Canadian Carbon Pricing Confusions

The federal government (Environment and Climate Change Canada - ECCC) released on April 30, 2018 its estimate of the incremental effect of its carbon pricing initiative relative to other policies in achieving Canada’s GHG reductions – Estimated Results of the Federal Carbon Pollution Pricing System. They estimate annual reductions in 2022 of 80-90 mega-tonnes (MT) of CO2. Their numbers are dramatically higher than estimates by my research team. Why?

The approach we took to estimate the incremental effect of federal emissions pricing

At about the time the Trudeau government announced that emissions pricing would be “central” to achieving its GHG reduction targets, it also announced specific regulatory policies, including nation-wide adoption of Alberta’s coal plant phase-out and methane regulations, tightening of vehicle regulations, and (a bit later) a clean fuel standard, which is similar to BC’s low carbon fuel standard but applied to all sectors not just transport. To assess the incremental effect of the federal carbon pricing policy, we created a reference scenario which included everything that should happen absent the federal pricing initiative. 

Thus, our reference scenario included all carbon pricing and regulatory policies of the provinces and simulated their effect on emissions between 2018 and 2030. BC and Alberta had both committed to $30 /tCO2 for carbon pricing while Ontario and Quebec had committed to a price that climbs toward $20 and surpasses that threshold well before 2030. All four provinces had existing and announced regulations, such as Alberta’s announced cap on oil sands emissions, methane regulations, and coal-plant phase-out by 2030, and BC’s clean electricity standard and low carbon fuel standard. We included regulations by other provinces too, such as the electricity decarbonization policy in Nova Scotia. To these we added the existing and announced federal regulations. 

We sustained all of these provincial and federal policies through to 2030, which gave us a forecast of the evolution of Canadian emissions if Trudeau’s government had avoided carbon pricing as a policy and instead relied on existing provincial policies (pricing and regulation) and its own announced regulations. This reference scenario (without the federal pricing initiative) sees Canadian emissions fall approximately 6% from their 2005 level.

To this reference scenario, developed in early 2016, we later added the federal carbon pricing policy, which reaches $50 /tCO2 by 2022. We assumed, in the absence of a schedule beyond 2022, that the carbon price would remain constant after that. Not surprisingly, the incremental effect of the federal carbon pricing policy is very small by 2030 and even smaller by 2022. I’m getting my research associate to dig out the exact numbers for these two dates. (She now does modeling for the International Energy Agency in Paris and is awfully busy!). But my eyeball guess looking at our graphs is that the incremental effect of the federal carbon pricing policy is to reduce emissions 1-2% from their 2005 level, a reduction of 10-15 MT in 2030. That number should be smaller in 2022, far below the claim of 80-90 MT in the latest ECCC report.

The federal approach to estimate 80-90 MT of reductions from pricing by 2022.

In reading the report, I see two possible causes for the discrepancy between our estimate of a low incremental contribution from the federal carbon pricing initiative and the high estimate in this latest federal report. The first cause is that the federal government estimate takes credit for all pre-existing carbon pricing initiatives of the provinces. The second cause, more speculative on my part, is that they may not have done proper incremental policy modeling, meaning that the federal carbon pricing got recognition for emission reductions that should be attributed to non-pricing policies.

Page 3 of the report helps explain the first cause of the discrepancy. The estimated 80-90 MT attributed to federal carbon pricing is based on the assumption that there never have been provincial emissions pricing policies in Alberta, BC, Ontario and Quebec. The carbon pricing policy is “compared to a hypothetical scenario in which they [provincial governments] did not have pricing systems in place.” (p.3) In other words, the reference scenario for estimating the federal carbon pricing initiative is a hypothetical world in which there is no carbon pricing anywhere in Canada. Which of course is not true.

This is clearly not an accurate way to represent the incremental effect of the carbon pricing initiative of the federal government. While it makes a lot of sense to have better federal coordination and consistency of climate policies across the country, and the federal backstop carbon price does that, it is nonetheless grossly misleading to suggest that current provincial pricing can be attributable to federal policy any more than that the phase-out of coal plants in Ontario in 2004-2014, the policy-driven cancellation of coal plants in BC in 2007, and Alberta’s announced phase-out of coal plants in 2015, can be attributed to the federal coal plant policy announced in 2016.

While this is likely to be the dominant cause of the discrepancy in our estimates, I also could not find an explanation in the report of the method the federal policy modelers used to estimate the incremental effect of the federal carbon pricing initiative and federal regulations. As I noted above, this entails first simulating all of the provincial and federal non-carbon pricing policies and the provincial pricing policies to 2022 and 2030. And then to run a second simulation with only the addition of the federal carbon pricing initiative. The change in emissions between these two simulations indicates the incremental contribution of that policy. This contribution of the federal carbon pricing policy will be very small, as we found with our modeling research. But you actually don’t need a model to see what is obvious by surveying the portfolio of provincial and federal regulatory policies, past and present.

Take-Away

In 2016 I and two research associates produced a report entitled Is Win-Win Possible? Can Canada’s Government Achieve Its Paris Commitment . . . and Get Re-Elected? In which we explained that a rapidly rising carbon emissions price was needed to achieve the Paris commitment. We noted that while all climate policies are politically difficult, there is considerable evidence from real-world GHG policy experience and political science surveys to suggest that carbon pricing is far more politically challenging than some regulatory policies. We also noted that flexible regulations can be designed to approach carbon pricing in economic efficiency, if designed with that purpose in mind.

Some economists, including some at Canada’s carbon pricing advocacy entity, the Ecofiscal Commission, dismissed our assessment. They presented studies constructed to show a deliberately big economic efficiency gap between regulations and carbon pricing, instead of testing the likely long-run cost of using flexible regulations like the low carbon fuel standard over several decades to decarbonize transport. And they dismissed as naïve any research showing the visceral antagonism to pricing policies by significant segments of the population – and therefore the risks to politicians of relying on such policies. 

None seemed willing to even discuss the importance of comparing GHG policies using a criterion such as political cost per tonne reduced in order to compare this to economic cost per tonne reduced. This is unfortunate, because research by ourselves and others shows that carbon pricing has an enormous political cost per tonne in comparison to flexible regulations. This helps explain why many of these flexible regulations have played a much bigger role in GHG emission reductions thus far in Canada, California and Europe, including Scandinavia where there has been some form of carbon pricing for years.

A decade ago, Canada had a federal election dominated by the issue of carbon pricing. Voter rejection of carbon pricing enabled Stephen Harper to defeat Stephan Dion and win power for a decade, a decade in which he deliberately stalled on implementing effective GHG reducing policies. That was not an economically efficient outcome.

Because carbon pricing advocates have convinced the Trudeau government to take a large political risk for only a small incremental GHG reduction, history may soon repeat. Studies that are distorted to show an artificially large reduction from the federal pricing initiative are not going to save the day. Trudeau may win re-election and sustain the federal carbon pricing. But if so, this will occur in spite of carbon pricing, not because of it. One must ask if the risk is worth it, especially when the impacts of coal-plant phase out, methane regulations, and a clean fuel standard (that fairly efficiently decarbonizes transport) dominate our GHG reductions and yet are much less difficult politically – as polling continuously shows.

Ironically, our incremental modeling of various GHG reduction policies in Alberta shows a similar outcome. We estimate the incremental effect of Alberta’s carbon pricing policy (at its stringency level of $30 and different application in various economic sectors) is less than 5% of the GHG reductions caused by the other regulatory policies (excluding subsidy policies) in its Climate Leadership Plan. The vast majority of reductions are caused, again, by the coal plant phase-out, the methane regulation, the oil sands emissions cap (which varies depending on forecasts of future oil sands output), and various efficiency regulations. Yet some polls suggest that while the Notley government’s popularity is little affected by its introduction of regulations (most Albertans support coal plant phase-out), it has been greatly affected by the strong and ongoing opposition to her carbon tax.

Climate policy advisers need to take into account the real world trade-off between economic efficiency and political acceptability

Here is my response to fellow economists who seem unwilling to take into account this trade-off when giving climate policy advice. It appeared in Policy Options on October 11, 2016. The text is also given below:

Last week, the House of Commons endorsed the Paris climate agreement, under which Canada commits to reduce greenhouse gases by 30 percent below 2005 levels by 2030. Simultaneously, Prime Minister Justin Trudeau abandoned hope that each province would voluntarily implement policies to achieve the national target. He said the federal government would, if necessary, impose a national charge of $10 per tonne of carbon dioxide in 2018, rising to $50 by 2022. After a year of niceties, realpolitikhas arrived.

It is encouraging that Canadian governments increasingly acknowledge that effective climate policy requires a carbon price or equivalent regulations to reduce our use of coal, oil and natural gas. But this does not make the task easier. In September, I and my co-researchers Tiffany Vass and Mikela Hein released a report in which we estimate that Canada’s carbon price must reach $200 by 2030, if it is to be the dominant policy for achieving the Paris target. (This week we analyzed Trudeau’s proposed carbon price. If the price remained at $50 from 2022 to 2030, emissions would fall 12 percent. If it rose to $100 by 2030, they would fall by 17 percent.)

Relying entirely on emissions-pricing to reach our targets is a tough sell, because a $200 carbon price would increase the price of gasoline 45 cents per litre in just over a decade. Many people won’t grasp that as they switch to already-available electric, plug-in hybrid and biofuel vehicles, they will not be paying the high carbon price. And while economic impacts can be minimized if the government returns carbon revenues through income tax cuts, many people won’t see the correlation. Hence the political challenge.

This explains why, in our September report, we suggested that economists could help real-world climate policy implementation if they analyzed the costs of other policies that have successfully reduced emissions, especially the flexible regulations that have been dominant in activist jurisdictions like California. But in a recent article, members of Canada’s Ecofiscal Commission Don Drummond, Nancy Olewiler and Chris Ragan rejected our proposal.

First, they claimed that I and my colleagues don’t see the higher costs associated with carbon emissions regulations “as much of a problem.” This misrepresents our challenge to economists to estimate how flexible regulations like clean electricity standards, low carbon fuel standards and vehicle emission standards — compared with carbon pricing — will hurt the economy. If the economic penalty is small, flexible regulations should be considered where they have a much higher chance of being politically acceptable. Former Liberal leader Stéphane Dion’s failed electoral bid, which was based on a carbon tax, ensured a decade of climate inaction by former prime minister Stephen Harper. If we agree that a continued failure to act on climate will have a large cost, then not incorporating political acceptability into the policy calculus is penny wise and pound foolish.

Second, they argued that carbon pricing is now politically acceptable. But academic surveys and real-world evidence show the opposite. Carbon prices are everywhere still at such low levels that their effect in places like California, British Columbia, Quebec, and Ontario is negligible relative to regulatory actions that have also been introduced in those jurisdictions. Flexible regulations are projected to account for 90 percent of California’s reductions between 2005 and 2025.

Third, they argued that everyone can see the benefits of using carbon revenues to lower income taxes. Stating unequivocally, and without evidence, that “nobody should believe the claims of political infeasibility,” they explain that whenever the public complains that carbon taxes are too high, an easy solution is to explain that income taxes will go down.

Maybe this works with the students in their economics classes, but it certainly didn’t work for Stéphane Dion, and nor did it work for former BC premier Gordon Campbell, whose supposedly revenue-neutral carbon tax is the poster child for emissions-pricing. Government, climate activists, business leaders, and academics like Nancy Olewiler and myself made this case for revenue neutrality via income tax cuts repeatedly in the 2008-09 BC climate debate, to no effect. During the opposition’s “axe the tax” campaign, Campbell’s government dropped 20 points in the polls and would have lost the 2009 election, but it was saved by the bell when the global recession and resulting collapse in oil prices shifted voter concerns from gasoline to jobs. In a recent survey on the public’s relative views on climate policies in BC, I and co-researchers Katya Rhodes and Jonn Axsen found that strong opposition to the carbon tax was 7 to 10 times greater than strong opposition to flexible regulations.

We repeat our appeal that economists learn from other social sciences. Effective climate policies are politically difficult. Being unwilling to consider trade-offs that are at the margin between purist economic efficiency and political acceptability is to risk continuing along the path of climate inaction, which itself is economically inefficient.

Is Win-Win Possible? Can Canada’s Government Achieve Its Paris Commitment . . . and Get Re-elected?

For the past 6 months, I and co-researchers Mikela Hein and Tiffany Vass have been developing our national energy-economy model (CIMS) to simulate climate policy scenarios that explore the effect of current Canadian policies, and contrast this with (1) the must-price-emissions approach that some are advocating, and (2) an alternative approach that emphasizes a significant role for flexible regulations, similar to what California is doing with regulations on electricity, vehicles, fuels, etc. Available on this link, our report is called “Is Win-Win Possible? Can Canada’s Government Achieve Its Paris Commitment . . .  and Get Re-elected?"

If policy advisors and policy makers are to learn anything from the past 30 years of ineffective climate policies, they would hopefully see that climate policy is very difficult politically and emissions pricing is especially difficult. Canada intends to achieve its Paris commitment. To do so by emphasizing emissions pricing would require a price that climbs by about $15 per year to reach $200 per tonne of CO2 by 2030. It is highly unlikely that federal or provincial politicians will pursue this approach. Fortunately, they don’t have to. As noted, California is especially relying on flexible regulations. Such an approach is likely to be less economically efficient than emissions pricing. But researchers can help policy makers by estimating the magnitude of the economic efficiency trade-off for political acceptance. Our report attempts to start that process.

Canadian climate policy and your vote

“Policy academics are cheap dates.” One of my mentors, professor Aiden Vining, loved saying that. His point was that we policy academics will gladly pay for our own dinner if we think that a politician, of any political stripe, wants our advice. This explains why, in my 30 years of climate policy research, I have willingly advised Conservatives, Liberals, NDP and Greens, sometimes when in power, sometimes in opposition. Once, a politician actually paid for my dinner – at McDonalds.

I have learned some things that are relevant to this federal election. One lesson is that climate policy is really, really hard. Our political system has strong incentives for politicians not to implement effective climate policies. To be effective, policies must either price CO2 emissions or regulate CO2-causing fuels and technologies. These compulsory policies impose short-term costs (real and perceived) on some people, some of whom will wage war on the guilty politician. As in all wars, truth is the first casualty: the climate policy and its implementing politician will be blamed for completely unrelated misfortunes by these people, powerful backers, and a media that loves attacking politicians.

Canadian Climate Policy Report Card: 2015

Executive Summary

Over the past three decades, governments in developed countries have made many commitments to reduce a specific quantity or percentage of greenhouse gases by a specific date, but often they have failed to implement effective climate policies that would achieve their commitment. Fortunately, energy-economy analysts can determine well in advance of the target date if a government is keeping its promise. In this 2015 climate policy report card, I evaluate the Canadian government’s emission commitments and policy actions. I find that in the nine years since its promise to reduce Canadian emissions 20% by 2020 and 65% by 2050, the Canadian government has implemented virtually no polices that would materially reduce emissions. The 2020 target is now unachievable without great harm to the Canadian economy. And this may also be the case for the 2050 target, this latter requiring an almost complete transformation of the Canadian energy system in the remaining 35 years after almost a decade of inaction.

Canadian Climate Policy Report Card: 2015

Background
A critical challenge to preventing the harms from human-produced greenhouse gas emissions, especially CO2 from burning fossil fuels, is that elected representatives face weak incentives to implement effective climate policies and strong incentives to implement no or ineffective policies. There are several reasons.

First, significant CO2 emissions reductions require ‘compulsory policies’ – regulation of technologies and energy forms and/or pricing of CO2 emissions – and these are seen to cause immediate costs for some even though the long-term benefits for society exceed these costs. These immediate costs would begin during the mandate of current politicians, and have significant political risks, while the benefits of avoiding climate change will mostly occur after the career of current political leaders.

Canadians deserve honest climate talk

Contributed to The Globe and Mail

Published Tuesday, Aug. 05 2014

In 2007, Prime Minister Stephen Harper’s government asked me and four other economists if we agreed with its study showing huge costs for Canada to meet its Kyoto commitment to reduce greenhouse gas emissions by 2010. We all publicly agreed, much to the chagrin of the Liberals, NDP and Greens, who argued that Kyoto was still achievable without crashing the economy. It wasn’t.

As economists, we knew that the Liberal government of Jean Chrétien should have implemented effective policies right after signing Kyoto in 1997. It takes at least a decade to significantly reduce emissions via energy efficiency, switching to renewables, and perhaps capturing carbon dioxide from coal plants and oil sands. Each year of delay jacks up costs.

Mr. Harper’s government knew this too. Years later, when environment minister Peter Kent formally withdrew Canada from Kyoto, he charged the previous Liberal government with “incompetence” for not enacting necessary policies in time to meet their target.

The National Energy Plan as Environmentalist Holy Grail

Every few years, some Canadian environmentalists campaign vigorously for a national energy plan in the mistaken belief that it is not only achievable, but will reduce carbon pollution. Since this pursuit deflects their focus from Canada’s ineffective climate policies, it is a welcome gift to carbon polluters and their political operatives. And, amazingly, decades of failure have failed to dampen enthusiasm for this Holy Grail quest.

A letter to Minister Oliver from climate scientist and energy experts

On May 7th 2013, I was among twelve Canadian climate scientists and energy experts who sent a letter addressed to Natural Resources Minister the Hon. Joe Oliver.

As professionals who have devoted our careers to understanding the climate and energy systems, we are concerned that the Minister’s advocacy in support of new pipelines and expanded fossil fuel production is inconsistent with the imperative of addressing the climate change threat. We are going to have to wean ourselves off our addiction to fossil fuels. Thus our choices about fossil fuel infrastructure carry significant consequences for today’s and future generations.

Government directive to muzzle last words of NRTEE

Yesterday I received a bizarre letter sent to a list of undisclosed recipients - presumably people who had been members at some time, like me, of Canada's National Roundtable on the Environment and the Economy (NRTEE). 

When Stephen Harper's government announced the upcoming closure of the NRTEE, Minister John Baird defended this by saying that the advisory body should stop calling for a carbon tax. (In fact, it called for cap-and-trade, like the Harper government at one point, but never for a carbon tax - I have read every one of its reports in this area and contributed to a few.)  So the Harper government's desire to kill this 25 year old advisory body, originally created by the Conservative government of Brian Mulroney, is understandable - unconscionable, but understandable.

Now it seems they even want to prevent access to some of the final material produced by the NRTEE, in this case the reflections written by past chairs and a retrospective essay by Bob Page, the last chair. It's difficult to imagine a more controlling and mean-spirited attitude.

If you feel as I do, please let other people know about this.  Here is the letter:

Dear colleagues;

We are writing to follow up on our parting email of a couple of weeks ago. At that time we advised you of an initiative we had underway to transfer a legacy NRTEE website to Sustainable Prosperity, who were to host the site under an NRTEE domain name, in a static manner going forward, to ensure Canadians had ready web access to this valuable body of work.

This plan has now changed. We were directed in writing by the Minister on Friday March 22nd that we were not to proceed with the transfer of the NRTEE domain name to Sustainable Prosperity, but to transfer it to Environment Canada along with the contents of our external website. He advised us that Environment Canada then intends to make the information publicly available. At this time it is not clear how this will be accomplished in the very limited time remaining before we close our doors March 28th.

At the same time we were instructed that no new content was to be added to the website. In an email from Environment Canada’s legal services unit in advance of the formal notification from the Minister, it more specifically referred to not uploading the Reflections document (from past Chairs and CEO’s) onto the website. Neither the Reflections document nor the retrospective essay on the Round Table by Dr. Bob Page had been uploaded to the web at the time of the Minister’s notification, nor have they been since.

We cannot provide any explanation for this decision – none was provided in the letter or subsequent discussions with the Department.

We apologize for the fact this communiqué is in English only but the NRTEE is in the very final stages of preparing to close its doors and translation was not possible.

As we had made this undertaking to you all, we felt it important to clarify the change in circumstances and direction going forwards. As the NRTEE goes permanently off-line tomorrowmorning we will not be able to acknowledge any replies you might make to this email.

Once again, thank you for all your support over the years.
        

US politicians should reject the Keystone pipeline

By Mark Jaccard
Originally published in The Hill on March 13, 2013

As a Canadian energy and climate economist, I have first-hand experience with the magician-like techniques of the Canadian government and petroleum industry as they try to double the output of our highly polluting tar sands. Politicians in Washington should be wary, especially if they are sincere in wanting to spare us and our children from an increasing barrage of Katrinas, Sandys and droughts.

Magicians use slight-of-hand to distract us from what they are really doing. The fossil fuel industry and its allies have spent a lot of money to bombard us with messages about the jobs and tax benefits of increasing carbon pollution via this or that fossil fuel project. Count how many times they explain how this carbon pollution is consistent with what scientists say and politicians promise in terms of avoiding devastating climate change. Of course, they don’t explain. That is the art of deception on which magic is based: to get you looking the wrong way. If you were to look the right way, you would see that we cannot be expanding fossil fuel infrastructure today and keep global temperature increases below 2 degrees Celsius (3.7 Fahrenheit). That infrastructure – all of it – must be stable or contracting.

But my Canadian government and the tar sands industries who want Keystone argue that somehow, miraculously, increasing carbon polluting infrastructure will not increase carbon pollution. (George Orwell’s Ministry of Truth has nothing on these guys.) They argue that even without Keystone Alberta tar sands would be developed to the same extent. So you might as well approve Keystone – so the argument goes.

But this is simply not true. Tar sands production is currently about 2 million barrels per day. At this level it already has trouble getting to market, which is why tar sands producers must accept a lower price for their oil – which is good news for U.S. gasoline purchasers, but not for investors hoping to expand tar sands.

Keystone would help tar sands producers expand output by 50 to 100 percent. Without it, output would stay constant. But this is where the magicians offer their next deception. They claim that even without Keystone tar sands production would increase because the oil would simply be shipped to China via a Northern Gateway pipeline through British Columbia. You might as well build Keystone and keep the oil from going to China, so the magicians argue.

In fact, the likelihood of this is slim – and getting slimmer every day. The reason is British Columbia. My province is the Canadian, and perhaps the North American, epicenter of two important social movements – environmentalism and rights activism by aboriginal peoples.

British Columbia has North America’s only real carbon tax, with all of its revenues returned as income and corporate tax cuts. And our electricity policy is the toughest in North America, allowing no fossil fuel power without carbon capture and storage. It is no surprise that polls consistently show that a majority of British Columbians oppose Northern Gateway.
Our provincial election is in May, and the opposition party, which is well ahead in the polls, has promised to prevent the project if it forms the next government.

British Columbia’s aboriginal peoples are proud, organized and active in defending their land and coast. Court rulings have made it extremely difficult to develop resource and infrastructure projects without their support, and almost all the tribes along the proposed pipeline route and on the coast are adamantly opposed to Northern Gateway. They have promised lengthy court battles and even civil disobedience should anyone try to build it.

The odds against Northern Gateway are huge. Without it and Keystone, there is no tar sands expansion, no increase in carbon pollution. Stopping Keystone will hinder tar sands expansion; believing otherwise is nothing more than a magician’s delusion.

If U.S. policy makers don’t want to lock-in a Sandy-Katrina future for our children, rejecting Keystone is one of the most obvious and easiest steps.

(Link to original article)

Climate and Voting – the environmental, social justice and survival issue of our times

British Columbia, where I live, will have a provincial election in May 2013. By a strange set of circumstances, BC voters have a rare opportunity, for the second provincial election in a row, to significantly influence the global climate struggle with their vote. Ironically, this means switching their vote from what it was in 2009 – it can’t get more non-partisan than that!

In 2009, the NDP opposition crassly promised if elected to kill in the cradle North America’s only true carbon tax, even though they had previously argued for its implementation. Many climate-concerned voters, who might have normally voted for the Greens or the NDP, voted for the governing Liberals in order to save the tax. During the campaign, I joined with experts from a diversity of ideological perspectives to try to convince people to vote strategically in our first-past-the-post system, hoping to ensure the NDP would lose swing ridings and not form government. (The NDP often emphasizes its concern for social justice, but sometimes seems to forget that climate change is one of humanity’s greatest social justice issues – just ask someone from Bangladesh, or a similarly vulnerable poor country, who understands the human implications of climate change.)

The Liberals just barely won the election and the carbon tax was saved, a victory that was even more significant than we thought at the time – since the global financial crisis soon blunted climate policy initiatives in most, but not all, jurisdictions. Today, the tax stands symbolically as the only significant carbon tax in North America, representing a model for future policy efforts. Policy advisors study the tax, the New YorkTimes writes about it, even Republican politicians have talked favorably about it. Preventing the NDP from destroying the tax was the most critical outcome of that election. The struggle was stressful, but successful.

In this election, however, the roles are reversed. The reason is the proposed Northern Gateway pipeline.

Recent papers in Science and Nature on our global carbon emission limits – summarized in Bill McKibben’s article inRolling Stone – explain what many of us have known for at least two decades. Humanity cannot develop our massive unconventional oil resources while at the same time preventing the 2 C temperature increase that scientists believe could destabilize the climate, perhaps leading to runaway global warming. In Canada, this means that we cannot be expanding production levels and transport infrastructure for Alberta’s tar sands. This does not mean shutting down the tar sands tomorrow. With existing production facilities and pipeline infrastructure, its operation would continue for decades. But it cannot be expanding with new major developments and additional pipeline capacity. As McKibben points out, the math is ridiculously simple – and terrifying.

This means that the proposed Keystone XL pipeline from Alberta to the US and the Northern Gateway pipeline from Alberta to the BC coast should not be built. They would allow tar sands production to double from its current level of 2 million barrels per day.

The past three decades have shown that the vast majority of politicians have proven adept at expressing great concern for the threat of global warming, while not actually committing to policies that would stop or reduce emissions growth. The governing Liberals in BC, for example, have said they still believe in reducing greenhouse gas emissions, yet promote rapid expansion of shale gas production and new coal mines. They express “concerns” about Northern Gateway, yet refuse to promise to stop it if re-elected in May. We all know what this means.

In contrast, the opposition NDP has promised to kill the project. And believe me, a provincial government that wanted to kill a project like this would be able to do it – even if the federal government had the jurisdiction to approve its construction and had already done so.

The NDP is leading in the polls, but that does not mean they will win the election. The Conservatives have all but collapsed, which will mostly help the Liberals. And the Greens are still capturing a large share of voter interest, which will mostly hurt the NDP. Meanwhile Liberal supporters pound away with personal attack ads – a strategy that has worked well for Stephen Harper in election after election – and one wonders if some desperate oil patch money is behind this. The election outcome is definitely not a foregone conclusion.

All of this sets the stage for well-meaning people concerned about climate to make a tragic mistake this May – by voting Green in ridings where it could have ensured the election of an NDP member instead of a Liberal. (We must never forget how Ralph Nader’s Green candidacy helped George Bush just barely defeat Al Gore.)

In my view, this election is, and should be presented by people concerned about climate, as a referendum on Northern Gateway, and we should be encouraging individuals to vote NDP in any riding where the NDP has a chance of defeating the Liberal candidate, even if that individual would prefer to vote Green in an electoral system with proportional representation. The only riding where I am suggesting climate-focused people might vote Green is in the Victoria riding where climate scientist Andrew Weaver has an excellent chance of winning (hence not a wasted vote) and would be supporting an NDP or Liberal government where it did the right thing and hounding it where it did not. (For example, both the Liberals AND the NDP are too bullish on shale gas and LNG exports – a subject for a future blog.)

At this point, the prevention of Northern Gateway would be a (second) unique occasion in which British Columbian voters would be able to influence the broader struggle to stop global warming with one X on a ballot. Its cancellation would embolden activists and average citizens to realize that the tar sands and other carbon polluters can be stopped and would contribute to a rethinking of climate policies and emission reduction efforts in the two biggest carbon polluting countries in the world: the US and China.

Why we need to stop oil sands expansion

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.

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.

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 9780307359223

There 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 Chrétien 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 – and Stephen Harper an excellent student.

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.