Nova Scotia Carbon Pricing Should Focus on Heating Oil and Gasoline

20 Jul 2016 7:54 PM | Anonymous

July 20, 2016 – Halifax

Prime Minister Justin Trudeau and U.S. President Barak Obama demonstrated bold environmental leadership when they declared a joint initiative on climate change action and clean energy promotion in March of this year. Recently Federal Environment Minister Catherine McKenna made headlines again when she confirmed that Canada will implement a price for carbon by the end of 2016. Nova Scotia faces the option of having a federal carbon price imposed on its jurisdiction or the opportunity to design pricing mechanisms that suit its economy and promote a Nova Scotian advantage in the green economy.

 Renewable energy producers and energy transition advocates, SWEB Development, recommends a carbon pricing strategy focused on fuel transition at the consumption level as the most effective driver to emission reductions and sustainable economic development for Nova Scotia. In other words, incenting a shift of heating oil and transportation fuels to the electricity grid.

 Nova Scotians spend over $2Billion annually on transportation gasoline and heating fuel, essentially all of which is imported. “We spend a staggering amount on importing fossil fuels into Nova Scotia. The good news is we can reduce our emissions in Nova Scotia and keep more of that money in our economy at the same time” says Daniel Roscoe, Chief Operating Officer of SWEB Development.

 Nova Scotia has been a leader in transitioning the electricity sector from coal to renewable energy. In 2015, 26.5% of Nova Scotia’s electricity production came from renewable sources. That is an increase of 18% from 2002. The electricity sector is on track to meet or exceed the robust environmental goals for the Environmental Goals and Sustainable Prosperity Act (EGSPA) that were laid out in 2007.

 These achievements in the electricity sector set us up well to build an energy transition strategy that will significantly reduce GHG emissions and drive economic development in a sustainable and equitable fashion.

 Technologies incorporated in the electrification of these sectors will include smart meters, heat pumps, electrothermal storage units, batteries, and electric vehicles. These technologies will be key to enabling the ongoing decarbonisation of our electricity system, and Nova Scotia already has a robust network of companies able to supply, install and maintain them.

 Building on models used for energy efficiency, the home heating and transportation sectors could fund innovation in their industries and leverage the funds that were designated by the Federal Government earlier this year to build the green economy. The resulting model would not only be revenue neutral, but could foster sustainable economic development and drive wealth back into Nova Scotia’s economy.

 By tackling GHG emission reductions through conversion to a less carbon intense source in locally produced electricity, Nova Scotia will accomplish a range of environmental and economic goals. Most significantly, real, measurable GHG emission reductions can be achieved. Local innovation in new technologies and promotion of economic growth can capitalize on leadership and entrepreneurship in Nova Scotia. Furthermore, sustainable, equitable economic development that enables cross sector application of GHG emission reductions and rural economic development will also provide protection for the most vulnerable against energy price fluctuations and allay any burden of a carbon pricing regime.

BACKGROUNDER

Carbon Pricing in Nova Scotia: Policy Strategies for Emission Reduction Success

 Headline this week in Bloomberg News (July 18, 2016)

Canada will have a national price on carbon emissions by the end of this year, Environment Minister Catherine McKenna says.

 Nova Scotia stands at a crossroads in addressing greenhouse gas emission reductions. Pricing mechanisms will be introduced at the national level in the very near term. The opportunity to drive economic success and innovation lies in policy decisions at the regional level. Decisions on how to implement the carbon price will affect the provincial economy and society at root levels. As the entire world transitions to a green economy, the opportunity for Nova Scotia to take advantage of the shift is integrated closely to its approach to carbon pricing and the carbon economy.

 With GHG emission reductions valued in a tangible price, there comes a fundamental shift in the nature of market economics. Incorporating an environmental value as a market commodity opens up new possibilities to growing our economy and driving innovation. Policy makers will need to be open to the possibility of this singular opportunity to drive innovation and economic development by utilizing the value of the carbon commodity to spur economic development in Nova Scotia and encourage real, verifiable emission reductions.

 The principles for a Nova Scotia carbon pricing system that were agreed upon by the participants in the first carbon forum hosted by Ecology Action Centre in May 2016, included:

  • That the price and mechanism be politically viable
  • That a regional approach incorporating Maritime-wide cooperation was preferable
  • That any system implemented should be transparent and efficient
  • That the system be effective in reducing GHG emissions
  • That the system be fair across the board to vulnerable individuals, businesses, and sectors
  • That the system be supportive of the transition to a green economy

 Participants also agreed upon the importance of innovation and economic transition in the context of building a sustainable economy in Nova Scotia through carbon pricing. Agreement on the following:

  • The introduction of a carbon pricing framework should spur innovation, and attract new talent to Nova Scotia. Innovative solutions for problems and inefficiencies identified by the introduction of a carbon pricing framework should be supported, and catalyze the transition to a sustainable and green economy.
  • A carbon pricing framework should prioritize carbon reduction strategies in the transportation sector.
  • Reduction of emissions from residential, commercial, and industrial properties should be specifically targeted by a carbon pricing framework. A carbon pricing framework should also support the electrification of home and commercial heating sources.

 Given the consensus principles of fairness, efficiency, transparency, and innovation, SWEB Development proposes a carbon pricing policy that focuses on transportation and home heating sectors. To date the electricity sector has borne the brunt of regulation and policy surrounding emission reductions. In fact, in 2015 26.5% of Nova Scotia’s electricity consumption was fueled by renewable sources.

 A full 28% of Nova Scotia’s GHG emissions come from transportation and another 13.3% from home and commercial heating. If the electricity sector continues to bring new renewable sources online and further decreases the carbon intensity of electricity production, additional load on the system would be fed by a decreasingly carbon intense system. Therefore, any transition from fossil fuel based systems to electrical systems will further drive emission reductions and maximize the value of renewable growth in the electrical grid.

Furthermore, energy security will be enhanced by the use of electricity from locally produced sources like wind, hydro, tidal, and solar. Nova Scotia’s dependence on imported fossil fuels in all sectors, engenders an economic vulnerability that could be mitigated by the utilization of local production and local resources.

Therefore, any price on carbon should:

  • capitalize on the greening of the grid by implementing programs to electrify transportation through incentives and regulation
  • capitalize on the greening of the grid by implementing programs to electrify home heating and cooling through incentives and regulation
  • encourage the transition to 100% renewable electricity
  • drive innovation and transition to a green economy, thereby fostering a better, more sustainable economy and environment throughout the province and Maritime region.
  • foster offset projects that drive local innovation and economic development

 The Numbers / Targets

Environmental Goals for Economic Prosperity Act – Nova Scotia

10% below 1990 levels by 2020

35-45% below 1990 levels by 2030

 Major sources of Emissions as of 2014

                Electricity 45%

                Transportation 27%

                Home Heating 12%

  Nova Scotia Power in 2015 – 26.6% of electricity comes from renewable sources

 REFERENCES

Carbon Pricing Forum Synthesis (EAC: 2016)

 Larry Hughes, Energy Security in Nova Scotia (CCPA: 2007)

 Nova Scotia Power website, www.nspower.ca

 Statistics Canada, Households and the Environment, 2011 http://www.statcan.gc.ca/pub/11-526-s/11-526-s2013002-eng.pdf

 ICF International for the NS Department of Energy, Market Trends for the Supply & Demand of Electricity in Nova Scotia, 2014 http://0-nsleg-edeposit.gov.ns.ca.legcat.gov.ns.ca/deposit/b10672321.pdf

 Statistics Canada, Sale of fuel used for road motor vehicles, by province and territory (2014) http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trade37a-eng.htm

 Josh Wingrove, Bloomberg, “Canada to Introduce Carbon Price in 2016 Minister Says” (July 15, 2016) http://www.bloomberg.com/news/articles/2016-07-15/canada-to-introduce-national-carbon-price-in-2016-minister-says

 Government of Canada, U.S.-Canada Joint Statement On Climate, Energy, and Arctic Leadership (March 10, 2016) http://pm.gc.ca/eng/news/2016/03/10/us-canada-joint-statement-climate-energy-and-arctic-leadership

 Government of Nova Scotia, Nova Scotia’s Climate Change Action Plan (January 2009) https://climatechange.novascotia.ca/sites/default/files/uploads/ccap.pdf

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