Lament for a Nation – The Climate Version

Posted on April 15, 2015 by admin

George Hoberg
April 15, 2015

Last week, the prestigious Ecofiscal Commission released a report on climate policy that strongly advocated “The Way Forward” (its title) was through carbon pricing by the provinces. It is certainly no surprise that a group of economists would advocate carbon pricing. But it is quite striking that a group of economists would be so enthusiastic about provincial instead of federal leadership. Typically, economists advocate the most economically efficient solution, and a balkanized subnational process would seem inconsistent with that. Their endorsement of the provincial approach has been widely applauded in the media.

I have the utmost respect for both the member of the Ecofiscal Commission and the process they are using. However, before the idea of provincial leadership gains even more credibility (did we really just have a provincial “Climate Summit”), I did want to go on record that, in the opinion of this political scientist, it is a ridiculous idea. Only in Canada, and in particular in Harper’s Canada, could the outlandish notion that it is not the federal government’s place, indeed duty, to lead in developing a national climate policy gain such currency.

When George Grant published his famous essay in 1965, he was lamenting what he saw as Canada’s capitulation to American hegemony. In contemporary climate policy in Canada, we’re not capitulating to the US (which is racing ahead of us on climate). We’re capitulating to a self-imposed ideology of provincial paramountcy that blinds us the obvious merits of federal leadership.

The Ecofiscal approach contrasts with the recommendation of the Sustainable Canada Dialogues, a group of over 60 Canadian academics that released its report, Acting on Climate, last month. (I helped draft the section on climate policy instruments.) That report strongly endorsed national carbon pricing either through a national carbon tax or a national cap and trade system. The report states:

From a cost-effectiveness standpoint, a national GHG reduction plan has advantages. There would be concerns about fairness and competitiveness if emitters in one province paid a significantly different carbon price than emitters elsewhere in Canada. A cap and trade system would realize economic benefits from being applied to a larger and more diverse area.

The Ecofiscal Commission report, however, was supported by much more extensive analysis, including elaborate modelling with a computable general equilibrium model that compared different scenarios. They compare the cost-effectiveness of provincial-led regulatory approaches, provincial-led carbon pricing approaches, and then linked (national) carbon pricing approaches. The most compelling conclusion of their report is that the modelling shows you get 89% of the gains from shifting from a regulatory approach to a more flexible carbon pricing approach at the provincial level. A national approach would be more cost-effective (getting you the final 11%), but the Commission uses the results to downplay the relative important of federal leadership and play up the huge gains available from provincial carbon pricing.

A more careful look at their results suggests that conclusion, in my view, is not justified, for three reasons.

The analysis overstates the cost-effectiveness advantage of a provincial approach: The figure below shows the relative benefits of three features: flexibility, revenue recycling, and linkage. The biggest gains in efficiency, 2/3rd nationwide, are from moving from a regulatory approach to a more flexible carbon pricing approach. An additional 24% comes from what they call revenue recycling, and the final 11% from linkage in a nationally-coordinated approach

The analysis is notable in how large the efficiency gain are by moving away from regulation, especially given the federal government’s continued reliance on that instrument. But I don’t think it is right for the Commission to attribute the gains from revenue recycling to a provincial-led approach. The Commission is certainly correct to note that the revenues collected from carbon pricing raise significant political questions about what to do with the revenues, a particularly sensitive topic in post-1980 Canada. Much of the tension can be addressed by returning any carbon pricing revenues to the province of origin. That can be done with a federal approach as easily as it can with a provincial approach. That’s what the Sustainable Canada Dialogues’ Acting on Climate report recommends (pp. 29-30). What the Ecofiscal Commission’s analysis models is not revenue recycling per se, but the economic impact of the income tax reductions made possible by a tax shift from income to carbon (as BC does with its revenue-neutral carbon tax). There’s no guarantee that provinces will use the revenues that way (Ontario is saying it won’t), and even if they did that’s not an impact reasonably attributed to a provincial-led approach.

There is indeed a substantial efficiency gain from moving to carbon pricing at the provincial level, but the degree of efficiency gains from a provincial vs. national approach are overstated.

The analysis relies on the dubious assumption that provinces will voluntarily meet their targets: The Ecofiscal Commission report builds its analysis on scenarios assuming provinces meet their existing targets. Doing this avoids two challenging features of a national approach: having a national discussion about sharing the burden for reductions, and mechanisms for compliance if provinces fail to meet their targets. First, you can also avoid a conflict over dividing up responsibility for a national target  if you have a nationwide carbon tax or cap and trade program because, as the Sustainable Canada Dialogues report describes, “provincial emission levels would be responses to market signals, not established in advance” (p. 29).

Second, if there’s no strong federal leadership role, there’s no mechanism to force compliance with targets.  Canada’s most stubborn climate challenge remains the reluctance of the country’s largest and fastest growing emitting province, Alberta, to enact sufficient climate policies to contribute to the national effort. (The Ecofiscal Commission notes that Alberta’s current approach “had no significant impact on annual GHG emissions or even emissions intensity” (p. 22).) BC and Saskatchewan will also face big challenges meeting their targets. We could surrender to a “naming and shaming” approach of voluntary provincial commitments, like the UNFCC is doing with international climate diplomacy. But that’s supposed to be the difference between nation-states and the international community. In nations, we have laws that we enact through the political process and that we agree to enforce.

Provincial leadership would produce large inequalities in burden-sharing: What the Ecofiscal report doesn’t say is how the carbon price varies across the country when provinces pick their own approach to meet their own target without federal coordination. Due to highly variable costs of control and stringency of targets across the provinces, their recommended approach would likely lead to widely different carbon prices across the country. This would create serious problems for competitiveness and fairness.

A national approach would be more cost-effective, coherent, enforceable, and equitable. If one or more provinces so strongly resisted adopting the national approach, it could work to exempt a province so long as mechanisms were put in place to ensure that the province contributed its fair share to the national reductions.

I completely get what the Ecofiscal Commission is trying to do, and applaud their sensitivity to political feasibility. We need to get going on climate policy, and in Harper’s Canada, provincial leadership offers the hope of quick progress. But don’t let the report raise doubts about the strong merits of federal leadership and a Canada-wide climate policy. It’s more efficient. It’s fairer. And it’s what nations do.

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Rethinking the impacts of fossil fuel divestment: a critique of the Pacific Institute for Climate Solutions white paper

Posted on February 28, 2015 by admin

February 27, 2015
George Hoberg*

The Shadow Impact Calculator and Divestment: Data and Model LimitationsGeorge Hoberg*

A White Paper released by the Pacific Institute for Climate Solutions last month argues that fossil fuel divestment campaigns are based on a set of unfounded assumptions. The authors, Hadi Dowlatabadi and Justin Ritchie of UBC, make some valuable contributions to the debate over divestment. But their criticisms of the divestment advocates’ core arguments are off-base.

The PICS paper makes two important contributions to the debate. The authors provide a series of recommendations about policies and financing that can provide effective support to the divestment movement. Second, the authors emphasize the challenge, frequently lost in the divestment dialogue, that a very high fraction of the world’s fossil fuel reserves are owned by governments and not traded in financial markets, and therefore relatively immune to pressure tactics focusing on financial markets.

But the paper’s challenges to the core assumptions of the divestment movement are unfounded, both because they are not addressing the actual theory of change guiding the fossil fuel divestment movement, and because their methodology, and the way they applied it, does not actually allow them to effectively measure what they are trying to analyze.

First and most important, the PICS paper attempts to examine the direct impacts of divestment, either on the greenhouse gas emissions associated with portfolios, or on directly reducing carbon pollution because divestment “will keep fossil fuels in the ground.” This is not an accurate representation of the theory of change underlying the divestment movement. As our colleagues at the University of Victoria have highlighted already in response to this study, “The divestment movement’s primary goal is to challenge the social license to operate oil companies enjoy, making it harder for them to successfully lobby against needed government action.” (For similar responses to the PICS study, see here, and here.)  An influential report from Oxford University argues: “The outcome of the stigmatisation process, which the fossil fuel divestment campaign has now triggered, poses the most far-reaching threat to fossil fuel companies and the vast energy value chain. Any direct impacts pale in comparison.” The same study, which also looked at past divestment efforts, found that “in every case [they] reviewed, divestment campaigns were successful in lobbying for restrictive legislation.”

Second, the PICS report analysis of the more direct impacts of divestment is based on a methodology that does not effectively measure what the authors are trying to analyze. A new critique posted on the PICS website takes the PICS report to task for several methodological and analytical problems. The authors of the PICS report develop a methodology called the “shadow impact calculator” designed to show the “carbon shadow” of investments. The shadow impact calculator relies on an input-output model using historic greenhouse gas (GHG) emissions intensities and single-year snapshots of the economy. As a result, it is just not particularly useful in illuminating the future carbon footprint impacts of changing investment decisions, which is exactly what the climate-focused investors are trying to do.

Finally, the way the authors applied their method to a sample university portfolio (UBC’s) dramatically underestimates the carbon impact of divestment. Their analysis substituted the six fossil fuel companies in which UBC has direct holdings for a sample of six renewable energy firms. They come up with the surprising result that the carbon shadow of that investment shift is only reduced by 22%. Their sample of renewable firms was selected randomly, but the six they ended up with had a major outlier in it which led, unintentionally, to a terribly unrepresentative sample. As shown in the figure, a re-analysis using the average carbon shadow of renewable companies – a more representative approach – reveals a much larger 90% reduction in the carbon shadow.

The PICS White Paper is off-base for two reasons. First, it does not address the theory of change actually guiding the fossil fuel divestment. Second, a more careful analysis shows that the direct impacts of divestment on the carbon shadow of investments can be much higher they find.

_____________________________________________

*Double disclosure statement: As any reader of this blog would likely know, the author is the faculty coordinator of UBCC350, the group leading the divestment campaign at UBC. The author also received research funding from PICS on forest carbon policy.

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Letter to Vancouver Sun in response to editorial critical of divestment at UBC

Posted on February 27, 2015 by admin

February 27, 2015

This letter was submitted to the Sun today:

Your February 26 editorial relied heavily on a study that concluded that divestment from fossil fuels would not have a significant impact on the “carbon shadow” of UBC’s endowment. Unfortunately, that study significantly underestimates the impact of divestment.

The renewable firms the authors used to assess the impact of reinvestment turn out to be outliers. Using average renewable firms yields a 90% reduction of the carbon footprint of the fossil fuel component of UBC’s endowment, not 22%. (Technical critique here.)

The study compares investments based on firms’ emissions only to the point of sale. For a solar panel producer, that approximates emissions over the product’s full life cycle. For fossil fuels companies the PICS study excludes the vast majority of emissions, which occur when those fuels are burned by consumers. The moral justification for divestment lies in the much larger differences over the full life-cycle that are not captured by the study’s methods.

If we are to live in a world with a safe climate system, “the vast majority of [fossil fuel] reserves are unburnable,” Bank of England Governor Mark Carney recently warned. UBC should not fund its students’ education by investing in industries whose products inevitably harm their future.

Kathryn Harrison, Political Science, UBC
George Hoberg, Forest Resources Management, UBC

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Two cheers for Trudeau’s climate plan – the best a climate hawk could expect out of a Liberal leader named Trudeau?

Posted on February 7, 2015 by admin

George Hoberg

http://www.cbc.ca/news/politics/justin-trudeau-vows-to-set-national-carbon-reduction-targets-1.2948272

February 7, 2015

In a speech to the Petroleum Club in Calgary yesterday, Liberal leader Justin Trudeau gave more details about what climate policy his party would pursue if they form the government after the October 2015 federal election.  He announced that the federal government would, in cooperation with the provinces shortly after the Paris climate summit in December, establish a national target for greenhouse gas reductions. But it would be up to the provinces to choose their own approach to reducing emissions.

For the perspective of a climate hawk, this is a significant improvement over the indication several weeks ago that he would leave carbon pricing to the provinces. Without a binding national target and a federal effort to coordinate compliance with the target, deference to provincial policies would not have improved on the status quo. But in his Calgary speech, Trudeau made very clear that the federal government would play this coordinating role under his leadership.  For me, that is a major breakthrough.

But there is much that Trudeau did not specify. For one, he didn’t mention anything about what the national target would be, only that they would be  “informed by the best economic and scientific analysis.” (The US announced in October a new national target of 26-28% below 2005 levels by 2025.) He also didn’t say anything about what will turn out to be the most divisive part of his policy – how to allocate province-specific reduction targets. This gap is particularly important, because a well-designed national cap and trade system or carbon tax would not require the allocation of province-specific emission reduction targets. The emission responses of provinces would be determined by how prices and/or exchanges influenced the behaviour of emitters as they adapted to the new price of carbon.

While I’m disappointed with Trudeau’s unwillingness to work on the development of a national plan, listening to his speech reveals that his proposal is quite artful politically. He carries special baggage, as he explicitly noted in his speech, because of his father’s 1980 National Energy Program that poisoned both his name and his party in Alberta, whose cooperation is necessary if any Canadian climate policy is going to be effective.  He’s addressing at least part of that toxic political legacy by letting the provinces choose the policy instrument that works for best for them.

At present, the provinces essentially have three different mechanisms for carbon pricing in play. British Columbia has it revenue-neutral carbon tax, Alberta has its hybrid regulation-tax, and Quebec has a cap and trade system. Ontario recently announced that it would be introducing a carbon pricing system but is not indicating whether it will go in with Quebec or pursue a carbon tax.

If we have a national target that actually has teeth and is a meaningful contribution to global efforts, the inconsistency among provincial approaches will become problematic. If you have a cap and trade system, you want as large a market as possible to trade in, so there are real incentives to spread it nationally. Moreover, if there were different prices on carbon across the country, questions of fairness and competitiveness would inevitably arise.  One outcome of the Trudeau approach is that a nationally coherent plan could emerge out of intergovernmental discussions after the October election. Much will hinge on what Ontario decides to do; Wynne’s instrument choice could be pivotal in getting either Quebec or BC to reconsider their approach. For now, Trudeau is betting that his worst mistake would be to be perceived as imposing the preference of the federal government on the provinces.

By not forcing the provinces to adopt a national policy instrument, Trudeau would avoid a political challenging choice. But he also creates another – the need to allocate province-specific targets. At the end of the day, Trudeau’s approach trades one politically difficult decision for another. But in the Harper era, it may be the best a climate hawk could expect out of a Liberal leader named Trudeau.

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Forces at Work in Natural Resource Policy – A Hoberg Course Brief

Posted on February 6, 2015 by admin

George Hoberg

Analytical Framework for Natural Resource Policy

February 6, 2015
pdf: Forces at Work in Natural Resource Policy – Hoberg course brief

In thinking and teaching about natural resource policy, I find it useful to use a framework I refer to as “forces at work in natural resource policy,” shown in the accompanying figure.   In environmental and natural resource policy, at the end of the day, we are interested in how human actions affect the economic, social, cultural, and environmental values of concern to us. We’ll refer to these as consequences, and include things like jobs, income, economic growth, regional equity, environmental impacts, quality of participation in decision-making, etc.

Policies are the rules produced by government designed to influence actions. Policies can be thought of as bundles of objectives or goals, instruments, and settings on those instruments. For example, in the area of climate policy, we could have an objective to reduce greenhouse gases by a certain amount by a particular time, an instrument of a carbon tax, and a setting of that carbon tax of $40 per tonne of carbon dioxide equivalent.

Policies are produced through governance processes, influenced by environment and markets. Governance is the structure and process through which policies are decided. It consists of three core components:

  1. Who has authority to make policy decisions? In Canada, this usually involves elected decision-makers, but can also include appointed officials with regulatory authority.
  2. Who participates in policy processes? Many interest groups, such as industry associations or environmental groups, play important advocacy roles in the policy process, but they do not have decision-making authority. They may have a great deal of influence over decision-makers, but they are not, in the immortal words of George W. Bush, “deciders”.
  3. At what level of government are decisions made? Government authority can exist at the local or regional level, at the provincial (or state level), at the national/federal level, or at the international level. At times, authority is shared between different levels of government

By environment, we’re referring to the physical-material world, particularly biophysical and resource characteristics. Climate, for example, would be part of this variable, as would the content and quality of reserves of a particular energy source like goal or natural gas, or the quality and quantity of the standing timber stock or species habitat in a landscape. The state of available technology is also included in this variable.

With markets, we are referring to a wide range of economic variables, including prices and quantities and exchanges in the marketplace, driven by the relationship between supply and demand.

The “forces at work” framework emphasizes how these three categories of variables interact with each other to produce policies, that influence the actions of business and consumers that produce the consequences to the values of concern to us.

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Multi-Criteria Decision-Making for Comparing Energy Choices – A Hoberg Course Brief

Posted on February 3, 2015 by admin

George Hoberg and Guillaume Peterson
February 3, 2015
pdf Hoberg course brief – MCA final

Decision-makers must take into account a large variety of components when comparing energy choices. A simple and straightforward way to evaluate each option is to analyse the cost of each alternative. However, many uncertainties exist, such as how energy prices, abundance, and availability will vary in the future. Furthermore, a variety of social benefits and costs, referred to as externalities, are not reflected by prices and cannot be easily transformed into monetary values. This creates the need for well-organized tools for the systematic assessment of objectives, choices, and consequences.

One such tool, multi-criteria decision-making (MCDM), represents a general term to describe an assortment of approaches aimed at explicitly accounting for various criteria during decision-making analysis. MCDMs offer various advantages: they allow for the consideration of conflicting criteria, provide a structure and organization to guide a transparent analysis process and can handle both qualitative and quantitative criteria (Belton & Stewart, 2002). The MCDA process is generally separated into 5 general steps: (1) definition of decision context, (2) identification of evaluation criteria, (3) identification of alternatives, , (4) evaluation of each alternative against each criterion, and (5) trade-off analysis. This brief presents an overview of each step of a simple MCDM for comparing energy alternatives.

1. Definition of the decision context

This first step aims at defining the main question or problem that needs to be addressed by the MCDM. Simply put, it aims at identifying “what is the decision that needs to be made”? The decision context when comparing energy policy could be defined as “how to get the energy services we need at the least possible economic, environmental, and socio-political cost.”

2. Identification of evaluation criteria

The evaluation criteria are the key factors that inform the evaluation of the alternatives and the trade-off analysis. They can be understood as the “aspects that matter in the decision-making process”. A good set of criteria should (1) consider all the important factors, (2) be concise and understandable and (3) contribute independently to the overall performance of an alternative. Furthermore, the evaluation criteria have to be measurable, either quantitatively (when possible) or qualitatively. When comparing energy alternatives, seven important criteria should be considered:

  • Abundance refers to the viability and availability of both current and potential future sources of energy. For instance, renewables offer unlimited reserve, whereas the abundance of fossil fuels is limited based on the world proved oil reserves. The abundance could be calculated in years of potential supply given consumption rate.
  • The cost per unit of energy alludes to the societal cost of generating electricity and can be calculated quantitatively ($/MWh) for each alternative. This calculation must include all the costs, including the initial investment, the discount rate and the cost related to extraction, operation and maintenance.
  • Reliability is the capacity of an energy source to generate consistent energy output to meets societal energy demand. A lack of reliability can lead to interruptions when the electricity supply is lower than the demand.
  • The environmental impacts are evaluated based on the environmental footprint. An important environmental factor to consider is the contribution to climate change through GHG emissions, which can be evaluated in terms of carbon intensity (CO2eq/unit of energy). Other important environmental impacts include air, land and water pollution and toxic contamination and the impact of energy production on land use change (e.g., deforestation, forest degradation).
  • Extreme events have low or unknown probability of occurrence and are often associated with serious consequences and impacts on humans and the environment. Some of their impact and risk of occurrence can be minimized, but uncertainties will always remain, highlighting the importance of considering the extreme event risk associated with each energy option.
  • Geopolitical risk focuses on the impact of international politics on the attractiveness of energy options. For instance, geopolitical factors can influence the stability, reliability, availability and price of energy options. A recent example is the drastic drop in oil price caused by a complex combination of geopolitical factors.
  • Public acceptability is fundamental for the implementation of any energy alternative. Public opinion on energy options varies, and the political risk associated with each of them greatly influence decision-makers.

3. Identification of alternatives

The alternatives represent the options that may offer solutions to the problem. There are four major options that can address the growing demand for energy services: (1) energy efficiency, (2) nuclear power, (3) renewables, and (4) fossil fuels. (Each of these categories has many specific technological choices.)Each of these alternatives offers advantages and disadvantages in terms of economic, environmental and socio-political components that need to be evaluated. For example, energy efficiency improvement reduces the need for energy generation, but can involve important up-front investments. Nuclear power offers energy with far fewer greenhouse gases emissions or air pollution, but presents environmental and social concerns due to nuclear waste and weapons proliferation. Renewables offer an unlimited flow of clear energy, but their reliability sometimes depends on environmental conditions such as wind or solar energy. Fourth, fossil fuels represent a very price-competitive option, but are non-renewable and generate harmful GHGs and other air pollutant emissions (Jaccard, 2005).

4. Evaluation of each alternative against each criterion

This step involves the assessment of the performance of each alternative against each criterion. To do so, each criterion should be given a unit ($/MWh) or scale (excellent, good, poor) of measurement. For instance, the following figure (reproduced from IRENA, 2015) illustrates the estimated costs of producing electricity (USD/kWh) in 2014 and 2025 (projected) for various renewable energy sources compared to fossil fuels’ electricity costs. (LCOE is the levilized cost of electricity.) Not all criteria need to be measured with the same unit or scale.

5. Analyse trade-offs

The goal of trade-off analysis is to identify the alternative that better meets the main objective. It is very rare that one alternative will be superior for all criteria, meaning that most MCDM will involve trade-offs. Many techniques can be used to evaluate trade-offs and compare the performance of different alternatives. One such approach is the use of a trade-offs matrix, a table where you list alternatives on one axis and your criteria on the other. In each cell, you should provide meaningful information about the consequences of that alternative for that particular criterion. The following table (reproduced from Jaccard, 2005) provides an example of a trade-off matrix evaluating the projected cost, the extreme event risks and the geopolitical risk of the four energy options previously presented.

In addition, MCDM approaches normally employ various weighting techniques to compare the different alternatives, ranging from simple (ranking) to extremely sophisticated (modelling, algorithms). These techniques can broadly be separated into three categories: (i) value measurement models, where numerical scores are given to each alternative through the assessment of the criteria; (ii) goal, aspiration or reference level model, where desirable levels or goals are assigned for each criterion as a basis for assessing the alternatives; and (iii) outranking models, where alternatives are compared pairwise with the criteria to identify if there is a preference for one of them (Belton and Steward, 2002, p. 9).

References

Belton, V., & Stewart, T. J. (2002). Multiple Criteria Decision Analysis: An Integrated Approach. Springer Science+Business Media Dordrecht.

IRENA. (2015). Renewable Power Generation Costs in 2014.

Jaccard, M. K. (2005). Sustainable fossil fuels the unusual suspect in the quest for clean and enduring energy. Cambridge, UK; New York: Cambridge University Press. Accessible from UBC Library

Other recommended reading:

Stagl, S. (2006). Multicriteria evaluation and public participation: the case of UK energy policy. Land Use Policy, 23(1), 53–62. doi:10.1016/j.landusepol.2004.08.007

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What is the Role of First Nations in Decision-Making on Crown Government Resource Development Projects? – A Hoberg Course Brief

Posted on January 19, 2015 by admin

George Hoberg

Chief Roger William celebrating Supreme Court decision (from UBCIC)

January 20, 2015

pdf of this post: Hoberg course brief – aboriginal law

The relationship between Canadian governments and Aboriginal groups has shifted dramatically over the past several decades, but has yet to reach any stable equilibrium that clarifies their relative roles. The core uncertainty is whether Crown governments have the legal authority to proceed with a project if affected First Nations are strongly opposed. This issue received renewed attention when the Canadian Supreme Court issued its Tsilhqot’in Nation v British Columbia decision in June 2014. Much attention has been paid to the emphasis the Supreme Court placed on the need to obtain consent from aboriginal title-holders before proceeding with projects on title land. But as we will see, the shift in the relationship between the government and First Nations on resource project decision-making is not as significant as many have argued.

Structural uncertainty over aboriginal title in British Columbia

First, a bit of background on the continuing challenge to reconcile aboriginal title with Crown or settler title in British Columbia is useful. While treaties were established throughout much of Canada, there are few treaties in BC. The settler governments simply asserted sovereignty over BC, claiming that, prior to European settlement, legally BC was terra nullius or “empty land,” a deeply offensive notion to First Nations who have resided throughout the province, with established system of governance, for many millenia. In response to litigation by First Nations, the Supreme Court began slowly chipping away at this doctrine, first (in the Calder case in 1973) by granting that unless it was formally “extinguished” aboriginal title exists.

However, establishing that a particular First Nation has title to a particular area of the province requires an exhaustive legal process. The current situation throughout much of British Columbia is that aboriginal title has been asserted (in some cases by multiple First Nations over the same land) but not yet legally established in a way that it is recognized by the Crown government.

The breakthrough Tsilhqot’in case

The Tsilhqot’in case was historic because it was the first time courts recognized aboriginal title for BC First Nations. It helped clarify the process for making and considering title claims, and what title means once it has been granted. It also clarified the relation between First Nations and Crown governments on aboriginal title land. The court ruled that “The right to control the land conferred by Aboriginal title means that governments and others seeking to use the land must obtain the consent of the Aboriginal title holders” (paragraph 76). However, in the very next sentence, the court qualified this right to consent:  “If the Aboriginal group does not consent to the use, the government’s only recourse is to establish that the proposed incursion on the land is justified under s. 35 of the Constitution Act, 1982”(paragraph 76).

The justification test for infringing Aboriginal title

The key question then becomes the “justification test.” The Supreme Court articulated the test as follows: “To justify overriding the Aboriginal title-holding group’s wishes on the basis of the broader public good, the government must show: (1) that it discharged its procedural duty to consult and accommodate, (2) that its actions were backed by a compelling and substantial objective; and (3) that the governmental action is consistent with the Crown’s fiduciary obligation to the group” (paragraph 77). Each of these conditions requires further elaboration.

The duty to consult and accommodate exists whether or not title has been established. When the Crown is contemplating actions that it thinks might affect aboriginal title, its obligation to consult the affected First Nation are defined by a spectrum articulated in the Court’s 2004 Haida decision: “In general, the level of consultation and accommodation required is proportionate to the strength of the claim and to the seriousness of the adverse impact the contemplated governmental action would have on the claimed right” (paragraph 79).

Objectives that were considered “compelling and substantial” were articulated in the Supreme Court’s 1997 Delgamuukw case. The Tsilhqot’in case simply quoted the Delgamuukw decision on the definition: “In my opinion, the development of agriculture, forestry, mining, and hydroelectric power, the general economic development of the interior of British Columbia, protection of the environment or endangered species, the building of infrastructure and the settlement of foreign populations to support those aims, are the kinds of objectives that are consistent with this purpose and, in principle, can justify the infringement of [A]boriginal title.  Whether a particular measure or government act can be explained by reference to one of those objectives, however, is ultimately a question of fact that will have to be examined on a case-by-case basis” (paragraph 83).

The third part of the justification test requires the action to be consistent with the government’s “fiduciary duty” to First Nations. This is the most confusing part of the Tsilhqot’in decision. Usually, fiduciary duty requires the fiduciary (in this case the Crown) to ensure the interests of the principal (in this case the First Nations) are being met. In Canadian law, however, fiduciary duty to First Nations means something different. It essentially requires simply that Aboriginal rights need to be balanced with other interests.

The Tsilhqot’in decision did elaborate this requirement is several ways. It held that the duty “infuses an obligation of proportionality” into the process: “Implicit in the Crown’s fiduciary duty to the Aboriginal group is the requirement that the incursion is necessary to achieve the government’s goal (rational connection); that the government go no further than necessary to achieve it (minimal impairment); and that the benefits that may be expected to flow from that goal are not outweighed by adverse effects on the Aboriginal interest (proportionality of impact)” (paragraph 87). In addition, the Court added a specific future-oriented test: “incursions on Aboriginal title cannot be justified if they would substantially deprive future generations of the benefit of the land” (paragraph 86).

A useful way to think about these tests is to imagine how the BC government would try to make them work for Site C, or the federal government for one of the oil sands pipeline proposals. They clearly fall within the allowed objectives, so the only question is whether they meet the other parts of the justification test.

How much does the Tsilhqot’in decision change things?

What impact the Tsilhqot’in decision will ultimately have is uncertain, but legally it changes far less than many assume. In the typical situation where title is asserted but not proven, there is no change from the vague standards articulated in the 2004 Haida and Taku decisions: consult always, accommodate if the claim is strong and the infringement significant, but there’s no veto for the First Nation. What’s new about the Tsilhqot’in decision is that title was finally granted to a particular First Nations over a particular area. But even in that case, it appears that title can be still be infringed with resource projects such as dams or pipelines so long as the Crown goes through the careful justification process. It seems quite clear that legally, First Nations do not have a veto or right to consent, even where title has been legally established.

Wait: Doesn’t the UN give First Nations the right to consent?

First Nations groups frequently refer to the provision in United Nations Declaration on the Rights of Indigenous Peoples that states “States shall consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free and informed consent prior to the approval of any project affecting their lands or territories and other resources, particularly in connection with the development, utilization or exploitation of mineral, water or other resources” (Article 32.1). However, the UN Declaration is not legally binding on signatories. When it finally endorsed the Declaration in November 2010, the Government of Canada took pains to note that it objects to the provision of “free, prior and informed consent when used as a veto.”  In explaining why it would endorse the Declaration if it had these objections, the government stated: “We are now confident that Canada can interpret the principles expressed in the Declaration in a manner that is consistent with our Constitution and legal framework.” That legal framework is the one described above, that does not give First Nations a right to consent.

Hoberg’s Hypothesis: It’s politically impossible for natural resource projects in Canada to proceed if there is significant opposition from directly affected First Nations

The law seems clear that there is no legal right to consent. But there may be an emerging political, or de facto, obligation of Crown governments to obtain the consent, or at least avoid the adamant opposition of, directly affect First Nations. I argue that it may now be the case that, while the law falls short of granting a right to consent to First Nations, it may now be politically impossible for natural resource projects in Canada to proceed if there is significant opposition from directly affected First Nations.

The Prosperity Mine case in British Columbia has been quite revealing. The proposed mine went through both the BC and Federal environmental assessment processes. There were significant environmental concerns with the proposal, and First Nations in the area were resolutely opposed. The BC government considered these objections and approved the project. But the Harper Government, known for its support for resource development, examined the same concerns and rejected the project, citing among other reasons the strong objections of local First Nations to the proposed use of a cherished lake as a tailings pond. The project was redesigned to avoid dumping in the lake and resubmitted, but the local First Nations still opposed the project, and the Harper government again rejected it.

We now have several live cases that will test this hypothesis. Both Site C and the Northern Gateway Pipeline have been authorized for construction by Crown governments despite the explicit, vehement opposition of direct affected First Nations. Whether or not shovels are ever put in the ground for either project will be an important test of the hypothesis.

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Fossil Divestment at UBC: Opportunity for Leadership and Moral Imperative – George Hoberg Remarks to UBC Faculty Association

Posted on October 27, 2014 by admin

George Hoberg
October 27, 2014

(A text of the remarks I made at the Faculty Association introducing the motion to call for a referendum on divesting the UBC endowment of fossil fuels. A more detailed rationale with extensive references can be found here)

Good morning everyone and it is so great to see you all here today. I’m especially grateful to see so many of the more than 190 faculty members who signed our open letter.

I’m George Hoberg, a professor in the Faculty of Forestry. I’ve been at UBC now for 27 years, the first 14 in the Department of Political Science, and the remainder in Forestry. My research is on environmental and natural resource policy, including energy and climate policy. Among other things I teach courses on sustainable energy policy to 150 undergraduates and 30 graduate students.

It’s as a result of these three things — my identity as a UBC faculty member, my research into the problem, and especially my teaching – that I’m here today to make a motion that UBC should divest its endowment of fossil fuels.

Last January, our students voted overwhelmingly, almost 4 to 1, to call on the university to divest. It’s time that UBC faculty join that call.

Academic researchers understand all too well that climate change presents an urgent crisis for humanity. The science is clear: the evidence is overwhelming that we are hurtling towards a future that is dangerous for humankind. Immediate actions are required to restructure our energy systems away from fossil fuels and toward clean energy. Luckily, research by engineers and economists also shows that such a transition is both technologically feasible and affordable.

Some are concerned that divestment might reduce the income UBC receives from its endowment, but this need not to be the case. Concern that divesting would hurt the performance of portfolios is not supported by the best available data. Studies designed to measure the impact of divestment have found little or no impact on returns. Indeed, there are increasing concerns, from the likes of the Governor of the Bank of England and major pension funds, that a “carbon bubble” could pose a significant threat to fossil fuel investments.

Just as UBC has undertaken renewal of its facilities and operations as a “living laboratory” for sustainability, we call on our university to apply its expertise and values with the same vigour to its endowment. UBC should devise a profitable fossil-free portfolio that inspires sustainable investing by other institutions.

Others argue that UBC should maintain ownership so that it can exercise leverage as a shareholder. However, because the business model of fossil fuel companies relies fundamentally on exploiting carbon reserves that humanity can’t afford to burn, working through shareholder channels is inadequate to achieve the transformative changes required. These urgent times demand rapid and significant changes in our energy system, and we believe those changes would be better fostered through the more dramatic action of divestment. Moreover, divestment rejects the dissembling tactics of the fossil fuel industry, including efforts to mislead the public about climate science and to delay the adoption of cost-effective policies that draw on social science research.

Given the extraordinary size of the fossil fuel industry and the nature of global capital markets, many argue that the divestment movement is largely symbolic. Divestment by a single investor, acting alone, cannot be expected to make a significant dent in addressing climate change. In fact, the very structure of the climate problem makes it a challenge to demonstrate that any particular action by an individual entity can be effective. The climate crisis is a global “tragedy of the commons,” created by millions of individuals and organizations around the world, all acting in their short term economic interests.  Emission reduction by any individual, or even any country, cannot solve this immense collective action problem. To insist that any individual action or organization must be demonstrably effective accepts a logic that dooms the planet to dangerous climate change. If we continue to be guided by short term economic interests, humanity will simply be incapable of rising to the challenge.

In fact, the symbolism of the demand for divestment is what gives it power and makes it effective. The divestment movement is inspired by the anti-Apartheid movement of the 1980s. The impact of the anti-Apartheid investment campaign was less on the value of shares of companies doing business in South Africa than on how it altered the climate for economic and political relations with the racist South African regime. Fossil fuel divestment can play the same role in providing policy-makers the political space to take decisive actions to address the climate crisis.

There’s a strong scientific and economic justification for divestment, and research shows that divestment is unlikely to affect the financial performance of the endowment’s portfolio. But at the end of the day, the most important rationale for divestment is a moral one. It’s an opportunity to do what we can to address a shared problem with the resources we have at our disposal.  When faced with daunting collective problems like climate change, people are often unwilling to act unless they are sure others are willing to do the same. To that end, divestment is, more than anything else, a signal to each other that we recognize the scope of the problem and we are willing to start taking actions to address it. As part of a rising global movement on divestment, UBC can show leadership by divesting, and inspire others to follow suit.

As teachers, we are reminded of our moral duty to future generations. We interact daily with today’s youth, who will suffer the greatest consequences should we fail to address the climate crisis. We believe that it is inconsistent with UBC’s core values of sustainability, global citizenship, and innovation to support an industry whose products are driving us toward an unsustainable future. And it is disturbing to us that our students’ education, an investment in their future, should be funded in part by profits from an industry that harms that same future. In his installation address, President Gupta said “Each generation has a responsibility to take the world as we find it and do our utmost to make it better.” UBC cannot live up to that promise when it is invested in an industry that poses a direct threat to the well-being of future generations, including our own students.

Divestment is an act of leadership. We are proud of UBC’s commitment to sustainability. We support the overwhelming call by our students for divestment from fossil fuels. The time has come for UBC to take the next step in living up to its ideals.

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LNG for the Win! The October 2014 BC Throne Speech

Posted on October 6, 2014 by admin

wordle for BC throne speech October 2014

George Hoberg
October 6, 2014

The Clark government’s Fall Speech from the Throne continues the eggs-in-one-basket pattern established in recent years – the future of BC is premised on the rise of the LNG industry.

The speech is centred around themes of “turning points” and “leadership”. BC’s current turning point is created by the combination of three factors:

  • “For over a generation, the funding commitments of Western governments have exceeded their means.”
  • “the American shale gas revolution has meant the export market south has dried up – and is never coming back”
  • “If we choose to do nothing, to maintain the status quo, we will have chosen decline.”

The choice the BC Liberal government makes, through leadership, is fiscal austerity and the pursuit of new markets in Asia  through LNG: “By choosing to develop the world’s cleanest-burning non-renewable resource, and ship it to the world’s fastest-growing economies, we have chosen growth.”

As someone who follows environmental issues, the relative priority given to resource development over environmental concerns remains noteworthy. We’ll have to see what the regulatory framework for LNG is when announced (presumably later this week). But it is significant that there is no commitment to “world’s cleanest LNG” in the Throne speech, and instead an emphasis on natural gas being the “cleanest-burning non-renewable” – in other words, the cleanest dirty fuel. There remains a quick nod to climate issues, with reducing GHGs in China as part of the rationale, and commitment to regulating so that BC “continues to lead the global fight against climate change.” But no information is provided about how that claim might be made plausible.

Other than a passing reference to multiple categories in the BC Jobs Plan, there is no mention of contributions to the BC economy beyond the resource sector. Given the risks of the LNG strategy, it’s quite shocking that the Clark government seems to be so willing to bet our future on one not-yet-existent industry.

Number of mentions of key areas:

  • LNG/Natural Gas 15
  • First Nation/aboriginal 4
  • Forests/forestry 8
  • Mining 3
  • Climate/pollution/GHGs 3
  • Clean tech (“technology and green economy”) 1
  • Pipelines 0
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It’s D-Day for Harper on Northern Gateway

Posted on June 8, 2014 by admin

George Hoberg
June 8, 2014

June 8 - Convergence 2014: Protecting Our Sacred Waters from Tarsands Oil - photo by Ben West

The next big thing in the battle over the Northern Gateway pipeline happens by June 17, when the Harper cabinet’s decision on the National Energy Board’s recommendation to approve the pipeline (with conditions) is due. What’s likely to happen next?

It’s useful to think about the Northern Gateway conflict as involving four stages. We’ve completed the first regulatory stage, where the project has been submitted and undergone regulatory review. We are now in the second stage, on the cusp of a decision by the elected officials with legislative authority over pipeline approval. When that’s done, there are two more stages: the legal stage, and the on-the-ground stage.

The Political Stage

In my view, the odds are still with Harper endorsing the NEB recommendation. He’s invested a great deal politically in getting oil sands access to Pacific markets, and to walk away from the project would be acknowledging a major defeat. But a yes decision is by no means a slam dunk, for several reasons. First, Harper needs to win the next federal election, and public opinion in BC is not favourable to pipeline approval, which puts the 21 Conservative seats at greater risk.

Second, we haven’t heard from Christy Clark and the government of British Columbia on its position on the pipeline in quite some time. If the Clark government remains opposed (its current formal position is that the project does not meet BC’s famous five conditions), it would be very costly politically for the Harper government to approve it.

Finally, there is no evidence that the adamant opposition of First Nations in BC has changed. From the beginning, First Nations opposition has always been the biggest threat to the project. If Enbridge or the government hasn’t been able to turn that around, approving the project will set back relations with First Nations even further, and jeopardize other resource projects important to the Harper government.

Harper’s Choices

Harper essentially has three choices. He can accept the NEB recommendations and conditions. He can reject them, which would kill the project for the time being (Enbridge would be able to propose the project again at a later date). Or he could pull an Obama, and simply put off making a decision about the pipeline.

The National Energy Board Act gives cabinet the authority to accept or reject the recommendation decision of the NEB but cabinet cannot alter the terms and conditions the NEB recommends. The cabinet can, however, ask the NEB to reconsider its terms and conditions, and give it a new deadline. It can actually do so repeatedly. So if Harper wants to simply buy more time, he can do so by asking the NEB to reconsider. (Updated: Or, as was pointed out by James Coleman at the Calgary Law School, he can just extend the deadline indefinitely under Section 54(3).)  Doing so would be a major about face for the Prime Minister who rammed a streamlining of the regulatory review process through Parliament in 2012, and who has been so critical of Obama for failing to bring finality to the Keystone XL decision. But in some ways it would be the most politically graceful move given the painful choices Harper confronts.

What Happens if Next if Harper Says Yes?

The Federal cabinet decision is the most important decision point in this political stage of the Northern Gateway conflict, but it is not the only one. BC’s Premier Clark would still need to weigh in. It would be very difficult for Clark to move to yes on Northern Gateway without a major shift by either Enbridge or the federal government on BC’s demand of a “fair share of the fiscal and economic benefits.” So one thing to look for as part of a yes decision by Harper is whether big new developments occur on sharing economic benefits with BC. Even if that condition gets satisfied, however, Clark will be risking a major political backlash, if she endorses the project, given the political strength of opposition to Northern Gateway in BC. If Clark takes a stand and says no, the pipeline can only proceed if Harper is willing to go to war with BC politically and constitutionally. Given the importance of BC’s 21 seats to the Conservative’s chances for success in the 2015 election, that seems unlikely.

If Harper and Clark both say yes, then look to two other major decision points. The Dogwood Initiative is poised to unleash a citizens initiative to ban tankers from the Pacific coast. While the process is stacked against initiatives, a strong showing of support in the campaign would send shock waves through the electoral process.

And then there’s the proponent, Enbridge. The company has the option of sitting on the license and continuing to work with First Nations to see if it can reduce opposition to the project. If the company chooses to proceed, then we move to the third, legal stage of the conflict.

The Legal Stage

There are already five legal challenges filed against the NEB decision to recommend approval, two by environmentalists, three by First Nations. More are anticipated if the Harper cabinet says yes. It will take a year or more to resolve these cases; this dispute seems destined for the Supreme Court of Canada. The courts could enjoin Enbridge from proceeding before the issues are resolved. If they don’t, Enbridge could still choose to take a pause until they are resolved.

But if Enbridge puts one shovel in the ground in BC to initiate pipeline construction, we’ll enter the fourth, on-the-ground stage of the conflict.

The Looming Civil Conflict

If legal approvals get put in place and Enbridge proceeds, there will be a grand battle on the ground between the company and pipeline opponents. I believe a decision to proceed with the pipeline will result in civil conflict beyond what Canada has experienced in modern times.  I was at yet another rally today in Vancouver against the pipeline where senior First Nations leaders stated that they would use every legal means to stop the pipeline, and if that failed, their people would take “matters into their own hands” to stop the pipeline. If it comes to this on-the-ground stage, the nightly news will be filled with RCMP dragging aboriginal elders off of roads, and continuous physical and legal confrontations between police and opponents. It will make the Clayoquot Sound conflict look like a tea party.

This conflict over a pipeline continues to manifest the struggle over the definition of Canada moving through the 21st century.

Posted in Energy Pipelines, Oil Sands | Leave a comment