Contributed by Robert Lyman © 2020
Shell Canada announced on November 12 that it will roll out its Drive Carbon Neutral program in Canada under which “offsets” are purchased to compensate for the emission of greenhouse gases from gasoline consumption.
Offsets are a form of credit that consumers are asked to purchase to assuage their guilt for consuming fossil fuels, in keeping with the thesis that humans are causing catastrophic global warming and that this is sinful. In keeping with the medieval practice of requiring sinners to pay indulgences for the absolution of their sins, imposing offsets instills the proper feelings of guilt and discourages people from sinning in future. Like so many climate policy measures, the use of offsets aims to elevate the reduction of GHG emissions to a moral crusade.
Shell announced that it would assign to gasoline purchases the offset cost of two cents per litre. The company will cover the initial cost of the program, but starting in 2021, participating drivers can choose to pay the two cents per litre to purchase the carbon credits from a reforestation project in British Columbia. Shell hopes that Canada will develop a widespread regulatory regime and market for “carbon credits” in future.
Let us pause to wonder at the foolishness of this program.
Federal and provincial governments are already implementing 237 GHG emissions reduction measures on which the Canada reports biennially to the United Nations. These measures include regulations, taxes, tax credits, subsidies of all kinds, consumer information programs, restrictions on energy developments and many more. These measures are both generic, covering all parts of the economy, and sector-specific. There is no country-wide inventory of all measures taken, including those implemented by municipalities, there has never been a cost-benefit analysis to determine whether they are worth their cost, and there is no authoritative analysis of what effect that are having on emissions. The most widely publicized single measure is the carbon dioxide pricing regime, which itself takes three different forms – carbon dioxide taxes, output-based pricing systems applied to large industrial emitters, and emissions trading systems (“cap and trade”). So, the use of market-based pricing as a means to raise the cost of the energy Canadians use is already well in place, and the costs of these measures are rising every year. In the specific case of motor gasoline, the federal carbon pricing regime establishes a minimum rate of $30 per tonne currently, or seven cents per litre. That will rise in 2021 to 9.2 cents per litre and in 2022 to 11.5 cents per litre.
The Government is now implementing another regulatory program, the Clean Fuel Standard, that will effectively raise the cost of all fossil fuel consumption much higher, and perhaps double the effect of the carbon pricing regime.
Shell Canada, undoubtedly under instruction from its “green” parent company, appears to have decided that these added costs are simply not enough to motivate (or is it punish?) Canadian motorists enough. We all need social pressure to pay two cents more per litre (though the program is voluntary).
Two cents sounds like so little, right? How can consumers complain? Well, in 2019 Canadians consumed 43.3 billion litres of gasoline. Two cents per litre, if added to all gasoline sales, would total $866 million.
“We see a lot of demand from customers to start helping. How can a customer who maybe can’t afford to buy an electric car, but wants to do something to help the environment, get involved?” said Shell Canada president Michael Crothers in an interview.CTV News
Gasoline is already by far the most heavily taxed energy source. The average tax on gasoline in Canada in 2020 is 42 cents per litre, according to the Canadian Taxpayers’ Federation. See the federation’s 2020 report here:
Gasoline only constitutes 44% of the refined oil products consumed in Canada. If the taxes were to be fully apportioned across all oil products, it would have to include diesel fuel (28%), aviation fuel (9%), residual fuel oil (3%), still gas (5%) and others (10%). Carbon dioxide taxes apply to natural gas and coal, too. How long before some supporter of “carbon neutrality” suggests that we all must buy offsets for those energy sources?
In Europe, the various offsets and emissions credits systems have proven vulnerable to a series of scams and fraudulent activities run by organized crime. Offsets for forest planting have proven vulnerable to fraud in Brazil. See the following report.
Shell may be able to ensure that its reforestation project partner in British Columbia is really planting trees, but we should all be wary of proposals to broaden such programs to country-wide ones.
The goal of carbon neutrality is fundamentally flawed, based on a false thesis about the causes and effects of a changing climate, and an exaggeration of the role that countries like Canada can play in influencing the trends in global emissions. Shell can invite its customers to go on a guilt trip, but I won’t be going on the ride. Neither should you.
About the Author
Robert Lyman is an economist with 27 years’ experience as an analyst, policy advisor and manager in the Canadian federal government, primarily in the areas of energy, transportation, and environmental policy. He was also a diplomat for 10 years. Subsequently he has worked as a private consultant conducting policy research and analysis on energy and transportation issues as a principal for Entrans policy research group. He is a frequent contributor of articles and reports for friends of science, a Calgary-based independent organization concerned about climate change-related issues. He resides in Ottawa, Canada. Full bio.