From the Fraser Institute

APPEARED IN THE FINANCIAL POST

By: Bjørn Lomborg

Canada’s chattering classes claim that climate change is one of the country’s pre-eminent threats. This is extraordinary. Canada is experiencing a productivity slowdown, the worst decline in living standards in 40 years, and growth rates that lag most developed economies. Geopolitical threats loom, the healthcare system is under stress and education is faltering. Yet the federal government has spent or committed more than $160 billion on climate initiatives since 2015, and is funneling $5.3 billion to help poor countries respond to climate change.

Like most nations, Canada faces tough decisions in coming decades. Resources spent on climate will not be not available for health, education, security or boosting prosperity.

Global warming is a real problem. Science has shown quite clearly that more CO₂, mostly from fossil fuel use, increases global temperatures. Climate economics has shown how this brings both problems and benefits (for instance, more deaths caused by heat, fewer by cold) but, overall, more problems than benefits. More CO₂ means higher social costs, so reducing CO₂ does have real benefits.

But climate policies also have costs. They force families and businesses to use more expensive energy, which slows economic growth. You might have heard otherwise but if the new ways really were cheaper, no regulations or mandates would be needed.

If climate change were treated like any other political issue, we would openly recognize these trade-offs and try to balance them to get the most climate benefits for the least cost, recognizing that climate policies need to compete against many other worthy policies.

But in two important ways the climate conversation has gone off the rails.

First, people say — wrongly — that global warming is an existential challenge, risking the end of mankind. Of course, if the world is about to end, it follows that any spending is justified. After all, if a world-obliterating meteor is hurtling towards us, we don’t ask about the costs of avoiding it.

Second, it is also often claimed — somewhat contradictorily — that the green transition will make energy cheaper, societies safer and everyone richer. In this “rainbows and unicorns” scenario, there are no trade-offs and we can afford climate policy and everything else.

Both claims are repeated ad nauseam by Canadian politicians and activists and spread by media hooked on selling climate catastrophes and green utopias. But both are quite untrue.

That is why I’m writing this series. I will outline how many of the most sensationalist, scary climate stories are misleading or wrong and ignore the best climate science. Being data-driven, I will show you this with the best peer-reviewed data and numbers.

So: Is climate change the world’s all-encompassing problem today? One way to test this is to look at extreme weather, which we constantly hear is having an ever-larger impact on our societies. But the data paint a very different picture (see chart).

We have good evidence for the number of people killed in climate-related disasters, i.e., floods, storms, droughts, and fires. (We’ll look at temperature deaths next week.) A century ago, such disasters routinely killed hundreds of thousands, even millions of people in a single disaster. On average, about half a million people a year died in such disasters. Since then, the death toll has declined precipitously. The last decade saw an average of fewer than 10,000 deaths per year, a decline of more than 97 per cent.

Of course, over the past century the world’s population has quadrupled, which means the risk per person has dropped even more, and is now down by more than 99 per cent. Why this great success story? Because richer, more resilient societies with better technology and forecasting are much better able to protect their citizens. That doesn’t mean there is no climate signal at all, but rather that technology and adaptation entirely swamp its impact.

In the same way, climate’s impact on overall human welfare is also quite small. In proportion to the total economy, the cost of climate-related disasters has been declining since 1990. Looking to the future, the best estimates of the total economic impact of climate change come from two major meta-studies by two of the most respected climate economists. Each shows that end-of-century GDP, instead of being 350 per cent higher, will only be 335 per cent higher.

“Only” becoming 335 per cent richer is a problem, to be sure, but not an existential threat. Despite that, as this series will show, many of the most draconian climate policy proposals so casually tossed around these days will do little to fix climate but could dramatically lower future growth and the opportunities of future generations.

We need to get smart on climate. This series will map out how.

Bjørn Lomborg

From the Fraser Institute

By Jake Fuss and Grady Munro

With a federal election on the horizon, it’s worth reflecting on the Trudeau government’s extraordinary fiscal legacy, which includes record-high levels of spending (even after excluding emergency COVID spending), an uninterrupted string of budget deficits, a near doubling of the federal debt from $1.1 trillion to $2.1 trillion, and sky-high federal debt interest payments, which will reach a projected $51.9 billion (more than all GST revenue) this fiscal year.

Clearly, the next federal government, whoever that may be, must get smarter about government spending. Fortunately, as noted in our new study  published by the Fraser Institute, there are many areas within the federal government to find savings.

For example, this fiscal year (2024/25) the government will spend a projected $3.5 billion through the Canada Infrastructure Bank (CIB). Established by the Trudeau government in 2017, the CIB is a federal Crown corporation tasked with investing and attracting investment in infrastructure projects across Canada. Despite approving “investments” totalling $13.2 billion (as of the fourth quarter of 2023-24), the CIB has demonstrated an alarming lack of progress. As of July 2024, only two (out of 76) CIB-funded projects had been completed—the purchase of 20 electric buses in Edmonton and the construction of two solar facilities in Calgary. Small wonder that a 2022 multi-partisan House of Commons committee report recommended the government abolish the CIB.

To find more savings, the government should look at its seven Regional Development Agencies (RDAs), which provide financial assistance (a.k.a. corporate welfare) to businesses in specific regions across the country. Total spending will reach a projected $1.5 billion this fiscal year. But research shows that corporate welfare does little to nothing to promote widespread economic growth but simply allows the government to pick winners and losers in the free market. And rather than using concrete objectives and results to justify their existence, the RDAs rely on vague platitudes such as “businesses are growing” and “communities are developing economically.”

The government should also eliminate its so-called “Strategic Innovation Fund,” which spends tax dollars (a projected $2.4 billion this fiscal year) to simply shift jobs and investment away from some firms and industries to firms and industries favoured by the government, with no net benefit for the overall economy. And “Global Innovation Clusters,” which incentivize firms to spend time and resources modifying their businesses to secure government grants (worth a projected $202.3 million this fiscal year) rather than developing new and improved goods and services.

Finally, there’s the Green Municipal Fund (GMF), which uses federal tax dollars (including a projected $530 million this fiscal year) to bankroll municipal projects that purportedly accelerate the transition to “net-zero” greenhouse gas (GHG) emissions. But several current projects (e.g. “climate-friendly” home tours, funding for climate advocacy groups in Ottawa) will not reduce GHG emissions in any measurable way. In other words, the GMF is spending taxpayer dollars on projects that make no progress towards the GMF’s stated goal.

In total, our study highlights eight areas where the federal government should cut spending, with potential savings totalling $10.7 billion this fiscal year alone. By cancelling these wasteful programs, the government could eliminate roughly one-quarter of the current budget deficit.

Until policymakers in Ottawa get serious about cutting wasteful spending, budget deficits will likely continue. Smaller and smarter government in Ottawa is both possible and necessary.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Grady Munro

Policy Analyst, Fraser Institute