The new federal carbon tax has ignited the political global-warming fires, right on queue for the federal election. First, a quick recap from my past articles. The latest IPCC report warned us only 12 years remain to cut global carbon emissions in half, on the path to zero-emissions in 30 years. This establishes the near-term boundary to transition from today’s carbon-energy economy. The outside boundary is about 50 years due to depletion of proven global “economically viable” oil and gas reserves. Led by China and India, global emissions rose 2.7 per cent in 2018, but likely much more due to significant discrepancies in China’s reported coal consumption.
The Liberal government’s climate-change plan demand-side features a small carbon tax and some energy saving incentives/subsidies. More concerning, their restrictive supply-side policies strangle our carbon-energy sector. Our economy will need this revenue stream to help fund the future energy transition. We have a highly motivated buyer, the USA – without secure Canadian oil (99% of our oil exports), they have just ten years of proven reserves remaining.
Now to debunk the political rhetoric:
- The carbon tax reduces emissions. The Liberal $20/ton tax ($50 by 2022) will have no meaningful impact on consumption behavior. To do so, the tax would need to be much higher. Worse, its costs are hidden, regressive, and ripple through the entire economy. My table below clearly shows Ontario, without a carbon tax, handily beat both BC and Quebec (each with carbon-pricing) on key metrics (assisted by nuclear and wind replacing coal). Even the USA managed an 13 per cent decline without a carbon tax. Global climate-leader Sweden, with a high carbon tax, is included for comparisons – they achieved a 29 per cent emissions decline in 10 years. It’s little surprise then that only 20 per cent of all countries (80 per cent European – geographically small, lacking carbon-energy sectors) have carbon-pricing, covering just 13 per cent of global emissions.
- PM Trudeau says: “Fighting climate change and growing the economy go hand-in-hand”. This totally ignores the scale of the coming transformation – replacing our carbon-energy system. The cost is never discussed, so the table below shows my ball-park estimates, built from recent US EIA and National Energy Board data. The electrical system capital cost for blended Scenario D, is approximately $3 trillion, excluding customer/business equipment replacement costs and business competitive losses (point four below). This builds a new smart electrical system with approximately four times the current electrical system capacity, removing >90% of emissions. For context, this capital cost is 1.5 times our entire economy GDP, almost tripling hydro rates and raising heating costs six-seven times (vs. natural gas today). Canada’s oil and gas sector’s 900,000 dependent jobs, $220B of GDP, and $182 Billion in Foreign Direct Investment cut in half, or more. This is risk cost. It will take many decades to complete with costs and impacts varying significantly by province. There is growth in the electrical and nuclear power sectors, but far from offsetting the costs – a serious energy supply-side strategy is long over-due.
- Renewable wind and solar energy ‘is the future’. In Canada (and globally) this energy represents approximately 1.5 per cent of all energy (electrical sector approximately 5 per cent). Its share is growing, but due to its highly intermittent nature, it’s much more expensive and is ‘grid-capped’, meaning beyond an approximately 20 per cent share (in Canada), very expensive power storage and extra capacity supply grows rapidly. Without substantial growth in Advanced Nuclear power, by 2040 carbon-sourced energy still provides over 70 per cent of our energy. Carbon capture and storage will help, but it is growing much too slowly.
- Real emission reductions are required from developed countries – only. Rapid growth in developing countries, led by China and India, doubles global GDP by 2040 (80 per cent from approximately 2.5 billion people joining the middle-class), growing energy demand 32 per cent. They made only weak commitments to lower emission intensity (to GDP) not actual emissions, meaning emissions rise regardless of developed countries’ actions. Getting an emissions-reduction pass further disadvantages our manufacturing sector, already hollowed-out over the last 20 years. It is naïve to expect them to follow our “lead”, voluntarily prioritizing emission reductions over economic/middle-class growth. What geniuses negotiated this deal? Perhaps fear of running out of affordable oil and gas (sooner) will have more success?
- Immigration’s impact on climate change – only government silence. Canada takes in approximately 360,000 immigrants per year ( about 1 per cent of the population, excluding temporary workers), driving >80% of our population growth. Here’s the problem: most come from countries with 1/4 our carbon intensity/capita. Maintaining the planned 1.1 per cent immigration rate, adds another 6 million to Canada’s population (up 16 per cent) by 2030. This adds to global emissions and at our current intensity improvement rate, 87 MTCO2E more to Canada’s 2030 emissions target gap. For context, that’s more than the emissions from all our passenger vehicles today. Is this wise?
I understand these are tough messages, but Canadians need to understand the truth if we are to take meaningful actions and avoid catastrophic blunders. Trudeau’s plans create the illusion of fighting climate-change – buzz words and minimalist actions to acquiesce/fool the people – while weakening Canada’s economy in the process. Let’s see if the other political parties have better plans.
Dave Wilkin, Masters, Electrical Engineering, P. Eng.
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