Tuesday, October 11, 2016

Canada's Pyrrhic Climate Victory

Early this autumn the Canadian government led by Liberal Prime Minister Justin Trudeau formally announced Canada's first nationwide carbon pricing. This is an important milestone in Canada's pursuit of a low carbon energy strategy.

Securing a carbon deal was no easy feat for the Canadian Prime Minister. When carbon pricing was first announced in a meeting with the provinces in Montreal, the environment ministers of Saskatchewan, Nova Scotia and Newfoundland, all walked out. However, even in these provinces, we are seeing serious emission reduction efforts take hold.

While many provinces already participate in some form of carbon pricing agreement, as of 2018 there will be a national carbon pricing plan. As agreed upon last March in Vancouver, Trudeau and the provinces worked out a carbon pricing agreement that can either involve carbon taxes or cap-and-trade. Any province that lacks adequate plans to reduce its GHGs will be taxed by the federal government. A portion of the money raised through the scheme will go towards clean energy.

Canada is far from the first country to come up with such a scheme, the UK, Denmark, Sweden, South Korea and Mexico all have national carbon pricing. The carbon price will begin at $10 a tonne in 2018 and will increase by $10 per year until 2022. However, a carbon tax of $50 a tonne is only one-quarter of the $200 a tonne that some suggest is necessary to enable Canada to make the transition to clean energy.

Trudeau's emissions reduction plans in the energy sector include efforts to reduce methane leaks from oil and gas extraction, phasing out coal-fired power generation and measures to encourage the adoption of clean-energy technology.

Changes to energy policy are necessary if Canada is to meet its emissions reduction target (30 percent below 2005 levels by 2030). Other federal initiatives could include ending the $3.3 billion in subsidies given to oil and gas sector each year. Trudeau could also implement a national requirement for zero emission vehicle sales, more investment in renewable energy and public transportation infrastructure.

Most Canadian support carbon pricing. An Environics Institute poll suggests that 61 percent support carbon pricing, while strong opposition has fallen from 28 percent to 17 percent.

Carbon pricing is a great incentive for businesses. The Bloomberg Editorial Board heralded the news in an article titled, "Canada Sets the Trend on Climate," They claim that Trudeau’s approach (a) signals to the world Canada is serious about meeting its Paris obligations, (b) shows that even a fossil-fuel producing jurisdiction can summon the will to tax carbon, and (c) is revenue neutral, not a tax grab.

Due to lower commodity prices the oil and gas industry continues to cut costs and shed jobs. Nonetheless, the Canadian economy is doing well, employment grew by the most in more than four years in September. Statistics Canada reports that the latest jobs numbers show the largest job increases since April 2012. This is more than three times what was predicted.

Everything is looking pretty good in Canada until you consider that on September 27th the federal government approved a $36-billion liquefied natural gas (LNG) project in British Columbia. The Pacific Northwest LNG export terminal will be one of the largest sources of carbon pollution in the country. The export terminal cancels out the benefits of the newly announced national carbon pricing plan.

The project would be built on Lelu Island near Prince Rupert, B.C., in the Great Bear Rainforest. If it is build it would ship 19 million tonnes a year of liquefied gas to markets in Asia. The more than five million tonnes of CO2 it would generate each year would make it one the largest single greenhouse gas emitters in Canada, according to the Canadian Environmental Assessment Agency.

Trudeau is being criticized for the "contradiction" inherent in announcing a national carbon pricing just after he approves the LNG terminal carbon bomb. The terminal will still have to meet stringent environmental assessment guidelines including 190 conditions and more consultations. It will also be the first project in Canada to cap emissions.

The math makes no sense. Even if the economics of the venture work out, the carbon budget does not. As Bill McKibben explains in the National Observer, Trudeau's action, "defies the unassailable arithmetic of climate change, a calculus that only gets stronger with each week of emerging science." We simply cannot afford to burn known oil and gas reserves and stay within 2 degrees Celsius of pre-industrial norms.

The terminal also contradicts the Prime Minister's promise to foster "nation-to-nation relations" with First Nations and honour the UN Declaration on the Rights of Indigenous Peoples. First nations fought hard to make the Great Bear Rainforest a conservation area and now they are preparing to launch a massive series of lawsuits against the government in the wake of the LNG decision.

Prime Minister Trudeau promised to make climate change a priority and so far it turns out he was half right.

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