Can Canada Survive Climate Change Policy?

via Friends of Science Calgary
http://ift.tt/2on3Vep

Contributed by Robert Lyman © May 9, 2017

This is the prepared text of a presentation made at the Friends of Science Society’s 14th Annual CLIMATE DOGMA EXPOSED event in Calgary, Alberta, Canada, on May 9th, 2017. Robert Lyman is a Principal at the Ottawa-based ENTRANS Policy Research Group, Inc., a former public servant of 27 years, working in senior policy roles, and prior to that, a diplomat for 10 years. Following this presentation, Steve Goreham spoke on “Outside the Green Box: Rethinking Sustainable Development.”

IMG_5031 (1)

A full house at the Red and White Club, McMahon Stadium.

Ladies and gentlemen, I truly am pleased to be in Calgary for this event and to be able to speak to you on the question of whether Canada can survive climate change policy.

Hearing the question framed this way must surprise some of you. We hear so often in the media and from environmental groups that Canada and other countries may not survive what many predict to be the catastrophic effects of human-induced global warming. It must indeed seem strange that someone would wonder about the effects of the policies now proposed to reduce greenhouse gas emissions as though the policies themselves are the threat. And yet they are.

Everyone comes to this issue with a certain perspective, so I will declare mine at the outset. I am not a scientist. I am not here to address the issue of how much human-related greenhouse gas emissions are contributing to increased concentrations of carbon dioxide in the atmosphere nor on the sensitivity of global temperatures and climate to the increases in those concentrations over time. There are others here far more qualified than I to discuss that.

Instead, I want to discuss the policy and program measures that the people of Canada and other countries, especially in the industrialized world, are being urged to adopt and what will be the implications of those policies and programs. I believe in the importance of a sound public policy process when governments decide on issues that have important present and future consequences.

My career has taught me several important lessons about what makes for good public policies. The first is that good policies need to reflect the diversity of Canada and of the public interest. As in most countries, the people here include many different groups differentiated by financial interests, economic and social status, region, viewpoint and political party. Good public policy needs to take into account how each group will be affected and seek the highest benefit for all. Similarly, Canadians expect governments to pursue many different national goals: economic development, social justice, safety and security, public health and environmental quality to name a few. Sometimes these goals are compatible and sometimes they compete with one another. We live in a pluralist, multi-goal society. Further, good public policies in Canada must acknowledge and respect the design of our federal political structure. Policies that severely harm some provinces and regions, allegedly to benefit the whole, may indeed place the federation at risk.

Every now and then, a policy issue comes along whose adherents think it is the most important one of all. Today, the theory that humans are causing cataclysmic global warming has created a claim for ascendancy over all other public policy objectives.

Indeed, many environmental organizations here consider that Canada should, as a point of moral principle and to show leadership, seek to completely eliminate greenhouse gas emissions in the shortest possible timeframe.

To that end, they seek the complete ending of coal use as the first step in the transformation of the electricity sector. They oppose all construction of new oil or natural gas pipeline systems. They use pressure on investors and various shaming tactics to discourage new investment in oil and gas exploration and development. They ask governments to impose absolute ceilings on the level of GHG emissions from certain energy sources as we have seen in the case of the oil sands. They advocate constantly in support of new programs, regulations and subsidies to favour renewable energy sources over traditional ones.

Before discussing the challenges that these demands pose, let me review how we came to this juncture and Canada’s place in the world.

In 1988, governments working together at international levels first raised concerns about the possibility that increasing human-related greenhouse gas emissions might be having an adverse impact on global temperatures. Since then, various countries have adopted targets to reduce emissions. In 1992, developed countries agreed on a voluntary target of stabilizing greenhouse gas emissions at 1990 levels by 2000. They did not even come close. Having not met a relatively modest target, countries agreed upon a more stringent one. In 1997, about 150 countries committed under the Kyoto Protocol to reduce GHG emissions by an average of 5% below 1990 levels by the 2008 to 2012 period. They failed miserably.

You might ask why, in Canada, a series of governments made political commitments to emission reduction targets that their officials candidly advised them probably could not be met. Part of it, I suspect, was simple cynicism. There was no political downside to promising to reduce emissions, only to actually doing it. Making large emissions cuts is costly and governments are usually cautious about provoking the public. So, they pretended to embrace the targets, but stopped short of the really disruptive measures. This, however, had a disadvantage. The government’s adherence to non-attainable targets gave environmental groups a proverbial two-by-four with which they could beat federal politicians about the head and shoulders every year. And so they did.

Since the 1990’s, twenty-two conferences of the parties to the united nations framework convention on climate change have been held in efforts to broker a deal.

Recently, some countries have made political commitments to more stringent reductions. In the Copenhagen accord of December 2009, Canada and other countries committed politically to reduce GHG emissions to 17% below 2005 levels by 2020. Pursuant to international discussions preceding COP21 in December 2015, the government of Canada made a political commitment to attain a 30% reduction from 2005 levels by 2030. Outside of the COP framework, in 2008 the group of eight leaders, including Prime Minister Harper for Canada, established a long-term objective of reducing global emissions by 50% by 2050. They also announced that they supported a goal for all industrialized countries to reduce their emissions by 80 per cent or more, compared to 1990, by 2050.

At the COP21 conference, the parties finally realized that agreeing on another yet-more-stringent target was not credible, so they adopted a new strategy. They agreed not to set out in the agreement explicit goals to reduce emissions. Consequently, the COP21 agreement can be presented, especially in the united states, as not a treaty. It contains very few binding legal requirements, there is no formula for determining what each country’s obligations are, and there are no legal penalties for non-compliance. Rather, it represents a best-efforts political commitment to keep the level of global GHG emissions below that which, in theory, might produce a two degree celsius increase in average global temperatures. So no one knows for sure how much emissions would have to be reduced, and the countries did not agree on specific targets. One might fairly describe this as a failure. Significantly, though, the agreement included a political commitment to file with the U.N. Secretariat a series of five-year plans to reduce emissions. These five-year plans were to become the bases upon which stringent reductions will occur.

Ladies and gentlemen, these commitments are just the beginning, the mere “foot in the door” for the more radical demands that lie ahead. We are still bound in principle to reduce Canadian GHG emissions by 50% from 2005 levels by 2050. The U.N still wants us to “show leadership” by reducing emissions by 80% from 2010 levels by 2050. A number of environmental groups in Canada and other countries have recently endorsed the Wind, Water and Sunlight, or WWS, vision. This vision seeks completely to eliminate the use of all fossils fuels – coal, oil, and natural gas – in the world by 2050. The New Democratic Party’s LEAP Manifesto endorses this vision, as does the Green Party and most of Canada’s influential environmental organizations. The government of Ontario also has formally committed the province to this vision. So have a number of large Canadian municipal governments.

How can we even begin to understand the magnitude of the changes being proposed? One way is to look at the sources of energy consumption and related emissions today. In 2005, Canadian emissions were 738 megatonnes of carbon dioxide equivalent. In 2014, after six years of the worst recession since the Great Depression, Canadians emitted less, 722 megatonnes. Twenty-six per cent of those emissions were from oil and gas production, 23 per cent were from transportation, and roughly equal portions of around 10 per cent were from electricity generation, buildings, industry and agriculture, with waste and other sources making up a residual 7 per cent. Assuming that emissions do not grow one bit over the next 32 years as a result of increased economic activity or increased population, achieving a 50 per cent emissions reduction from 2005 levels would mean reducing emissions to 369 megatonnes CO2 equivalent. That is comparable to completely eliminating the current emissions from oil and gas production, electricity generation, and all emissions-intensive industries like mining, petrochemicals, auto and parts manufacturing, iron, steel and cement. Gone. Achieving the aspirational goal of 80 per cent reduction recommended by the IPCC would mean reducing emissions to 147 megatonnes CO2 equivalent. That would be comparable to reducing Canada’s per capita emissions and our energy economy to the current levels of Bolivia, Sudan or Iraq.

I think it is fair to say that this would not be wildly popular outside of certain environmentalist and left-wing circles. The effects on regional economies would be devastating. Just eliminating all oil and gas production would deprive Alberta, Saskatchewan, Newfoundland and Labrador and the northern territories of their most promising resource development and income growth opportunities. Eliminating or sharply reducing all consumption of oil would mean electrifying all railways, sharping curtailing ownership and use of personal and commercial road vehicles, and severely limiting use of aviation and marine transportation services. No sector of the economy would be spared. If indeed such measures were actually to be implemented as national policy, really and truly the Canadian federation might not survive as a political entity.

You might say that any government that tried to push the climate change agenda so far would soon run into the limits of technology, economics or politics. That may be true. Unfortunately, even if radical emissions cuts prove to be impossible, governments still may be impelled by international political commitments to take measures with major economic costs. The American Enterprise Institute recently noted that, even though not legally binding, the Paris agreement provides a framework for a global, political pressure machine to exist for decades. The agreement is designed to stimulate political protest any time policy makers fail to keep commitments to de-carbonize the economy, pony up billions of dollars in climate aid for developing countries, and make increasingly ambitious emission reduction promises every five years, in perpetuity. Further, the Paris agreement tacitly affirms the preferred narrative that climate change is humanity’s greatest peril and that ‘inaction’ threatens millions of lives.

Which benefits would be achieved by incurring such costs?

Well, climate change is, above all, a global issue. The emissions occur all over the world and the effects are global.

Despite all the rhetoric about reducing world carbon dioxide emissions from fuel combustion and gas flaring, according to the U.S. Carbon dioxide information analysis center, they rose steadily from 16.6 Gigatonnes carbon dioxide equivalent in 1973 to 34.1 Gigatonnes in 2014. So, they more than doubled over that timeframe. Importantly, though, the origins of the emissions changed significantly. In 1973, the countries of the organization for economic cooperation and development, or OECD, accounted for two-thirds of global CO2 emissions from fuel combustion; by 2014, the OECD share had declined to just over a third. So all, or almost all, of the emissions growth occurred outside of the OECD.

What does the future hold? No one has an infallible crystal ball, but the united states energy information administration, or EIA, is one of the most authoritative sources of analysis and future projections concerning energy supply, demand and emissions. In May 2016, it issued its most recent international energy outlook, with projections to 2040. Based on the most thorough analysis of the likely trends in economic and population growth and the rate at which new technologies will be applied, the outlook included some striking projections:

First, worldwide energy use will grow continuously over the next three decades, led by strong increases in non-OECD areas and especially in Asia. In the EIA reference case, consumption grows 48 per cent from 2012 to 2040.
Fossil fuels will still account for almost 80 per cent of energy use in 2040.
Use of petroleum and other liquid fuels will grow from 90 million barrels per day in 2012 to 121 million barrels per day in 2040, while natural gas use will grow from 129 trillion cubic feet in 2012 to 203 tcf in 2040.
Energy-related carbon dioxide emissions will grow from 32.3 Gigatonnes in 2012 to 43.2 Gigatonnes in 2040, a 34% increase.
91% of the emissions growth will take place outside the OECD.

So, we have two sharply different perspectives of the future, the EIA’s projections of what probably will happen and the aspirations of the U.N. And many environmental groups as to what in their view should happen. Reducing emissions by 50% by 2050 to meet the U.N.’s vision would mean a global total of about 16 Gigatonnes, in contrast to the EIA’s projection of 43 Gigatonnes (Gt). The OECD countries – the United States, Canada, most of Europe, Japan, Australia and others – could eliminate 100% of their projected emissions of 14 Gt, and the world would still be over its target by 13 Gt.

Let me repeat that in a more striking way. You have probably heard before that, as Canada represents only 1.6% of global emissions, nothing that we do in this country will make any difference to the trends in global emissions or the resulting climate effects, if any. If the current projections of the united states EIA are correct, then not only Canada but also the entire OECD region could cease to emit, and the global emissions total would still be far above the levels the IPCC claims must be achieved.

With this as background, I would like to discuss three problems that now beset Canadians’ efforts to deal with climate change mitigation–the difficulty in choosing appropriate policy instruments, the excessive expectations concerning governments’ ability to deal with the climate issue, and the weakness of the federal government policy and planning process.

To my knowledge, there has never been a public policy issue as complex as climate change. The calls for massive and rapid emissions reductions would be daunting if they affected only a single commodity in one sector of the economy. Instead, they concern fundamental changes to global and national energy systems and infrastructure that have developed over the past century and longer. Almost every aspect of our current industrial, transportation, settlement, and commercial capital stock and infrastructure has developed based upon the availability of relatively low cost hydrocarbons.

Some advocates of rapid transformation believe that this can best be effected through the price mechanism. Unfortunately, fossil fuels stubbornly continue to be relatively plentiful and cheap. So, to retain the advantages of using market-based measures, the advocates recommend carbon taxes and cap and trade systems to reduce emissions. The federal government’s national carbon tax system imposes charges that will rise from $10 to $50 per tonne by 2022, and who knows to what levels after that.

Not surprisingly, the current carbon tax regime has run into political resistance. The opposition in parliament has asked some embarrassing questions. How much revenue will the carbon taxes raise? What will be the cost of living impact on the average family? How will the competitiveness of Canadian firms be affected? The government will not say. Even tougher questions remain. How much does the government think such taxes will actually reduce Canadian emissions? What will be the effect of that reduction on global emissions and on temperatures? How high will carbon taxes and fees have to go to achieve the 2030 and 2050 goals? The former National Roundtable on the Environment and the Economy projected that, to reach the 2050 goal, a carbon tax of at least $300 per tonne would be needed. That, at least, gives us some idea of where the tax level may be headed in future.

Even in the absence of satisfactory answers about future tax levels, the theory that allegedly justifies both carbon taxes and cap and trade systems fails in practice. Professor Ross McKitrick of the University of Guelph has explained why. First, a carbon tax is only desirable in theory if it acts as the replacement for the long list of regulations, programs and subsidies that are now in place; the federal, provincial and municipal governments, however, have no intention of removing those measures. Second, a carbon tax, to avoid damaging the economy, has to be genuinely revenue neutral, in the sense that the funds must be channeled back into the economy by lowering the rates of other broadly-based taxes, not by being used to fund a host of new programs and subsidies that benefit the “green” lobbyists and industries; while British Columbia claims to have done this, there is zero chance any other government will. Third, the size of the carbon tax has to be set at a rate that properly reflects the alternative cost of reducing emissions and the best estimate of what damage is being avoided by reducing emissions; the current federal tax has no connection to either of these standards. Fourth, there has to be credible evidence that the economic cost incurred will be offset by incremental improvement in the world’s environmental condition; Canada is too small an emitter to matter and, as I explained, Asian countries are rapidly increasing their emissions in any case. Finally, we should not set a new carbon tax burden on Canadian companies seeking to compete in international markets; proceeding here when we know the Americans will not impose a carbon tax is simply irresponsible. Many of the same problems apply to cap and trade systems.

I decided to explore further Professor McKitrick’s comment about the current list of regulations, programs and subsidies. There is not in Canada a comprehensive list of the measures that have been implemented by all orders of government to reduce greenhouse gas emissions. They have been increasing in number, reach and cost since 1988. I counted 37 different generic types of measures now in use. Large bureaucracies exist to design, implement, and (less frequently) evaluate these measures. They stretch like the tentacles of some vast octopus across every aspect of the Canadian economy and touch everyone’s life. As no one has ever established an inventory of the measures now in place or of those under consideration, no one knows how much these measures already cost Canadians. Two things are certain – they cost billions of dollars annually, and they are not going away soon, regardless of the taxes imposed on carbon. I might add a third certainty, which is that the government will continue to develop and implement more and more programs and regulations as time goes on.

Governments’ persistent reliance on what are generally called “direct action measures”, redundant if one believes in the efficacy of prices and taxes, indicates another tenet of the current climate change mitigation advocates. They strongly believe that governments have the institutional and knowledge capacity to manage the economy and to drive the pace of technological change. I referred earlier in my remarks to the wind, water and sun vision of Professors Jacobson and Delucci that has been extremely influential in supporting the 2050 targets. Jacobson and Delucci do not stop at setting out a list of promising technologies and visualizing the amount of renewable energy generation capacity needed to meet future demand. They set out detailed, quantified “roadmaps” of exactly which steps governments should take by which dates and of the resulting generation levels by 2050.

The adherents to the WWS vision express extraordinary optimism, verging on blind faith, in the pace at which scientific discoveries, technology applications, commercialization of new products, and market penetration through mass production will occur. They seem to think that, if something can be done and it has alleged environmental benefits, all that stands in the way of its mass commercialization is for governments to subsidize or regulate so as to achieve their preferred outcome.

In reality, of course, scientific breakthroughs do not come on a fixed schedule, and there is no direct relationship between the amount of money that society spends on research and the likelihood or timing of a discovery. If there were, cancer would have been cured long ago.

Dr. Peter Grossman, one of the foremost experts in the history of U.S. Energy policy, has described how over many years U.S. Policy makers referred to the Apollo program and the Manhattan project as models for the development of alternative energy technologies. The technologies they have promoted at great costs are the same ones being advocated today in the name of addressing alleged global warming – solar energy, wind energy, cellulosic ethanol, electric vehicles, etc. The Apollo Fallacy, as Grossman calls it, conflates an engineering problem with a commercial problem, and it actually deflects efforts (and funds) away from scientific research and advance and focuses them instead on grandiose social schemes. Among other things, programs to accelerate the demonstration and use of specific technologies have amounted to picking winners over losers, and governments have proved again and again and again that they are remarkably bad at that game.

There is an older term to describe what the advocates of rapid transformation want. It is called central planning. In fact, they seek the largest intrusion of state authority and central planning into the economy since the second world war.

For those with some knowledge of history, there is considerable irony here. The climate change issue came to public prominence around 1990. 1990 was also the year when the political systems of the former Soviet Union and its satellite states collapsed as a result of their internal contradictions, and especially the realization that central planning was a fundamentally flawed approach. How ironic it is that, at precisely the moment in history when the failures of central planning were laid bare for all to see, environmentalists should seize upon climate change as evidence that central planning was an idea whose time had come!

That confidence might be warranted if government climate change programs over the past twenty years had been wildly successful. Frankly, that has not been the Canadian experience. Instead, let me remind you of the conclusions reached by the federal government’s own monitor of program effectiveness, the Commissioner of the Environment and Sustainable Development.

Starting in 1998, the commissioner began to critique the government’s approach to managing emission reduction measures. In the seven reports that followed, there were five consistent themes.

First, the government has not created effective governance structures for managing climate change activities. In fact, there have been weaknesses in horizontal governance across departments, accountability and coordination.
Second, there has been, and remains, no overall implementation plan. The government has produced no estimate of the emission reductions expected from each sector. Without an implementation plan, industry, consumers and other levels of government lack a solid basis for knowing how to apply technology or make investment decisions.
Third, as a result, Canada cannot determine whether the targets for emissions reduction already announced will be met or how much it will cost to do so.
Fourth, there are few mechanisms in place to measure the performance of the emission-reduction measures that have been implemented so far.
Fifth, the federal and provincial governments do poorly in coordinating their approaches to emissions reduction.

In short, while there have been some exceptions, the federal government’s management of the climate change file has been a frustrating combination of good intentions, partisan politics and limited capacity to deliver.

Environmentalists often claim that what we need is an honest dialogue about climate change. What they really mean is that the general public should acquiesce with the thesis that human-induced global warming threatens a catastrophe and that reducing emissions should be given priority over all other public interest objectives.

I agree that we need an honest dialogue about climate change mitigation. It should start with the recognition that governments to date have publicly embraced emission reduction targets that are unachievable with present technology and at acceptable economic costs. We should acknowledge that we as a society have multiple goals of which environmental quality, however important one might think it is, represents only one. If we value our prosperity and unity as a federal, geographically diverse country, we must approach the climate change issue with a respect for all our collective goals.

The Canadian federation has resolved difficult controversies in the past, including those concerning the best response to international events. Historically, we have valued moderation and accommodation. This offers hope that we can avoid irreconcilable differences in future.

Much of Canada’s current political elite favours the pursuit of international goals over the steadfast promotion of the Canadian interest, whether on issues of trade, security or the environment. Never before, however, have we faced a situation in which commitment to an international objective May impose enormous and divisive costs on Canada for no discernable global environmental benefit. Climate change thus offers a clear dichotomy between the Canadian national interest and the global environmental agenda.

Which should we value higher? I, for one, choose Canada.

Thank you.

acyb04_19270077-eng 1927 map of canada w resources nrcan