The Storyline That Does Not Add Up

Contributed by Robert Lyman©2017

Robert Lyman is an Ottawa energy policy consultant, former public servant of 27 years and prior to that he was a diplomat for 10 years.

From time to time Environment and Climate Change Canada (ECCC) publishes updated statistics on greenhouse gas (GHG) emissions in Canada. The most recent report includes the data for 2015, as well as some historical figures going back to 1990, the base year for many of the emissions reduction targets that have been set by the federal and provincial governments.

The federal government’s basic “storyline”, or policy rationale, to justify the targets is that the emissions reductions can be achieved at modest costs and without wrenching changes to living standards or the availability of energy services that citizens demand. The targets are set in relation to different baselines; some use 1990, some 2005, and some 2010, but they all entail emissions reductions of significantly increasing impact as time goes on. Thus, the federal government aims to achieve a 17% reduction from 2005 levels by 2020 and a 30% reduction from 2005 levels by 2050, while various provinces, including Ontario and Quebec, have more ambitious short-term reduction targets and targets for 2050 that involve reductions varying from 80% to 95% below 1990 levels.

What would it actually mean, in numerical terms, if these targets were met?

According to ECCC statistics, Canada’s GHG emissions were 611 megatonnes of carbon dioxide equivalent (Mt) in 1990. They rose to 638 Mt in 2005 and 722 Mt in 2015. The emission reduction goals are therefore 530 Mt by 2020, 447 Mt by 2030 and (using the 80% reduction target) 122 Mt by 2050.

Progressively more stringent targets have been set since 1990. In view of this, one might have expected that Canada’s emissions would have declined steadily from 1990 to the present. In fact, emissions rose steadily from 1990 to 2000, declined slightly in 2001 and 2002 and then rose again, peaking in 2007 before the worldwide financial crisis.  With the significant reduction in economic activity following the crisis, emissions declined to 2009, after which they have risen slightly or stayed roughly stable. The following graph shows greenhouse gas emissions by Canadian economic sector from 1990 to 2015.

Source: Environment and Climate Change Canada

Note how the sectorial composition of emissions has changed over the period. Emissions from oil and gas have risen steadily, both in total and comparative terms, and are now the largest sector source. From 1990 to 2015, crude oil production more than doubled. Transportation emissions have also generally risen, rising 42% from 1990 to 2015, and constitute the second largest source. Emissions from buildings, agriculture and waste have remained essentially flat. The largest emissions reductions have occurred in electricity (from a peak of 128 Mt in 2001 to 79 Mt in 2015, a 38% reduction) and in heavy industry (from a peak of 102 Mt in 1996 to 75 Mt in 2015, a 26% reduction.

The following table shows the most recent sectorial breakdown.

Canada’s GHG Emissions by Sector in 2015

To attain the 2020 target of 530 Mt, emissions would have to decline by 192 Mt from 722 Mt in 2015, an average of 38.4 Mt per year. The only years since 1990 when emissions dropped by anything comparable to that was during the worldwide economic crisis period 2007-2009, when emissions declined by 61 Mt, or an average of 30.5 Mt per year. We would need to have a far more serious economic crisis extending from 2015 to 2020 to place us on the path to meeting the 2020 target. Fortunately, this is not happening.

Looking further out to the 2030 target of 447 Mt, this would require a reduction of 275 Mt, or an average of 18.3 Mt per year from 2015. Apart from the worst recession years, that has not happened in the past.

In the absence of a prolonged recession, from where might emission reductions of that magnitude come? Let us examine the possibilities.

Due to policies adopted in Ontario, Nova Scotia and Alberta, there has been a sharp reduction in coal-fired electricity generation. Consequently, emissions from coal declined from a peak of 106.4 Mt in 2000 to 61 Mt in 2015. If policies remain the same, as seems likely, and all remaining coal–fired generation is phased out by 2030, that would eliminate the remaining 61 Mt.  Such a change may be partially offset by an increase in natural gas-fired generation needed to provide the backup capacity for intermittent solar and wind energy power generation.  However, a net reduction in electricity emissions of 50 Mt is certainly possible by 2030.

No doubt, environmental groups will make every effort to prevent any growth in oil and natural production and exports, and they will continue to urge that industry “leave it in the ground”. Eliminating absolutely all oil and natural gas production in Canada, if that were possible, would subtract 2015’s 189.5 Mt. Added to the 50 Mt net reduction from electricity generation would reduce emissions by 239.5 Mt, and take us 87% of the way to the 2030 target, leaving only 35.5 Mt to reduce in other sectors. This would not be well received in Alberta, Saskatchewan, Nova Scotia or Newfoundland and Labrador. In fact, of course, it is highly unlikely that federal or provincial governments would impose such draconian controls on production and pipeline movement. More likely, with increasing production resulting from past investments, it seems that oil and gas emissions will grow, not decline. That would mean that about 225 Mt (275-50) in reductions would have to be found in the others sectors.

The other sectors include transportation, buildings, heavy industry, agriculture, and waste. They produced a collective 453.6 Mt in emissions in 2015. If one were to reduce emissions proportionately across all of them, it would mean cutting emissions in each sector almost in half. That would certainly spread the pain around, but the opportunities for reductions are not equally distributed.

Alternatively, governments could focus their efforts almost entirely on reducing emissions from transportation. Many people think that transportation-related GHG emissions come almost entirely from passenger transportation in cars and light duty trucks. In fact, the total of these two categories in 2015 was 83 Mt, less than half of the transportation total. So one could eliminate every single car, SUV and pick up truck in Canada, and you would only cut Canada’s emissions by 11.5%. The fastest growing component of transportation emissions are freight trucks, which tripled from 1990 to 2015 and produced 63.2 Mt in 2015. The trends in freight transportation are closely tied to the overall level of economic activity and trade. Passenger and freight transportation by aviation, rail, bus, marine vessel or motorcycle added another 20.3 MT, and there were “other” sources (presumably off-road vehicles) that produced 6.4 Mt.

Despite the dreams of some, it would not be remotely possible to electrify a substantial portion of the transportation system by 2030, and people will still insist on moving regardless of how high the carbon taxes and fees become. So the chances of completely eliminating the 173 Mt of emissions from transportation by 2030 are, in practical terms, nil. Even if one could, it would still leave Canada 52 Mt short of the target.

Every other combination of ways to achieve a 225 Mt emissions reduction by 2030 presents enormous quandaries. How about shutting down all heavy industry (auto and parts plants, refineries, mines and smelters, petrochemical plants, cement, aluminum and steel plants, etc.)? If one did that, and eliminated all emissions from agriculture, that would reduce emissions by 147.4 Mt, leaving only 77.6 Mt to be eliminated from transportation. Of course, the employment, income and population effects would be severe.

The reality is that there are no options that are technically and economically feasible, and likely to be politically acceptable to the Canadian public. This does not even take into account the likelihood that Canada’s economy and population will grow between now and 2030, thus stimulating higher emissions.

If the 2030 target presents difficult, perhaps impossible choices, how can we really believe that, in 32 years, Canada will be able to reduce emissions to 122 megatonnes? The numbers just do not add up.