11. Miscellaneous matters

The Canadian Environmental Protection Act, 1999 (CEPA 1999) sets out general authorities or conditions for:

• disclosure of information;
• general regulation-making provisions;
• regulations regarding cost recovery;
• use of economic instruments, namely deposit/refund systems and tradeable unit systems;
• requirements governing publication of various CEPA 1999 instruments in the Canada Gazette;
• boards of review; and
• review of the act by Parliament every five years.

Economic instruments and incentives are a core element of Environment Canada’s environmental innovation agenda. In 2002-03, a federal government committee, led by Environment Canada and Natural Resources Canada, undertook a comprehensive analysis of the impact of the Kyoto Protocol. The analysis examined a package of possible government actions to address climate change, including:

• the domestic measures announced in Action Plan 2000 and in the 2001 Budget;
• agricultural and forest sinks from current practices;
• a domestic emissions trading system for the use of large industrial emitters;
• about 40 additional targeted measures (some of which are enhancements of Action Plan 2000 measures); and
• a system of offsets.

The analytical work provided a foundation for the Government of Canada’s Climate Change Plan for Canada, which was released in November 2002. The plan includes two key market-based economic instruments: an output-based emissions trading system for the large final emitters in the economy and an offset credit trading system for other sectors.

In October 2002, Environment Canada launched the Pilot Emission Removals, Reductions and Learnings Program (PERRLP). This is a five-year, $15 million pilot project to encourage Canadian companies and organizations to take immediate action to reduce greenhouse gas emissions. The first purchase round was held in fall 2002 and focused on landfill gas capture and combustion, carbon dioxide capture, and geological storage projects.

In 2002, Environment Canada launched a preliminary analysis of multipollutant emissions trading. The Canadian and U.S. governments also established a work plan for analysis of the potential for cross-border emissions trading of air pollutants.

Environment Canada continues to be an active participant in the National Round Table on the Environment and the Economy Ecological Fiscal Reform (EEEFR) project. The project has two main objectives: to conduct an in-depth exploration of the concept of ecological fiscal reform and to focus on a few specific environmental issues with a view to developing a suite of concrete measures.

Case studies were completed on the potential for economic instruments and incentives in the areas of conservation of agricultural landscapes, cleaner transportation, sulphur in heavy fuel oils, and substances of concern. The case studies showed that there is a role for ecological fiscal reform in Canada and that it can offer many benefits over traditional policy instruments.

An initial exploration of the use of economic instruments such as charges or taxes to deal with toxic substances has been done, including the formation of a multidepartment working group that sponsored a paper examining the use of ranking indices and a workshop to discuss the paper and next steps.

Environment Canada commissioned a paper that analyzes international experience with economic instruments and suggests areas where they might be successfully applied in Canada. The department also participated in the process headed by the External Advisory Committee on Smart Regulation, which was mandated by the Prime Minister to recommend areas where the government needs to redesign its regulatory approach to create and maintain a Canadian advantage.

The committee examined the issue of increasing the use of economic and other non-regulatory instruments to provide the optimum mix of policy tools for achieving objectives such as sustainable development. It will shortly make its recommendations to the Prime Minister.