Montreal is one of the responsible investment hubs of the planet, with a thriving investment community. With over 60 PRI signatories and hundreds of people, Quebec is probably one of the most active regions for the Principles of Responsible Investment (PRI) around the globe. During a recent trip to Canada, I had the chance to present at an informal gathering of experts of Montreal's responsible investment community. I was asked to present a glimpse into Australian climate policy.
As two of the highest per capita emitters globally, Australia (16.5 tons of CO2 (tCO2e)/person)) and Canada (15.2 tCO2e/person) have more in common than their geographical distance and highly different climates suggest. While the majority of Australia's population lives in a few urban centers on the coast, predominantly on the Eastern seaboard, the large majority of Canada's population lives in a sliver of land in the very South of the world's second largest country, in close proximity to the US border and South of the US city of Seattle.
Both countries' industries depend largely on mining and the extractives sector, with coal predominant in terms of emissions on the Australian side, and tar sands on the Canadian. With respect to the 2015 UN Paris Agreement, Canada has pledged a 30% reduction of its 2030 emissions compared to the 2005 baseline, while Australia committed to a 26-28% reduction in the same time frame. As previous British colonies that still pertain to the Commonwealth, Australia and Canada have unresolved issues and face challenges in terms of Indigenous Reconciliation, with some, albeit small and slow progress made recently and ambitions in this regard seemingly ramping up. Each country is also very exposed to the threats of global warming, each in their own, unique way. Australia's economy and population are highly threatened by intensifying droughts and heat waves, bouts of heavy precipitation, rising sea levels and more frequent and powerful cyclones. Conversely, Canada's infrastructure and population face climate change-related challengesrevolving around melting glaciers and sea ice, thawing permafrost, and loss of biodiversity, to name but a few.
In terms of carbon, this is where the parallels between the two countries end though. The ways Australia and Canada intend to decarbonize and meet its goals under Paris differ vastly.
To this date, Australia holds the sad record of being the only country in the world to introduce a carbon tax only to repeal it later. The country's main avenues of reducing emissions are the 'Emissions Reduction Fund' - ERF (now relabelled as 'Climate Solutions Fund' - CSF), the Safeguard Mechanism and the Renewable Energy Target. In 2014, the ERF/CSF was launched as a 2.55bn AUD fund to support Australian businesses, farmers and land managers to take practical actions to reduce emissions and improve the environment. With its reverse auction mechanism, it seeks to provide cost effective carbon abatement. As part of the ruling Liberals/Nationals Coalition victory in the May 2019 Australian Federal Elections, an additional 2bn AUD were pledged to the CSF to allow Australia to meet its 2030 Paris targets. ERF/CSF projects feature diverse methodologies, such as agriculture, energy efficiency, and Aboriginal savanna burning for example. Australia's 'safeguard mechanism' protects taxpayers' funds by ensuring that emissions reductions paid for through the crediting and purchasing elements of the ERF are not displaced by significant increases in emissions above business-as-usual levels elsewhere in the economy. It requires Australia's largest emitters to keep emissions within baseline levels. Australia's third piece of reducing emissions is the 'renewable energy target' (RET). The RET is designed to reduce emissions of greenhouse gases in the electricity sector and encourage the additional generation of electricity from sustainable and renewable sources. On the sub-national level, six Australian states already go further than the federal program by establishing 'net zero' emission goals by 2050. This concerns the Australian Capital Territory, New South Wales, Queensland, South Australia, Tasmania and Victoria.
Canada introduced a federal carbon tax in April 2019 as a means to lower the country's carbon emissions to be in line with its Paris target. This is a backstop mechanism that imposes a tax initially priced at 20 CAD/tCO2e on provinces that do not have policies for a carbon price of their own. The tax will increase over time. Monies collected are returned to the population as a 'carbon dividend'. The provinces of British Colombia, Prince Edward Island (carbon tax) and Quebec (hybrid of carbon tax and cap-and-trade linking of carbon markets with California) both have functioning systems in places. Provinces where the federal carbon tax applies are Alberta, Ontario, Manitoba, New Brunswick, Yukon, Nunavut and Saskatchewan. Currently, Canada's Federal carbon tax faces multiple challenges by provinces in the Supreme Court, with Quebec recently supporting Saskatchewan's challenge. Federal elections in Canada are to be held on October 21, 2019. At this stage, the continuity of Justin Trudeau's Liberal Government is under threat by the Conservatives, led by Andrew Scheer, who are leading in the polls by a slight margin. As the race accelerates and ultimately unwinds on election date, the future of Canada's carbon tax will most likely also be determined at the ballot box. This will decide whether Canada will join Australia's unique record of introducing and then repealing a tax on carbon, or whether this gloomy prospect can be avoided.
These and other topics were vividly discussed by the participants of the networking event that was superbly organized and hosted by the Montréal responsible investment community's charming Rosalie Vendette (with thanks!).