling that stalled climate action, and allowed us to hide our inaction behind good talking points. It was also easy to point to China and say they are the problem – building coal fired power plants daily at levels that make our global GHG contribution of 2 per cent look minuscule.
But no more. On Wednesday, China and the U.S. announced a bilateral agreement on controlling their GHG emissions. The U.S. would increase it’s current target of 17 per cent below 2005 levels by 2020 to become 26 per cent to 28 per cent below 2005 by 2025. China agreed to cap its emissions by 2030, thereby limiting its considerable emissions growth. These two countries account for 45 per cent of global emissions, so this historic agreement has important global implications.
Yet, will these countries act on their targets? U.S. movement to implement policy aligned with its targets seems likely given recent action by the U.S. Environmental Protection Agency to control domestic emissions from the electric power sector, which is the largest source of U.S. GHGs. Climate action in clean energy is also driving deployment and innovation in the U.S., further reinforcing the expectation that U.S. GHGs will fall.
But can we believe China will get its GHG policy act together? The answer may surprise you. China is a world leader on climate and clean energy policy. Driven by a mix of clean air, energy security and green industrial policy, China has implemented hundreds of policies ranging from shutting down inefficient industrial plants, to carbon emissions trading systems that cover five-times Canada’s current GHG emissions, to incentive programs for renewable energy. China is serious and China is moving on carbon and clean energy.
Given the bilateral agreement announced today, and the evidence that both China and the U.S. are implementing policy, the China-U.S. GHG agreement has two important implications for Canada.
First, the Keystone XL effect just spilled over globally. With the U.S. and China now committing to long-term reductions, and with Europe increasing its 2030 GHG target just last month, 85 per cent of our current export markets now have significant long-term carbon constraints. Our carbon exposure in exports markets now looks significant, especially if we continue to stall GHG action, particularly in the oil and gas sector.
Second, Canada will either need to harmonize with the U.S. or chart a new policy direction. Canada has made strong and continuous assertions that we are harmonizing GHG policy with the United States. Indeed, our 2020 target is identical to the U.S. target, while we have harmonized a range of vehicle GHG regulations. Canada now needs to make a decision in the next few months whether or not to follow the U.S. lead. Pressure will be mounting to make a post-2020 GHG target commitment prior to the 2015 Paris United Nations climate conference. This commitment will set domestic policy at the federal level and will influence provincial policies and actions for years to come.
Canada’s hiding in the U.S. shadow on climate policy has proved a good strategy to justify inaction. No longer will this be the case. With a bilateral China-U.S. agreement on controlling long-term GHG, pressure will mount for Canada to not only announce new long-term GHG targets, but to prove it is taking action.