This is second in a series of articles on implementation of BC's Greenhouse Gas Action Plan. The first article, in NEWS from West Coast Environmental Law #19:13, analyzed the BC Motor Vehicle Emission Reduction Regulation. This article looks at Action Item 11, Introduction of BC Energy Codes for New Houses and Buildings.
It is a sad commentary on the implementation of Canada's
greenhouse gas strategy: in 1994 the federal government took for
granted that all provinces would adopt the National Energy Codes
by 1996. In 1996, BC is being praised as showing provincial leadership
simply by doing what the federal government had assumed would
occur in its "business as usual" forecast of greenhouse
gas emissions.
In 1994, Natural Resources Canada (NRCan) forecast a thirteen per cent increase in Canada's greenhouse gas emissions between 1990 and 2000. NRCan based this forecast on the assumption that all provinces would adopt the National Energy Code for Buildings and the National Energy Code for Houses. The federal government and the provinces promised additional measures to close the thirteen percent gap between forecast emissions and Canada's commitment to stabilize emissions at 1990 levels by the year 2000.
Two years later, British Columbia is one of only four provinces actually moving towards adoption of the Codes. Ontario's Harris government is moving in the opposite direction. It is considering dropping its energy efficiency standards as part of a "back-to-basics" review of government regulations.
The National Energy Codes specify energy efficiency requirements relating to insulation, windows and heating. Requirements under the Codes are intended to save consumers money; the financial benefits of higher efficiency (energy costs savings over time) should more than compensate for any extra costs of insulation, building materials and efficient equipment.
Improving the energy efficiency of new homes is an important greenhouse gas emission reduction measure. New houses in the lower mainland are usually heated either by natural gas directly or by electricity generated from natural gas combustion. Nationwide, combustion of fossil fuels to meet water and space heating requirements accounts for about thirteen percent of Canada's total greenhouse gas emissions.
Currently, BC has minimal insulation standards for houses and no standards for commercial buildings outside of Vancouver. Although the versions of the Energy Codes which are being developed in BC are generally improvements over the current situation, they may lower energy efficiency standards for natural gas heated houses in the Lower Fraser Valley. (The combination of warm climate and cheap natural gas means higher energy efficiency is not cost-effective unless environmental costs are considered.)
One province, Manitoba, is using an "environmental multiplier" to reflect the high environmental costs of energy use. An environmental multiplier adds some environmental costs into the direct cost of fuel. The US EPA uses a similar environmental multiplier in setting efficiency standards for appliances.
BC Ministry of Employment and Investment officials state that they will delay use of a multiplier until the next restatement of the Codes. That delay will affect BC greenhouse gas emissions for the full 60 to 75 year lives of houses built in the next few years.
- Chris Rolfe
A key action point in BC's Greenhouse Gas Action Plan - implementing and extending Integrated Resource Planning (IRP) - was recently set back by the BC Court of Appeal. In its February 23 decision, the Court agreed with BC Hydro's argument that the BC Utilities Commission couldn't require Hydro to engage in IRP.
IRP is an attempt, early on in the planning process of a utility, to consistently evaluate social and environmental costs and benefits of power generation and energy conservation. The factoring-in of environmental and social costs tends to favour a shift to renewable sources and conservation.
These shifts are important elements of the greenhouse gas emission reduction strategy. Carbon dioxide emissions in BC from electrical power generation have grown from 1,227 kilotonnes in 1990 to 2,400 kilotonnes in 1994, and the largest source of greenhouse gases in BC is the BC Hydro Burrard Thermal Plant.
The BC Utilities Commission had been a leader in requiring IRPs; it is one of only three Canadian utility commissions to require IRPs.
Ironically, private sector utilities have co-operated in IRP processes, but BC Hydro - a Crown Corporation - balked and said the Utilities Commission did not have the power to apply government policy to it. The BC Court of Appeal agreed, saying that the Utilities Commission could only force the consideration of environmental costs in the context of project approval hearings.
WCELA has urged the government to amend the Utilities Commission Act to require IRP and incorporation of environmental costs into decision-making.
- Chris Rolfe
The March 1996 Federal Budget is a mixed blessing
for the environment. While the budget makes renewable energy
and energy conservation companies more attractive to investors,
it grants new write-offs to the tar sands industry estimated at
$422 million.
The tax give-away to the Alberta tar sands projects involves a change in rules allowing all tar sands projects to rapidly write off capital costs for expansion. This $422 million bonus to the oil companies which own Northern Alberta's tar sands projects compares to $10 million allocated for research and development in renewable energy.
On a better note, two changes in the budget will improve renewable energy and energy conservation proponents' access to financing (and thus move renewable sources and conservation from the drawing board to implementation). The first change is to allow manufacturing and mining companies to write off investments in energy efficiency or renewable equipment against all sources of income, not just income from those sources. Energy companies have long enjoyed this tax treatment.
The other change involves allowing some of the initial
development costs of renewable energy - for instance, searching
out geothermal sites - to be 100% deductible from income and to
allow this deduction to be passed through to shareholders. Although
the government has not yet stated what expenses will qualify for
these deductions and "flow through" treatment, the changes
will begin to put renewable energy sources on an equal footing
with oil and gas exploration.
Environmentalists increasingly find themselves looking at the minutiae of the tax system to consider its impact on different industries and the environment. The removal of subsidies for the oil and natural gas industry, and the use of budgetary measures to encourage renewable energy, are increasingly being seen as essential elements of any successful program to reduce Canada's dependence on fossil fuels and to reduce emissions of greenhouse gases.
The first decision of the fledgling World Trade Organization's Appellate Body has found that gasoline quality regulations under the US Clean Air Act are contrary to the General Agreement on Tariffs and Trades. The April 29 decision has been attacked by some environmentalists as proof that GATT is a threat to good environmental regulation, and heralded by others as a blow against protectionism disguised as environmental regulation.
Venezuela and Brazil challenged the US regulations because they had the effect of prohibiting gas importers from selling dirtier imported gasoline than the average gasoline sold in the US in 1990. In contrast, domestic refiners were only required to ensure that various parameters such as the average sulphur level and the average benzene level did not deteriorate from the levels met by that refiner in 1990. Because a number of parameters are regulated, only about 3 per cent of US refiners actually meet the statutory average required of importers. The US argued that the different rules for importers were necessary for enforcement purposes.
The US reformulated gas regulations are clearly valid environmental legislation passed for environmental purposes. Several factors suggest that the specific rules dealing with importers were also bona fide environmental regulation. First, the EPA treated "blenders" who buy gasoline from US refineries and blend it with other ingredients such as alcohol in the same manner as importers. Second, the different rules for importers did not apply where the importer and refinery were the same entity and thus came at least partially under US jurisdiction.
On the other hand, after receiving complaints from importers, the EPA proposed easing the rules applicable to importers on the grounds that the environmental risks could be minimized. However, after lobbying from domestic refineries, Congress prohibited the EPA from making the proposed change.
According to the Appellate Body, the decision "does not mean or imply that the ability of any WTO member to take measures to control air pollution or, more generally, to protect the environment, is at issue." According to an American environmentalist active in air issues, the EPA rules were a necessary political compromise to maintain support for reformulated gas requirements. Whether the specific rules challenged are protectionist or not, the end effect may be a weakening of good environmental regulation.
The requirement that gasoline quality be maintained at 1990 levels was enacted to stop refiners and importers from "dumping." In other words, they could not meet more stringent standards (reformulated gas standards) that apply in areas with major air quality problems by selling their dirtier batches of gas in areas where reformulated gasoline is not required.
Importers, like domestic refiners, can also establish individual baselines that allow them to sell gasoline which is no dirtier than their 1990 imports, but only if they have detailed quality and volume records for 1990. Where, as in most cases, this information is not available, importers must meet statutory standards for sulphur, benzene, and other parameters based on the average levels in all gasoline sold in the US in 1990.
Unlike domestic refineries, importers were not allowed to use 1990 records of inputs and processes to determine an individual baseline. The EPA rejected allowing importers to use these methods because:
The WTO panel found that the US rules violated the trade rule that foreign products are to receive regulatory treatment equal to like domestic products. The panel rejected US arguments that the gasoline rules were caught by the GATT exceptions for regulations necessary to protect human health or related to conservation of an exhaustible natural resource.
Placing importers on a near equal footing with domestic manufacturers may have some environmental impact on the eastern seaboard (where about one fifth of gas is imported). This could be overcome by the EPA toughening regulations against both importers and domestic manufacturers, but it is questionable whether there will be sufficient political support for these changes.
- Chris Rolfe
Eventually the only emissions from the hydrogen fuel cell buses may be water. However, currently the buses' hydrogen fuel is supplied by "stripping" hydrogen from natural gas. The hydrogen fuel cell process is very clean for local pollutants but does little, if anything, for reducing total emissions of greenhouse gases.
Nonetheless, some environmentalists believe that hydrogen fuel technology is a real solution. Potentially (if the hydrogen is produced by electrolysis using electricity from solar power, wind or other clean sources) hydrogen fuel cells mean a totally clean power source for buses and other vehicles.
Transit's twenty-five natural gas buses also reduce local pollutants - especially fine particulate - but do nothing for greenhouse gas emissions.
Although slightly more expensive than standard diesel buses, the natural gas buses will help reduce the costly health impacts from the fine particulate emitted by diesel buses. The purchase of the hydrogen fuel cell buses at $1.9 million each (compared to $350,000 for a natural gas bus) has been justified not only on the basis of potential air benefits but also because of hoped-for economic spin-offs. The hydrogen fuel cell bus manufacturer is based in North Vancouver.
The BC government recently announced the launch of a program to purchase and scrap old polluting cars. The program is sponsored by auto dealers and the petroleum industry and will cost taxpayers little, but it will not be as effective as a similar program proposed by the BC Lung Association (BCLA).
Under the Scrap It Program, the owner of a pre-1983 vehicle which has failed AirCare and turns it in for scrapping will receive either $750 towards a new car, $500 towards a used car or a one year BC Transit pass. Cars must also have been driven 5,000 km in the last year. Up to 1,000 cars will be collected in the first year in the Lower Mainland.
The Program is a reduced version of a 5,000 car per year program suggested by the BCLA in May 1995. It is weaker than the BCLA proposal for three reasons. First, its smaller size means it is less likely to remove cars that would not be scrapped in any event. Second, the Program encourages participants to buy replacement cars rather than simply getting them out of cars. Third, the Scrap It Program is not as focused on gross polluters. The Lung Association had suggested only scrapping cars which failed AirCare repeatedly and were driven for the last year without being repaired (under AirCare, repairs on older cars are not necessary if the repairs cost over $250).
The Program's impact on greenhouse gas emissions remains to be seen and will depend on the age of the cars collected. Fuel efficiency of new cars has been stable since 1982 so replacement vehicles may be no more fuel efficient than those scrapped. A scrap program aimed at pre-1978 vehicles has been suggested by the Canadian Climate Action Network as an effective greenhouse gas emission reduction measure.
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