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Economy

Canada should not want to lead the world on climate change policy

Published

1 month ago

8 minute read

From the Fraser Institute

By Ross McKitrick

Some commentators in the media want the the federal Conservatives to take a leadership position on climate, and by extension make Canada a world leader on the journey to the low-carbon uplands of the future. This would be a mistake for three reasons.

First, unlike other areas such as trade, defence or central banking, where diplomats aim for realistic solutions to identifiable problems, in the global climate policy world one’s bona fides are not established by actions but by willingness to recite the words of an increasingly absurd creed. Take, for example, United Nations Secretary General António Guterres’ fanatical rhetoric about the “global boiling crisis” and his call for a “death knell” for fossil fuels “before they destroy our planet.” In that world no credit is given for actually reducing emissions unless you first declare that climate change is an existential crisis, that we are (again, to quote Guterres) at the “tip of a tipping point” of “climate breakdown” and that “humanity has become a weapon of mass extinction.” Any attempt to speak sensibly on the issue is condemned as denialism, whereas any amount of hypocrisy from jet-setting politicians, global bureaucrats and celebrities is readily forgiven as long as they parrot the deranged climate crisis lingo.

The opposite is also true. Unwillingness to state absurdities means actual accomplishments count for nothing. Compare President Donald Trump, who pulled out of the Paris treaty and disparaged climate change as unimportant, to Prime Minister Justin Trudeau who embraced climate emergency rhetoric and dispatched ever-larger Canadian delegations to the annual greenhouse gabfests. In the climate policy world, that made Canada a hero and the United States a villain. Meanwhile, thanks in part to expansion of natural gas supplies under the Trump administration, from 2015 to 2019 U.S. energy-based CO2 emissions fell by 3 per cent even as primary energy consumption grew by 3 per cent. In Canada over the same period, CO2 emissions fell only 1 per cent despite energy consumption not increasing at all. But for the purpose of naming heroes and villains, no one cared about the outcome, only the verbiage. Likewise, climate zealots will not credit Conservatives for anything they achieve on the climate file unless they are first willing to repeat untrue alarmist nonsense, and probably not even then.

On climate change, Conservatives should resolve to speak sensibly and use mainstream science and economic analysis, but that means rejecting climate crisis rhetoric and costly “net zero” aspirations. Which leads to the second problem—climate advocates love to talk about “solutions” but their track record is 40 years of costly failure and massive waste. Here again leadership status is tied to one’s willingness to dump ever-larger amounts of taxpayer money into impractical schemes loaded with all the fashionable buzzwords. The story is always the same. We need to hurry and embrace this exciting economic opportunity, which for some reason the private sector won’t touch.

There are genuine benefits to pursuing practical sensible improvements in the way we make and use fossil fuels. But the current and foreseeable state of energy technology means CO2 mitigation steps will be smaller and much slower than was the case for other energy side-effects such as acid rain and particulates. It has nothing to do with lack of “political will;” it’s an unavoidable consequence of the underlying science, engineering and economics. In this context, leadership means being willing sometimes to do nothing when all the available options yield negative net benefits.

That leads to the third problem—opportunity cost. Aspiring to “climate leadership” means not fixing any of the pressing economic problems we currently face. Climate policy over the past four decades has proven to be very expensive, economically damaging and environmentally futile. The migration of energy-intensive industry to China and India is a very real phenomenon and more than offsets the tiny emission-reduction measures Canada and other western countries pursued under the Kyoto Protocol.

The next government should start by creating a new super-ministry of Energy, Resources and Climate where long-term thinking and planning can occur in a collaborative setting, not the current one where climate policy is positioned at odds with—and antagonistic towards—everything else. The environment ministry can then return its focus to air and water pollution management, species and habitat conservation, meteorological services and other traditional environmental functions. The climate team should prepare another national assessment but this time provide much more historical data to help Canadians understand long-term observed patterns of temperature and precipitation rather than focusing so much on model simulations of the distant future under implausible emission scenarios.

The government should also move to extinguish “climate liability,” a legal hook on which dozens of costly nuisance lawsuits are proliferating here and elsewhere. Canada should also use its influence in the UN Intergovernmental Panel on Climate Change to reverse the mission creep, clean out the policy advocacy crowd and get the focus back on core scientific assessments. And we should lead a push to move the annual “COPs”—Conferences of the Parties to the Rio treaty—to an online format, an initiative that would ground enough jumbo jets each year to delay the melting of the ice caps at least a century.

Finally, the new Ministry of Energy, Resources and Climate should work with the provinces to find one region or municipality willing to be a demonstration project on the feasibility of relying only on renewables for electricity. We keep hearing from enthusiasts that wind and solar are the cheapest and best options, while critics point to their intermittency and hidden costs. Surely there must be one town in Canada where the councillors, fresh from declaring a climate crisis and buying electric buses, would welcome the chance to, as it were, show leadership. We could fit them out with all the windmills and solar panels they want, then disconnect them from the grid and see how it goes. And if upon further reflection no one is willing to try it, that would also be useful information.

In the meantime, the federal Conservatives should aim merely to do some sensible things that yield tangible improvements on greenhouse gas emissions without wrecking the economy. Maybe one day that will be seen as real leadership.

Author:

Ross McKitrick
Professor of Economics, University of Guelph

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Economy

COP 29 leaders demand over a $1 trillion a year in climate reparations from ‘wealthy’ nations. They don’t deserve a nickel.

Published on November 16, 2024

By

From Energy Talking Points

The injustice of climate reparations

COP 29 is calling for over $1 trillion in annual climate reparations

  • A major theme of COP 29 is that the world should set a “New Collective Quantified Goal” wherein successful nations pay poor nations over $1 trillion a year to 1) make up for climate-related harm and 2) build them new “green energy” economies. In other words, climate reparations.¹
  • What would $1 trillion a year in climate reparations mean for you and your family?Assuming the money was paid equally by households considered high income (>$50 per day), your household would have to pay more than $5,000 a year in climate reparations taxes!²
  • Climate reparations are based on two false assumptions:1. Free, wealthy countries, through their fossil fuel use, have made the world worse for poor countries.

    2. The poor world’s main problem is dealing with climate change, which wealth transfers will help them with.

But free, fossil-fueled countries have made life better for poor countries

  • Free, wealthy countries, through their fossil fuel use, have not made the world worse for poor countries—they have made it far, far better.Observe what has happened to global life expectancies and income as fossil fuel use has risen. Life has gotten much better for everyone.³
  • The wealthy world’s fossil fuel use has improved life worldwide because by using fossil fuel energy to be incredibly productive, we have 1) made all kinds of goods cheaper and 2) been able to engage in life-saving aid, particularly in the realms of food, medicine, and sanitation.
  • Without the historic use of fossil fuels by the wealthy world, there would be no super-productive agriculture to feed 8 billion humans, no satellite-based weather warning systems, etc. Most of the individuals in poor countries would not even be alive today.

Free, fossil-fueled countries have made the poor safer from climate

  • The wealthy world’s fossil fuel use has been particularly beneficial in the realm of climate.Over the last 100 years, the death rate from climate-related disasters plummeted by 98% globally.

    A big reason is millions of lives saved from drought via fossil-fueled crop transport.⁴
  • The “climate reparations” movement ignores the fact that the wealthy world’s fossil fuel use has made life better, including safer from climate, in the poor world.This allows it to pretend that the poor world’s main problem is dealing with rising CO2 levels.

The poor world’s problem is poverty, not rising CO2 levels

  • The poor world’s main problem is not rising CO2 levels, it is poverty—which is caused by lack of freedom, including the crucial freedom to use fossil fuels.Poverty makes everything worse, including the world’s massive natural climate danger and any danger from more CO2.
  • While it’s not true that the wealthy world has increased climate danger in the poor world—we have reduced it—it is true that the poor world is more endangered by climate than the wealthy world is.The solution is for the poor to get rich. Which requires freedom and fossil fuels.⁵

Escaping poverty requires freedom and fossil fuels

  • Every nation that has risen out of poverty has done so via pro-freedom policies—specifically, economic freedom. 

    That’s how resource-poor places like Singapore and Taiwan became prosperous. Resource-rich places like Congo have struggled due to lack of economic freedom.

  • Even China, which is unfree in many ways (including insufficient protections against pollution) dramatically increased its standard of living via economic freedom—particularly in the realm of industrial development where it is now in many ways much freer than the US and Europe.
  • A crucial freedom involved in rising prosperity has been the freedom to use fossil fuels.Fossil fuels are a uniquely cost-effective source of energy, providing energy that’s low-cost, reliable, versatile, and scalable to billions of people in thousands of places.⁶
  • Time and again nations have increased their prosperity, including their safety from climate, via economic freedom and fossil fuels.Observe the 7X increase in fossil fuel use in China and India over the past 4 decades, which enabled them to industrialize and prosper.⁷
  • For the world’s poorest people to be more prosperous and safer from climate, they need more freedom and more fossil fuels.The “climate reparations” movement seeks to deny them both.
  • The wealthy world should communicate to the poor world that economic freedom is the path to prosperity, and encourage the poor world to reform its cultural and political institutions to embrace economic freedom—including fossil fuel freedom.Our leaders are doing the opposite.

Climate reparations pay off dictators to take away fossil fuel freedom

  • Instead of promoting economic freedom, including fossil fuel freedom, wealthy climate reparations advocates like Antonio Guterres are offering to entrench anti-freedom regimes by paying off their dictators and bureaucrats to eliminate fossil fuel freedom.This is disgusting.⁸
  • The biggest victim of “climate reparations” will be the world’s poorest countries, whose dictators will be paid off to prevent the fossil fuel freedom that has allowed not just the US and Europe but also China and India to dramatically increase their prosperity.
  • The biggest beneficiary of “climate reparations” will be China, which is already emitting more CO2 than the US and Europe combined. (Though less per capita.)While we flagellate and cripple ourselves, China will use fossil fuels in its quest to become the world’s superpower.⁹
  • The second biggest beneficiary of “climate reparations” will be corrupt do-gooders who get to add anti-fossil-fuel strings to “reparations” dollars and dictate how it’s spent—which will surely include lots of dollars for unreliable solar panels and wind turbines made in China.

Leaders must reject reparations and champion fossil fuel freedom

  • We need leaders in the US and Europe who proudly:1. Champion the free world’s use of fossil fuels as an enormous good for the world, including its climate safety.

    2. Encourage the poor world to embrace economic freedom and fossil fuels.

    Tell your Representative to do both.

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1  Scientific American – COP27 Summit Yields ‘Historic Win’ for Climate Reparations but Falls Short on Emissions Reductions
2  Global population was about 8.02 billion in 2023.

World Bank data

About 7% of world population are considered high income, which translates into about 562 million individuals. Considering 3 people per average household in high income households, this translates into about 187 million households.
Pew Research – Are you in the global middle class? Find out with our income calculator

$1 trillion per annum paid by 187 million households means the average household would pay about $5,300 per year.

3  Maddison Database 2010 at the Groningen Growth and Development Centre, Faculty of Economics and Business at University of Groningen
4  UC San Diego – The Keeling Curve

For every million people on earth, annual deaths from climate-related causes (extreme temperature, drought, flood, storms, wildfires) declined 98%–from an average of 247 per year during the 1920s to 2.5 in per year during the 2010s.

Data on disaster deaths come from EM-DAT, CRED / UCLouvain, Brussels, Belgium – www.emdat.be (D. Guha-Sapir).

Population estimates for the 1920s from the Maddison Database 2010, the Groningen Growth and Development Centre, Faculty of Economics and Business at University of Groningen. For years not shown, population is assumed to have grown at a steady rate.

Population estimates for the 2010s come from World Bank Data.

5  UC San Diego – The Keeling Curve

Data on disaster deaths come from EM-DAT, CRED / UCLouvain, Brussels, Belgium – www.emdat.be (D. Guha-Sapir).

Population estimates come from World Bank Data.

6  Our World in Data – Energy Production and Consumption
7  BP – Statistical Review of World Energy
8  UN News – ‘Pay up or humanity will pay the price’, Guterres warns at COP29 climate summit
9  Our World in Data – Annual CO₂ emissions from fossil fuels, by world region
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Business

Ottawa’s emissions cap another headache for consumers and business

Published on November 14, 2024

By

From Resource Works

Ottawa’s emissions cap for oil and gas aims to cut emissions but risks raising costs for consumers and disrupting industry stability.

Ottawa has brought down a new emissions cap for the oil and gas industry, with a mandate to reduce emissions by 35 percent from 2019 levels by 2030 to support the federal government’s climate targets. While the federal government is celebrating the cap as a big step towards a more sustainable future, it is going to make life harder for consumers and businesses alike.

This cap is coming in at a time when the oil sector is finally gaining greater stability due to the expanded Trans Mountain pipeline (TMX), and the mandate would undermine that progress and press greater costs upon households and industries that are already adjusting to high inflation and uncertainty in world markets.

Now that TMX is operational, Canada’s oil producers have grown their access to international markets, most importantly in Asia and the West Coast of the United States. Much-needed price stability now exists for Western Canadian Select (WCS), cutting the discount against the U.S. West Texas Intermediate benchmark, enabling Canadian oil to compete more effectively.

Newfound stability means that Canadian consumers and businesses have benefited from slightly lower prices, and that industry has grown less dependent on a more limited domestic demand. However, Ottawa’s emissions cap does threaten this new balance, and the sector now has to deal with compliance costs that could be passed down to consumers.

In order to meet the cap’s targets, Canadian oil producers must heavily invest in carbon capture and storage (CCS) technologies, which is costly but essential. Major CCS projects include Shell’s Quest and the Alberta Carbon Trunk Line, both of which are already operational.

The Pathways Alliance is a coalition of six major oil sands companies and is preparing to invest in one of the world’s largest networks for carbon storage. These efforts are crucial for reducing emissions, despite requiring vast amounts of capital.

Those in the industry are worrying that the emissions cap will push resources away from production and, instead, towards compliance, adding costs that will be borne by fuel prices and other consumer products.

Ottawa has portrayed the cap as an essential measure for meeting the federal government’s climate goals, with Environment Minister Jonathan Wilkinson labeling it “technically achievable.” Nonetheless, industry players argue that the timeline does not align with the practicalities of scaling CCS and other strategies aimed at decarbonizing.

Strathcona Resources executive chairman Adam Waterous pointed out the “stroke-of-the-pen” risk, in which shifting political landscapes imperil ongoing investments in carbon capture. Numerous oil producers feel that without certainty in carbon price stability, Ottawa’s cap will result in an unstable business environment that will push investment away from production.

Business leaders do not share the federal government’s optimism about the cap and see it as a one-sided approach that fails to reckon with market realities. The Pathways Alliance, which includes companies like Suncor Energy and Canadian Natural Resources, has been frustrated in its multiple attempts to get federal support to fund its $16.5-billion CCS project.

Rather than imposing these new limits, energy industry advocates argue that the government should provide targeted incentives like “carbon contracts for difference” (CCfDs), which help to stabilize carbon credit prices and reduce financial risk among investors. These measures would enable the energy sector to decarbonize without putting a greater burden on consumers.

The cap’s timing also raises concerns about the Canada-U.S. relationship. Canada has traditionally been a stable supplier of energy and helps to bolster U.S. energy security. However, as the U.S. increases its reliance on Canadian oil, the cap could disrupt this trade relationship. Lowered production levels would leave the economies of both the U.S. and Canada vulnerable, potentially disrupting energy prices and supply stability.

For households across Canada, the emissions cap could mean further financial strain. The higher costs of compliance passed to oil producers will mean higher prices at the pump and more expensive heating costs at a time when Canadian consumers are already struggling financially.

Businesses will also face increasing operating costs, which will be passed down to consumers via more expensive goods and services. Furthermore, higher costs and reduced production will erode Canada’s competitive advantage in the global energy market, slowing economic growth and risking job losses in the energy sector.

So, while Ottawa can laud its emissions cap as a necessary action on the climate, the implications for consumers and businesses are tremendous. Working with industry to find pragmatic, collaborative solutions is how Ottawa can avoid creating more financial burdens for Canadians.

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