It would be hard to imagine a worse report card than the one the Environment Commissioner dropped on the government the other day, regarding its plan to reduce Canada’s greenhouse-gas emissions. You may have seen the highlights:
- We have made next to no progress in reducing emissions in 30-odd years of trying. Notwithstanding more than 10 different federal plans and billions of dollars in spending, emissions are “significantly higher” now than they were in 1990. Moreover, “there has been no sustained downward trend” since 2005. What reduction there has been is mostly due to two things: the 2008 financial crisis and the 2020 pandemic.
- We are lagging well behind other countries. Canada is the only country in the G7 to increase total emissions since 1990, and boasts the smallest reduction in emissions since 2005.
- We are well above our current emissions target, a 40-per-cent to 45-per-cent reduction in emissions by 2030 from 2005 levels. Emissions as of 2021 were still about 50 per cent above target (670 megatonnes versus 440), and rising. They have probably risen further since then.
- We are unlikely to hit our target. Bad enough that Canada has missed every one of its previous targets for greenhouse-gas emissions, but it is “not on track” to meet its 2030 target. “Course correction is critical,” the commissioner advises. That doesn’t mean it will happen.
That’s the bad news. Here’s the worse news. Disastrous as this scenario is, it is almost certainly optimistic. This does not appear to be widely understood. Maybe we won’t hit the 40-plus-per-cent target the government unveiled in 2021, some commentators noted, but didn’t the commissioner say we were on track to reduce them by 34 per cent – better than the original 30-per-cent reduction to which the government committed us at the Paris climate conference in 2015?
No. That 34-per-cent projection is not the commissioner’s, but the one issued by the Environment department in December of last year. And if there is one thing the commissioner’s report makes abundantly clear, it is that we should attach no significance whatever to the department’s projections. Its estimates of future emissions are built on air and its plans to achieve them are made of green cheese. Consider:
- Not only have many of the most important measures in the government’s 2030 Emissions Reductions Plan yet to be implemented, months or even years behind schedule, but most of them have no schedule to be behind (“Only 45 per cent of the measures in the plan had an implementation deadline”) nor any way to assess how far behind schedule they are (the department had “no information” on whether they “were on track to be implemented on time”).
- Similarly, not only is the plan likely to fall short of its overall reductions target, but most of the measures it contains don’t have a target to fall short of (“The plan did not include a target or expected emission reductions for 95 per cent of its measures”), nor any means of tracking how far short of the target each is likely to fall (of the measures that had a target, fewer than half had “specific milestones to track annual progress”).
- For most of the measures, the expected reduction was zero: “Less than half of the measures tracked … were expected to directly reduce emissions.” The best the department could say of the rest was that, while they would not achieve any reduction in emissions themselves, they “aimed to enable other measures to reduce emissions.”
The department’s latest forecast, then, is no more likely to prove accurate than any of the string of flaky forecasts it has issued previously. Certainly its projections are not based on any newfound practical rigour. Rather, they are based on what might charitably be described as wishful thinking. Among other problems identified by the Environment Commissioner, they:
- “assumed that there would be no delays in the design and implementation of mitigation measures,” about which see above.
- “took for granted that some outcomes would occur” without any assurance they would. For example, the modelling “assumed that all new buses would be electric by 2040.” However, “it did not have or model a measure that would require this outcome.”
- “assumed that some of the technologies required to reduce emissions would soon be available.” Carbon capture and storage, for example, a technology that is still very much in its infancy, is assigned responsibility for 27 megatonnes of emissions reductions annually by 2030.
- and, incredibly, “did not factor in the impact and cost of climate change” – for example, how “a changing climate would increase the number of hot days and therefore [increase] energy demand from air conditioning.” It’s easier to fight climate change if you assume the climate does not change.
But never mind trying to project future emissions. The department does not even know what emissions are now. Rather it relies on figures that are at least 16 months old. The 2023 progress report the department is supposed to release in coming weeks will be based on 2021 data. Likewise, “Canadians will not know until April 2032 whether the 2030 emission reduction target has been met.”
Still, historical numbers have their uses. For one thing, you can rewrite them to make current performance look better. You’ll notice Canada’s targets are invariably stated in relative, rather than absolute, terms: in proportion to 2005 levels, rather than as a fixed number of megatonnes.
Sure enough, the commissioner reports, “we found that the department was planning to update its methodology for calculating historical emission data” for its next report. “The emissions reported for past years, including 2005, were expected to be significantly higher than in previous reports.”
Result: “With a higher baseline level in 2005 to work from, the target level for emissions [in 2030] will also be higher.” That’s how the government plans to succeed: not by getting our emissions down to the target, but by raising the target.
It’s still likely to fail. The department’s projection, phony as it is, is also nearly a year old. A lot has happened since then, including the massive wildfires that blanketed much of the country this summer, and last month’s cynical decision to exempt heating oil from the carbon tax, centrepiece of the government’s emissions-reductions strategy.
Even if that is not followed by further carve-outs, from a Liberal government that is 15 points behind in the polls and falling, the Conservatives have vowed, should they come to power, to scrap the tax altogether. Just the anticipation of this will cause many businesses and consumers to hold off on making the kind of investments in emissions-reducing technology the tax is supposed to encourage.
As it is, the tax is responsible, by my calculation, for just one-third of actual and planned emissions reductions. But if that ratio falls further – if, indeed, it falls to zero – then one of two things must happen: Either we will fall even further short of our target, or governments will have to make up the difference with other policies. Other, much more expensive policies.
But the policies we have now are already too costly, in the sense of “costlier than the alternative”: The subsidies and regulatory schemes that account for the bulk of current reductions almost always cost the economy more than a simple carbon tax would – in some cases many times more. The cost of subsidies to purchasers of electric vehicles, for example, has recently been estimated at $355 for every tonne of emissions avoided – versus the current national carbon price of $65 a tonne.
A 2019 study by the Ecofiscal Commission remains the most authoritative comparison of the costs of the two approaches. The study’s estimate of the cost of a “pure” carbon-pricing approach to achieving our Paris target was in line with other studies, at about one-20th of 1 per cent of GDP annually. The cost of a more regulatory-heavy approach, on the other hand, it estimated at as much as four-fifths of a percentage point – 16 times as high.
At some point the costs of any action can become greater than the benefits. In this case, the benefits come in the form of costs avoided. But what are the relevant costs for this calculation? How much should we be willing to pay, and how should this be determined?
One way is: whatever it costs to meet our targets. But the significance of our targets is more political than climatological: Whether the world burns does not depend on whether Canada, responsible for 1.6 per cent of global annual emissions, meets its targets. Climate is global, not local.
Another way to calculate how much we should be willing to pay to reduce our emissions is based on the cost of the harm they would otherwise cause: to the economy, to public health, and so on. Actions to reduce emissions are worth taking so long as they cost less than this benchmark, known as the social cost of carbon (currently estimated at US$51 a tonne). But note that this implies no particular target for the amount of emissions reduced.
Any particular measure is likely to be imprecise. But that only reinforces the case for reducing emissions by the cheapest means possible. The lower the cost of any action we take, the better the odds that it will be worth doing. The costs of a carbon tax, as we’ve seen, are relatively small – so small that they are probably worth bearing. The costs of other measures – not only existing ones, but the ones that are now likely to be piled on top of them – are probably not.
That kind of comparison is worth performing at the best of times. It’s critical in our current state. It’s one thing to absorb a 0.80-percentage-point hit to growth in an economy with an underlying annual growth rate of 4 per cent or 5 per cent. It’s quite another in an economy that is projected to grow at only 1.6 per cent a year. Deliberately cutting economic growth in half, in a country with an aging population, runaway health care costs, and governments, particularly at the provincial level, that are careening toward insolvency, is not an option.
Certainly it should not be, in the presence of cheaper, more efficient alternatives. Yet it seems that is where we are now headed. Madness.
Andrew Coyne