On February 25th I and three climate scientists, along with activist-writers Tzeporah Berman and Bill McKibben, held a press conference to present our recent report on the huge contradiction between the Harper government's promise to reduce carbon pollution 17% by 2020 and its promotion of expanded tar sands production through new projects and new pipelines like Keystone and Northern Gateway. The report can be found at canadianclimatepolicy.org.
An article in the February 25th Globe and Mail refers to this report as well. I am misquoted in the original online version as being negative about the prospects for cap-and-trade. I actually said that I am agnostic about carbon tax versus cap-and-trade versus regulations. If the Harper government wants to do regulations, that's fine by me. California is using regulations to achieve about 90% of emission reductions and it is on course to meet its aggressive reduction target.
But the Harper government has not implemented the regulations it promised to meet its target and as the Environment Commissioner in our Office of the Auditor General noted last year, it is now too late to hit the 2020 target. This is why we need to not allow any investments that expand the production and transportation of fossil fuels to produce more carbon pollution. This does not mean shutting down the oil sands. It means stopping its expansion. It does not mean shutting down existing pipelines. It means stopping the construction of new capacity. Existing facilities will still operate for decades. But we must stop the insanity of new major carbon polluting infrastructure.
Tuesday, 26 February 2013
Wednesday, 20 February 2013
Countries like Canada are large enough to make a difference on climate change
The global warming threat requires a rapid
reduction in the carbon pollution emitted from every country in the world. But
just as each country is only a percentage of the planet’s population or GDP,
each country emits only a percentage of total carbon pollution. This enables
short-sighted or selfish people (perhaps profiting from carbon pollution) to
argue that their country should continue with projects to expand carbon
pollution (or at least not reduce it) because their individual effort will not
solve the problem.
The response has two parts.
1. The first is to point out that the
logical consequence of this approach is for no one to act, even major emitters,
and so we would collectively march to disaster – a classic “tragedy of the
commons” outcome.
But this elicits a follow-up argument that
there is still no point acting until everyone acts simultaneously since
free-riders will undermine one’s effort. This triggers the second part of the
response.
2. It is true that the ideal is for
everyone to act simultaneously. This would be wonderful. But, realistically,
this is extremely unlikely since humanity lacks effective global governance, as
20 years of failed United Nations climate negotiations have shown. So, again,
the logical outcome of the demand for simultaneous action is to collectively
march to disaster.
An
effective way to make this point is to ask what we should do in our
jurisdiction in the face of this world reality – eventually arguing that the
answer (below) is trivial, obvious to any child.
If (1) we do not want disaster, and (2) we
know that humanity will not initially act in unison, then the only logical
response is for individual jurisdictions to reduce their carbon pollution while
simultaneously trying to get other jurisdictions to also act. One cannot possibly
convince others to act if one is not acting oneself. And, even if one is
acting, pressure of some kind is likely required to get others to act. This is
likely to be restrictions on trade that help domestic industries compete with
industries located in jurisdictions without effective climate policies.
Thus, the most likely path to success looks
like this. The jurisdictions that are most motivated must act first. They may
be motivated because they have an enlightened understanding of the path to
success (northern Europe perhaps), or effective environmental governance
institutions (California perhaps), or a special incentive because of higher
global warming impacts (islands like the UK and Japan, climate-vulnerable
regions like Australia). Initial efforts at trade restrictions will be
difficult. But once the number of jurisdictions has passed a critical
threshold, the difficulty will diminish rapidly as trade pressures mount on
non-acting jurisdictions.
In the March issue of the Canadian
magazine, The Walrus, I used Canada’s experience in confronting the global
threat of Nazi Germany as an example of how to present these logical arguments.
Here is an excerpt from that article.
We hear, “Canada contributes only 2 percent to global emissions, so there is no point making an effort until everyone acts at once.”
Yet every year on Remembrance Day, the prime minister extols our critical role in confronting Nazi Germany’s global threat. He fails to mention that we actually contributed less than 2 percent of the Allied effort in World War II; one million Canadians served in our armed forces, compared with over 60 million who fought from the USSR, the US, the British Empire, France, Poland, and other countries. Even though we were only 2 percent of the solution, we have something to be proud of. We punched above our weight by joining France and England in declaring war on Germany in 1939, without knowing if and when the USSR and the US would join the cause. We did not wait for everyone to act simultaneously against a global threat, which is virtually impossible, but instead showed leadership. If we were to show leadership on climate, we would join forces with other leading regions, such as California, Europe, Australia, and Japan, and as this effort snowballed we would use trade measures if necessary to bring other countries along.
Saturday, 16 February 2013
Jobs for us, a planet for our kids
by Mark Jaccard
Originally published in The Vancouver Sun February 16, 2012
People who profit from an expanding fossil fuel industry want you to be suspicious of climate science. You should be suspicious of them.
All the world’s leading climate scientists know that burning coal, oil and natural gas is heating the earth. These scientists may debate whether our current path will increase temperatures four or six degrees Celsius in this century, but they all agree that either of these outcomes will devastate British Columbia’s environment during the lives of our children and, eventually, raise sea levels by tens of metres. Unfortunately, the fossil fuel profiteers have a lot of money to buy media coverage, politicians and even a few contrarian scientists who are not climate experts, so our ability to prevent this disaster is a long shot. But, for our children, we have to try.
For one thing, we must see through the deceit of politicians who trumpet jobs from fossil fuel expansion while ignoring the impacts on the planet, not to mention on their own climate promises. Prime Minister Stephen Harper knows that his pursuit of oilsands expansion, the Northern Gateway pipeline across B.C. from Alberta and dangerous oil tankers on our coast contradicts his promise to reduce Canadian greenhouse gas emissions 17 per cent by 2020. Premier Christy Clark knows that her pursuit of expanded shale gas production and natural gas exports contradicts her promise to reduce B.C.’s emissions 33 per cent by 2020. One of her ministers has already justified this destructive choice, saying “jobs come first.” In other words, jobs from destroying the planet are preferred to jobs that preserve it.
But what would happen if we rejected the plans of politicians and fossil fuel profiteers who are propelling us to the high-carbon, planet-destroying economy? Actually, we know the answer. The evidence is all around us.
In 2007, the B.C. government recognized it could not allow fossil fuel electricity plants and meet its emissions reduction promises, so it cancelled contracts to build two new coal-fired power plants and relegated the natural gas-fired Burrard Thermal plant to backup status. Yes, the economy lost jobs associated with these fossil fuel projects. But in their place, BC Hydro contracted for zero-emission electricity from run-of-river hydro, wind and biomass projects. A recent estimate by PricewaterhouseCoopers puts the combined economic impacts of these clean electricity projects at 18,000 person-years of construction and 2,000 full-time jobs, which is more than the coal plants would have created. These include high-paying skilled jobs in engineering, accounting, economics, finance, planning, law, environmental science, hydrology, public relations, construction trades, and technical operations.
Fossil fuel profiteers want us to believe that we must continue to pollute the atmosphere in order to drive our cars. This is not true. Vehicles can run on biofuel (biodiesel or ethanol), clean electricity and hydrogen, none of which pollute the atmosphere. An extended range hybrid car or truck can rely mostly on clean electricity, supplemented with biodiesel or ethanol, giving the same horsepower as conventional vehicles. Since such technologies are already commercially available, you can buy one today.
My research group at Simon Fraser University is currently estimating the job effects in B.C. of transitioning 80 per cent of cars and trucks to zero-emission technologies and fuels over the next two decades. This would create more jobs in zero-emission electricity generation as well as jobs in forestry and biofuel production as cellulosic ethanol can be produced from wood waste and dedicated wood chip-to-fuel facilities. Our preliminary estimate is that the replacement of planet-destroying gasoline and diesel with planet-saving electricity and biofuel in hybrid cars and trucks would create more than 60,000 person-years in construction and 15,000 to 20,000 permanent jobs in the province.
These are crude estimates which we will refine over the coming year of research — they depend on choices about clean electricity projects, biofuel production processes, and vehicle technologies and fuels. Regardless, the lesson is clear. Job creation is not a reason to develop planet-destroying fossil fuels.
We can create as many or more high-skilled, high-paying jobs by shifting now to the planet-saving energy system. As Nicholas Stern, former chief economist of the World Bank says, “the low-carbon economy will be more energy-secure, cleaner and safer … the high-carbon economy will self-destruct.”
Pipeline itself not the only problem we should worry about: Continued development of the oilsands will increase Canada's CO2 emissions
By Mark Jaccard
Originally published in The Vancouver Sun, January 25 2012
As a sustainable energy researcher, I have been inundated with media requests to comment on the proposed new pipelines from Alberta’s tarsands, especially Enbridge’s Northern Gateway here in British Columbia. I have mostly declined, assuming that with such intense public interest the key issues would get a full airing. But I was wrong — for no one is discussing the proverbial “elephant in the room.” This is the connection between tarsands expansion and Prime Minister Stephen Harper’s 2007 promise to Canadians to reduce our greenhouse gas emissions 65 per cent by 2050.
Harper’s promise, recently reconfirmed, simply reflects the overwhelming scientific consensus that while any increase in average global temperatures from pre-industrial levels is dangerous, increases above 2 degrees Celsius will likely have cataclysmic effects for the ecosystems on which we depend. Yet human combustion of fossil fuels has already driven the temperature 1.2 degrees higher, and we are on a path of 4 degrees or more in this century alone, which will ultimately increase the sea level by tens of metres. This is why leaders of industrialized countries, like the U.S. and European Union, agreed to reduce emissions 80 per cent by 2050 and will work to require global emissions to start declining this decade.
A target 38 years hence might seem safely distant. But this is incorrect. All leading independent climate policy institutes concur that only with immediate action will we achieve a 65-80 per cent reduction in less than four decades. In the case of vehicles, this means the rapid deployment of near-zero-emission technologies which, thankfully, are already commercially available. These include hybrid vehicles using biofuels (ethanol or biodiesel), plug-in hybrid vehicles, and battery-electric vehicles. In contrast, our demand, and soon the global demand, for oil must contract, especially the demand for high-cost, high-emission tarsands.
Thus, for his promise not to be a lie, Harper cannot allow expansion of tarsands and associated pipelines, and he must require a growing market share of near-zero-emission vehicles. He knows this because his analysts are privy to the work of the world’s leading researchers. Canadians on all sides of the issue should read a 20-page report from MIT’s Joint Program on the Science and Policy of Global Change entitled Canada’s Bitumen Industry Under CO2 Constraints (found at http://globalchange.mit.edu). The report shows how and why the Canadian tarsands must contract as part of a global effort to prevent a 4 degree increase in temperatures and catastrophic climate change.
Why, then, would anyone argue for tarsands expansion and pipelines like Gateway? The reasons are obvious, as writers have known through the ages.
People who stand to get rich from tarsands development will delude themselves and try to delude others that the climate science is faulty or uncertain. As Upton Sinclair wrote, “it is hard to get a man to understand something when his income depends on his not understanding it.” And those who stand to gain from the tarsands indirectly (like politicians) will distract people from the obvious connection between tarsands expansion and climate catastrophe. “Tarsands are a small part of the problem.” “What about the Chinese?” “The tarsands will inevitably be developed.” “Low-emission vehicles and fuels are not ready yet.” And so on – all of it bogus. As H. L. Mencken wrote, “the truth that survives is simply the lie that is pleasantest to believe.”
The oft-heard argument that B.C. needs the jobs and tax revenue is particularly galling. This is like arguing we need jobs making a toxin or nuclear weapons. We are not helping ourselves and our children by creating jobs that spew CO2 into the atmosphere. We are already creating jobs that propel our vehicles without CO2 emissions, and we can do so much more.
And where is the logic in the almost-complete focus on pipeline or oil tanker spills by environmentalists and first nations? If Enbridge is able to convince the hearing panel that these local threats are acceptable, then the project goes ahead. But since climate change will devastate all of the ecosystems potentially affected by the project, efforts to prevent local damage from spills are fruitless if they are not part of a concerted effort to stop CO2 emissions. Otherwise, it’s like trying to prevent a fuel leak on the Titanic as it steams toward the iceberg. We need to turn the ship.
The facts are simple. Our political leaders are lying to us if they aid and abet the expansion of tarsands while promising to take action to prevent the imminent climate catastrophe. If you love this planet and your children, and are humble and objective in considering the findings of science, you have no choice but to battle hard to stop Gateway and other tarsands pipelines. It is time to face up to this challenge with honesty and courage.
Originally published in The Vancouver Sun, January 25 2012
As a sustainable energy researcher, I have been inundated with media requests to comment on the proposed new pipelines from Alberta’s tarsands, especially Enbridge’s Northern Gateway here in British Columbia. I have mostly declined, assuming that with such intense public interest the key issues would get a full airing. But I was wrong — for no one is discussing the proverbial “elephant in the room.” This is the connection between tarsands expansion and Prime Minister Stephen Harper’s 2007 promise to Canadians to reduce our greenhouse gas emissions 65 per cent by 2050.
Harper’s promise, recently reconfirmed, simply reflects the overwhelming scientific consensus that while any increase in average global temperatures from pre-industrial levels is dangerous, increases above 2 degrees Celsius will likely have cataclysmic effects for the ecosystems on which we depend. Yet human combustion of fossil fuels has already driven the temperature 1.2 degrees higher, and we are on a path of 4 degrees or more in this century alone, which will ultimately increase the sea level by tens of metres. This is why leaders of industrialized countries, like the U.S. and European Union, agreed to reduce emissions 80 per cent by 2050 and will work to require global emissions to start declining this decade.
A target 38 years hence might seem safely distant. But this is incorrect. All leading independent climate policy institutes concur that only with immediate action will we achieve a 65-80 per cent reduction in less than four decades. In the case of vehicles, this means the rapid deployment of near-zero-emission technologies which, thankfully, are already commercially available. These include hybrid vehicles using biofuels (ethanol or biodiesel), plug-in hybrid vehicles, and battery-electric vehicles. In contrast, our demand, and soon the global demand, for oil must contract, especially the demand for high-cost, high-emission tarsands.
Thus, for his promise not to be a lie, Harper cannot allow expansion of tarsands and associated pipelines, and he must require a growing market share of near-zero-emission vehicles. He knows this because his analysts are privy to the work of the world’s leading researchers. Canadians on all sides of the issue should read a 20-page report from MIT’s Joint Program on the Science and Policy of Global Change entitled Canada’s Bitumen Industry Under CO2 Constraints (found at http://globalchange.mit.edu). The report shows how and why the Canadian tarsands must contract as part of a global effort to prevent a 4 degree increase in temperatures and catastrophic climate change.
Why, then, would anyone argue for tarsands expansion and pipelines like Gateway? The reasons are obvious, as writers have known through the ages.
People who stand to get rich from tarsands development will delude themselves and try to delude others that the climate science is faulty or uncertain. As Upton Sinclair wrote, “it is hard to get a man to understand something when his income depends on his not understanding it.” And those who stand to gain from the tarsands indirectly (like politicians) will distract people from the obvious connection between tarsands expansion and climate catastrophe. “Tarsands are a small part of the problem.” “What about the Chinese?” “The tarsands will inevitably be developed.” “Low-emission vehicles and fuels are not ready yet.” And so on – all of it bogus. As H. L. Mencken wrote, “the truth that survives is simply the lie that is pleasantest to believe.”
The oft-heard argument that B.C. needs the jobs and tax revenue is particularly galling. This is like arguing we need jobs making a toxin or nuclear weapons. We are not helping ourselves and our children by creating jobs that spew CO2 into the atmosphere. We are already creating jobs that propel our vehicles without CO2 emissions, and we can do so much more.
And where is the logic in the almost-complete focus on pipeline or oil tanker spills by environmentalists and first nations? If Enbridge is able to convince the hearing panel that these local threats are acceptable, then the project goes ahead. But since climate change will devastate all of the ecosystems potentially affected by the project, efforts to prevent local damage from spills are fruitless if they are not part of a concerted effort to stop CO2 emissions. Otherwise, it’s like trying to prevent a fuel leak on the Titanic as it steams toward the iceberg. We need to turn the ship.
The facts are simple. Our political leaders are lying to us if they aid and abet the expansion of tarsands while promising to take action to prevent the imminent climate catastrophe. If you love this planet and your children, and are humble and objective in considering the findings of science, you have no choice but to battle hard to stop Gateway and other tarsands pipelines. It is time to face up to this challenge with honesty and courage.
Full Steam Ahead? In moving toward a clean energy future, unbridled optimism has its pitfalls
By Mark Jaccard
Originally published in the Literary Review of Canada January, 2012
The Leap: How to Survive and Thrive in the Sustainable Economy by Chris Turner
Random House
368 pages, hardcover
ISBN 9780307359223There are individuals, organizations, institutions, corporations and even some governments showing leadership in the quest for cleaner energy, more livable communities and a lighter human footprint on the planet. In The Leap: How to Survive and Thrive in the Sustainable Economy, Chris Turner tells their stories. And he tells them in a way that is compelling and accessible—mixing vignettes of colourful personalities with clear descriptions of technological innovations, green corporate strategies, urban rejuvenations and key energy-environment policies.
If the continual failure of major governments to act against the climate risk depresses you, this optimistic book can help. After reading it, you feel good about the inspirational people in different corners of the world who are rolling up their sleeves to make a difference. You feel good about the author, too, for his effort to spread their messages in a way that hopefully attracts many readers. The planet needs more books like this.
For a taste of the book’s many characters and places, Turner’s occasional focus on Denmark provides an illustrative sample. He describes the multi-decade transformation of Copenhagen, since it first banned cars from its main street in 1962, through a series of decisions on town planning, urban renewal, cycling infrastructure, public transit and district heating that show how an enviable quality of life in a modern city can coexist with an incredibly low per capita use of energy. Jan Gehl, one of Denmark’s earliest advocates and practitioners of this approach, has helped spread the “Copenhagenization” process to cities around the world.
Turner also describes Denmark’s leadership in the development of wind power that, while initially a modest effort in the late 1970s to reduce dependence on foreign oil and coal, has morphed into a full-blown crusade to eliminate the use of fossil fuels over the next few decades as a model for the world. This is not easy for a country such as Denmark, whose best renewable source of electricity is wind, which is intermittent and often most plentiful during night when electricity demand is lowest. But the Danes are also converting coal-fired power plants to biomass (wood and crop residues) while strengthening their transmission links to the hydropower reservoirs in neighbouring Norway and Sweden.
Interconnection with these energy storage systems certainly helps manage the electricity system in the face of wind’s intermittency. But this initial effort will be supplanted by the growing adoption of vehicles with batteries—like the hybrid-electric Prius and Volt—that can store wind-generated electricity for when it is needed.
The concurrent deployment of “smart meters” to all electricity consumers will enable two-way communication between the electricity system operator and vehicles parked anywhere in the country, so that batteries can be charged or discharged depending on the supply-demand balancing needs of the system. Vehicle batteries can thus store excess wind-generated electricity for use when the wind is not blowing but demand is high. Special tariffs that reflect electricity’s value at any given moment will motivate those who can benefit from participating in this experiment in decentralized energy storage. Those with hybrid-electric vehicles can even agree to have their battery drained completely in special cases and they would simply rely on biodiesel or ethanol for their next vehicle trip while their battery recharges.
The book is brimming with informative and interesting stories like these from Denmark, and for this reason I highly recommend it. I have, however, a fairly significant complaint. It stems from Turner’s strategy of presenting his book as more than a travelogue of modern renewable energy, community redesign and inspiring people. He wants to convince the reader that he has an insightful new concept for motivating and guiding action—“the leap” (or “the great leap” or “the great sideways leap” depending on the page). To explain it, Turner detours through metaphors and fields of research that are unrelated to the book’s topic and confuse more than clarify. It all comes across a...........s a thinly veiled effort to endow the book with a sophistication and gravitas that it does not merit.
The problem starts with Turner’s rationale for the leap. Humanity is in the grips of three related crises: failure of the financial system, peak oil and climate change. A rapid shift to renewable energy will solve all three. By creating jobs, rebuilding social capital and providing stable energy prices, the shift to renewable energy will somehow repair our fragile financial system. At the same time, this shift will eliminate the twin threats of peak oil and climate change. The shift must happen quickly, but this is difficult because it requires a significant change in world view, given our fossil fuel dependence and our penchant for creating inhospitable cities that segregate rich from poor and prioritize cars over people. The solution is to leap: quickly take actions and implement policies that others have done elsewhere or that simply seem like the right thing to do, without bothering too much with careful analysis, critical thinking or caution.
For those harbouring doubts about what this approach actually is, or why it would be wise, Turner provides three specific metaphors. First, he asks us to imagine two trains running parallel toward a chasm. You are on the train that will fall into the chasm, while the other will sail miraculously over it, and for some reason you know this. You should leap to the other train (which I intend to do when I next find myself in a similar situation). This is metaphor number one. If this is unhelpful for real-world decisions, then consider the following. You are one of several transatlantic shipping companies operating out of New York in the early 1800s. The Black Ball shipping company tries for a competitive edge by setting a regular schedule for departures while all the other companies only leave port once their holds are full. This successful business strategy is an example of a leap. This is metaphor number two. Still not clear? Okay, how about you are the governor of New York State in the early 1800s, and you convince your constituents to support the construction of the Erie Canal. The canal proves a great success, fuelling the dramatic growth of New York City. The decision to build the canal was a leap. This is metaphor number three.
Now, what do these metaphors actually tell us? I am not sure. My guess is that Turner is saying we should—in the interests of shifting quickly to renewable energy and liveable cities—be willing to quickly gamble on new approaches and technologies. If these gambles prove successful in hindsight, Turner calls them leaps. But what if they are not successful? Should we have been more careful, perhaps done something else instead of wasting effort and resources? Turner does not provide much guidance here. Yet, while regular scheduling of transatlantic shipping was a successful gamble, the business pages of our newspapers are replete with daily examples of similar-scale entrepreneurial leaps that fail. The hindsight fact that one succeeded hardly provides evidence for the value of leaping.
And the Erie Canal may have been a successful gamble, but economic historians point to most canal projects of the early 1800s in Europe and North America to illustrate the enormous waste of society’s resources from risky projects that should have been considered more carefully in advance. Many of the canals started in this period were never completed, and most of the rest were rendered obsolete within a decade of completion by “the leap” to railways. Indeed, Turner’s selective vision is clearly evident when he mentions but draws no lessons from the financial losses to the followers of George Washington, who pursued his dream of a canal from the Potomac to the Ohio—a project that was never completed.
When Turner shifts from the leap to the great leap, he evokes images of the decisions of China’s Chairman Mao. The Great Helmsman too was a fervent advocate of the leap approach to socioeconomic decision making, but his hastily launched Great Leap Forward of 1958 had disastrous consequences for China’s environment, economy and an estimated 30 million people who died from famine.
If Turner would simply argue that we need to rapidly transform the global energy system to reduce carbon dioxide emissions from burning fossil fuels in order to prevent human-produced climate change, his book would be more coherent and defensible. Instead, he again tries to score populist points by linking the 2008 financial crisis to both coincidentally high oil prices and climate change, declaring the three phenomena to be symptomatic of a fundamental breakdown of our socioeconomic system. Yet the expert book he summarizes to explain the financial crisis, by Nobel laureate Joseph Stiglitz, does not argue that high oil prices caused the financial crisis. Indeed, no book by a reputable economist does that. Greed, inadequate regulation and a period during which bankers were willing to close their eyes and leap do just fine on their own as explanations.
Turner’s wholesale acceptance of the peak oil story compels him to overlook the countless independent assessments showing that the earth has a frightening amount of fossil fuels, in a great diversity of forms, all of which can be used to generate electricity and power vehicles. Turner accepts independent assessments, such as those from the Intergovernmental Panel on Climate Change, when it comes to climate science, but he ignores independent assessments that show the huge magnitude of global fossil fuel supplies at reasonable prices. While he does use one estimate of conventional oil supplies by the International Energy Agency, he ignores that agency’s other studies that explore the ability to substitute between forms of fossil fuels. (For example, South Africa today produces a substantial share of its vehicle fuels from coal and some countries produce vehicle fuels from natural gas.)
Turner should stick with the climate threat. Virtually all climate scientists agree it is huge and already upon us. It is the only rationale we need for acting quickly. But in acting quickly, we need to be cautious and careful. There are many possible wrong steps ahead.
Fortunately, for guidance there are large independent assessments of the global energy system. While the IPCC is known for its volumes that assess the climate science, it produces other volumes that assess the options for reducing greenhouse gas emissions. The Energy Modeling Forum, based at Stanford University, brings together world-leading analysts for assessing the technologies, energy sources and policies for rapidly transforming the global energy system. Ten years ago, the International Institute for Applied Systems Analysis in Vienna directed the production of the World Energy Assessment, an excellent resource for non-experts. It is repeating this process in producing the Global Energy Assessment, to be released in early 2012. Consulting these reports—especially their summaries for policy makers—can help populist writers become a bit more discriminating, a bit less prone to leap in response to the latest discussion with an advocate of one particular technology or policy.
To give one example of many throughout the book, Turner raves about Germany’s feed-in tariff, which pays a higher price to producers of renewable electricity. The policy was recently adopted by Ontario. He parrots FIT advocates in claiming that this policy is vastly superior to a system of renewable quotas, which some jurisdictions use instead of FIT. What he fails to acknowledge is that since the introduction of FIT in 2000, Germany has continued to modernize and expand its coal plants, just as Ontario now builds natural gas plants. Yet, the IPCC, EMF modelling studies and the upcoming Global Energy Assessment clearly show that rich countries must not be installing any new fossil fuel generating facilities if humanity is to keep the global temperature increase below two degrees Celsius. That is why British Columbia in 2007 implemented a near 100 percent clean electricity quota system, which forced the cancellation of two coal plants and the exclusive development in B.C. of small hydro, wind and biomass electricity facilities. While the FIT has certainly had some good effects, it is hardly the “full-blown leap” Turner calls it, and countries such as Germany need to quickly augment or replace it with a ban on new fossil fuel–burning investments or a 100 percent clean electricity quota system—which amount to the same thing.
Chris Turner has written an interesting book full of inspiring examples of what people are doing around the world to reduce greenhouse gas emissions from energy use and to make more liveable cities. Readers will especially enjoy and benefit from the book if they skip through the discussions of his leap concept and zero in on these wonderful examples.
PM's Unintentions Exposed: Carbon pricing report reveals the fiction behind Harper's climate promises
By Mark Jaccard
Originally published in Alternatives Journal, 2011
In 1997, then-prime-minister Jean Chrétien committed Canada to dramatically reduce its greenhouse gas (GHG) emissions by 2010 by signing the Kyoto Protocol. This helped him win re-election in 2000. It mattered little that most independent policy experts claimed Chrétien’s modest climate policies would not stem the growth of Canada’s emissions. Their arguments proved true, but since Chrétien was no longer in office in 2010, there was little interest by then in learning from his failed climate policies.
Or maybe someone was learning.
In 2007, Prime Minister Stephen Harper committed Canada to dramatically reduce its GHG emissions by 2020. This helped him win re-election twice, including a majority government this year. It mattered little that most independent policy experts claimed Harper’s modest climate policies would not stem the growth of Canada’s emissions. Harper is unlikely to still be in office in 2020 should he fail to fulfill his promise to reduce emissions by 17 per cent. And, barring a miracle in human and political longevity, he is definitely not at political risk for his promise to reduce Canadian emissions 65 per cent by 2050.
The parallels are uncanny. But is the comparison fair? Perhaps Harper is not a Chrétien disciple, carefully learning the master’s recipe for a successful climate politics that matches do-little policies with a heroic commitment to a safely distant deadline. So how can we know, in the case of climate politics, if Harper is Chrétien redux?
Actually, the question is easily answered. When governments are faced with skepticism about their commitments and policies, they can commission independent assessments. This is a frequent practice. In 2007, for example, the Harper government asked me, as well as four other independent economists, if we agreed with its analysis that a last-ditch effort to reach Chrétien’s 2010 Kyoto target would be devastating to the Canadian economy. We all concurred, an assessment the Harper government quickly made public.
Thus, the Harper government could commission independent analysts or the National Roundtable on the Environment and the Economy to assess its climate policies for their likelihood of achieving the government’s 2020 promise. In fact, it did just that, albeit inadvertently, when it asked the roundtable to explain how to achieve its 2050 target. This analysis led to the 2009 report, Achieving 2050: A Carbon Pricing Policy for Canada. I say inadvertently because, while the government did not ask the roundtable to analyze the 2020 target, that date is on the path to 2050, making it a trivial task to extract from the report the approximate emission pricing and regulatory policies needed to achieve Harper’s 2020 promise. One can easily see that the government’s current policies will not achieve the 2020 target.
Because 2020 is nine years away, Harper benefits from an assumption that we cannot yet know if his policies will or will not achieve his promises. As the case above illustrates, however, independent climate-policy experts actually can tell well in advance if a target will be achieved. This is because many of our GHG emissions are associated with long-lived investments in energy supply, industrial facilities, buildings, vehicles and equipment. We know what needs to happen today for an emissions outcome 10 years hence. We already know that if government was serious about its 2020 promise, there would be no new investment today in oil sands development and oil pipelines, industries would face a rising price for GHG emissions, and regulations would be forcing a rapid transition to zero- and low-emission vehicles. But none of this is happening. While Jean Chr̩tien cannot be blamed for the actions of politicians who follow him, it appears that in the art of climate politics, he was a great teacher Рand Stephen Harper an excellent student.
Originally published in Alternatives Journal, 2011
In 1997, then-prime-minister Jean Chrétien committed Canada to dramatically reduce its greenhouse gas (GHG) emissions by 2010 by signing the Kyoto Protocol. This helped him win re-election in 2000. It mattered little that most independent policy experts claimed Chrétien’s modest climate policies would not stem the growth of Canada’s emissions. Their arguments proved true, but since Chrétien was no longer in office in 2010, there was little interest by then in learning from his failed climate policies.
Or maybe someone was learning.
In 2007, Prime Minister Stephen Harper committed Canada to dramatically reduce its GHG emissions by 2020. This helped him win re-election twice, including a majority government this year. It mattered little that most independent policy experts claimed Harper’s modest climate policies would not stem the growth of Canada’s emissions. Harper is unlikely to still be in office in 2020 should he fail to fulfill his promise to reduce emissions by 17 per cent. And, barring a miracle in human and political longevity, he is definitely not at political risk for his promise to reduce Canadian emissions 65 per cent by 2050.
The parallels are uncanny. But is the comparison fair? Perhaps Harper is not a Chrétien disciple, carefully learning the master’s recipe for a successful climate politics that matches do-little policies with a heroic commitment to a safely distant deadline. So how can we know, in the case of climate politics, if Harper is Chrétien redux?
Actually, the question is easily answered. When governments are faced with skepticism about their commitments and policies, they can commission independent assessments. This is a frequent practice. In 2007, for example, the Harper government asked me, as well as four other independent economists, if we agreed with its analysis that a last-ditch effort to reach Chrétien’s 2010 Kyoto target would be devastating to the Canadian economy. We all concurred, an assessment the Harper government quickly made public.
Thus, the Harper government could commission independent analysts or the National Roundtable on the Environment and the Economy to assess its climate policies for their likelihood of achieving the government’s 2020 promise. In fact, it did just that, albeit inadvertently, when it asked the roundtable to explain how to achieve its 2050 target. This analysis led to the 2009 report, Achieving 2050: A Carbon Pricing Policy for Canada. I say inadvertently because, while the government did not ask the roundtable to analyze the 2020 target, that date is on the path to 2050, making it a trivial task to extract from the report the approximate emission pricing and regulatory policies needed to achieve Harper’s 2020 promise. One can easily see that the government’s current policies will not achieve the 2020 target.
Because 2020 is nine years away, Harper benefits from an assumption that we cannot yet know if his policies will or will not achieve his promises. As the case above illustrates, however, independent climate-policy experts actually can tell well in advance if a target will be achieved. This is because many of our GHG emissions are associated with long-lived investments in energy supply, industrial facilities, buildings, vehicles and equipment. We know what needs to happen today for an emissions outcome 10 years hence. We already know that if government was serious about its 2020 promise, there would be no new investment today in oil sands development and oil pipelines, industries would face a rising price for GHG emissions, and regulations would be forcing a rapid transition to zero- and low-emission vehicles. But none of this is happening. While Jean Chr̩tien cannot be blamed for the actions of politicians who follow him, it appears that in the art of climate politics, he was a great teacher Рand Stephen Harper an excellent student.
Let's Get Serious: Focusing on behavioural change is an easy excuse for politicians to avoid implementing greenhouse-gas-cutting laws
By Mark Jaccard
Originally published in Alternatives Journal, 2011
"We must change our behaviour to avert climate change.” Almost every day I hear this – from environmentalists, politicians, business leaders, educators, journalists, almost anyone who cares. The assumption is pervasive: without behavioural change, we cannot avoid climate change. Ironically, however, I hear this everywhere except in my job – which involves collaborating internationally with researchers who design and test models that simulate the impacts of policies meant to reduce greenhouse gas (GHG) emissions. When we test against past environmental-policy successes, we find that behavioural change did not reduce the emissions that cause acid rain, urban air pollution, depletion of the ozone layer, lead contamination and so on. Technologies changed, not behaviour.
My dictionary defines behaviour as “how one acts or conducts oneself.” For over two decades, governments have begged us to change behaviour in order to reduce GHG emissions: drive less, turn off lights and electronic devices when leaving a room, lower home temperatures when absent or sleeping, dry clothes outside, take shorter showers, fly less and so on. These are behavioural changes because they involve acting differently on a regular basis, usually requiring our conscious attention to do so.
Behavioural change is not, therefore, a one-time decision to purchase a different device: a high-efficiency fridge, a hybrid-electric vehicle, a compact fluorescent light bulb. Such a decision requires no behavioural change, no conscious effort to conduct oneself differently. Similarly, behavioural change is not a one-time decision by energy companies (usually forced by policy) to generate electricity with renewables, increase biofuel content of gasoline and jet fuel, or manufacture and market electric vehicles.
You might not think that this distinction between behavioural change and technological change is critical. Think again. Rigorous research consistently shows that getting people to acquire a different technology is dramatically easier than getting them to sustain the conscious effort needed to act differently on a regular basis. We usually require compulsory policies such as regulations and taxes to induce technological change because the effect is more significant and enduring.
Ask a friend how they changed their behaviour to help reduce acid-gas emissions, lead emissions, urban smog and ozone-depleting chlorofluorocarbons, and you’ll get a confused look. They didn’t change their behaviour. Instead, governments implemented compulsory policies that either banned environmentally unfriendly technologies and fuels or made them increasingly more expensive.
We must do the same with GHG emissions, but this will happen only after we stop deluding ourselves about the necessity and ease of behavioural change. Figuring out why this delusion has continued for more than two decades is a challenge. My guess is that people don’t readily give up on their favourite myths, regardless of the evidence. Many environmentalists believe that once they get everyone to see the world as they do, then people will change their behaviour as they have. Politicians like to agree with environmentalists on this because it lets them off the hook. They get to fund ads asking people to change their behaviour (Remember the One-Tonne Challenge?), which is a lot easier than implementing regulations and putting a price on GHG emissions. (Remember Stéphane Dion?) Even climate skeptics and those who make money producing our current technologies and fuels enjoy the behavioural-change myth because, as long as it prevails, humanity will do very little to reduce emissions.
Trying to change one’s own behaviour and that of others in order to use less energy or a less-polluting form of energy is certainly a good thing. But it is harmful if it diverts our attention and efforts from the more fundamental change that is very difficult yet absolutely essential: changing our laws and our fiscal system.
Originally published in Alternatives Journal, 2011
"We must change our behaviour to avert climate change.” Almost every day I hear this – from environmentalists, politicians, business leaders, educators, journalists, almost anyone who cares. The assumption is pervasive: without behavioural change, we cannot avoid climate change. Ironically, however, I hear this everywhere except in my job – which involves collaborating internationally with researchers who design and test models that simulate the impacts of policies meant to reduce greenhouse gas (GHG) emissions. When we test against past environmental-policy successes, we find that behavioural change did not reduce the emissions that cause acid rain, urban air pollution, depletion of the ozone layer, lead contamination and so on. Technologies changed, not behaviour.
My dictionary defines behaviour as “how one acts or conducts oneself.” For over two decades, governments have begged us to change behaviour in order to reduce GHG emissions: drive less, turn off lights and electronic devices when leaving a room, lower home temperatures when absent or sleeping, dry clothes outside, take shorter showers, fly less and so on. These are behavioural changes because they involve acting differently on a regular basis, usually requiring our conscious attention to do so.
Behavioural change is not, therefore, a one-time decision to purchase a different device: a high-efficiency fridge, a hybrid-electric vehicle, a compact fluorescent light bulb. Such a decision requires no behavioural change, no conscious effort to conduct oneself differently. Similarly, behavioural change is not a one-time decision by energy companies (usually forced by policy) to generate electricity with renewables, increase biofuel content of gasoline and jet fuel, or manufacture and market electric vehicles.
You might not think that this distinction between behavioural change and technological change is critical. Think again. Rigorous research consistently shows that getting people to acquire a different technology is dramatically easier than getting them to sustain the conscious effort needed to act differently on a regular basis. We usually require compulsory policies such as regulations and taxes to induce technological change because the effect is more significant and enduring.
Ask a friend how they changed their behaviour to help reduce acid-gas emissions, lead emissions, urban smog and ozone-depleting chlorofluorocarbons, and you’ll get a confused look. They didn’t change their behaviour. Instead, governments implemented compulsory policies that either banned environmentally unfriendly technologies and fuels or made them increasingly more expensive.
We must do the same with GHG emissions, but this will happen only after we stop deluding ourselves about the necessity and ease of behavioural change. Figuring out why this delusion has continued for more than two decades is a challenge. My guess is that people don’t readily give up on their favourite myths, regardless of the evidence. Many environmentalists believe that once they get everyone to see the world as they do, then people will change their behaviour as they have. Politicians like to agree with environmentalists on this because it lets them off the hook. They get to fund ads asking people to change their behaviour (Remember the One-Tonne Challenge?), which is a lot easier than implementing regulations and putting a price on GHG emissions. (Remember Stéphane Dion?) Even climate skeptics and those who make money producing our current technologies and fuels enjoy the behavioural-change myth because, as long as it prevails, humanity will do very little to reduce emissions.
Trying to change one’s own behaviour and that of others in order to use less energy or a less-polluting form of energy is certainly a good thing. But it is harmful if it diverts our attention and efforts from the more fundamental change that is very difficult yet absolutely essential: changing our laws and our fiscal system.
R&D: Act Three in the Climate-Policy Tragi-Comedy
By Mark Jaccard
Originally published in Alternatives Journal, 2011
If the implications were not so horribly tragic, the spectacle of humanity’s bumbling climate policy failures would make for an entertaining farce. And the next act promises more of the same.
In Act One, governments and environmentalists convinced themselves that economists were wrong to argue that greenhouse-gas-emissions pricing is essential to reduce emissions (whether via carbon tax or cap-and-trade). Governments feared the political cost of raising the price of energy derived from fossil fuels, while environmentalists assured them that people would voluntarily change their ways if informed of the financial benefits of energy efficiency and the quality-of-life benefits of changing behaviour. So, for much of two decades, climate policy was limited to information programs and subsidies, which failed utterly.
In Act Two, a number of governments and environmentalists reluctantly acknowledged that emissions pricing is essential, but politicians mostly balked when faced with being seen to cause energy-price increases. So they gave away permits that matched emission levels (European Union’s cap-and-trade), or they allowed cheap offsets that do little to reduce emissions (again, EU’s cap-and-trade), or they renamed existing fuel taxes as carbon taxes without increasing energy prices (many European countries), or they talked seriously about emissions pricing, but did nothing at all (US, Canada, Australia, Japan).
Act Three is still being scripted. It might involve ever-tighter emissions regulations on vehicles, electricity generators and industries. Criticized by economists for economic inefficiency, regulations have the advantage of making it difficult to see that politicians are causing energy price increases. For example, few people would have noticed if a low-carbon fuel standard had raised prices by 15 per cent over the last five years, a period during which gasoline prices fluctuated by several times that percentage. And regulations can actually reduce emissions!
But regulations are unlikely to be implemented if governments and environmentalists accept the latest arguments of armchair policy experts like Ted
Nordhaus, Michael Shellenberger and Bjørn Lomborg. They argue that governments should downplay emission pricing and replace it with research and development (R&D) subsidies that drive down the cost of low-emission technologies. Fund R&D until solar power is cheaper than coal power, or so the thinking goes. This is enticing to politicians because, again, they avoid emissions pricing. Polluting industries love it: “We promise to stop polluting as soon as you put us out of business with your solar innovations.” And, of course, climate skeptics support the idea because it is a logically flawed approach that, for the reasons described below, will prevent emissions reductions.
First, emissions pricing and R&D to reduce emissions are not alternatives, they are causally linked. Private R&D to reduce emissions happens when there are profitable opportunities. These opportunities only arise because of emissions pricing or regulations that ban emitting technologies.
Second, public R&D could happen without the profit opportunity, but public R&D will never be more than a tiny percentage of the R&D that is needed. Indeed, with government budgets all in deficit, public R&D funds require tax increases. Economists say the most economically efficient way to raise this money is – you guessed it – emissions pricing.
Third, there is no guarantee that R&D will enable renewable energy to outcompete fossil fuels over the next half century. Coal, gas and oil industries have an enormous capacity to fund their own R&D, and they have proven time and again their ability to cut costs in the face of competition. We need emissions pricing and regulations. Without these, we need to block, by regulation or civil disobedience if necessary, any projects that abet greenhouse gas emissions, like coal plants, oil pipelines and gasoline vehicle manufacturing plants. Most likely, Act Three will follow the lead of Acts One and Two of this planetary tragi-comedy.
The Case of Carbon Neutrality
By Mark Jaccard
Originally published in Alternatives Journal, 2011
Starting with a commitment at a G7 meeting in 1988, the world’s most powerful political leaders have frequently acknowledged the urgency of reducing greenhouse gas emissions, yet over two decades later, an effective global effort has not materialized. Political leaders talk about the need for an international agreement, but have failed to achieve it. They have set ambitious targets and implemented long policy lists, but these have been largely ineffective.
Over these past two decades, political scientists and economists, among others, have offered explanations for our inability to take effective action to avert climate change. I have focused on our propensity to implement policies that are less effective in reducing emissions than we tell ourselves. In particular, we frequently rely on voluntary approaches, such as information programs and subsidies that try to convince firms and individuals to change technologies or behaviour. Canada’s Voluntary Challenge and Registry, for example, asked industry to record all of its voluntary actions to reduce greenhouse gas emissions. Since firms frequently take actions that inadvertently reduce emissions, such as acquiring more efficient devices, it is no surprise that industry produced long lists of emissions reductions. Governments happily trotted them out for the media, downplaying the fact that, at an aggregate level, emissions were still rapidly rising.
The latest fad is “carbon neutrality” – paying someone to reduce their emissions by an amount that equals your emissions. Since their emissions reduction “offsets” your emissions, you become “carbon neutral.” Carbon neutrality is now big business, with millions of dollars in subsidies passing from individuals, firms and governments to companies that claim to cause emissions reductions that would otherwise not have occurred. Offset companies, which make a commission on the exchange between offset buyers and sellers, are highly motivated to ensure that everyone sees carbon offsetting as an effective means of reducing emissions.
Buying your way to innocence sounds too good to be true. It probably is.
The offset industry tells us it provides emissions reductions that would not otherwise have occurred – in essence, “verified additionality.” But we cannot be certain what would have occurred in the absence of an offset subsidy. Since we cannot run history twice, the best we can do is examine past subsidy programs.
This has led researchers such as me to focus on the subsidies for energy efficiency and fuel switching offered by some utilities and governments. This hindsight research has generally found that many of these subsidies, sometimes more than half, went to individuals and firms that would have acquired the more efficient devices anyway. Even subsidies to plant trees on agricultural land (to store carbon) are suspect, since analysts assessed that shifting land away from agriculture can increase the price of agricultural land, thereby inducing some forest owners to switch their land back to agriculture – in effect offsetting the offset.
So if carbon neutrality is one more policy delusion, what should we do instead? It is not a surprise that the answer is simple, albeit one we prefer to avoid. We need to prohibit emitting greenhouse gases or make it expensive. This requires pricing emissions (carbon tax or cap-and-trade) and/or strict regulations on technologies such as cars and electricity plants. And we need to apply these policies to activities that are now the focus of offset activities, such as energy efficiency, fuel switching, afforestation, agriculture, and capturing emissions from urban landfills and industrial processes.
Will we do this? Maybe. But if the past two decades are a guide, we are more likely to stick with policies such as offsets, which have minimal impact and cause little offense. This is a key reason why it is a long shot that humans will act in time to avert serious disruption to the planet.
Minimizing the inevitable rate hike: What is best for BC Hydro - to be run by its review panel or independent regulation of the past three decades?
By Mark Jaccard
Originally published in the Vancouver Sun August 23, 2011
The recent report by the panel reviewing BC Hydro's electricity rates triggered a predictable flurry of conflicting comments from entrenched ideologues. One side blamed private power producers for rising rates while the other blamed the utility's mismanagement and government environmental policy. With the rampant distortions, it gets confusing. Here are a few things to keep in mind.
First, throughout the world, new supplies of electricity cost more. In British Columbia, some increase in electricity rates is inevitable as we blend new higher-cost supplies with the low-cost power from our hydropower legacy. This is true whether that new supply is provided by private companies or a Crown corporation like BC Hydro.
Second, evidence from around the world shows that for small projects private power tends to be cheaper than public power, but for large projects there is little difference. With small projects, there are substantial costs associated with preliminary assessments of potential sites and, since only a tiny fraction of these are finally developed, many private investors incur losses.
If only BC Hydro was allowed to develop small projects in B.C., ratepayers would pay for these losses, just as ratepayers paid for BC Hydro's write-offs of more than $100 million on Site C two decades ago and over $100 million on a failed Vancouver Island natural gas plant a decade ago. In spite of these past costly mistakes by Hydro, the global evidence generally indicates that well-managed crown corporations can develop large projects just as cost-effectively as private companies.
Third, environmental policy is a factor in rising electricity rates everywhere. B.C.'s zero-emission electricity policy reflects our willingness to join many jurisdictions around the world (the US, Europe, China) in incurring higher electricity rates to reduce greenhouse gas emissions. If we cared only about having more money in our pockets today, and not for the future of the planet, we should build nothing but coal and natural gas plants. Only a few extremists, who arrogantly deny what scientists are frantically saying, still make this argument.
Fourth, electricity self-sufficiency also increases rates in the shortrun, but this extra cost may be justified as an insurance premium to reduce the risk of higher prices during regional shortages in future, and also the amount of power B.C. must purchase from polluting coal plants in Alberta. To ensure self-sufficiency when our hydropower production is low (because of low water flows), Hydro can build extra capacity or sign additional long-term contracts with independent producers. In both cases, Hydro
will have to sell surplus power at (usually) lower spot prices in years of medium and high water flow. We can have lower rates for awhile by not being self-sufficient. But like any decision not to insure, it may backfire and result in much higher rates and more pollution if we guess wrong. People who pretend away this trade-off are being disingenuous.
Fifth, regulated monopolies manage their costs better than unregulated monopolies. BC Hydro has long been regulated by the BC Utilities Commission, but the Clean Energy Act last year removed much of its expenditures from that independent control. As I argued on these pages at the time, this alone can increase upward pressure on rates. (When I chaired the commission in the '90s, our executive director, Bill Grant, liked to say: "The only thing better in life than being a regulated monopoly, is being an unregulated monopoly.")
The BC Hydro review panel has essentially taken over the commission's function. But one has to ask why this ad hoc, politically driven oversight is preferable to the systematic, independent regulation of Hydro of the past three decades. The review panel's suggestion that Hydro's rate application be cut in half - from annual increases of 10 per cent down to five per cent - is probably what the commission would have ordered anyway. It reminds me of the mid-'90s, when the panel I chaired rejected a Hydro rate application, even though Hydro's witnesses testified the increase was crucial for sustaining reliable service. A few years later, Hydro's CEO testified that our disciplining of the company had been the correct decision, forcing it to find efficiencies without compromising reliability.
What conclusions do I draw? The public versus private power debate is mostly a red herring. Acquiring new power, protecting the environment, and energy self-reliance all increase rates. But these rate increases can be minimized if we re-establish independent regulation of BC Hydro by the commission.
Finally, above all, ignore the ideologues.
Originally published in the Vancouver Sun August 23, 2011
The recent report by the panel reviewing BC Hydro's electricity rates triggered a predictable flurry of conflicting comments from entrenched ideologues. One side blamed private power producers for rising rates while the other blamed the utility's mismanagement and government environmental policy. With the rampant distortions, it gets confusing. Here are a few things to keep in mind.
First, throughout the world, new supplies of electricity cost more. In British Columbia, some increase in electricity rates is inevitable as we blend new higher-cost supplies with the low-cost power from our hydropower legacy. This is true whether that new supply is provided by private companies or a Crown corporation like BC Hydro.
Second, evidence from around the world shows that for small projects private power tends to be cheaper than public power, but for large projects there is little difference. With small projects, there are substantial costs associated with preliminary assessments of potential sites and, since only a tiny fraction of these are finally developed, many private investors incur losses.
If only BC Hydro was allowed to develop small projects in B.C., ratepayers would pay for these losses, just as ratepayers paid for BC Hydro's write-offs of more than $100 million on Site C two decades ago and over $100 million on a failed Vancouver Island natural gas plant a decade ago. In spite of these past costly mistakes by Hydro, the global evidence generally indicates that well-managed crown corporations can develop large projects just as cost-effectively as private companies.
Third, environmental policy is a factor in rising electricity rates everywhere. B.C.'s zero-emission electricity policy reflects our willingness to join many jurisdictions around the world (the US, Europe, China) in incurring higher electricity rates to reduce greenhouse gas emissions. If we cared only about having more money in our pockets today, and not for the future of the planet, we should build nothing but coal and natural gas plants. Only a few extremists, who arrogantly deny what scientists are frantically saying, still make this argument.
Fourth, electricity self-sufficiency also increases rates in the shortrun, but this extra cost may be justified as an insurance premium to reduce the risk of higher prices during regional shortages in future, and also the amount of power B.C. must purchase from polluting coal plants in Alberta. To ensure self-sufficiency when our hydropower production is low (because of low water flows), Hydro can build extra capacity or sign additional long-term contracts with independent producers. In both cases, Hydro
will have to sell surplus power at (usually) lower spot prices in years of medium and high water flow. We can have lower rates for awhile by not being self-sufficient. But like any decision not to insure, it may backfire and result in much higher rates and more pollution if we guess wrong. People who pretend away this trade-off are being disingenuous.
Fifth, regulated monopolies manage their costs better than unregulated monopolies. BC Hydro has long been regulated by the BC Utilities Commission, but the Clean Energy Act last year removed much of its expenditures from that independent control. As I argued on these pages at the time, this alone can increase upward pressure on rates. (When I chaired the commission in the '90s, our executive director, Bill Grant, liked to say: "The only thing better in life than being a regulated monopoly, is being an unregulated monopoly.")
The BC Hydro review panel has essentially taken over the commission's function. But one has to ask why this ad hoc, politically driven oversight is preferable to the systematic, independent regulation of Hydro of the past three decades. The review panel's suggestion that Hydro's rate application be cut in half - from annual increases of 10 per cent down to five per cent - is probably what the commission would have ordered anyway. It reminds me of the mid-'90s, when the panel I chaired rejected a Hydro rate application, even though Hydro's witnesses testified the increase was crucial for sustaining reliable service. A few years later, Hydro's CEO testified that our disciplining of the company had been the correct decision, forcing it to find efficiencies without compromising reliability.
What conclusions do I draw? The public versus private power debate is mostly a red herring. Acquiring new power, protecting the environment, and energy self-reliance all increase rates. But these rate increases can be minimized if we re-establish independent regulation of BC Hydro by the commission.
Finally, above all, ignore the ideologues.
Campbell's hidden $200-million tax cut
By Mark Jaccard
Originally published in the Vancouver Sun June 9, 2011
British Columbia politics in 2010 were dominated by accusations that Gordon Campbell
used the HST tax reform, which he claimed was "revenue-neutral," as a sneaky way to
increase taxes. Few believed his claim, and plummeting public opinion forced him to
resign. In 2008-09, B.C. politics were dominated by accusations that Campbell used the
carbon tax reform, which he also claimed was revenue-neutral, as a sneaky way to
increase taxes. His party's 20-point lead in the polls evaporated, and he almost lost the
provincial election in May 2009.
By now, Gordon Campbell must detest the term revenue-neutral. As it turns out, with the
carbon tax, he shouldn't have used it anyway. He should have said "revenue-negative," or
just plain old "tax cut."
That's right. The evidence now shows that because of B.C.'s carbon tax reform, at least
three-quarters of us now pay less taxes to the B.C. government. But one never hears this.
Instead, people still complain about Campbell's punitive carbon tax. To Campbell, the
world must sometimes seem awfully cruel.
Recall, when introducing the carbon tax, the Campbell government committed in
legislation to offset all tax revenue it received with cuts to personal and corporate income
taxes, along with cash payments to lowincome earners who pay little or no taxes. It also
gives back to municipal governments most of the carbon tax revenues they pay.
The B.C. finance ministry's records for the first two years of carbon tax reform (July
2008 to July 2010) show that the government collected $848 million in carbon taxes and
gave up $1.042 billion via income tax reductions and payments to low-income people and
municipal governments. Thus, in its first two years, the revenue-neutral carbon tax was
actually a $200-million tax cut. (And this is not even including the $100 cheques from
general revenue the government sent everyone just as the tax kicked in.)
In theory, a revenue-neutral carbon tax reform should have left about half of British
Columbians paying less tax and half paying more than before, although for a large
percentage the net effect might have been close to zero. In other words, benefits from the
tax cuts would be roughly equal to the higher payments for more expensive fuels. But
because the carbon tax reform ended up reducing net taxes by $200 million, the
percentage of net winners is likely to be somewhat greater than 50 per cent of taxpayers.
And this is only half the story. Energy consumption data show that B.C. businesses pay
about two-thirds of the carbon tax, with individual consumers paying the other third. This
would be equitable if businesses also received about two-thirds of the benefits from
cutting corporate and personal income taxes. However, the Campbell government
selected income tax cuts for businesses and individuals such that the latter receive about
two-thirds of the "recycled" carbon tax revenue. With B.C. households paying about one third of the carbon tax and receiving two-thirds of the income tax cut, the carbon tax
reform is, in effect, a transfer from B.C. businesses to B.C. individuals. It's a great deal
for individual taxpayers and even most small businesses, but not for some large,
emission-intensive industries.
Reviewing data on fuel consumption by different levels of taxable income in B.C., my
crude estimate is that the combined effects of the transfer from industry to households
and the carbon tax cut mean that at least 75 per cent of British Columbian households are
paying less taxes today because of the carbon tax. The much smaller minority who are
paying more are mostly the very well-off for whom the income tax cuts cannot offset
their high fuel use.
When one contemplates the past three years of invective in the media against Campbell's
"carbon tax grab," it is quite a shock to contrast this with clear evidence that the carbon
tax reform reduced taxes for a substantial majority of British Columbian households. But,
having researched environmental policies for over 25 years, I have come to learn that it is
not what politicians do to us that is shocking, it is what we falsely accuse them of doing -
and then what we do to them in revenge. Gordon Campbell's trying carbon tax experience
only reinforces that lesson.
Who knows what we might learn about the HST's net effect two years from now -
assuming it's given a chance to last that long. Too late for Gordon Campbell in any case.
Originally published in the Vancouver Sun June 9, 2011
British Columbia politics in 2010 were dominated by accusations that Gordon Campbell
used the HST tax reform, which he claimed was "revenue-neutral," as a sneaky way to
increase taxes. Few believed his claim, and plummeting public opinion forced him to
resign. In 2008-09, B.C. politics were dominated by accusations that Campbell used the
carbon tax reform, which he also claimed was revenue-neutral, as a sneaky way to
increase taxes. His party's 20-point lead in the polls evaporated, and he almost lost the
provincial election in May 2009.
By now, Gordon Campbell must detest the term revenue-neutral. As it turns out, with the
carbon tax, he shouldn't have used it anyway. He should have said "revenue-negative," or
just plain old "tax cut."
That's right. The evidence now shows that because of B.C.'s carbon tax reform, at least
three-quarters of us now pay less taxes to the B.C. government. But one never hears this.
Instead, people still complain about Campbell's punitive carbon tax. To Campbell, the
world must sometimes seem awfully cruel.
Recall, when introducing the carbon tax, the Campbell government committed in
legislation to offset all tax revenue it received with cuts to personal and corporate income
taxes, along with cash payments to lowincome earners who pay little or no taxes. It also
gives back to municipal governments most of the carbon tax revenues they pay.
The B.C. finance ministry's records for the first two years of carbon tax reform (July
2008 to July 2010) show that the government collected $848 million in carbon taxes and
gave up $1.042 billion via income tax reductions and payments to low-income people and
municipal governments. Thus, in its first two years, the revenue-neutral carbon tax was
actually a $200-million tax cut. (And this is not even including the $100 cheques from
general revenue the government sent everyone just as the tax kicked in.)
In theory, a revenue-neutral carbon tax reform should have left about half of British
Columbians paying less tax and half paying more than before, although for a large
percentage the net effect might have been close to zero. In other words, benefits from the
tax cuts would be roughly equal to the higher payments for more expensive fuels. But
because the carbon tax reform ended up reducing net taxes by $200 million, the
percentage of net winners is likely to be somewhat greater than 50 per cent of taxpayers.
And this is only half the story. Energy consumption data show that B.C. businesses pay
about two-thirds of the carbon tax, with individual consumers paying the other third. This
would be equitable if businesses also received about two-thirds of the benefits from
cutting corporate and personal income taxes. However, the Campbell government
selected income tax cuts for businesses and individuals such that the latter receive about
two-thirds of the "recycled" carbon tax revenue. With B.C. households paying about one third of the carbon tax and receiving two-thirds of the income tax cut, the carbon tax
reform is, in effect, a transfer from B.C. businesses to B.C. individuals. It's a great deal
for individual taxpayers and even most small businesses, but not for some large,
emission-intensive industries.
Reviewing data on fuel consumption by different levels of taxable income in B.C., my
crude estimate is that the combined effects of the transfer from industry to households
and the carbon tax cut mean that at least 75 per cent of British Columbian households are
paying less taxes today because of the carbon tax. The much smaller minority who are
paying more are mostly the very well-off for whom the income tax cuts cannot offset
their high fuel use.
When one contemplates the past three years of invective in the media against Campbell's
"carbon tax grab," it is quite a shock to contrast this with clear evidence that the carbon
tax reform reduced taxes for a substantial majority of British Columbian households. But,
having researched environmental policies for over 25 years, I have come to learn that it is
not what politicians do to us that is shocking, it is what we falsely accuse them of doing -
and then what we do to them in revenge. Gordon Campbell's trying carbon tax experience
only reinforces that lesson.
Who knows what we might learn about the HST's net effect two years from now -
assuming it's given a chance to last that long. Too late for Gordon Campbell in any case.
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