BC’s ‘New’ Climate Plan Scales Olympian Heights of Political Cynicism

This blog was first published as an Op-Ed piece in The Globe and Mail Aug. 21, 2016

In 30 years of evaluating government climate plans, I have learned to classify them into three categories: somewhat effective, naively ineffective and cynically ineffective. BC’s new climate plan fits perfectly into one of these categories. Can you guess which?

Let me help. The thing about ‘effective’ climate policy is that it is never a political winner. Effective policies would start immediately to reduce carbon dioxide emissions by either pricing these or regulating fuels and technologies. The price can be achieved by a carbon tax, as in BC and Alberta, or an emissions cap with tradable permits, as in Ontario and Quebec. Alternatively, regulations, which dominate in California, would require a growing market share for zero-emission vehicles, furnaces, electricity generation, and industrial equipment. In every case, the stringency of these effective policies must be increasing – a rising carbon tax, a falling emissions cap, tightening regulations. Everything else is bogus.

Politicians know that effective climate policy is not a political winner because these effective policies cause gasoline prices to rise immediately, while the benefits from slowing climate change and sea level rise occur after the politician’s career is over. Only a politician willing to show ethical leadership would take effective action on this difficult global challenge. Politicians who are not leaders but seem to care would gravitate to ineffective policies. Politicians who are cynical and don’t care would deliberately fake it, implementing a long list of ineffective policies, engaging in endless ‘public consultation’ and dismantling the effective policies implemented by previous climate leaders.

Which brings us to BC Premier Christy Clark and her new climate plan. From 2007 to 2011, her predecessor, Gordon Campbell, led the world in implementing effective climate policies, out-muscling even Arnold Schwarzenegger’s efforts in California. He banned the use of coal and natural gas to generate electricity. He implemented a rising carbon tax. He established the legislative framework for an emissions cap, and for tightening regulations on fuels, vehicles, buildings and equipment. He not only set a climate target for 2020, but also interim targets for 2012 and 2016 to enable real-time monitoring of the effectiveness of his efforts.

But when Clark replaced Campbell in 2011, one of her first acts was to freeze the tax at its 2012 level. Because of inflation, this means the tax has been declining in real value for the last four years. She also undermined his zero-emission electricity requirement and his emissions-cap legislation, and she has done nothing to tighten any of his other regulations. At the same time, she has vigorously promoted expansion of the natural gas industry which, if successful, would dramatically increase emissions. And last year, she launched yet another public consultation.

In refusing to serve on her consultative panel, I pointed out that this was the last thing BC needed, and that anyone joining the panel was legitimizing a strategy of inaction. In BC, we already had effective policies, and Clark would know from her advisors that only by increasing their stringency would emissions fall. But endless public consultation is a convenient way of appearing to care without taking action. And the panel did not help by naively calling for an increase in the carbon tax. This played directly into Clark’s populist posture as defender of overtaxed car and truck drivers, and was unnecessary, as California’s smart regulations have proven.

Last week, Clark finally released her climate policy. Predictably, it perfectly fits the ‘cynically ineffective’ category. First, there is no immediate tightening of the stringency of any effective policies to achieve emissions targets in, say, 2020 and 2025. Second, consistent with the cynical category, the plan includes a list of innocuous policies that are known to be ineffective – subsidies to industry to electrify some processes, information programs for consumers, and statements about the government’s good intentions. And taking cynicism to a new level, the plan’s so-called emissions reductions are dominated by tree planting on lands that are already allocated to forestry, an action that does not decrease emissions in the long run.

If there were an Olympic event for political cynicism on the climate challenge, BC’s new climate plan would be a strong contender for the gold medal.

My interview in "Building a consensus on climate change? Not so easy, after all" in Macleans

Here is the link to an article by John Geddes "Building a consensus on climate change? Not so easy, after all", Ottawa bureau chief at Maclean’s, who does a good job of distilling my point that while carbon pricing is the most economically efficient GHG reduction policy, it is willful blindness to assume that economic efficiency is the only criterion when trying to implement climate policy. If regulations are more politically acceptable, especially for doing the heavy lifting, then put some intelligence (even economic intelligence) into designing market-oriented regulations that are relatively economically efficient.



One might notice by the way, that in the first two weeks of March Trudeau failed to get provinces to agree to even a small carbon price (that would have virtually no effect on emissions - such as $15 or $30 per tonne of CO2)) and then went to Washington and quickly signed an agreement with Obama to dramatically reduce methane emissions from the oil and gas industry. No mention of emissions pricing. It will be regulation." 

The Paris climate summit

This article appeared in Policy Options in November 2015.

The Paris climate summit

Canada has consistently failed to deliver, but it’s not too late for us to make a major contribution at the climate summit in Paris.

The other day I heard an environmental advocate argue that Prime Minister Justin Trudeau needed to make an ambitious commitment at the UN Paris climate summit (COP 21) to atone for all the “climate fossil” awards won by our previous prime minister. I’m not so sure.

Remember when newly elected President Barack Obama won the Nobel Peace Prize? He hadn’t yet done anything. Apparently the Nobel committee bestowed the award simply because he was not George W. Bush. In the same vein, Trudeau will be welcomed because he is not Stephen Harper.

I am not saying, of course, that Trudeau should just go to Paris and smile. But to make a real contribution, he will need to be brutally honest about why UN negotiations have failed for over two decades and equally honest about why Canada’s emission reduction efforts have also continuously failed.

Want an effective climate policy? Heed the evidence

This article appeared in Policy Options in February 2016.

Want an effective climate policy? Heed the evidence

Carbon taxes and caps may be most effective in economic theory, but smart regulation will produce better climate policy for our political reality.

Wisely, Prime Minister Justin Trudeau resisted the temptation at the Paris climate summit in December to double down on Stephen Harper’s 2030 target for Canadian carbon dioxide (CO2) emissions. While future emissions promises are easily made, effective climate policy is devilishly difficult. To have any chance, Trudeau needs to stay wise — which starts by avoiding advice from technology and policy advocates who themselves avoid inconvenient evidence from leading climate policy research and real-world experience. What does this evidence tell us?

For one thing, it’s a mistake to expect a big contribution from energy efficiency. For three decades, governments and utilities have made efficiency the focus of their emissions reduction efforts, with negligible results. Yes, energy efficiency is always improving, and we can slightly accelerate that trend. But humans require energy for basic needs and, more important, we keep inventing frivolous devices that use more. (Need evidence? Stroll through your local big-box store.)

BC’s carbon tax after 5 years

In 5 years, debates about BC’s carbon tax have generated much heat and little light, but Stewart Elgie and Jessica McClay of the University of Ottawa have just released a good effort to rectify this situation. Comparing fuel consumption (gasoline, diesel, propane, fuel oil, etc.) in BC with the rest of Canada, before and after the imposition of the carbon tax, they detect a significant change. Prior to 2008, BC’s petroleum fuel use changed in lock-step with the rest of Canada. But afterwards it fell 17.4% per capita in BC while rising 1.5% in the rest of the country. They also noted that BC’s economy performed as well or better than other provincial economies, a partial response to the much-touted argument that BC’s economy would suffer terribly because of the tax. (Stephen Harper repeatedly claims that carbon taxes destroy economies, with zero evidence in support – which some people would call lying.)

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.