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The Simple Truth: Where Climate Policy is Taking Canada

Contributed by Robert Lyman © 2021

About the Author

Robert Lyman is an Ottawa energy policy consultant and former public servant of 27 years, a diplomat for 10 years prior to that. His complete biography can be read here.

Most Canadians, I suspect, have only the most general understanding of the issues surrounding climate policies. They may have seen the Al Gore film An Inconvenient Truth and any number of news reports on the CBC claiming that humans are causing catastrophic global warming and that Canadians must “do their bit” to save the planet. They also may have heard and read some of the articles claiming that wind and solar energy are increasingly cheap and will soon replace conventional energy sources like oil, natural gas, coal and nuclear energy. They have probably heard less about the costs that have been imposed on the Canadian economy in terms of foregone investment, income and employment due to higher taxes and more intrusive regulations. For many people, busy with other things in their lives, much of this sounds all too complicated and “technical” to spend much time thinking about.

The purpose of this paper is to set out the “other” side of the story about climate policy and to do so in simple terms that, I hope, most people can understand. This is not a story about millions of tonnes of greenhouse gases, complicated science and econometric modelling (whatever that is) or the intricacies of carbon taxes. I will try to explain what would happen in people’s everyday lives if Canada were really to meet the current goal of ending the use of oil, natural gas and coal by 2050, 29 years from now.

A little bit of background information is needed. As most people know, Canada is one of the largest, coldest and most economically advanced countries in the world. It also has very large natural resources that historically have been plentiful and relatively cheap. All of this has meant that, for at least 80 years Canadians have been large users of energy services. By energy services, I mean transportation of people and goods, heating (and air-conditioning) of buildings, heat for cooking, and the thousands of uses of electricity ranging from lighting to refrigeration to cell phones and all other appliances. Without these advantages, Canada would be like Mongolia, a cold, inaccessible, and poor country. Today oil, natural gas, and coal provide about two thirds of the energy services Canadians need. Hydro-electricity and nuclear energy provide most of the rest. Wind and solar energy meet only 3% of our needs.

https://www.iea.org/countries/canada

Climate policy now consists of a wide range of measures implemented by the federal, provincial and territorial governments; in fact, there are over 300 measures on which Canada reports to the United Nations every two years. The municipalities are increasingly getting into the climate policy game, by imposing restrictions on growth, housing, parking and other matters. Generally, the measures fall into seven categories:

• Taxation to increase the costs of energy
• Regulation of new infrastructure to produce, transport, or use hydrocarbon energy to inhibit some types and to facilitate others, based on emissions considerations
• Regulation of the energy-using performance of vehicles, appliances and housing, among others
• Subsidies to energy producers and to electicity-powered vehicles that would not be appealing to consumers if they had to pay the full costs; these subsidies shift some of the costs from energy users to taxpayers
• Publicly-funded research, development and commercialization of renewable energy technologies
• Mandates (i.e. orders by governments) that give priority to certain energy sources over others and bans that prohibit some types of energy use altogether
• Taxpayer funding of non-governmental groups that advocate for more climate policy actions

https://blog.friendsofscience.org/2019/11/23/the-tragic-delusion-of-doing-our-share/

How this Will Affect Canadians in Future

The taxation will raise the costs of all energy services provided by oil, gas and coal. It will do so directly, by increasing the prices of the fuels by 100% or more. It will also do so indirectly, because the increased cost of transportation (by trucks, rail and aircraft) will affect all goods that must be moved to market.

The taxation will make it much more difficult for companies that need a lot of energy to operate and stay in business. This is especially so for companies in the oil and gas, petrochemicals, mining, metal fabrication, cement, steel, pulp and paper and auto industries, as they will lose both domestic and export markets to companies in other countries that do not bear the same costs. When many of these companies close or move their operations to other countries, this will reduce investment, income and employment across Canada. It will be especially tough on the people who live in remote single-industry towns in the northern parts of the provinces or in the federal territories. In other words, millions of people will lose their jobs.

Governments claim that they will rebate most of the funds raised by carbon taxes, but the rebates do not apply in all provinces (not in Quebec, for example) and the rebated revenues do not go to the most affected industries. Because the federal and many provincial governments are deeply in debt and therefore badly need more money, it is virtually certain that the percentage of carbon tax revenues retained by governments will increase in future. In other words, the rebates will decline and the costs to the people of carbon taxes will rise.

The increased reliance on wind and solar energy for electricity generation will significantly increase electricity costs (they have already doubled in Ontario) and leave users vulnerable to brownouts and blackouts because of the intermittency of these energy sources (i.e. they only produce when the sun shines or the wind blows, not when electricity is needed). The unreliability of the electricity system will drive more industrial plants out of Canada.

The effect of these changes may be the devaluation of the Canadian dollar. It would not be surprising to see the value of the dollar decline to 60 U.S. cents or lower, which would drive up the prices of all imported goods in Canada.

The federal government has changed the environmental assessment process that it applies before it will issue permits to large infrastructure projects, saying that it will not approve new projects that increase greenhouse gas emissions (that is, use more oil, natural gas or coal). Refusing to permit the construction of new airports, ports, bridges and highways will hamper Canadians’ access to needed transportation facilities, thus increasing congestion and limiting economic growth.

Increasingly stringent emissions standards for vehicles, appliances and housing will significantly increase the costs of these (e.g. by up to $100,000 per unit for new houses) and limit the number of models available, taking away people’s choices as to what they can buy.

The federal government plans to ban the sale of internal combustion engines for cars by 2040. Forcing everyone who needs a car to buy an electric vehicle will raise the costs of a new car by at least $15,000. Remember that electric vehicles take many hours to recharge and use batteries that don’t stay charged as long when it gets cold. Taxpayers will bear a very heavy burden to subsidize the electric vehicle purchasers and to pay for the recharging infrastructure. All the gasoline service stations will go out of business. People living in high rise apartment buildings will face serious problems getting access to rechargers.

Governments are planning to force airlines to purchase “offset credits” for the jet fuel they use. This will double or triple the costs of air fares. Air travel will be beyond the budgets of many Canadians. Forget the cross-country flights to visit relatives or the winter breaks in the Caribbean. If the increased costs do not drive down the movement of passengers and air freight enough, government will attempt to do so by rationing rights to fly, so people will be forced to prove that they need to fly before they will be allowed to do so.

Hundreds of billions of dollars will be spent on municipal light-rail transit systems at a time when more and more people are choosing to live outside of large urban areas or to work from home. This cost will fall heavily on transit users, municipal taxpayers and federal ad provincial taxpayers. In effect, the people who live in small cities and rural areas will be paying the high cost of transit in the biggest cities.

Municipal “anti-car” policies eliminating road lanes and public parking will increase congestion and kill many businesses in the city centres. Similarly, urban “densification” policies and zoning affecting residential construction will cause builders to build smaller dwellings in more densely-populated areas, thus increasing congestion in the belief that it will force people unto public transit. These policies will fail, as they have up to now.

Bans on the use of natural gas for electricity generation will remove the cheapest and most reliable source of backup generation needed to prevent brownouts and blackouts. Bans on the use of natural gas for cooking will prevent homeowners from having natural gas stoves and create special problems for restaurants. Bans on the use of propane for cooking and heating will deprive thousands of people who live in rural areas of affordable and convenient energy supplies.
The increased costs imposed on, and regulation of, farmers will cause food prices to escalate, especially for meat products.

Government refusal to allow more oil and gas pipelines to be built will impose disproportionately high adverse effects on industries in Alberta, Saskatchewan and Newfoundland. They also will deprive northern Canada of the opportunity to develop their oil and gas resources, and thus to achieve higher incomes and independence from heavy reliance on federal government funding. This, in turn, will severely increase the stresses within Confederation and potentially lead to successful secession movements.

Canada will be required to import many of the products, such as petrochemicals, that it now manufacturers domestically. These will come from countries like China, where no such climate-related restrictions and few environmental regulations are in place.

If you doubt the likelihood of anything I have written, I invite you to research it for yourself. Above all, I encourage you not to accept blindly the media and government claims that Canadian climate policy will be either costless or will change the trends in emissions at the global level.

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3 Comments

  1. Andrew Roman

    The government says it will create many new green jobs. What would you reply?

  2. Bob Lyman

    Andrew, as Michelle Sterling’s (fosadmin) comments indicate, I have previously dealt with claims of job creation from green policies in Canada. The bottom line is that the labour-intensity of the economy is not a very good standard against which to assess the merits of economic or environmental policies. What we want are efficient, internationally competitive firms that can prosper without relying on government subsidies. Canada’s experience has been that, with green policies, we have shed hundreds of thousands of jobs in the resource and manufacturing industries and created tens of thousands of jobs in the energy efficiency industries and in industries that involve installation of wind and solar plants, the difference being that one set of jobs are the consequence of the normal interaction of competitive supply and demand in (mostly) free markets and the other is the product of government-directed and taxpayer-funded measures. The United States, like Canada, has been shedding manufacturing jobs for years, with the countries of Asia being the beneficiaries. Green policies only accelerate that trend.

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