Canada’s new climate-policy guru says the world will need to keep oil reserves in the ground to achieve its climate-change targets and questions the effectiveness of having a few ambitious countries going it alone with aggressive carbon pricing.
Environmental economist Carolyn Fischer is one of 20 world-leading academics that the federal government has lured to the country with lucrative Canada 150 research chairs, Science Minister Kirsty Duncan announced Thursday.
Dr. Fischer will take up her position at University of Ottawa and work with the Smart Prosperity Institute, which is based there.
Born in Ontario but raised largely in the United States, the economist has established herself as one of the world’s leading researchers on climate-change policy. She is a senior fellow at the Washington-based think tank Resources for the Future, and currently a fellow with the European Commission at Venice’s Eni Enrico Mattei foundation.
In a phone interview, Dr. Fischer said she is keen to have the opportunity to work in Canada, where governments are implementing a wide array of climate-change policies.
“Internationally, Canada is becoming a leader on climate change, while the U.S. federal government is making a concerted effort to become a laggard,” Dr. Fischer said.
“The contrast couldn’t be more striking. Canada has made a strong commitment to address greenhouse gas emissions …. That makes it an exciting time to be working on climate policy in Canada, especially from an environmental economist’s perspective.”
She will be landing in Canada as the political debate over climate policy and carbon pricing heats up.
The Liberal government tabled legislation this week to impose a carbon tax in provinces that refused to adopt their own pricing system or fail to meet federal standards. At this point, the federal levy will apply in Saskatchewan and New Brunswick, but Ottawa is still assessing plans in other provinces and territories to ensure they will meet federal standards.
Meanwhile, conservative opposition parties in Ontario and Alberta have pledged to dismantle provincial carbon pricing policies if they win in the upcoming elections, setting the stage for potential federal-provincial battles over the carbon tax.
The Smart Prosperity Institute think tank where Dr. Fischer will work has a leadership council that includes some of the country’s top business executives and regularly provides policy advice to the federal and provincial governments.
The institute has recently secured more than $10-million in funding over the next seven years to support research on climate policies and how best to support the development and widespread adoption of low-carbon technologies.
In a paper she co-authored last year, Dr. Fischer warned that the most politically-appealing policies are not always the most efficient or effective, and can have negative consequences that undercut the intention.
The paper, written with University of Michigan economist Stephen Salant, argued that a significant portion of today’s oil reserves will not be extracted as the world seeks to limit climate change, with the high-cost resources – such as oil sands – most at risk.
“If, collectively, we’re really serious about meeting the climate challenge, we know we can’t burn everything we’ve got, especially coal,” Dr. Fischer said in the interview. “It makes sense that the highest-cost and highest-emission resources are going to be the least competitive and stay in the ground.”
In assessing the most effective approach to addressing climate change, Dr. Fischer and Dr. Salant warn against an undue reliance on high carbon prices among a relatively small number of countries and states.
If those jurisdictions dramatically reduce their oil demand by imposing high emissions prices, that would be like squeezing on a balloon. World crude prices would fall, stimulating demand in parts of the world where carbon emissions are not taxed, the study concluded. The world could meet its carbon budget that way, but the approach puts the most pressure on resource owners in jurisdictions like Alberta.
By contrast, approaches that avoid wide disparities in carbon prices – such as broad-based adoption of carbon pricing worldwide and more investments in low-carbon technologies that all countries can use – have two benefits, the authors concluded. Not only do such approaches reduce the cost of the transitioning off fossil fuels to lower-carbon sources, but they also will ensure producers will receive higher prices for the fossil resources that can be burned within the carbon budget.