This is a guest commentary by Dave Wilkin.
The battle over the April 1 Carbon Tax hike has heated up –It’s Trudeau’s “Taxing Pollution” vs. Poilievre’s “Axe the Tax”. It appears the government has lost this round, as most Canadians and provincial leaders (including Liberals) now oppose it. Fighting climate change has taken a back seat to the cost of living, housing affordability and healthcare concerns. Other climate change regulations, including rising federal fuel taxes, emission caps, EV purchase mandates, and zero emission grids by 2035, are drawing concerns, similar to the Parliamentary Budget Officer’s carbon tax study’s long-term economic impact findings.
Let’s turn now to the bigger global energy picture for some insights, drawing largely from the Energy Institute’s 2023 Statistical Review of World Energy.
First, to reach net-zero emissions by 2050 is a massive undertaking, with huge uncertainties. McKinsey & Company, a global consulting leader, estimates the global cost at about $275 trillion US for energy/land-use system physical assets (2021-2050). That’s $9.2 trillion annually, about 7.5 percent of global GDP (70 percent for new/reallocated spending from high to low-emission assets). The cost distribution is disproportionate: About 6 percent for OECD (wealthy) countries, but 2-3 times that for most Non-OECD (mostly developing) countries. It’s front-loaded and progress lags, likely pushing it closer to 10 percent by 2030. For Canada, that’s roughly $130 billion Cdn. annually, similar to other estimates, including my own. Current spending is a fraction of these amounts.
Next, on primary energy, we find consumption grew 31 percent globally from 2005-2022. But again, imbalances: Non-OECD countries were up almost 70 percent with energy per capita half of that, while OECD countries were mostly flat (per capita it fell 12 percent). For comparison, Canada’s energy consumption grew 4 percent while per capita, it fell 13 percent. On the energy mix, fossil fuels share is about 82 percent both globally and in the US, the EU is 71 percent, and Canada, 64 percent.
Examining global proven fuel reserves, we see both oil and gas will last around 50 years at current production levels (RP ratio), but for OECD country reserves, it’s 25 and 14 years respectively. Canada holds over 70 percent of OECD oil reserves (RP: 89 years), the US about 20 percent (RP: 11 years) and the EU has almost none. Non-OECD countries’ RP ratios for all fossil fuels are over 67 years. Note that proven oil & gas reserves continue to rise globally.
Global CO2 energy-related emissions continue to rise, driven by non-OECD countries, whose emissions have grown by 50 percent since 2005 to a 68 percent global share in 2022. China and India drove half of that growth. Over the same period, EU emissions fell by a quarter, the US down 18 percent, and Canada down 3 percent. Our global emissions share fell to 1.5 percent.
Lastly, 49 countries have national carbon pricing, covering roughly 10 percent of global emissions. The majority are in the EU, where average pricing is around $90 US/ton and energy costs are about 2 to 4+ times higher than in Canada. Another 40 countries have subnational pricing, covering another 13 percent of global emissions. Notably, of the major Asian exporting countries, only South Korea ($11/ton) and Japan ($2/ton) have national carbon pricing. The US doesn’t.
Given the above, here are key implications and takeaways:
- High carbon taxes and heavy fossil fuel regulations disproportionally impact poorer countries and the less well-off among wealthy ones. They weaken economies and make exports less competitive. Affordable energy is a necessity, not a luxury.
- The impact of the very high net-zero transition costs constrains other government spending priorities, pushes up debt, and fuels inflation. It does bring significant opportunities in clean energy sectors and transportation, but insufficient to offset the high transition costs.
- Without significant increases in transfers from wealthy countries, developing countries will fail to lower emissions. They will continue to tap significant non-OECD fossil fuel reserves to fuel much of their growth.
- Energy-insecure wealthy countries remain highly motivated to transition from fossil fuels, thus their push for high carbon pricing, heavy regulations, and renewables. However, increasing uncertainty/disruptions in global energy markets, and lagging transition progress means Canada’s significant mineral resources and oil & gas reserves will become increasingly relevant to them.
- Population growth, a large natural resource sector, and a big cold country drive Canadian energy consumption higher.
- Climate impacts and their costs are rising. Climate resiliency investments are crucial but sadly lacking.
In closing, here’s some advice for the next federal government:
- Set realistic, achievable targets and hit them.
- Plan thoroughly, in collaboration with provinces/territories/businesses, considering all impacts/trade-offs, with full costing.
- Leverage Canadian advantages: abundant resources (including oil and gas), and nuclear technology.
- Communicate clearly, consistently, and honestly.
- Make adjustments when things change.
Here’s hoping they will listen to the people.
Dave Wilkin is a Professional Engineer, with a master’s degree in Electrical Engineering from the University of Toronto. His career spans over 40 years in Information Technology, banking, energy, and consulting. A former resident of Huntsville, Ontario, he now lives in Burlington but still spends time at his Huntsville area cottage.
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Hear! Hear! Mr. Stinson. One doesn’t look to Provincial or Federal Conservatives to actually preserve and conserve the environment. Lately, their party platforms do not attract talented candidates who wish to plan and make a diference.
Sooooo tired of the ‘axe the tax’ rhetoric (a single-pitch ball game, a bit like the ‘buck-a-beer’ cheer). Carbon tax is a more adult way to deal with climate change – the costs are going to be there in dealing with this reality, one way or another. We have been called to open our eyes and realize – No, it is Not just called ‘weather’.
PS there is a carbon tax rebate- we have received ours for just over $800.
Hands up all those who think the powers that be, the leadership, or the proposed leadership of this Canada of ours, has any idea as to what in hell they are doing. We are supposed to be able to see a reason to have faith in our leaders, but I tell you, they leave me wondering. One group has a thought and the rest pass it off as gas. Some don’t even think, fearing ridicule.
The feds have a plan which economists seem to think will work some, or maybe just a little for us here at home. Then someone mentions that the problem lies in the lap of the Chinese. Could be. But could we contribute to your trip there. Explain how you feel. Be firm. Explain that they better clean up their act. Or else!! See how that works for you. We await the results.
So few vote nowadays that we can’t say if there are many who agree with the Liberal carbon reduction attempt, and who knows what the PC plan is! There could be one, possibly being held in abeyance ’til after the election. As a pleasant surprise? Or to not prematurely induce laughter. Who can say. Could be a PC epiphany.
Brian Tapley points out that there doesn’t seem to be any type of grass roots program to help or allow common people to contribute. It’s always big pie in the sky crap that few of us can take part in.
Our own Premier seems to be organizing the herd for an all out revolt. He can be counted on for sure! Not when it comes to treating workers fairly, or building homes or presenting himself truthfully. Like spouting off to farmers against the gas tax. How it is robbing them of their lively hood, after he took his best shot at paving their land over. With highways and single family dwellings. But for fomenting revolt against a plan while not having a plan himself. He’s our huckleberry.
He’s in full voice now and rolling. Once the herd is gathered, perhaps as he says it will end these Liberal days. I won’t feel any better about “Axe the Tax” being in charge. I do worry about stampedes and cliffs.
Our politicians are so uninspired and short-sighted. Being ‘in power’ is paramount. Whether they achieve anything or not is not important. I wonder if our form of democracy can deliver us a future.
Although people in Muskoka talk about the need to stop climate change it is quite apparent that no own really cares. We have elected a MP and a MPP from parties that don’t support curbing green house gases unless it doesn’t cost anything. With no climate change action plan the Conservatives will guarantee that Canada fails in our obligation to reduce green house emissions and we will be lumped in with China, as part of the problem not part of the solution.
Just ask the people affected by floods, fires, and other disasters on account of carbon emissions. It’s very expensive and life altering.
The final notes leave me to believe that there are no likely political solutions to the mess we have made and are leaving for the next generations. Luckily, there are individuals and communities of people who will work together to keep trying to find specific actions and technology to solve the puzzle and maybe the next ten years will not be a business as usual, doom party, reminiscing about the good old days of the fossil fuel era.
A few final thoughts.
Trudeau’s carbon tax is designed to change behavior/encourage green purchases like EVs
& heatpumps, but there is little evidence that it does. Canadian families are struggling, few have the means for the large up-front costs, or to make big lifestyle changes. Those who can, do, regarless of carbon rebates. Witness the EV early adopter wave that has crested.
The Federal government should focus on helping families directly, encouraging businesses to invest to become more productive/efficient and assisting Provincial governments with the enormous investments faced to triple the size of power grids and to improve infrastructure resiliency generally.
As for the projected large spinoff benefits, they are overstated. A renewables-based energy system that replaces today’s fossil fuel system is highly capital intensive, more complex, less resilent and more costly to maintain. Much of it would be manufactured offshore and built by public sector utilities, not the private sector. That’s a hard reality.
As pointed out, the countries with high carbon pricing are the wealthy ones in Europe where energy security remains top priority. In developing countries, it’s economic growth and poverty reduction, both of which require lots of affordable energy.
So, the energy transition is going to extend far beyond 2050. Trudeau’s fixation on unrealistic targets will undermine Canadian prosperity while doing nothing to address the big global challenges.
Drama Queens Poilievre and Dani Smith are screaming about a measly 3.2 cents a litre when gas varies more than that every week.
PP called it unaffordable and tried to force a non-confidence vote and Dani even called it “Inhumane.” LOL.
While both ignored the fact the carbon tax rebate went up a matching amount so it makes no difference at all.
In fact gas is down FAR more than the total carbon tax of 17 cents per litre from the $2 peak last year.
It seems many people still don’t understand the point of the tax and the rebate.
The most effective and least expensive way to lower emissions.
To read the report from 200+ economists go to:
ecofiscal /2024/03/26/open-letter-ca.
Funny how “Scott Moe says Saskatchewan considered carbon tax alternatives, but found them too costly”
Search and watch the video “Saskatchewan softens tone in carbon tax battle with Ottawa.”
So Moe found out from the feds that his plan is “illegal and likely to cost residents more money by cutting off the federal carbon tax rebate.”
Doing nothing about climate change is extremely expensive and responsible for a big part of inflation.
“From chocolate to home insurance, climate change is making life more expensive.”
To see the PBO say most Canadians are better off with the rebate and how the tax and rebate works watch the video:
“Carbon tax crash course: How it works and what it will cost you”
Some people still get hung up on whether or not you get more back with the rebate than you pay in the tax without making any changes.
That’s not the point.
The point of the tax and rebate is to encourage you to switch to low carbon energy without penalizing those who don’t/can’t.
ALL incomes get FAR more back with the rebate if they go EV and heat pump.
That’s the point.
Avoid the tax and still get the big rebate.
Up to $2160/year for a family of 4 in rural AB.
The rebate pays the entire yearly cost of “fuel” for an EV (FREE “fuel” courtesy of the gas burners), road tax if any and helps to pay off the EV and heat pump.
On top of $12K total EV purchase rebates in PQ for example. On top of $11K total heat pump rebates in BC for example.
Heat pumps are FREE in Ontario if you switch from electric heating and have low income.
After rebates EVs and heat pumps can cost less than comparable GHG spewing versions.
So the gas tank is heading for empty and the pollution is heading for hotter weather and it all is to come about in the next 50 years.
What does the government actually do with the carbon tax collected?
I get a small payment periodically, seemingly sort of at random, with no explanation of how it was arrived at or what I might be expected to do with it. To be honest the amount I get would not cover a coffee fund, even at Mac’s golden arches prices, forget Starbucks.
Meanwhile, I would absolutely love to help our environment. I’d love to do it by installing more solar panels, maybe some windmill, efficient heat pumps in my buildings or something like it BUT I GET NO HELP FROM THE GOVERNMENT with these simple and technically practical items that already exist.
No they push electric cars and garden tools. The former are not practical for me, being built in the form of the highest end luxury vehicles, none of which are the least bit practical for my needs. Things like lawn mowers, really? Does anyone anywhere actually think a few electric lawn mowers will make a measurable difference to the world we actually live in. What mushroom ate these folks chewing on?
Where are the solid and reputable businesses that can come and help me install more solar?
Where are the rate packages for such solar that make it an economic feasibility?
Same for heat pumps.
Same for electric vehicles. 100,000 dollars for a 4 seat car that cannot make it to Buffalo and back without sitting at some charge station (which does not exist or is already in use) for hours.
Can someone in government actually open the door, look outside and see the real world that small business has to live in inside Ontario, and I’m sure all of Canada? If you can’t do this and make it “productive and economic” for these businesses to try to make an order of magnitude change to their operations after over 100 years of tradition and current development you guys (Liberal, NDP, Conservative or whatever) are FAILING IN YOUR JOB.
Where is this information? Why is it only singular individuals that are writing comments like in Doppler? Where is the comprehensive, well explained and above all practical advice from our absent leaders?
Trudeau is feeding school children, I don’t know what the NDP is up to, the green party is so small as to be irrelevant and the conservatives are nuts. The USA is far worse and I don’t really think the environment is high on Russia or the Ukraine’s list of goals at the moment. We need better. A lot better!
Dave Wilkin: Do you believe that any of our parties could adopt or adhere to your advice?
Set targets. They are history a day after the election. They’d have to be real easy to hit or all interest would be lost.
Plan thoroughly. That would mean you need to consider other opinions. Fat chance.
Leverage Canadian largess. We sell. We don’t develop.
Honesty! Honestly?
Adjust. Can’t remember the plan.
We get a statement from the Premier of Alberta. That the carbon tax “will ruin countless lives, futures, dreams.” How in the luva can the lady know that? And from Pete we get “Axe the tax.” “Spike the hike.” Sound bites. Plan may be forthcoming. But the Liberals said I would get a check from this carbon tax.
Local economists seem to agree it is a viable way of our reducing the dependence on fossil fuels. But economics is measured differently in countries such as China and India.
I’ve paid tax on a lot of things. Whisky and beer. Never got a check back from the LCBO or the Beer store. Road tax on fuels. Not one check from the DHO or the M of T and C or the MTO. Nor from Petro-Can (oops. Suncor. Something else we sold). Taxes on cigarettes and tobacco, back when a lot of us were into the fags. Never got a check from any of the tobacco companies nor from the government as an incentive to quit smoking.
So I think there will be an argument as to what works, right up to the point you can write your name in the smog around you. Then there will still be some Einstein who will question your spelling.
I have no real way of knowing what will work to save this little green planet. I’m pretty sure a lot of our politicians have no more idea than me. But Trudeau said he would, and did, send me a check. Whether this tax will help a little or a lot???
And though some may see this as entirely mercenary. Eleven hundred dollars. Yay!
Nine times a day, Wyoming coal trains a mile long dump coal at Roberts Bank BC for shipping to China. I have seen both ends. This climate change ideology is killing the Canadian economy meanwhile China is building a coal plant weekly!
Get over it, climate change is called weather!
Dave thanks for taking the time to write your article, I found it very interesting . There is definitely a balance between taking action on climate versus the impacts on the economy and families’ affordability. Unfortunately in many counties having electricity and heat for making food for your family trumps their focus on climate and is a luxury. I wish the gov’t would just be honest with folks and a tax is a cost (taxes increase costs:full stop) and this rebate process just wastes money (not a transparent way for the objective of taxing pollution). I see valid points on both sides so thanks for your commentary.
Dave, you are either misunderstanding or misquoting the global McKinsey report. It says 1. The cost of inaction will far exceed the cost of action. 2. The required NET increase in global spending to reach net-zero by 2050 would be about $1 trillion annually. 3. Canada’s share is about $28 B per year / 40,000,000 = $692 per capita. (About the same as a ticket to a Leaf game or half the price of a Taylor Swift ticket) 4. “Insured climate related losses in Canada now routinely exceed $2 billion annually. 5. Uninsured climate-related losses are much higher.
What news do you watch? Just this weekend, coastal areas in Newfoundland and California experienced yet more infrastructure-wrecking rainfalls from atmospheric rivers, and inland Quebec has its earliest wildfire on record. By 2040, climate-related losses are projected to increase by as much as 120%.
Data from countries that have a refundable carbon tax clearly shows the tax has zero negative impacts on productivity or GDP or happiness. Better to axe Poilievre’s regressive “Axe the tax campaign”.
The most recent poll says most Canadians believe the energy transition will be challenging but necessary and want solutions to support them through it (which Ottawa is already providing). But you will never see that in the far-right Sun Media or Conrad Black’s National Post.
Over the last 5 years Cdn CO2 reduction. equals less than 5,000,000 tons / year.
Over the last 6 years Chinese CO2 production has increased by. 520,000 tons / day.
Every 9 days , China replaces everything Canada takes out in one year.
And Canada helps
We export 36 million tons of ( partly American Tran-shipped ) coal from Vancouver to China every year.
When burned , that creates 100,000,000 tons of CO2.
But then at 400 PPM of CO2 in the atmosphere. ( = 4 molecules of CO2 for every 10,000 nitrogen and oxygen )
another molecule of CO2 has no effect on our climate. Check out. ” Climate , the movie ” ,
Germany, Japan and now Greece, three of our long time allies that have all come to Canada asking if they can buy our LNG product, thereby reducing their reliance on energy from totalitatian regimes, and bringing much needed revenue into this country to help improve our wrecked economy. Unfortunately all three of these countries went about their pitch the wrong way. The proper way would be to shovel millions of dollars in bribes into the Trudeau Foundation slush fund, so that it could make it’s way into the pockets of Trudeau and his family, his friends, and the Liberal party. These leaders should’ve called Xi Jinping first so that he could explain to them how it’s done