By Mark Jaccard
Originally published in The Globe and Mail August 11, 2011
Stephen Harper can’t allow new coal-fired electricity plants to be built, such as the one Maxim Power is proposing in Alberta, and achieve his promise to reduce Canadian greenhouse-gas emissions 17 per cent by 2020. As a researcher of energy-economy systems, I say this with virtual certainty. I also know that any scholar in my field would agree with me, and that the Prime Minister’s expert advisers would tell him the same thing. The reasons are simple.
Our energy-economy system is currently dominated by the combustion of fossil fuel products made from natural gas, oil, tar sands and coal, a combustion that emits carbon dioxide, the main greenhouse gas causing climate change. The use of fossil fuels is linked to long-lived investments in energy supply and use – coal mines, tar sands processing plants, coal-fired electricity plants, oil and gas pipelines, industrial plants, buildings etc. We already have the technologies to use energy more efficiently, to switch to zero-emission sources such as hydropower, wind, solar and biofuels, and to prevent emissions by capturing and storing them.
But these technologies require considerable time to transform our energy-economy system, and it usually only occurs as old facilities are retired and replaced by zero-emission investments. Building a new coal-fired power plant goes in the opposite direction. It puts the lie to claims of significant emissions reduction over the next decade – an extremely short time frame.
History has a funny way of repeating itself. In 1997, Jean Chrétien committed Canada to a 2010 target for greenhouse-gas reduction, under the Kyoto Protocol, but did not implement the policies needed to achieve it – namely, a significant price on emissions and regulations to prohibit new investments that foster the combustion of fossil fuels. But 13 years was a safe distance in politics, and he left office before Canada officially reneged on its Kyoto commitment. One of his policy advisers has since acknowledged that Mr. Chrétien knew his policies would fail.
In 2007, Mr. Harper committed Canada to a 2020 target for greenhouse-gas reduction but hasn’t implemented policies that would achieve it. Like Mr. Chrétien, Mr. Harper must know his scant policies will fail. Recently released internal government documents show he’s receiving information from civil servants telling him his current policies are not transforming the energy-economy system in the direction he’s promised. Even his hand-picked National Round Table on the Environment and the Economy has said this, albeit inadvertently, in its 2009 report, Achieving 2050. The report shows that emissions must be falling already to achieve his 2020 target, which they certainly don’t when you allow new coal-fired electricity plants.
Mr. Harper’s choice of a target 13 years distant, without implementing policies to achieve it, is eerily reminiscent of Mr. Chrétien. Perhaps he sees the wily political master as his model. But there are other models available.
In 2007, then-B.C. premier Gordon Campbell also committed to a 2020 emissions reduction target. But to convince people of his sincerity – especially after two decades of climate policy failure by all Canadian governments at all levels – Mr. Campbell acted very differently. First, he got an independent body to set interim targets for 2012 and 2016, so people would know within a political time frame if he were on track to keep his promise. Second, he asked his advisers what investments needed to happen in 2007, and every year thereafter, to meet the 2020 target. On that basis, he immediately implemented a zero-emission electricity policy, which caused the cancellation of two proposed coal-fired electricity plants that had signed preliminary supply deals with BC Hydro.
BC Hydro abandoned its pursuit of coal and natural gas and switched to renewables such as run-of-river hydro, wind and biomass. If Alberta were not allowed to build another coal-fired plant, it would likewise use more renewables such as wind, biomass, hydropower and perhaps solar. This would slightly increase electricity rates, but not much because of the inertia in the energy-economy system – most electricity in Alberta would continue to be generated by existing low-cost facilities for years to come.
All of this raises an interesting conundrum for Canadians. What do you do when your government knowingly permits investments that prevent it from meeting its promises? Do you simply stand by and watch the construction of a coal plant that contributes great harm to the planet? Or is the only remaining ethical option to use every legal avenue and perhaps even peaceful civil disobedience to try to stop the plant?
Saturday, 16 February 2013
Carbon neutral public sector: a myth B.C. cannot afford
By Mark Jaccard
Originally published in the Vancouver Sun July, 2011
On June 30, the B.C. government announced it had become “carbon neutral.” Do you know
what this means?
If you’re unsure, you’re not alone. Pollsters find most people are. But some vaguely understand that being carbon neutral absolves them from guilt because, by paying someone else to reduce their greenhouse gas emissions (especially carbon dioxide), they are somehow no longer causing climate change when taking an airplane. Like paying someone else to do penance, you still emit carbon, but no longer feel guilty about your impact on the Earth’s climate, ecosystems and people.
The carbon neutral industry is growing. There are the guilty parties: individuals and companies who want or must become carbon neutral. They pay money to people who reduce their emissions: “carbon offset providers.” The two parties find each other thanks to “offset brokers,” companies that verify the emission reductions and get a commission from each transaction. Finally, there is government, which sanctions the offset industry and may, as in the case of B.C., even set its own goals for being carbon neutral.
Saving the planet by paying money instead of reducing your emissions sounds too good to be true. Experts say it is, but no one is listening.
The reasons are quite simple. The people who are paid to reduce emissions do things like switch from fossil fuels to renewable energy, invest in energy efficiency and plant trees. The problem is that all these activities have been occurring before. In some locations and circumstances, investments in renewable energy, energy efficiency, tree planting and other offsets are profitable, and would occur without the offset payment.
The carbon neutral industry claims to have a foolproof system to ensure that all offsets would not otherwise have occurred. But they have a conflict of interest. Independent researchers are much more circumspect. By looking at past subsidy programs that are similar to offsets, and increasingly at existing offset programs, they tend to find that while some offsets are indeed bona fide, others are not. The big message is that even more vigorous verification schemes will not solve this. It is simply impossible for third party verifiers to ever know all the internal factors that will determine the long-run profitability of a particular investment by a so-called offsetter.
This evidence is conveniently ignored by the carbon neutral industry and governments. This in itself is of interest to researchers who, like me, are trying to find out why our societies have been implementing climate policy after climate policy for almost three decades now without hitting any of our greenhouse gas reduction targets. Those who research the ability of humans to self-delude may have something to contribute.
A myth like carbon neutral would be relatively harmless if it were just something that businesses and individuals did on their own. But when adopted as official government policy, it can be harmful. In his climate policy frenzy of 2007-2008, former B.C. Liberal premier Gordon Campbell implemented some policies – like our carbon tax and our zero-emission electricity requirement – that are now recognized among the best climate policies in the world. Unfortunately, he also bought into the idea that government should be carbon neutral.
An excellent recent Sun commentary by Bob Simpson pointed out that B.C.’s policy of a carbon neutral public sector has the perverse effect of diverting our tax dollars from schools and hospitals to purchase offsets from profitable companies like EnCana in order to subsidize their investments to reduce greenhouse gases (“Taxing the public for a private good is a bad idea,” July 4). This is both economically inefficient and unfair. Unlike the rest of us, EnCana does not have to pay the carbon tax on these particular emissions. Instead, our schools and hospitals pay the $25 carbon tax for each tonne of carbon dioxide emissions and then pay an additional $25 per tonne as an offset payment to be carbon neutral, money which goes to EnCana to subsidize its emissions reductions.
Wouldn’t it be nice if your furnace was exempt from the carbon tax, and then a local hospital sent you money to upgrade to a more efficient model? That’s not likely to happen. But, hopefully, what does happen is that the B.C. government abandons the myth of carbon neutrality and gets on with the important task of pricing or regulating all emissions in the province.
Originally published in the Vancouver Sun July, 2011
On June 30, the B.C. government announced it had become “carbon neutral.” Do you know
what this means?
If you’re unsure, you’re not alone. Pollsters find most people are. But some vaguely understand that being carbon neutral absolves them from guilt because, by paying someone else to reduce their greenhouse gas emissions (especially carbon dioxide), they are somehow no longer causing climate change when taking an airplane. Like paying someone else to do penance, you still emit carbon, but no longer feel guilty about your impact on the Earth’s climate, ecosystems and people.
The carbon neutral industry is growing. There are the guilty parties: individuals and companies who want or must become carbon neutral. They pay money to people who reduce their emissions: “carbon offset providers.” The two parties find each other thanks to “offset brokers,” companies that verify the emission reductions and get a commission from each transaction. Finally, there is government, which sanctions the offset industry and may, as in the case of B.C., even set its own goals for being carbon neutral.
Saving the planet by paying money instead of reducing your emissions sounds too good to be true. Experts say it is, but no one is listening.
The reasons are quite simple. The people who are paid to reduce emissions do things like switch from fossil fuels to renewable energy, invest in energy efficiency and plant trees. The problem is that all these activities have been occurring before. In some locations and circumstances, investments in renewable energy, energy efficiency, tree planting and other offsets are profitable, and would occur without the offset payment.
The carbon neutral industry claims to have a foolproof system to ensure that all offsets would not otherwise have occurred. But they have a conflict of interest. Independent researchers are much more circumspect. By looking at past subsidy programs that are similar to offsets, and increasingly at existing offset programs, they tend to find that while some offsets are indeed bona fide, others are not. The big message is that even more vigorous verification schemes will not solve this. It is simply impossible for third party verifiers to ever know all the internal factors that will determine the long-run profitability of a particular investment by a so-called offsetter.
This evidence is conveniently ignored by the carbon neutral industry and governments. This in itself is of interest to researchers who, like me, are trying to find out why our societies have been implementing climate policy after climate policy for almost three decades now without hitting any of our greenhouse gas reduction targets. Those who research the ability of humans to self-delude may have something to contribute.
A myth like carbon neutral would be relatively harmless if it were just something that businesses and individuals did on their own. But when adopted as official government policy, it can be harmful. In his climate policy frenzy of 2007-2008, former B.C. Liberal premier Gordon Campbell implemented some policies – like our carbon tax and our zero-emission electricity requirement – that are now recognized among the best climate policies in the world. Unfortunately, he also bought into the idea that government should be carbon neutral.
An excellent recent Sun commentary by Bob Simpson pointed out that B.C.’s policy of a carbon neutral public sector has the perverse effect of diverting our tax dollars from schools and hospitals to purchase offsets from profitable companies like EnCana in order to subsidize their investments to reduce greenhouse gases (“Taxing the public for a private good is a bad idea,” July 4). This is both economically inefficient and unfair. Unlike the rest of us, EnCana does not have to pay the carbon tax on these particular emissions. Instead, our schools and hospitals pay the $25 carbon tax for each tonne of carbon dioxide emissions and then pay an additional $25 per tonne as an offset payment to be carbon neutral, money which goes to EnCana to subsidize its emissions reductions.
Wouldn’t it be nice if your furnace was exempt from the carbon tax, and then a local hospital sent you money to upgrade to a more efficient model? That’s not likely to happen. But, hopefully, what does happen is that the B.C. government abandons the myth of carbon neutrality and gets on with the important task of pricing or regulating all emissions in the province.
Six reasons to delay joining California's cap-and-trade program
By Mark Jaccard and Hadi Dowlatabadi
Originally published in the Vancouver Sun June 9, 2011
In 2007, frustrated with an absence of federal climate policies, 25 states and provinces in the U.S., Mexico and Canada formed the Western Climate Initiative. Their aim was to introduce meaningful climate policy even as the central governments dragged their feet. Since then, B.C. has introduced some of the best climate policies in the world. Our carbon tax, the most economically efficient in the world, covers 75 per cent of emissions and charges the same rate to businesses and consumers. Revenues from the tax are used to reduce individual and corporate income taxes, a tax shift that stimulates economic growth.
In 2012, California will launch its greenhouse gas cap-and-trade program but only B.C. and
Quebec have stayed the course as potential participants while the other 22 have either dropped out or taken a wait and see position. We give six reasons for B.C. to delay participation in the California cap-and-trade system.
First, all new markets have teething troubles. California's own 1999 experiment with electricity markets is an example of a poorly designed and privately exploited fiasco. Consumers paid a heavy cost in skyrocketing electricity prices, blackouts and market scams by Enron. Two years should give B.C. enough time to see if this market is working as planned.
Second, the point of cap-and-trade is to create an economy-wide price for GHG emissions.
However, B.C. already has this with its carbon tax. Given the sorry state of the California
industry, the cap-and-trade system will involve granting of free permits to powerful lobbies. This will bring uncertainty in the price of carbon in B.C. and undermine investments in greening our economy.
Third, carbon taxes have allowed B.C. to shift taxes away from lowincome households and
corporations on to consumers of fossil fuels. A successful cap-and-trade will take away carbon tax revenues in B.C., necessitating increases in income and corporate taxes or cutting back on government services.
Fourth, the strongest proponents of cap-and-trade are brokers and traders in that market. With each transaction they collect commissions, meaning that cap-and-trade systems have higher costs to society than a carbon tax. B.C.'s carbon tax, in contrast, required no new administrative costs and no commissions for brokers and traders. Perhaps one day it will be desirable to mesh our carbon tax with a regional, national or continental cap-and-trade system, especially if that is the policy direction that is widely chosen. But it makes little sense to absorb the extra costs of cap-and-trade today, in order to tag on to the California initiative, when we already have a more cost-effective mechanism in place.
Fifth, markets work well when there are many players of similar size. We are too small for our interests to be taken seriously by California. We have plenty of experience with that imbalance of power with how the U.S. has responded to Canada in our NAFTA disputes. Should we be a valuable addition to the market at some future time we will have more bargaining power then than we do now.
Sixth, market systems' strongest claim of superiority is that they lead to investments where cost of reducing GHGs is lower. The B.C. economy, thanks to widespread use of hydro and natural gas, is less carbon intensive than California's. A cap-and-trade system would lead to GHG compliance investments from B.C. being spent in California.
In principle, we are not against capand-trade as a mechanism for emissions pricing, especially where the involvement of many jurisdictions offers opportunities for permit trading that reduces costs. But joining the California cap-and-trade at this time presents many risks and few likely benefits. While waiting for that policy to be tested and hopefully joined by other jurisdictions, there is much we can and should do to sustain and improve our climate policies.
Originally published in the Vancouver Sun June 9, 2011
In 2007, frustrated with an absence of federal climate policies, 25 states and provinces in the U.S., Mexico and Canada formed the Western Climate Initiative. Their aim was to introduce meaningful climate policy even as the central governments dragged their feet. Since then, B.C. has introduced some of the best climate policies in the world. Our carbon tax, the most economically efficient in the world, covers 75 per cent of emissions and charges the same rate to businesses and consumers. Revenues from the tax are used to reduce individual and corporate income taxes, a tax shift that stimulates economic growth.
In 2012, California will launch its greenhouse gas cap-and-trade program but only B.C. and
Quebec have stayed the course as potential participants while the other 22 have either dropped out or taken a wait and see position. We give six reasons for B.C. to delay participation in the California cap-and-trade system.
First, all new markets have teething troubles. California's own 1999 experiment with electricity markets is an example of a poorly designed and privately exploited fiasco. Consumers paid a heavy cost in skyrocketing electricity prices, blackouts and market scams by Enron. Two years should give B.C. enough time to see if this market is working as planned.
Second, the point of cap-and-trade is to create an economy-wide price for GHG emissions.
However, B.C. already has this with its carbon tax. Given the sorry state of the California
industry, the cap-and-trade system will involve granting of free permits to powerful lobbies. This will bring uncertainty in the price of carbon in B.C. and undermine investments in greening our economy.
Third, carbon taxes have allowed B.C. to shift taxes away from lowincome households and
corporations on to consumers of fossil fuels. A successful cap-and-trade will take away carbon tax revenues in B.C., necessitating increases in income and corporate taxes or cutting back on government services.
Fourth, the strongest proponents of cap-and-trade are brokers and traders in that market. With each transaction they collect commissions, meaning that cap-and-trade systems have higher costs to society than a carbon tax. B.C.'s carbon tax, in contrast, required no new administrative costs and no commissions for brokers and traders. Perhaps one day it will be desirable to mesh our carbon tax with a regional, national or continental cap-and-trade system, especially if that is the policy direction that is widely chosen. But it makes little sense to absorb the extra costs of cap-and-trade today, in order to tag on to the California initiative, when we already have a more cost-effective mechanism in place.
Fifth, markets work well when there are many players of similar size. We are too small for our interests to be taken seriously by California. We have plenty of experience with that imbalance of power with how the U.S. has responded to Canada in our NAFTA disputes. Should we be a valuable addition to the market at some future time we will have more bargaining power then than we do now.
Sixth, market systems' strongest claim of superiority is that they lead to investments where cost of reducing GHGs is lower. The B.C. economy, thanks to widespread use of hydro and natural gas, is less carbon intensive than California's. A cap-and-trade system would lead to GHG compliance investments from B.C. being spent in California.
In principle, we are not against capand-trade as a mechanism for emissions pricing, especially where the involvement of many jurisdictions offers opportunities for permit trading that reduces costs. But joining the California cap-and-trade at this time presents many risks and few likely benefits. While waiting for that policy to be tested and hopefully joined by other jurisdictions, there is much we can and should do to sustain and improve our climate policies.
A convenient excuse for climate inaction
By Mark Jaccard
Originally published in The Globe and Mail November 30, 2010
At Cancun, Mexico this week, world leaders will try yet again to reach a global agreement on reducing greenhouse gas (GHG) emissions. The frequent excuse made by Canadian governments for inaction as part of reaching a global agreement is that the costs will be unfairly concentrated in specific regions.
Canadians certainly understand this concern, given the widely held assumption that climate policies will especially hurt fossil-fuel-intensive regions. Politicians from Alberta and Saskatchewan have attempted to associate proposals for federal pricing of GHG emissions with the much-maligned national energy program of the 1980s, which residents of these
provinces associate with economic decline and wealth transfers to Central Canada.
However, there are means by which Canada can moderate the regional impacts of GHG reductions. In particular, emissions pricing policies can be designed to distribute economic impacts more evenly, and even to prevent interprovincial transfers of income. If Canada is to meet its current GHG reduction targets of 17 per cent below 2005 levels by 2020, there are three broad policy strategies for doing so at relatively low cost to the overall national economy, each with different regional effects.
The first policy forces lower emissions per unit of economic activity (for example, tonnes of GHGs per dollar of output). This “emissions intensity standard” would apply to all emissions in the economy and would achieve the 17-per-cent target. Those who reduce intensity beyond what is required get permits they can sell to others. This policy is similar to the intensity policy Alberta currently applies to industries there.
The second policy sets an absolute cap on emissions and auctions permits to equal the cap. Auction revenues collected by the federal government are returned as federal personal and corporate income tax cuts. This policy is identical to the approach B.C. currently uses to recycle all its carbon tax revenue.
In the third policy, the government still sets an absolute cap on emissions and auctions permits to equal the cap, but returns to each province the exact amount of auction revenue generated. The provinces then cut their personal and corporate income taxes proportionally: Provinces with the most emissions would see the largest cut in personal and corporate income taxes.
Economic growth will slow down somewhat with the adoption of any of these policies.
Under the first policy, the intensity approach, it is likely that economic growth in Alberta and Saskatchewan would slow down less than in the rest of Canada – wealth would actually be transferred to these provinces from the rest of the country. This is because emitters there have lower-cost options for reducing emissions, and with an intensity approach, they don’t pay for their current emissions – only for those that exceed their intensity targets.
Under the second policy, the cap-and-trade system with emission revenues returned through cuts in federal taxes, interprovincial transfers from Alberta and Saskatchewan to the rest of Canada would be substantial, as would be the decline in economic growth in Western Canada.
Under the third policy, the cap-and-trade system with emission revenues returned to the province of origin and used to cut provincial taxes, Alberta and Saskatchewan would not experience a significant slowdown in economic growth. By definition, there would be no additional transfers out of the region.
The key message is to question the argument that Canada cannot price GHG emissions because the economic impacts would inevitably fall harshly on Alberta and Saskatchewan. This need not be so, but it is indeed a convenient excuse for inaction.
The C.D. Howe Institute Commentary, co-authored with Jotham Peters, Chris Bataille and Nic Rivers, is available at www.cdhowe.org.
Originally published in The Globe and Mail November 30, 2010
At Cancun, Mexico this week, world leaders will try yet again to reach a global agreement on reducing greenhouse gas (GHG) emissions. The frequent excuse made by Canadian governments for inaction as part of reaching a global agreement is that the costs will be unfairly concentrated in specific regions.
Canadians certainly understand this concern, given the widely held assumption that climate policies will especially hurt fossil-fuel-intensive regions. Politicians from Alberta and Saskatchewan have attempted to associate proposals for federal pricing of GHG emissions with the much-maligned national energy program of the 1980s, which residents of these
provinces associate with economic decline and wealth transfers to Central Canada.
However, there are means by which Canada can moderate the regional impacts of GHG reductions. In particular, emissions pricing policies can be designed to distribute economic impacts more evenly, and even to prevent interprovincial transfers of income. If Canada is to meet its current GHG reduction targets of 17 per cent below 2005 levels by 2020, there are three broad policy strategies for doing so at relatively low cost to the overall national economy, each with different regional effects.
The first policy forces lower emissions per unit of economic activity (for example, tonnes of GHGs per dollar of output). This “emissions intensity standard” would apply to all emissions in the economy and would achieve the 17-per-cent target. Those who reduce intensity beyond what is required get permits they can sell to others. This policy is similar to the intensity policy Alberta currently applies to industries there.
The second policy sets an absolute cap on emissions and auctions permits to equal the cap. Auction revenues collected by the federal government are returned as federal personal and corporate income tax cuts. This policy is identical to the approach B.C. currently uses to recycle all its carbon tax revenue.
In the third policy, the government still sets an absolute cap on emissions and auctions permits to equal the cap, but returns to each province the exact amount of auction revenue generated. The provinces then cut their personal and corporate income taxes proportionally: Provinces with the most emissions would see the largest cut in personal and corporate income taxes.
Economic growth will slow down somewhat with the adoption of any of these policies.
Under the first policy, the intensity approach, it is likely that economic growth in Alberta and Saskatchewan would slow down less than in the rest of Canada – wealth would actually be transferred to these provinces from the rest of the country. This is because emitters there have lower-cost options for reducing emissions, and with an intensity approach, they don’t pay for their current emissions – only for those that exceed their intensity targets.
Under the second policy, the cap-and-trade system with emission revenues returned through cuts in federal taxes, interprovincial transfers from Alberta and Saskatchewan to the rest of Canada would be substantial, as would be the decline in economic growth in Western Canada.
Under the third policy, the cap-and-trade system with emission revenues returned to the province of origin and used to cut provincial taxes, Alberta and Saskatchewan would not experience a significant slowdown in economic growth. By definition, there would be no additional transfers out of the region.
The key message is to question the argument that Canada cannot price GHG emissions because the economic impacts would inevitably fall harshly on Alberta and Saskatchewan. This need not be so, but it is indeed a convenient excuse for inaction.
The Climate Change Olympics: Perhaps some healthy provincial competition can get Canada moving.
By Mark Jaccard
Originally published in the Literary Review of Canada May, 2010
I wonder if we could, as a country, find a way to approach climate change with the same dedication we exhibited at the Vancouver Olympics. I am even trying to conjure up a slogan to match “Own the Podium” (“Own the Climate”? “Own the Environment”?), but I am obviously not a marketer. Instead, the decades go by and we pay lip service to our commitment to addressing this grave risk to the planet, but our policy makers tend to resemble a hockey player who is ragging the puck rather than trying to score.
Polls often suggest that many Canadians like the image of their country as a leader in addressing some of the major challenges facing the globe, and this leadership is sorely needed when it comes to climate policy. This lofty self-image might explain Canada’s aggressive commitments in the Kyoto Protocol of 1997, in which we promised to make substantial greenhouse gas emissions reductions by this year, 2010, even though our fossil fuel–intensive economy and rapid population growth, compared to most industrialized countries, would make this task relatively difficult and costly.
Canada made this bold commitment at Kyoto, but never implemented the kind of policies that would achieve it. We talked big, but our performance was pitiful. In researching Hot Air: Meeting Canada’s Climate Change Challenge, my co-author Jeffrey Simpson interviewed senior advisors to the Chrétien government and was told that there had been little real intent to implement policies that would achieve the Kyoto target. Various excuses were given for federal inaction. The Canadian public said it wanted Canada to lead on climate policy, but did not expect to pay more for energy commodities such as electricity, home heating fuel and gasoline. Regional politicians and media pundits argued that a forceful, effective federal policy would be interpreted as a jurisdictional threat to fossil fuel–rich provinces, perhaps causing a constitutional crisis. Industry threatened massive job losses if rising energy costs harmed its international competitiveness.
As a modeller of energy-economy-environment systems, I know—along with all other experts in this field—that in our market economy, the shift to lower emission technologies will only be significant if emissions are no longer free. In other words, emitting greenhouse gases must have a cost and this cost will drive the gradual shift of our economy toward low- and zero-emission technologies, many of which are already commercially available, but which gain little market share because they are more expensive when greenhouse gas–emitting technologies have a free ride. This includes renewable sources of electricity, hybrid and now plug-in hybrid electric vehicles, and heat pumps for buildings.
After Canada signed the Kyoto Protocol, my research team was selected by the federally funded National Climate Change Process to use our energy-economy model to estimate what Canadian policies were needed to achieve Canada’s Kyoto commitment for 2010; readers may recall that it was to be a 6 percent reduction below 1990 emissions levels. Our estimate was that the emissions price needed to rise quickly to about $150 per tonne of carbon dioxide, which would, for example, increase the price of gasoline in our cars by about 40 cents per litre.
Needless to say, the government did not adopt this high price for greenhouse gas emissions. In fact, it did not apply any price to emissions. That was the Liberals. And since 2006, the Conservatives have done the same. Canadian federal governments talk earnestly about climate policy leadership and yet, 20 years after starting to “act” on this risk, they still have not implemented, even tentatively, the one policy that is absolutely essential if emission reductions of any amount are to occur. That’s depressing.
It is depressing in part because researchers like me spend most of our time figuring out how to design emissions pricing policies so that their negative impacts on individuals, certain industries and regions will not be excessive. Policy advisors to government are now aware that Canada can gradually raise the price of emissions and combine such a policy with various mechanisms to ensure that the costs of the policy are not onerously concentrated on any one group. These policies have been demonstrated in various European countries and now even in a Canadian province, British Columbia.
At the federal level in Canada, a key issue is to make sure that national climate policy is not seen as unfair to any particular region. This is not easy, in part because of different perceptions of fairness and in part because some regions are more greenhouse gas–intensive and therefore may be expected to incur greater costs in the process of reducing emissions. While some optimists talk about all the business opportunities in the new green economy, the reality is that reducing greenhouse gas emissions imposes costs on the economy (costs that we are willing to incur in order to address the climate risk). Those costs result from the higher capital costs of more efficient buildings and equipment, production of alternative fuels such as nuclear and renewables and, in some places perhaps, the adoption of expensive processes that capture carbon from energy sources and store it underground—called carbon capture and storage.
Although these expenditures to reduce greenhouse gas emissions would occur right across the country, more would occur in regions that were especially emissions intensive, such as Alberta and Saskatchewan. Just because these reductions occur in these two provinces does not mean that this region should have to pay all the costs. Anyone can pay for them. As long as the mechanism we use to allocate the costs does not prevent the low-cost reductions from occurring, economists don’t care who pays. The allocation of the costs is an equity or fairness issue—in other words, a political issue.
But while everyone can agree that Canada should allocate the costs fairly, there are different ways of defining what is fair. And one’s preference for one definition over another is usually linked to one’s financial self-interest. (What a surprise!) The “polluter pay” principle argues it is fair that emitters bear all the costs of either reducing their emissions or paying taxes or emission permit fees for the damages their remaining emissions cause. If you are not a polluter, this seems fair. By this measure, Alberta and Saskatchewan would have to shoulder the lion’s share of the burden in Canada. In contrast, the “sovereignty” principle argues that polluters must be protected to some degree from economic harm when governments suddenly change laws and regulations. If you invested in a new coal-fired electricity plant or an oil sands plant in 2005 (both of which should last for decades) and, in designing it, you carefully complied with all existing pollution regulations, you would argue that it is only fair you be compensated for losses if that plant is rendered uneconomic by new pollution charges or restrictions. A third fairness criterion, the “ability to pay” principle, argues that people or countries that are poor should pay less than those that are wealthy, so certain areas of Atlantic Canada and the North would benefit from this principle. That would certainly seem fair to those who are less well-off.
How do we find our way out of this conundrum? As with all debates about equity, the solution is likely to be the result of some interplay of political negotiating power, legal rights and public sympathies. Alberta and Saskatchewan could threaten to leave the Canadian confederation. This is an extreme negotiating card they are reluctant to play, but the threat can help when they feel that the population, and thus political weight, of central Canada will otherwise lead to an unfavourable definition of fairness by the federal government. Alberta and Saskatchewan, or their emissions-intensive industries, might argue that they have a legal right to compensation for investments made in good faith under the previous regulatory regime. But given the massive wealth creation resulting from the fossil fuel industry, there is also pressure on the two provinces to recognize their comparative wealth and thus bear a greater share of the costs of reducing greenhouse gases, and both provinces have openly accepted some responsibility in this regard.
In 2009, the TD Bank provided funds for the David Suzuki Foundation and the Pembina Institute (two leading, non-profit, environmental organizations in Canada, which I will call DSF-Pembina) to hire MK Jaccard and Associates to assess the regional impacts of various emissions-pricing scenarios that differed with respect to the ambitiousness of Canada’s emissions reduction target and the targets of other countries (1). (You may be surprised to learn that I have little involvement in this 20-year-old company, which is composed mostly of my former graduate students, and that I was not even aware of this study before it was released.) In general, the DSF-Pembina emissions pricing scenarios showed that Alberta and Saskatchewan would bear more of the cost of reducing greenhouse gases and this was reflected in a slower rate of economic growth than was otherwise forecast to occur. Interestingly, though, under the emissions pricing scenarios Alberta and Saskatchewan would still have higher rates of economic growth than anywhere else in Canada. Advocates of the ability-to-pay fairness principle would see this as important.
Unfortunately—and this is a vivid example of how such debates can veer completely off the rails—the study included one scenario that would have resulted in Alberta and Saskatchewan not only paying higher costs but also actually transferring revenue to other parts of Canada. That one scenario became the lightning rod for the reaction to the DSF-Pembina study by the two provincial governments, regional interests and fossil fuel industry supporters. And naturally the mainstream media zeroed in on the controversy. Other scenarios that did not have this effect were completely ignored and the entire report was couched by some as an example of environmentalists waging war on Alberta and Saskatchewan (see Gwyn Morgan’s article in The Globe and Mail on November 9, 2009—“Zealots Throw Another Dagger at Our Oil Industry”) (2).
This type of reaction to a simple, exploratory report by two environmental organizations gives a sense of the challenges facing a federal government aspiring to global leadership in the effort to reduce greenhouse gas emissions. Divergent regional views on what is fair will have to be reconciled to some degree and overreactions to perceived attacks on provincial rights or revenues are a norm in Canadian federalism.
Still, it is rather surprising (and again disappointing) to note how rapidly and easily European countries have been able to achieve agreements on fair allocation of the costs of climate policy, even though these countries differ substantially in terms of their fossil fuel endowments and the intensity of the greenhouse gas emissions of their economies. Yet the Europeans quickly reached an agreement to allocate their burden under the Kyoto Protocol in 1997. Then, in 2005, they reached agreement on allocating carbon dioxide permits under their industry-focused cap and trade policy to price greenhouse gas emissions. They did this by compromising on the fairness principles I described above. Industries, and thus countries, with high greenhouse gas intensities, such as Poland, were allocated extra permits, thus reflecting the sovereignty principle. However, the overall permit allocation still resulted, in most cases, in greenhouse gas–intensive countries facing greater total costs than low-intensity countries, thus reflecting to some extent the polluter-pays principle. Finally, lower income countries in the European Union, such as Portugal, received targets that were not as onerous as those of wealthier countries, reflecting the ability-to-pay principle.
For such a compromise to occur in Canada, we would likewise have to trade off between these three equity principles. The Canadian government would implement an economy-wide cap and trade system with some permits allocated freely based on the past emissions (called grandfathering) and some allocated by auction. In an auction allocation, industries bid for permits until a price is found at which all permits issued by government are allocated among auction participants. For industry, the money they pay for the permit is no different than the money they would pay the government under a carbon tax. Both the carbon tax and the cap and trade system can be designed to make sure that all fuels face a price for greenhouse gas emissions, including home heating oil and natural gas and the gasoline and diesel used in our vehicles.
Allocating permits by grandfathering instead of auction favours greenhouse gas–intensive industries and their provinces (sovereignty). To ensure there is absolutely no transfer of wealth from Alberta and Saskatchewan to the rest of Canada, some of the auction revenue can be used to cut federal income and corporate taxes, but some would also need to be transferred directly to provincial governments so they could cut their taxes or make emissions reductions investments (in renewable power, public transit, energy efficiency and perhaps carbon capture and storage) to benefit their own residents and corporations (again sovereignty) (3).
At the same time, a cap and trade policy will drive greater expenditures on reducing greenhouse gases in Alberta and Saskatchewan and this is likely to slow the rate of economic growth somewhat in those provinces while having less effect on other provinces (polluter pays and ability to pay). A balance can be found, however, where this growth reduction in Alberta and Saskatchewan is not excessively greater than reductions in other provinces. With such a balance, the rich resources of those two provinces may still allow them to lead the country in economic growth.
Canada could implement a cap and trade policy to price greenhouse gas emissions quite quickly. The European policy took less than two years from conception to enactment, and our government can benefit from the European experience and from almost two decades of studying and discussing this with industry and other interests here in Canada. But, until they lost power in 2006, the Chrétien and Martin Liberals just kept discussing and discussing. And for the last four years, the Harper Conservatives have continued to talk without taking action.
This frustration with federal inaction has led some people to suggest that an alternative hope for effective climate policy is if Canadian provinces start to compete with each other for leadership, in effect creating an internal Canadian climate policy Olympics. In this sense, we might mirror what happened south of the border during the eight years of the George Bush presidency. During that period, the clear unwillingness to act of the U.S. government motivated cities, states and even groups of states to take the initiative in climate policy. The U.S. northeast has applied an emissions cap and trade policy to the regional electricity sector. California initiated negotiations on the development of a cap and trade system that has attracted the participation of many states (mostly in the west, hence the name Western Climate Initiative) and, more recently, of four Canadian provinces (Quebec, Ontario, Manitoba and British Columbia). If implemented, this cap and trade policy would lead to emissions pricing for all industry and even consumer emissions in vehicles and home heating fuels.
Except for their willingness to show interest in U.S.-led developments such as the Western Climate Initiative, Canadian provinces have not diverged much from the ragging-the-puck model of our federal government for the past decade and more. But that is changing. In 2007, British Columbia adopted a radical zero-emission electricity policy, effectively barring new investments in greenhouse gas–emitting electricity plants. This led to the cancellation of proposals for several large coal and natural gas plants, a dramatic reduction from where emissions were forecast to be headed. The province followed this up in 2008 with North America’s first serious emissions pricing policy—a carbon tax covering all fossil fuel–related greenhouse gas emissions that started at $10 per tonne of carbon dioxide, but has a fixed schedule for annual $5 increases to 2012 (the tax will reach $20 on July 1, 2010). Also, in 2008, B.C. passed enabling legislation to implement a cap and trade policy, dramatically tighter emissions standards for vehicles and several other key climate policies. B.C.’s climate policies vaulted the province into the ranks of the leading jurisdictions in the world.
Concurrent with B.C.’s 2007 initiative in the electricity sector, Alberta implemented North America’s first performance standards for industrial greenhouse gas emissions (sometimes called an intensity-based cap and trade policy), which requires industries to reduce their emissions per unit of output. Excess emissions would face a permit charge of $15 per tonne. While this policy is a good first step in motivating industries with an incentive to save $15 on each tonne of emissions they reduce, it does not, however, follow the polluter-pays principle. The charge is only levied on excess emission (above the target intensity level), so the average charge is much lower, perhaps less than $5 per tonne of carbon dioxide. Also, industry has an option of purchasing offset reductions from elsewhere in the economy, and these can be cheaper than the $15 fee. Alberta justifies this, however, on the basis that its industries (oil, petrochemicals) need to compete in international markets against products from jurisdictions that face no cost for greenhouse gas emissions. Many environmentalists are also skeptical of Alberta’s policy in that it does not apply an emissions price to final energy commodities including gasoline, home heating fuel and natural gas, so emissions pricing in the province is tentative at best.
But B.C.’s recent climate policy leadership has helped environmental lobbyists in their efforts to motivate provincial politicians elsewhere in Canada for effective climate policies. Even though the B.C. government raised the price of gasoline with its carbon tax, it was able to win re-election in 2009 against an opposition that promised to cancel the carbon tax. In 2009, Ontario launched its Green Act, an effort to encapsulate in one piece of legislation the government’s intent to become a climate policy leader. Some environmentalists argue that while the legislation has good optics, it deftly sidesteps the essential but challenging greenhouse gas pricing policy. But others note that it takes strong steps to support renewable electricity sources such as wind, solar, small hydro and biomass in preparation for the planned phase-out of the province’s coal-fired electricity plants, and sets the stage for Ontario to follow through with low-emission building codes, vehicle regulations, public transit, municipal planning and eventually a province-wide cap and trade system, perhaps in concert with Quebec or as part of the broader Western Climate Initiative.
A healthy competition among Canadian provinces might be just the formula for finally realizing effective climate policies in this country. Provincial politicians can learn from each other in terms of designing policies that navigate the challenges of being both politically acceptable yet effective at reducing greenhouse gas emissions. Environmental lobbyists can hold up ambitious politicians and their creative policies as beacons for the more reluctant provincial governments. With time, the media and the public will begin to see the results in terms of the evolution of emissions, helping them to distinguish between authentic and bogus climate policies.
Notes
1. The 2009 MK Jaccard and Associates study is titled “Exploration of Two Canadian Greenhouse Gas Emissions Targets: 25% Below 1990 and 20% Below 2006 Levels by 2020”; see <climate.pembina.org/pub/1910>. The DSF-Pembina report based on this study is titled “Climate Leadership, Economic Prosperity: Final Report on an Economic Study of Greenhouse Gas Targets and Policies for Canada,” at <climate.pembina.org/pub/1909>.
2. See also the Canada West Foundation counterpoint titled “Sharing the Load: Addressing the Regional Economic Effects of Canadian Climate Policy,” available at <www.cwf.ca/V2/cnt/publication_200912100533.php>.
3. This approach is described in Hot Air, and also described and modelled in the 2009 report by Tracey Snoddon and Randall Wigle in “Clearing the Air on Federal and Provincial Climate Change Policy in Canada,” IRPP Choices, volume 15, number 11, <www.irpp.org/choices/archive/vol15no11.pdf>.
Canadian Climate Policy: the Past, the Present and the Future
By Mark Jaccard
Originally published in The Globe and Mail February 16, 2009
The Past
In 2006 and 2007, Canada’s newly elected Conservative government, led by Prime Minister Stephen Harper, was much criticized by the opposition Liberals, NDP, Bloc Quebecois and Greens for its unwillingness to promise that Canada would meet its Kyoto Protocol commitment to reduce greenhouse gas (GHG) emissions in 2010 to 6% below their 1990 level. Since emissions were already more than 20% above this target, and the Kyoto deadline was imminent, these parties were obviously engaged in political posturing. Although it had been clear to experts and politicians for some time that Canada could not possibly meet its target, much of the public still associated Canada’s commitment to Kyoto with action on climate change. The opposition parties found it politically advantageous, therefore, to link the governing Conservatives to Canada’s Kyoto failure. The participation of the Liberals in this charade was particularly galling given the fact that they were responsible for negotiating the Kyoto target in 1997 and ratifying the protocol in 2002. Yet, throughout their lengthy tenure in power, under Prime Minister Jean Chretien, the Liberals failed to implement policies that would stop or even slow the country’s rising GHG emissions.
During the national debate over Kyoto in 2006-07, it was rarely mentioned that missing a GHG emissions reduction target was nothing new for Canada. Yet our country has been setting and then missing GHG reduction targets since 1988, when the Conservative government of Brian Mulroney first set targets for 2000 and 2005.
Surely there is something to be learned. Canada now has over two decades of experience in setting GHG emissions reduction targets, and then implementing policies to achieve these targets, only to see emissions continue to climb unabated. We have missed the 2000 target, the 2005 target and soon the 2010 target. In spite of this, Canada’s current government speaks with conviction about its new target for 2020 and especially about its aggressive target of a 60-70% reduction by 2050 – a much safer timeframe from a political perspective. (Maybe our politicians have learned something!)
What we should have learned is that policies that fail to price GHG emissions (sometimes called carbon pricing) will not reduce emissions. Non-compulsory policies that provide information about energy efficiency and fuel switching, or even modest subsidies through grants, low interest loans and voluntary offsets, will not reduce emissions. As Nicholas Stern emphasized in his UK government report, of the requirements for effective climate policy “the first is the pricing of carbon.”
The Present
It bears repeating. Climate policies that leave the atmosphere as a free waste receptacle will not reduce emissions. But how do we price carbon? Former Liberal leader, Stephan Dion, unsuccessfully promoted a carbon tax in the 2008 federal election. That is a very transparent way of pricing emissions. But as he found out, a bit too transparent. Another way is for government to cap emissions and allocate tradable permits that equal the cap. Such a system could start with industry. Permits could be allocated based on a firm’s previous emission levels, or they could be auctioned (some or all). Then firms could trade the emission permits. Those who find it relatively cheap to reduce emissions could have surplus permits to sell to those who find reduction expensive. The trading price of permits effectively provides a carbon price that creates the business case for investments in GHG abatement. Even the fuels used by consumers (gasoline, diesel, natural gas and oil for home heating) can be part of this system. Retailers of these fuels would simply be required to purchase permits to cover the carbon content in the fuels they sell, a carbon price that would be embedded in the prices faced by consumers.
Stephan Dion learned the hard way what most politicians around the world already know: if a carbon price is required, it is preferable that politicians not be directly identified with its effect on consumer prices. This is why the Europeans, the Australians and the US are all designing and implementing cap and trade policies instead of the more direct and transparent approach of carbon taxes.
An even more indirect means of carbon pricing is to regulate fuels and technologies. More than half the states in the US have a renewable portfolio standard, a regulation that requires a growing share of electricity generation to come from non-emitting renewable sources like wind, solar, hydropower, biomass and geothermal. Vehicle emission standards are also widespread, as are building and appliance efficiency standards. A growing number of jurisdictions now apply low carbon fuel standards, which effectively force gasoline and diesel retailers to blend a minimum percentage of biofuels like ethanol or biodiesel. In many jurisdictions, these policies are combined with subsidies to help new technologies over the initial development hurdles, as is the case with some new renewables technologies and with carbon capture and storage where fossil fuels might still be attractive.
All of these compulsory, carbon pricing policies – carbon taxes, emission caps, and technology and fuel regulations – will be combined in various ways in different jurisdictions. But the trend toward compulsory policies like these is inevitable. The sooner we acknowledge this, the sooner we replace emissions reduction talk with emissions reduction action.
The Future
Canada is sure to follow this trend. But we are not there yet. In 2007, the Conservative government rolled out its “Turning the Corner” climate policy. While this policy represents a nudge in the direction of carbon pricing, it is still woefully inadequate and needs a quick and dramatic revamp. First, the government claims that its policy includes a “cap” on industrial emissions. Actually, it does not. It has a “performance standard,” which requires the intensity of emissions (emissions per unit of industrial output of steel, oil, etc.) to decrease over time. Depending on the rate of output growth, emissions might not fall the desired amount. The government must change this to an absolute cap, as the Europeans have done and as the US government is about to do. Second, the so-called cap in Canada applies only to industrial emissions. There is no carbon pricing for the 50% of Canadian emissions that come from transportation, buildings and small industry. The cap must be extended to all emissions in the economy. Third, the so-called cap includes an enormous loophole. Under the cap, industries do not need to reduce their emissions if they can instead pay non-regulated industries and consumers to “apparently” reduce their emissions – what is commonly referred to as “offsets.” But offsets are subsidies. And we already know from our previous policy failures that subsidies are flawed. Often, we end up paying people for a more efficient fridge, but they buy a bigger one, for house insulation, but they expand their house, to plant trees on their farm, while the neighbouring farm converts its woodlot to farmland. If we instead put a cap on all emissions, offsets are not necessary. Everyone is required to participate in permit trading, which means that carbon pricing becomes universal – which is the only way we make the substantial reductions in emissions that scientists are calling for over the coming decades.
Originally published in The Globe and Mail February 16, 2009
The Past
In 2006 and 2007, Canada’s newly elected Conservative government, led by Prime Minister Stephen Harper, was much criticized by the opposition Liberals, NDP, Bloc Quebecois and Greens for its unwillingness to promise that Canada would meet its Kyoto Protocol commitment to reduce greenhouse gas (GHG) emissions in 2010 to 6% below their 1990 level. Since emissions were already more than 20% above this target, and the Kyoto deadline was imminent, these parties were obviously engaged in political posturing. Although it had been clear to experts and politicians for some time that Canada could not possibly meet its target, much of the public still associated Canada’s commitment to Kyoto with action on climate change. The opposition parties found it politically advantageous, therefore, to link the governing Conservatives to Canada’s Kyoto failure. The participation of the Liberals in this charade was particularly galling given the fact that they were responsible for negotiating the Kyoto target in 1997 and ratifying the protocol in 2002. Yet, throughout their lengthy tenure in power, under Prime Minister Jean Chretien, the Liberals failed to implement policies that would stop or even slow the country’s rising GHG emissions.
The Present
It bears repeating. Climate policies that leave the atmosphere as a free waste receptacle will not reduce emissions. But how do we price carbon? Former Liberal leader, Stephan Dion, unsuccessfully promoted a carbon tax in the 2008 federal election. That is a very transparent way of pricing emissions. But as he found out, a bit too transparent. Another way is for government to cap emissions and allocate tradable permits that equal the cap. Such a system could start with industry. Permits could be allocated based on a firm’s previous emission levels, or they could be auctioned (some or all). Then firms could trade the emission permits. Those who find it relatively cheap to reduce emissions could have surplus permits to sell to those who find reduction expensive. The trading price of permits effectively provides a carbon price that creates the business case for investments in GHG abatement. Even the fuels used by consumers (gasoline, diesel, natural gas and oil for home heating) can be part of this system. Retailers of these fuels would simply be required to purchase permits to cover the carbon content in the fuels they sell, a carbon price that would be embedded in the prices faced by consumers.
The Future
Canada is sure to follow this trend. But we are not there yet. In 2007, the Conservative government rolled out its “Turning the Corner” climate policy. While this policy represents a nudge in the direction of carbon pricing, it is still woefully inadequate and needs a quick and dramatic revamp. First, the government claims that its policy includes a “cap” on industrial emissions. Actually, it does not. It has a “performance standard,” which requires the intensity of emissions (emissions per unit of industrial output of steel, oil, etc.) to decrease over time. Depending on the rate of output growth, emissions might not fall the desired amount. The government must change this to an absolute cap, as the Europeans have done and as the US government is about to do. Second, the so-called cap in Canada applies only to industrial emissions. There is no carbon pricing for the 50% of Canadian emissions that come from transportation, buildings and small industry. The cap must be extended to all emissions in the economy. Third, the so-called cap includes an enormous loophole. Under the cap, industries do not need to reduce their emissions if they can instead pay non-regulated industries and consumers to “apparently” reduce their emissions – what is commonly referred to as “offsets.” But offsets are subsidies. And we already know from our previous policy failures that subsidies are flawed. Often, we end up paying people for a more efficient fridge, but they buy a bigger one, for house insulation, but they expand their house, to plant trees on their farm, while the neighbouring farm converts its woodlot to farmland. If we instead put a cap on all emissions, offsets are not necessary. Everyone is required to participate in permit trading, which means that carbon pricing becomes universal – which is the only way we make the substantial reductions in emissions that scientists are calling for over the coming decades.
B.C.'s dishonesty on climate change: The province's promise to cut emissions by 33% by 2020 is at odds with its lax standards on shale-gas development
By Mark Jaccard and Brad Griffin
Originally published in the Vancouver Sun July 28, 2010
When it comes to climate policy, Canadian provincial and federal governments have a perfect track record - they have consistently failed to achieve their greenhouse gas (GHG) emissions targets.
Our governments have been setting targets since 1988, initially for 2000 and 2005, and then for 2010 at the 1997 Kyoto conference. In every case, governments have broken their promises, by a wide margin. But few people seem alarmed, as long as politicians deftly replace missed targets with bold-sounding new targets a safe distance into the future.
This situation is tragic when we recognize the severe damage to the planet scientists say is now almost inevitable because of our delusional approach to targets and policies.
The B.C. government has promised to be different and, indeed, it has implemented some of the most progressive and effective policies in the world, including an essential carbon tax, the banning of fossil fuels for electricity generation, and stricter regulations for vehicles and buildings.
Nevertheless, the likelihood of B.C. reaching its 2020 target of reducing emissions by 33 per cent diminishes each year as we fail to attack head-on our addiction to fossil fuels and the emissions they cause.
The latest evidence came this spring when the government approved the EnCana shale-gas
processing plant in northeastern B.C. without requiring the plant to install carbon capture and storage.
Shale gas is natural gas that can be extracted by underground fracturing of shale rock with a pumped mixture of water, sand and chemicals. B.C. has a vast shale gas resource that is attracting substantial investment as advances in extraction techniques have made it competitive with other gas sources.
However, shale gas has a high concentration of carbon dioxide and the cheapest solution for industry is to separate this and vent it into the atmosphere at gas processing plants.
The Spectra processing plant near Fort Nelson vents carbon dioxide and it will soon be joined by the EnCana plant. What is surprising is that the EnCana plant received its permit even though the B.C. government has set aggressive GHG targets and recently revamped its environmental assessment process to consider cumulative effects -the consequence for total emissions of building many plants that together would be needed to develop an extensive fossil fuel resource like B.C.'s shale gas.
Since neither the government nor its environmental review agency has estimated cumulative effects, we decided to fill this gap using standard modelling tools developed at Simon Fraser University that the government sometimes relies upon. We estimated the effect on B.C.'s GHG emissions of a series of processing plants that would, over the next decade, match the exploitation potential of B.C.'s shale gas resource in that time frame.
Not surprisingly, we found that if the resource is exploited without capturing and storing the carbon dioxide, this activity alone will make it virtually impossible for B.C. to reach its 2020 GHG emissions target - especially once one includes the additional emissions from fuel combustion in the plants and methane leaks from associated pipelines (methane is an even more potent greenhouse gas than carbon dioxide).
The conclusions are obvious. The provincial government should either honestly tell British Columbians that, like all past Canadian governments, it is not being honest about its climate targets, or it should ban the development of shale gas unless the industry's processing facilities capture all their GHG emissions.
That option might sound draconian, but it's not. Norway has gas that is high in carbon dioxide and for over a decade it has been capturing this gas and safely storing it. The carbon dioxide in the gas is particularly easy to capture because industry must already separate it to produce commercially acceptable gas. If necessary Victoria could consider providing limited financial assistance to industry, based on a competitive bidding process and using some of the royalties generated by shale gas.
The evidence gets stronger with each passing year and decade that humanity is unlikely to seriously reduce GHG emissions until we have caused severe disruption and damage to the earth's climate, water cycle, ecosystems and the human economy. B.C. says it is one region on Earth that is willing to take the threat seriously and to take strong action -to be truly different from all of our past governments. Its approach to shale gas thus far tells another story.
Originally published in the Vancouver Sun July 28, 2010
When it comes to climate policy, Canadian provincial and federal governments have a perfect track record - they have consistently failed to achieve their greenhouse gas (GHG) emissions targets.
Our governments have been setting targets since 1988, initially for 2000 and 2005, and then for 2010 at the 1997 Kyoto conference. In every case, governments have broken their promises, by a wide margin. But few people seem alarmed, as long as politicians deftly replace missed targets with bold-sounding new targets a safe distance into the future.
This situation is tragic when we recognize the severe damage to the planet scientists say is now almost inevitable because of our delusional approach to targets and policies.
The B.C. government has promised to be different and, indeed, it has implemented some of the most progressive and effective policies in the world, including an essential carbon tax, the banning of fossil fuels for electricity generation, and stricter regulations for vehicles and buildings.
Nevertheless, the likelihood of B.C. reaching its 2020 target of reducing emissions by 33 per cent diminishes each year as we fail to attack head-on our addiction to fossil fuels and the emissions they cause.
The latest evidence came this spring when the government approved the EnCana shale-gas
processing plant in northeastern B.C. without requiring the plant to install carbon capture and storage.
Shale gas is natural gas that can be extracted by underground fracturing of shale rock with a pumped mixture of water, sand and chemicals. B.C. has a vast shale gas resource that is attracting substantial investment as advances in extraction techniques have made it competitive with other gas sources.
However, shale gas has a high concentration of carbon dioxide and the cheapest solution for industry is to separate this and vent it into the atmosphere at gas processing plants.
The Spectra processing plant near Fort Nelson vents carbon dioxide and it will soon be joined by the EnCana plant. What is surprising is that the EnCana plant received its permit even though the B.C. government has set aggressive GHG targets and recently revamped its environmental assessment process to consider cumulative effects -the consequence for total emissions of building many plants that together would be needed to develop an extensive fossil fuel resource like B.C.'s shale gas.
Since neither the government nor its environmental review agency has estimated cumulative effects, we decided to fill this gap using standard modelling tools developed at Simon Fraser University that the government sometimes relies upon. We estimated the effect on B.C.'s GHG emissions of a series of processing plants that would, over the next decade, match the exploitation potential of B.C.'s shale gas resource in that time frame.
Not surprisingly, we found that if the resource is exploited without capturing and storing the carbon dioxide, this activity alone will make it virtually impossible for B.C. to reach its 2020 GHG emissions target - especially once one includes the additional emissions from fuel combustion in the plants and methane leaks from associated pipelines (methane is an even more potent greenhouse gas than carbon dioxide).
The conclusions are obvious. The provincial government should either honestly tell British Columbians that, like all past Canadian governments, it is not being honest about its climate targets, or it should ban the development of shale gas unless the industry's processing facilities capture all their GHG emissions.
That option might sound draconian, but it's not. Norway has gas that is high in carbon dioxide and for over a decade it has been capturing this gas and safely storing it. The carbon dioxide in the gas is particularly easy to capture because industry must already separate it to produce commercially acceptable gas. If necessary Victoria could consider providing limited financial assistance to industry, based on a competitive bidding process and using some of the royalties generated by shale gas.
The evidence gets stronger with each passing year and decade that humanity is unlikely to seriously reduce GHG emissions until we have caused severe disruption and damage to the earth's climate, water cycle, ecosystems and the human economy. B.C. says it is one region on Earth that is willing to take the threat seriously and to take strong action -to be truly different from all of our past governments. Its approach to shale gas thus far tells another story.
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