The IMF has highlighted climate change as one of the biggest challenges facing the global economy.
By David Crane - The Hill Times
TORONTO—The Harper government's conditional approval of the Northern Gateway pipeline raises with greater urgency the question of how it plans to meet Canada's international promise to reduce greenhouse gas emissions to 17 per cent below 2005 levels by 2020—let alone meet even tougher commitments from 2020 onwards at the crucial global summit on climate change next year.
Right now we are far from meeting our international pledge, and there is little indication that the Harper government is even trying to honour its commitment. In his recent love-in with visiting Australian Prime Minister Tony Abbott, Prime Minister Stephen Harper congratulated Abbott for cancelling his country's "job-killing carbon tax" and seemed ready to join Abbott in his campaign to build a conservative alliance against U.S. President Barack Obama's campaign to raise climate change on the global agenda, including any form of carbon pricing.
Moreover, Harper is publicly rejecting calls from the U.S. to be more active on climate change, even though this would make it easier for Obama to approve the Keystone pipeline. In his fi rst speech as the new U.S. ambassador to Canada, Bruce Heyman highlighted the need for Canada to do more.
"We need to continue that work together moving toward a low-carbon future, with alternative energy choices, with greater energy efficiency, and sustainable extraction of our oil and gas reserves," he said, repeating a call that had been made earlier by his predecessor, David Jacobson. But Harper is having none of it, indicating that nothing would be done that had any effect on jobs, ignoring the fact that the shift to a lowcarbon economy also creates jobs.
At the same time that Harper was dismissing U.S. calls for action, Christine Lagarde, the managing director of the International Monetary Fund, was in Montreal calling on Canada to do something about carbon pricing, either a carbon tax or a cap-and-trade system. The IMF has highlighted climate change as one of the biggest challenges facing the global economy. "Free markets yes, but at the right price," Lagarde said, praising BritishColumbia for its carbon tax. The pricing of oil had to include its environmental costs, she said.
In its recent report on the Canadian economy, the Organization for Economic Cooperation and Development noted that for Canada "environmental sustainability and meeting international targets for reducing greenhouse gas (GHG) emissions remain challenges," with oil-sands production representing the fastestgrowing source of emissions. And while the federal government has rejected carbon pricing in favour of sector-specific regulatory approach it "has not yet released regulations for the oil and gas sector." It has, in fact, missed many promised deadlines for doing so and now seems to have abandoned the effort altogether.
Likewise, the report was critical of the Alberta government. "While the province of Alberta put a price on emissions in 2007, it has been too low to induce signifi cant investments in abatement technologies," the OECD said. It also suggested that royalties for oil and gas development were comparatively low compared to other countries. Indeed, "given generally low taxes on energy use nationwide, Canada effectively targets carbon at one of the lowest rates in the OECD," it says.
With massive expansion of the oilsands underway, and major efforts by the Harper government to sharply boost exports, it seems the Harper government will do little in moving Canada to a lowcarbon economy. The challenge is compounded by Finance Minister Joe Oliver's shrill and at times hysterical claim that Canada's future is tied to oilsands development, with no alternative economic strategy possible.
"Head down the path of economic decline, higher unemployment, limited funds for social programmes like health care, continuing deficits and growing debt, or achieve prosperity and security now and for future generations through the responsible development of our resources," he said recently in what is his recurring theme. But "responsible development" does not seem to include dealing credibly with greenhouse gas emissions.
The oil and gas industry has accounted for two-thirds of the increase in Canada's greenhouse gas emissions since 1990, the OECD report said. In 1990, the oil and gas industry emitted 101 million tonnes of carbon dioxide equivalent; by 2005 this had climbed to 159 million tonnes, and by 2012, 173 million tonnes. Oilsands production in Alberta is projected to push oil and gas industry emissions 23 per cent higher by 2020, compared to 2005, "completely offsetting improvements in the electricity sector through the phasing out of coalfi red power generation."
Thanks mainly to Ontario's decision to halt the use of coal in electricity generation, emissions from the electricity sector in Canada declined from 121 million tonnes in 2005 to 86 million tonnes in 2012, but this has been offset by emissions increases by the oil and gas industry. There's another reason as well for not betting Canada's future on one commodity, namely oil. The warning is contained in the IEA's recent medium-term oil market outlook.
"The world's appetite for oil continues to increase, but a combination of high oil prices, environmental concerns, technology advances and other factors signal that oil demand, like supply, may be going through process of transformation," it said. "An inflexion point will likely be reached in the second half of this decade after which fuel-switching away from oil and conservation measures will likely blunt the demand impact of economic and population growth, causing oil consumption growth to decelerate."
At the same time, supply could soar, with the expansion of shale oil and light tight oil resources around the world, as more nations seeks to replicate "the U.S. success story." U.S. shale and tight oil resources may account for just 15 per cent of the world's total.
This is no time for Canada to put too many of its economic eggs in one basket, for environmental and economic reasons. A well-diversifi ed and low-carbon economy make more sense.
David Crane can be reached at
The Hill Times