Study underscores Canada’s difficult choice on climate

Sept. 8, 2017
Canadians soon must confront the incendiary question of climate-change politics: How much sacrifice will people make in pursuit of doubtful benefit?

Canadians soon must confront the incendiary question of climate-change politics: How much sacrifice will people make in pursuit of doubtful benefit?

Their federal government wants to cut nationwide emissions of greenhouse gases (GHGs) by 30% from a 2005 baseline by 2030.

The central strategy, “carbon pricing,” will be expensive but insufficient, warns a study by the Conference Board of Canada and the Canadian Academy of Engineering.

Ottawa has prescribed a system of levies on fossil fuels and industrial emissions starting at $10/tonne of carbon dioxide-equivalent in 2018 and rising to $50/tonne in 2022. It wants provinces to implement that program or equivalent alternatives.

In 2022 the government will review progress to determine, it says, “the path forward”—by how much more to tax CO2, in other words.

Assuming governments use carbon-related revenue to cut taxes and increase spending and investment, the study says rising carbon taxes won’t hurt the economy much.

But a carbon tax continuing to climb by $10/tonne/year would reach $80/tonne in 2025, when the annual cost to the average Canadian household would be nearly $2,000/year, thanks mostly to higher prices of natural gas, gasoline, and electricity.

With a $200/tonne levy in 2025, the final consumer price of natural gas might increase by 60%, yet GHG emissions outside power generation would fall by only 1.5%.

Investment needed to achieve targeted GHG cuts, meanwhile, would amount to half the current rate of nonresidential business outlay, displacing spending elsewhere.

And GHG emissions, the study concludes, still would exceed targets.

“Simply pricing carbon and moving away from fossil fuels are insufficient measures to achieve deep GHG emission reductions,” says Louis Theriault, the Conference Board’s vice-president, industry strategy and public policy. Technical innovation will help but “can’t get us to the 2030 target given the relatively short window available to develop and adopt these solutions.”

Governments, it seems, must further raise energy costs and hurt consumers or moderate GHG ambitions and inflame environmentalists.

Canadian politicians have no more middle ground.

(From the subscription area of www.ogj.com, posted Sept. 8, 2017; author’s e-mail: [email protected])