Western Climate Initiative

Manitoba Wildlands has joined a group of non-profit, civil society organizations across the western United States and Canadian provinces concerned about WCI outcomes. The organizations in the Western Climate Advocates Network (WeCAN) are providing input and recommendations to state and provincial signatories to the Western Climate Initiative (WCI) as they develop a greenhouse gas (GHG) emissions reductions program and design a cap and trade system.

The cap-and-trade design is an important aspect of the regional effort by seven US states and four Canadian provinces to meet their goal of reducing greenhouse gas (GHG) emissions by 15 percent below 2005 levels by 2020. WCI Partners represent over 70 percent of the Canadian economy and 20 percent of the U.S. economy. Manitoba has indicated that it will meet its emissions targets based on Kyoto Protocol objectives and WCI goals through emissions reductions inside Manitoba.

• A limit on the emissions from all major sources of global warming pollutants;
• Include under cap all electricity-related emissions, including those associated with electricity imported from outside the WCI partner jurisdictions;
• Ensure all regulated entities use a consistent reporting methodology; and
• Mitigate economic impacts on consumers and regulated entities by allowing flexibility in how and when reductions are made (e.g., banking of allowances and the limited use of offsets).

• Electricity generation, including imported electricity
• Industrial and commercial fossil fuel combustion
• Industrial process emissions
• Gas and diesel consumption for transportation, as well as residential, commercial, and industrial fossil fuel uses not otherwise covered (see below)

The timeline agreed to by WCI Partners means that each would begin reporting emissions in 2011 for emissions that occur in 2010. The first phase of the cap-and-trade program will begin on January 1, 2012, with a three-year compliance period. The second phase will begin in 2015, when the program is expanded to include transportation fuels and residential, commercial and industrial fuels not otherwise covered in the first phase.

Ontario and Quebec in Canada signed an MOU in summer 2008 to initiate a cap and trade program that will be on line sooner than the WCI plan.

Design of WCI system will be finalized November 2008 with all Partner jurisdictions expected to pass supporting legislation in 2009 to implement the system.

Matt Horne, Acting Director of the Pembina Institute's B.C. Energy Solutions program commented, "The WCI recommendations represent a step forward from the draft version, but their lack of urgency reinforces the need for immediate action from Canada's federal and provincial governments. The system's start date of 2012, with full implementation not until 2015, is completely out of line with the recommendations of climate scientists."

Gauging the potential or pitfalls of the WCI cap-and-trade program is difficult as states and provinces have choices to make regarding implementation within their individual jurisdictions.

The Pembina Institute pointed to options for individual WCI Partners to strengthen the program. "In addition to the need for near-term action, several design issues will need to be strengthened prior to the WCI cap and trade program's launch in 2012. In particular, it will be critical for the states and provinces to commit to auctioning (as opposed to giving away free-of-charge) more than 10% of the pollution permits."

As Christopher Bush, a UCS climate economist, noted, "Auctioning permits allows states to spend money on projects that can further reduce pollution and benefit their residents".

The Pembina Institute did acknowledge the progress made on the issue of offsets, "On the positive side, there has been some important progress made by tightening the limits on offsets and reaffirming a commitment to including a sufficient percentage of emissions," said Horne.

The Union of Concerned Scientists also commented on issues related to offsets, urging both states and provinces limit offsets and maximize pollution reduction in the region. Doing so, UCS experts say, would spur more clean technology development and protect public health by reducing conventional smog-forming and toxic air pollutants. UCS praised the fact that the WCI now "permits states and provinces to set even tighter limits on offsets" - an improvement over the draft recommendations issued in July 2008.

Burning wood results in significant carbon dioxide emissions. Yet proponents of producing bioenergy from wood say the fuel does not cause pollution or emissions because trees grow back and remove all the carbon back out of atmosphere as they grow.

"The problem is that it can take more than a hundred years for a natural forest to take the carbon back from the atmosphere, if it ever does. In the meantime, switching to woody bionenergy would actually increase emissions in the short-term when emission reductions are most urgently needed," says Chris Henschel, an expert on forests and climate change with CPAWS.

Environmental groups have been pushing for emissions from all energy sources to be counted within the WCI cap-and-trade program. The final September 23, 2008 recommendations allow each province and state to decide whether or not to ignore these real emissions and treat them as carbon neutral.

CPAWS contends the WCI needs to send a clear signal it will not create a perverse incentive to log and burn natural forests with no climate benefit. Creating a market to burn wood from natural forests for electricity could result in much greater pressures to log forests and accelerate clear cutting in Northern pristine boreal forests.

Download Manitoba Wildlands' cover letter for Government of Manitoba - Joint Canadian ENGO Submission to the WCI Re: Western Climate Initiative Draft Design Recommendations for a cap-and-trade program (PDF)

The draft cap-and-trade framework proposes setting a hard cap on industrial emissions, providing cash incentives for companies to reduce their pollution levels. Greener companies can sell their pollution "credits" to the highest bidder - to those emitters who can't meet their targets. The intent is to encourage efficiency and conservation by rewarding industries that get below the cap and adding costs to high polluters.

The cap would force polluting companies to pay for emissions they created. They would then be free to pass those costs on to consumers.

The program would grant each participating province (British Columbia, Manitoba, Ontario and Quebec) an allocated and declining cap for each year from 2012 to 2020, set in advance. Those caps have not yet been set, but would be based on population, electricity consumption and production, and economic activity - not on current efficiency, the WCI report says. As such, the most efficient provinces in 2012 could sooner sell credits to other regions, creating a revenue stream.

In Manitoba Premier Doer made a public commitment in March 2008 that all reductions in emissions for the province's Kyoto targets, and hence for WCI reporting, would be from actual reductions in emissions within the province.

Emissions caused by production of transportation fuels, such as gasoline, are included in the draft design, though with significant delay before they are included. Others include electric generation, general combustion, industrial process emission sources and transportation fuel combustion. Emissions from production of biofuel would not be included.

The gases considered as emissions are carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulphur hexafluoride.

The cap would apply to all companies emitting more than 25,000 tonnes of those gases, measured as "carbon dioxide equivalents" per year. This level is much lower than current reporting levels for Canada's GHG national inventory.

Climate advocates have been supportive of the intent and overall direction of the WCI, but were cautiously critical of the draft cap-and-trade recommendations. They expressed disappointment at the prospect of initial caps being set at business-as-usual levels and the idea that the framework wouldn't bring large polluters into the system until 2012, and even 2015 for some (for more information, see section below, WCI's Draft Cap-and-Trade System Flawed: Canadian Climate Advocates).

The plan was open for public review and comments until mid-August and is scheduled to be finalized September 2008.

The WCI also released draft recommendations for member reporting of greenhouse gases on July 23, 2008.

A competitive polluter-pay principle is a good one, say WWF-Canada, the David Suzuki Foundation and the Pembina Institute, but emission caps are too high and the timeline - as late as 2012 or 2015 for some large emitters - too long.

"It's too late. This is a pressing issue and we don't have time to lose," said Nicholas Heap, climate and energy policy analyst with the David Suzuki Foundation.

It appears that the WCI proposal would set initial caps at business-as-usual levels, noted Pembina Institute's Cherise Burda.

• Advance the start date of the system to 2010.
• Set provincial caps on greenhouse gas emission at levels in line with their climate targets.
• Close potential loopholes with respect to use of credits from outside capped sectors.
• Auction all greenhouse gas allowances, rather than giving them away for free.

The Western Climate Initiative (WCI) held its third full stakeholder meeting on July 29th in San Diego. The meeting follows meetings in Portland and Salt Lake City, and was convened to present and discuss WCI recommendations (see section above, WCI Releases Draft Cap and Trade Program Framework).

For more information and resources related to WeCAN, see section below, Manitoba Wildlands Joins Western Climate Advocates Network (WeCAN)

Members of WeCAN are united in their support for a cap and trade system and complementary policies that will lead to deep reductions in greenhouse gas emissions in all member jurisdictions. The network made various submissions to the WCI in the lead up to the WCI's release of its draft cap-and-trade framework and draft reporting requirements.

Union of Concerned Scientists (UCS)
Download August 13, 2008 UCS Comments on the WCI's July 23 Draft Design Recommendation for a Regional Cap-and-Trade Program (DOC)
Download UCS Attachment 1: UCS Fact Sheet: Land Use Changes and Biofuels (PDF)
Download UCS Attachment 2: Graph (XLS)
Download UCS Attachment 3: UCS Memorandum Re: Notes on Analysis of 10% of Emissions Offset Limit in WCI (PDF)

Labour Groups
Download August 13, 2008 comments from BC, Manitoba, Ontario, Quebec, Oregon and California Labour groups (PDF)

West First
Download August 13, 2008 statement of principles supported by numerous officials and organizations, West First - Creating climate policy to ensure success for the West (PDF)

Pacific Forest Trust
Download August 12, 2008 Pacific Forest Trust Comments on the July 23 WCI Draft Design Recommendations (PDF)

Center for Energy Efficiency and Renewable Technologies (CEERT) / Center for Resource Solutions (CRS) / Renewable Northwest Project (RNP)
Download August 13, 2008 submission from the Center for Energy Efficiency and Renewable Technologies (CEERT), the Center for Resource Solutions (CRS) and the Renewable Northwest Project (RNP), Maximizing Renewable Electricity Generation for the Western Climate Initiative (DOC)

With Ontario as a member, the WCI now represents approximately 73% of Canada's economy and 20% of America's economy - making it the largest intended cap-and-trade program in North America.

Ontario has committed to reducing its GHG emissions to 6% below 1990 levels by 2014 and 15% below 1990 levels by 2020.

Ontario's refusal to embrace the California tailpipe plan had previously blocked it from joining. However, sources cited in the media indicate that WCI members wanted Ontario on board because inclusion of Canada's largest province would help build momentum for a cap-and-trade system.

WCI project manager Patrick Cummins said other factors may also be considered in WCI membership, including an overall commitment to address climate change. The July 18, 2008 WCI press release announcing Ontario's membership does not make any reference to adoption of the California vehicle emissions standard.

• Preventing dangerous global warming is paramount
• Permits to emit carbon must be used for public benefit
• Promoting a clean energy future
• Actual emissions reductions in each jurisdiction
• Pollution reductions must be verifiable
• Managing costs without breaking the cap
• Ensuring fairness and equity
• Linking with other programs
• Energy policy reform is an essential companion of any cap

The WCI regional goal includes a commitment for each partner to "update the other WCI partners on their climate action plan and GHG emissions inventories every two years" but no public reporting requirements are mentioned, although membership in the WCI requires participation in The Climate Registry.

• August 2007 as target date for setting overall regional goal (consistent with individual state and provincial goals) to reduce collective emissions
• Participating in multi-jurisdictional GHG registry to enable tracking, management, and crediting for entities that reduce GHG emissions, consistent with state/provincial GHG reporting mechanisms and requirements
• August 2008 as target date to develop design for a regional market-based multi-sector mechanism to achieve regional GHG reduction goal
• Promoting energy efficiency and renewable energy sources, advocating for national climate policies & targets; identifying measures to adapt to climate change.