Canada faces significantly higher costs than the United States to meet the same targets for greenhouse-gas reduction, a difference that is heightened by federal delays in policy action.
Prime Minister Stephen Harper signalled last week that Canada will set a less ambitious emissions-reduction goal for 2025 than the one announced by President Barack Obama, which aims to reduce greenhouse gases (GHGs) by 26 per cent from 2005 levels.
Governments around the world are announcing new targets in preparation for December's United Nations summit in Paris, where they aim to conclude a global treaty to slow the pace of climate change.
Mr. Harper said Canada will announce its target in May, and acknowledged new policy measures will be required to hit Ottawa's 2020 emissions-reduction goal.
The Prime Minister's statement reflects a long-standing truth in bilateral climate relations: Canada can either keep pace with U.S. ambition by paying a higher cost, or accept the same cost per tonne of emissions reduction and accept a lower target, economists say.
The cost per tonne of GHG reduction for the United States is roughly half what Canada faces in meeting the same target of reducing emissions by 17 per cent from 2005 levels by 2020, says David Sawyer, a principal in Ottawa-based consultancy EnviroEconomics.
Mr. Harper adopted that target at the Copenhagen summit in 2009, as the Americans announced the same goal. But the U.S. has an advantage because roughly 40 per cent of its emissions come from coal-fired electricity, and it is relatively inexpensive to replace coal with natural gas or even renewables. Only 15 per cent of Canada's electricity comes from burning fossil fuels, so there is limited potential for cheap reductions across the sector.
At the same time, it is difficult and expensive to reduce GHGs in the oil sands – Canada's fastest growing source of emissions.
For 2025, the gap between U.S. and Canadian costs shrinks somewhat because the Americans will no longer be able to rely on the relatively inexpensive shift from coal power, Mr. Sawyer said.
He added, however, that higher costs in Canada are exacerbated by policy inaction at the federal level.
"We don't [want to] justify inaction because of costs relative to the U.S.," he said. "If we had got going shortly after Copenhagen, costs would have been much lower. Inaction means closing the gap [to the 2020 target] now is really expensive."
As well, the comparison on costs misses important benefits that will accrue to economies that embrace a low-carbon future, and develop low-emitting approaches to energy supply and demand, said Louise Comeau, executive director at the Climate Action Network Canada.
Ottawa has long been aware of the cost differential. A 2011 report by the now-defunct National Roundtable on the Environment and Economy warned that Canada could either have a similar price on carbon as the U.S. and accept less emissions reduction, or have the same level of ambition on targets but impose a higher effective price on carbon.
Former roundtable president David McLaughlin said the Harper government's insistence on aligning climate action with the U.S. has "hindered Canadian action, not helped it."
He said Canada needed to set its own emission targets, based on its own unique energy economy but with some additional measures in the oil and gas sector.
"We will never meet any emissions-reduction target by giving the oil and gas sector a pass," he said. "You cannot ignore the fastest growing source of emission in your country and hope to be credible on climate change."
Federal officials say Ottawa will be releasing Canada's post-2020 targets in the coming weeks.
"Our position is that targets should be based on each country's unique national circumstances," a spokesman for Environment Minister Leona Aglukkaq said.