Contributed by Robert Lyman 2020. Lyman’s bio can be read here.
Canada’s Energy and Emissions Outlook to 2030
About one month ago, to very little media notice, the Canadian government released its Eighth National Communication and Fourth Biennial Report to the United Nations Framework Convention on Climate Change. This is the most recent in a series of progress reports on how Canada is performing in terms of reducing greenhouse gas (GHG) emissions. The national policy framework for this is the Pan-Canadian Framework on Clean Growth and Climate Change, agreed to by the federal, provincial and territorial governments in December 2016. The report can be seen here:
The report describes both Canada’s progress in reducing GHG emissions in the past and the prospects for further reductions in the period to 2030. The present target is to reduce emissions by 30% below 2005 levels by 2030. As emissions were 730 megatonnes of carbon dioxide equivalent (MtCO2e, or MT for short) in 2005, the target for 2030 is now 511 MT.
The following are points of interest in the report.
In December, 2019, the Government of Canada announced that it will set a target to achieve “net-zero” emissions by 2050. No one has yet satisfactorily explained what “net-zero” means. However, “this will include legally-binding, five-year emission reduction milestones based on the advice of experts and consultations with Canadians.“ Although there have been no such consultations yet, the government has made a specific commitment to plant 2 billion trees “in the coming years”.
Over the 2005 to 2017 period, annual emissions decreased by 15 MT, or 2%. So, emissions declined at the annual average rate of 1.25 MT per year. Emission decreases occurred in the electricity, heavy industry, and “waste and others” sectors, but increased in the oil and gas and transportation sectors.
Projections of future emissions are done under two scenarios, “with measures” (WM) and “with additional measures” (WAM). The WM scenario includes actions taken by governments, consumers and businesses over the period up to September 2019, excluding those that are “still under development”. The WAM scenario accounts for the effects of the additional policies and measures that are under development but have not yet been fully implemented. The WAM scenario is the one in which the government intends to really, seriously, without question get tough on Canadians so we will reduce emissions. You won’t like getting WAMed.
The WAM Scenario
Under the WAM scenario, to my surprise ECCC foresees emissions in the oil and gas sector actually rising slightly, as do emissions in heavy industry and agriculture. Further, emissions in the “waste and others” sector stay the same. The hammer of forced emission reductions falls heaviest on electricity (where the government has decided to shut down every coal-fired power plant in the country), transportation and buildings. The scenario even takes into account the “credits” that Canada will receive when Quebec-based firms pay millions of dollars to firms in California to pay for emissions achieved there under the Quebec-California cap-and-trade system.
After being WAMed, the oil and gas sector still will have higher emissions in 2030 than it does today? This is surprising, but it is not all good news for Canada’s petroleum industry. If one looks at the details as to how ECCC projects emissions to change, it becomes clear that emissions from conventional oil are projected to decline by 4 MT, with no new frontier oil emissions at all. One wonders whether Newfoundlanders, hopeful for the discovery and development of more offshore oilfields, will get the message. Oil sands-related emissions are actually projected to increase by 29 MT. The really bad news for the industry is that emissions from natural gas production are projected to decline by 24% from 50 MT to 38 MT. What should one read into that about the future for any new LNG projects?
The projected emission declines in transportation (24 MT) would come almost entirely from cars, light trucks and motorcycles. There are several policies and programs that target this sector, notably the carbon dioxide tax, the much more stringent regulations governing light duty vehicle emissions, and the large subsidies being provided to electric vehicles and mass transit systems. The regulations will no doubt have an impact, but Canadians have to date shown a remarkable tendency to stick with their personal cars, SUVs and pickup trucks, so one should probably view such a projection with some skepticism.
Emissions from buildings are projected to decline by 27% (from 85 MT to 62 MT) by 2030, even while the population continues to rise. It is possible that the cost of ever-rising carbon dioxide taxes may make home heating fuels far more expensive, but nothing in the WAM package of measures will make Canada’s weather change, so residences, industry and commercial buildings will still need to be heated and air-conditioned. The government plans to introduce new “net-zero” building codes that could increase the cost of a new house by $100,000 to $150,000 per unit, but that, if accepted by all the provinces, would not likely take place until 2030. So, one is left wondering how exactly homeowners and others will be WAMed into cutting energy use so much.
Under the WAM scenario, emissions in 2030 would decline to 588 Mt (including the “LULUCF”, or agriculture, forestry and land use, factor and the Western Climate Initiative allowances from California). This is 142 MT, or 19%, below 2005 levels. It also means that the annual average emissions reduction would be almost eight times higher than Canadians experienced from 2005 to 2017, during a period that included the worst recession since the Great Depression.
This will leave only 77 MT in additional emissions to be attained by 2030 to meet the 511 MT target. The government has not yet stated which measures it will employ to close that “gap”.
Previous reports to the U.N. have provided quite comprehensive lists of the many federal, provincial and territorial government regulations, subsidies, programs and tax measures that have been used to promote climate change mitigation and adaptation. The current report, in contrast, focuses only on the major regulations and program measures. Thus, it lists and gives brief descriptions of 66 federal government measures, 23 of which are cross-cutting in their impacts on sectors, and 43 of which are sector-specific. Similarly, the report lists and briefly describes 171 provincial and territorial government measures, most of which are sector-specific. It would be interesting to learn how many officials are employed and how many more will be needed to administer the future WAM programs.
Payments to Developing Countries
The report indicates that, over 2017 and 2018, Canada provided approximately $1.5 billion to developing countries for “climate action”. This support included: $704 million as part of Canada’s $2.65 billion commitment to the Green Climate Fund; $246 million as part of its regular international financial assistance projects with a climate change component; $17 million from Canadian provincial and municipal support; $509 million from Export Development Canada (EDC) to “mobilize” private finance; and US $30 million by the newly established development finance institution, FinDev Canada, for climate-related investments.
This report offers very useful insights into how the federal government, and especially ECCC, see its climate-related measures likely affecting emissions over the next decade. The reductions projected are quite uneven in their impacts both on sectors and on provinces. Certain provinces appear likely to be disproportionately affected, including Alberta, Saskatchewan, Quebec and Nova Scotia.
The report does not address the question of costs. It is striking that so much time and effort has been spent seeking to assess the emissions reduction effects and so little to what achieving such effects will cost Canadians directly and indirectly. The cost issue has many dimensions. There is the financial cost to governments (i.e. taxpayers) of the 237 measures already in place plus those that will be added by 2030. There is the financial cost that must be borne by energy consumers and businesses to pay the energy taxes and the higher cost of new energy sources. There is the large economic cost of displaced industry previously reliant on Canada’s low cost energy supplies and the immense losses in investment, income and employment because of policies that directly and indirectly hinder energy industry expansion. There is the loss in export earnings because of denied access to foreign markets for Canadian hydrocarbons. Finally, there is the loss in revenues to the federal and provincial governments that would otherwise have come from hydrocarbon production and sale. These costs, one supposes, are of no interest to the United Nations, but they should be of great concern to Canadians.
In fact, the really important questions for Canadians do not concern incomprehensible things called tonnes of carbon dioxide equivalent. These are just terms used to obscure the reality that Canadians are being told they must do without many things that have long underpinned their quality of life and standard of living – the high availability and security of supply of energy services; competitively-priced sources of energy for our businesses, homes and vehicles; and the investment, income and employment that resource development has provided. Wherever one reads about reduction of GHGs, one should also see the withdrawal of these services and the undermining of these values.