We don’t really want to fight climate change

By Aaron Wherry - Tuesday, December 13, 2011 at 2:49 PM - 0 Comments

Stephen Gordon invokes the law of revealed preference to explain Canada’s withdrawal from Kyoto.

Notwithstanding economically illiterate attempts to pretend otherwise, higher consumer prices for GHG-emitting goods and services are an essential component of any serious attempt to reduce emissions … It doesn’t matter what Canadians tell pollsters about how much they are concerned with climate change; what matters is the choices we make. And whenever we have been offered the choice of accepting personal inconvenience in order to reduce greenhouse gas emissions or of making sure that fossil fuels are cheap and plentiful, we have consistently and overwhelmingly chosen the latter.

‘An act of sabotage’

By Aaron Wherry - Tuesday, December 13, 2011 at 11:37 AM - 0 Comments

Japan, India and Tuvalu add their concerns.

The tiny South Pacific island nation of Tuvalu, one those most at risk from rising sea levels caused by climate change, was more blunt. ”For a vulnerable country like Tuvalu, its an act of sabotage on our future,” Ian Fry, its lead negotiator said. ”Withdrawing from the Kyoto Protocol is a reckless and totally irresponsible act,” he said in an email to Reuters.

Critics in Australia are using the Harper government’s decision to scorn the Australian government.

Leading the world

By Aaron Wherry - Tuesday, December 13, 2011 at 10:14 AM - 0 Comments

France is unimpressed.

“Canada’s announcement that it is withdrawing from the Kyoto protocol is bad news for the fight against climate change,” ministry spokesman Bernard Valero told journalists. ”It is out of the question to relax our efforts or to break the dynamic of the Durban agreement,” he said.

China too. The Guardian, New York Times and CNN take note. John Ibbitson says we should all be ashamed. NDP MP Laurin Liu says the Environment Minister was sidelined at Durban.

Canada out of Kyoto

By Aaron Wherry - Monday, December 12, 2011 at 6:14 PM - 0 Comments

Freshly returned from Durban, Peter Kent announces a withdrawal from Kyoto.

“We are invoking Canada’s legal right to formally withdraw from Kyoto,” Kent said outside the House of Commons. ”This decision formalizes what we’ve said since 2006, that we will not implement the Kyoto Protocol.”

Canada signed Kyoto in the late 1990s, but neither the current Conservative government nor their Liberal predecessors met targets. Kent says the move saves Canada $14 billion in penalties for not achieving its Kyoto targets.

Andrew Leach has tried to sort out the idea that staying in Kyoto would actually mean, so far as penalties might be concerned. More from Andrew here and here.

Full statement from the Environment Minister after the jump. Continue…

The Commons: The tiny, perfect Conservative

By Aaron Wherry - Thursday, December 8, 2011 at 8:42 PM - 0 Comments

The Scene. She is a pair of dimples in a room full of jowls.

Meet Michelle Rempel, the parliamentary secretary to the Minister of the Environment. She is short and smiley and perfectly patronizing. She speaks without holding a script, gestures with confidence and seems even to listen to what her counterparts are saying (even if only in search of a turn of phrase she can turn back on her opponent). Only 31 and barely six months into her first term in Parliament, she is already feigning indignation like she was born here. And so the government side is surely thankful that Peter Kent has been out of town this last little while. Continue…

Peter Kent versus the world

By Aaron Wherry - Thursday, December 8, 2011 at 9:30 AM - 0 Comments

The Environment Minister spreads the good word.

Environment Minister Peter Kent repeated his sharp criticism of Kyoto at a high-level session of the Durban talks. “Kyoto, for Canada, is in the past,” Mr. Kent told a large audience of delegates and climate negotiators on Wednesday. “For Canada, the Kyoto Protocol is not where the solution lies,” he said. “It is an agreement that covers fewer than 30 per cent of global emissions.”

As he spoke, six Canadian activists stood up and silently protested by turning their backs on him, wearing T-shirts that said: “Turn your back on Canada.” Security guards quickly rushed over and escorted them away, leading them through a narrow corridor at the back of the room and then evicting them from the conference. But the protesters won louder applause than Mr. Kent, whose speech was greeted by a smattering of polite applause from delegates.

Earlier this week, Mr. Kent promised the Harper government wouldn’t withdraw from Kyoto during the Durban conference, but wouldn’t comment on what might happen after the talks. Officials from Brazil, Germany, India and South Africa are unimpressed.

After Kyoto

By Aaron Wherry - Wednesday, November 30, 2011 at 1:20 PM - 0 Comments

Andrew Leach considers the past, present and future of Canada’s involvement in international climate negotiations.

So, while Canada is right to abandon Kyoto, and Canada is right that an effective treaty to address global carbon emissions needs to include most/all countries, I don’t think they’re on the right track in demanding an agreement with binding targets for all countries.  First, it’s unlikely you’ll see binding emissions targets imposed on developing countries. That makes it less likely that Canada will have a role in formulating whatever agreement does come around if they’ve disavowed interest based on that condition..  Second, an agreement with binding emissions targets for everyone is, in my view, the last thing Canada should be pushing for.  Canada should, and I will write more on this later, be pushing for an international standard by which a facility operated in the UK, in Alberta, or in India would face the same effective carbon price, or the same reward for reducing emissions. That doesn’t mean carbon tax – it means a system which measures effort, and doesn’t reward historic emissions.

In a follow-up, he explains what withdrawing from Kyoto means in practical terms.

The Commons: Convictions without courage

By Aaron Wherry - Monday, November 28, 2011 at 6:04 PM - 0 Comments

Fred Chartrand/Canadian Press

The Scene.“Kyoto is in the past,” Peter Kent intoned today at an announcement about something else. Not that he was confirming his government’s intention to withdraw from it. But not that he was denying it either. “This isn’t the day,” he explained.

Doing stuff is easy. It’s justifying the doing that’s hard. And so Mr. Kent is not yet ready to say for sure that the government is willing to do something about what it now only implies. The correct day for that is apparently scheduled to be a month from now, just before Christmas. But then someone who knew as much went and told the evening news. Only now Mr. Kent is insisting on pretending that didn’t happen. ”I wonʼt comment on a speculative report,” he said this morning.

He will say that the previous Liberal government’s decision to commit to the protocol was “one of the biggest blunders they made.” And the Prime Minister did once dismiss the whole thing as a “socialist scheme.” And the Conservative platform in 2006 didn’t even mention it. And successive governments have now spent more than a decade successfully ignoring it. And the current government has said it won’t extend past next year its commitment to it. But let it not be said that the government is prepared to actually withdraw from it. At least not yet. At least not that Mr. Kent is willing to say.

Not that the government’s unwillingness to announce a decision stops the opposition from lamenting that decision. Continue…

A never-ending journey of a thousand miles begins with a thousand first steps

By Aaron Wherry - Monday, December 13, 2010 at 9:10 AM - 66 Comments

Environment Minister John Baird, this weekend, on the Cancun accord. “This represents the first step to a single, new legally binding agreement … A first step.”

Prime Minister Stephen Harper, last week, on the Copenhagen accord. “Mr. Speaker, the Copenhagen accord was only a first step.”

Environment Minister Jim Prentice, last February, on the submission of Canada’s emission targets to the Copenhagen accord. “We took our first step down that road on Sunday, January 31, 2010.”

Environment Minister John Baird, three years ago, on the Bali climate talks. “With the United States now signed on to this framework the results of this conference show progress and we see that as an important first step.”

Environment Minister Rona Ambrose, four years ago, on the Clean Air Act. “After more than a decade of inaction on the environment by the previous government, Canada’s Clean Air Act is the first step in turning things around to protect the health of Canadians.”

Headline of news release from the office of Environment Minister Stephane Dion, five years ago, on the coming into force of Kyoto targets. “Achieving Our Kyoto Targets – A First Step Toward a Greener Canada”

Environment Minister David Anderson, nine years ago, on the Kyoto Protocol. “The Kyoto Protocol is only the first step on a long road towards implementing an effective solution to climate change.”

How closely are you following the international climate change negotiations in Cancun?

By macleans.ca - Tuesday, December 7, 2010 at 11:20 AM - 51 Comments

Too ugly to ignore? (Updated)

By Chris Sorensen and Colin Campbell - Wednesday, January 20, 2010 at 4:15 PM - 46 Comments

UPDATE (Feb. 1, 2010): Ottawa has sent a shot across the bow of the companies operating in Alberta’s oil sands by saying they must do their part to help Canada shed its dirty image when it comes to greenhouse gas emissions. Speaking before a group of business leaders in Calgary on Monday, Environment Minister Jim Prentice said the rapid development of the oil sands has contributed to a negative international perception of Canada and is at odds with the “clean energy superpower” image that it aspires to project to the world.

Many had expected the government to give the oil sands a break in any climate change program, but Prentice said that operators will be expected work with Ottawa and Alberta to help the country meet revised emissions targets that are part of the Copenhagen climate change accord. Canada’s new emissions targets, announced by Prentice over the weekend, are to reduce greenhouse gas emissions by 17 per cent below 2005 levels. That’s less than the previous target of 20 per cent below 2006 levels, but in line with targets set by the U.S. government. Prentice added, however, that the federal government still supports oil sands development and won’t adopt any specific measures unless the U.S. does first.

*****

If Canadians learned anything from the bickering at the Copenhagen climate change summit, it’s that our outsized appetite for energy and the ugly image of the Alberta oil sands—sprawling open-pit mines, belching smokestacks, murky tailings ponds—has bestowed upon us the unfamiliar role of environmental villain. And, justified or not, the scrutiny is only going to get worse in a year when Canada will host G8 and G20 summits and the Olympics.

The federal government has so far dismissed the characterization as the work of a few fringe environmental groups, but make no mistake: the oil sands are fast becoming a political problem for Prime Minister Stephen Harper, and one that can’t be ignored indefinitely. “I think Canada is going to have to do something about the oil sands, not just because of the international pressure, but because the unconstrained growth will make it so difficult for us to reach the targets we’ve set for ourselves,” said a member of Ottawa’s climate change panel and Copenhagen conference attendee, who spoke on the condition of anonymity. (He was referring to the government’s stated target of reducing emissions by 20 per cent from 2006 levels by 2020, not previous Kyoto targets.)

Continue…

The Commons: Back to the future

By Aaron Wherry - Tuesday, November 17, 2009 at 8:51 PM - 23 Comments

The Scene. Michael Ignatieff stood with a slight smile. His side cheered, government members jeered.

“Welcome back!” chirped one.

Then to the question, which was, lo and behold, something to do with the environment and the need for urgent action against potential ruin.

“Mr. Speaker, for four years, the government promised a plan to reduce greenhouse gas emissions,” Mr. Ignatieff reported. “Today, the Environment Minister has once again postponed the announcement of any action until the end of 2010. We’re three weeks from Copenhagen. How can we protect the environment if the government takes no position?”

This was some riddle.

Up to answer was John Baird, an environment minister in a previous life.

“Mr. Speaker, this government is working constructively with our partners around the world to ensure that we tackle global warming and the challenge of climate change,” Mr. Baird declared. “What we will not do is make promises that we cannot keep.”

It is a testament to Mr. Baird’s abilities as a public performer that he did not here descend into giggles. Continue…

Bring it on

By Aaron Wherry - Friday, November 13, 2009 at 10:35 AM - 115 Comments

National Post, November 5. Mild-mannered, absolutely. But Environment Minister Jim Prentice wants the world to know he’ll be no boy scout when crucial climate change talks convene in Copenhagen a month from today … In the end, it’s almost a guarantee that no matter what happens, Canada will be vilified on the world stage as an energy superpower that abandoned the Kyoto Accord and isn’t shouldering its share of carbon reductions. ”Well, if the price of having strong, capable, tough negotiators at the table is being singled out and given ‘fossil of the year’ awards, then so be it. Bring it on,”  Mr. Prentice told me, doing his best impression of not being a boy scout.

National Post, November 12. As the most middle-of-the-road federal cabinet minister, Jim Prentice was never apprehensive about appearing on CBC. But the environment minister turned down an invitation to appear Friday morning on CBC radio’s flagship show The Current for a very good reason: a hostile host. That would be David Suzuki, the wildly successful environmental crusader and perennial alarm-ringer, who has seen the end of the world coming under a variety of climate change scenarios … What bothers Minister Prentice’s people is how they’re being asked to appear on a national current affairs show where the host would be an obvious antagonist.

Lowered expectations

By Aaron Wherry - Thursday, February 5, 2009 at 6:17 PM - 7 Comments

Rona Ambrose, then environment minister, July 5, 2006. “The transit tax credit will not only save people money, but by taking public transit Canadians will be helping to improve our environment. The transit tax credit is part of our government’s made in Canada environmental plan. Our transit tax initiative will take the equivalent of 56,000 cars off the road each year which will significantly reduce greenhouse gases here in Canada.”

Environment Commissioner, December report. “In its 2007 Climate Change Plan under the Kyoto Protocol Implementation Act, Environment Canada stated that the Tax Credit is expected to result in emission reductions of 220,000 tonnes each year from 2008 through 2012. This was approximately double Finance Canada’s estimate of the resulting emission reductions in its strategic environmental assessment. In its 2008 Plan, Environment Canada amended the figure for expected reductions to an average of 35,000 tonnes per year—about 16 percent of the original estimate. Given the lowered figure, the Tax Credit will have a negligible impact on Canada’s greenhouse gas emissions. Many factors influence public transit ridership, including the price of gasoline. The result is that it is almost impossible to measure actual greenhouse gas emission reductions attributable to the tax credit. With regard to other air emissions, Environment Canada could not provide any analysis to support the assertion that the Tax Credit would result in measurable impacts.”

Jim Prentice, environment minister, this afternoon. “Well, as I said, there are two ways to measure the tax credit.  One is greenhouse gas reductions.  The other is it’s important as a fiscal measure for people who use bus transportation and it needs to be measured in light of both of those public policy objectives.  But certainly, you know, we will take the report.  We’ve just received it in the last few hours.  We’ll take it.  We’ll study it and we’ll learn from what the commissioner has to say.  They do — they do good work and we can all benefit from their advice.”

David McGuinty, Liberal environment critic, asked to comment on Prentice’s remarks. “Well then give me a tax break for taking out my garbage.”

Green? Who, me?

By Andrew Coyne - Thursday, October 2, 2008 at 12:00 AM - 1 Comment

Toward the end of last year, the Prime Minister embarked on his usual round of exclusive interviews. The news was not good. He told the Globe and Mail exclusively that Canadians should brace themselves for the impact of pending federal regulations on greenhouse gas emissions, warning that “mandatory reductions impose costs. Those costs are real in the short term. There is no way to avoid them. None.” He told the Toronto Star exclusively that the implementation of the regulations in the new year would bring home “the reality that you cannot reduce greenhouse gas—you cannot mandate it—without there being some economic cost in the short term.” Similarly bleak advisories were issued in exclusive interviews with the CBC (“very real costs”), and the Canwest News Service (“there is no way to do this without imposing costs on our economy in the short term”).

Well, now it’s October, in the middle of an election campaign, and Stephen Harper no longer wants to talk about the costs of his environmental plan. Indeed, he never even mentions his plan. Rather, he wants to talk about the other guy’s plan: the Green Shift that Stéphane Dion has made the centrepiece of his platform. Or, as Harper prefers to call it, the carbon tax, ignoring the offsetting cuts in personal and corporate income taxes in the Liberal plan. At every stop along the campaign trail, he assails the plan as a “risky scheme,” a “permanent tax on everything” that would plunge the Canadian economy into a recession. At the very least, he suggests, we cannot take the chance, in a time of “global economic uncertainty.”

The message appears to have hit home. The Liberals have been steadily losing altitude throughout the campaign, and while Dion’s personal unpopularity is undoubtedly a factor, the Green Shift/carbon tax has by all accounts been a major contributor. More significantly—and remarkably—no one has thought to ask the Prime Minister about the costs, and the risks, of his own plan. It has become a cliché of political commentary that “no one understands” the Liberal plan. But is anyone even aware of the Conservative plan?

It wasn’t that way in 2007, when the Conservatives released, to much fanfare, “Turning the Corner”—a “regulatory framework” for industrial greenhouse gas emissions, updated in a “final” regulatory framework last spring. Then, the Conservatives were anxious that everyone should know about their deep commitment to the fight against global warming, previous efforts having failed to impress this adequately on the public mind. The plan would require a select group of heavy industries—electricity, oil and gas, mining, metals, pulp and paper, and the like—to reduce their emissions “intensity,” that is emissions per unit of output, by 18 per cent within two years, with further reductions of two per cent annually required after that. The goal: an absolute reduction of 20 per cent in Canada’s emissions by 2020, 65 per cent by 2050.

The plan has many parts, but at its heart is the notion of tradeable emissions credits. Or in shorthand, cap-and-trade: firms that reduced emissions by more than they were required would earn credits on the surplus, which they could sell to other firms on the open market. Firms that found it too expensive to meet their targets could make up the shortfall out of these credits. Or they could buy them overseas, through the Kyoto Protocol’s Clean Development Mechanism. Or they could pay “contributions” into a green technology fund, starting at $15 for every tonne of carbon dioxide (or its equivalents) they were over their limit: a carbon tax, by another name.

But whatever the “compliance mechanism” industry adopts, have no doubt: you will pay. As the document puts it, “a portion of the costs associated with these investments and changes in operations will be passed on… in the form of higher prices”—just as the PM had warned. “Canadians can therefore expect to bear costs under the regulatory framework that are not trivial.” An accompanying press release notes this could mean “noticeable price increases for consumer products such as vehicles, natural gas, electricity, and household appliances,” adding “there will be a period of adjustment for all Canadians.”

How noticeable? How much adjustment? No one seems to know. To be fair, there’s no way anyone could. The final final regulations haven’t been released yet, let alone implemented. But even if they were, it is in the very nature of cap-and-trade that the costs are indeterminate. The price of the credits will be set by the market, in the usual way—by the intersection of supply and demand. A carbon tax is the reverse. The price of carbon is known in advance: $10 a tonne to start, rising to $40 by year four. How much emissions will fall as a result can only be guessed at—a point the Conservatives are quick to make.

But if the question is which plan is economically “riskier”—in the sense of uncertainty about its cost—the answer is clear: the Conservatives’. We know how much the Liberal plan will cost. We’ve no idea what the price of the Conservative plan will be. Well, we can guess: the government forecasts the market price of emissions credits in 2010 at about $25 a tonne, rising to $65 a tonne by 2018— not far off the cost of the Liberal carbon tax.

That’s not entirely coincidental. Remember that supply-and-demand graph from Economics 101? You can fix the price, as the Liberals propose, and let supply and demand adjust. Or you can fix the supply, as in the Conservative plan, and let the price rise. It amounts to the same thing. So you would expect them to cost about the same, for the same amount of reductions. The only way the Conservative plan could cost less than the Liberal plan is if it reduced emissions less. As indeed is the plan: while the Liberals also target 20 per cent reductions in emissions by 2020, that’s from 1990 levels, the original Kyoto reference point. The Tory reductions are measured against 2006 levels—22 per cent higher than the 1990 benchmark.

Moreover, there is virtually no chance of meeting even the more relaxed Tory timetable. The government itself concedes that, of the required 150 megatonnes (Mt) of reductions in emissions, just 60 Mt would come from the industries participating in the cap-and-trade scheme: not surprisingly, since they account for only a little over half of Canada’s emissions. The rest would be made up out of a grab bag of regulatory and subsidy schemes of a kind that have been tried—and have failed—before. Simulations by Simon Fraser University’s Mark Jaccard, considered Canada’s leading expert on the economics of climate change, suggest current government policy would result in reductions of about 120 Mt by 2020 from projected levels, i.e. from the levels to which they would otherwise have risen. But in absolute terms, emissions “are unlikely to fall below current levels,” meaning we’re on track to overshoot our target by something like 200 Mt.

In sum, the Conservative plan is just as costly (per tonne of emissions reduced) as the Liberals’, twice as complicated (emissions trading markets are, as Europe has learned, fiendishly difficult to design: just the task of ensuring credits are based on “real, incremental, verifiable” reductions would take several pages to explain), and probably half as effective. (Not that there’s anything wrong with cap-and-trade. But to get anywhere near our targets, we’re probably going to need both a carbon tax and cap-and-trade, as indeed the Liberals propose.) The Tory plan has, however, proved unassailably superior in political terms. The very thing that makes the Liberal plan less risky economically—the costs are known up front—makes it more risky politically. The Conservatives have succeeded in implying, without quite saying, that the choice is between a costly scheme and no costs at all. They’ve hit the political sweet spot: enough of a plan to say they have a plan, but not so much as to get in anyone’s face.

The Liberals have achieved the exact opposite (the sour spot?): a plan that is not radical enough to be the game-changer they had hoped, but costly enough to annoy just about everybody. True, Dion’s failings as a salesman haven’t helped. And yes, their timing could have been better, pitching a plan to raise fuel taxes just as oil and gas prices were setting all-time records—to say nothing of the turmoil now convulsing the world financial system. But the plan’s design was flawed from the start. The Liberals never have told us how a federal carbon tax would apply in provinces that already have one, while flirting, foolishly, with imposing tariffs on countries that have none. Most disastrously, they did not cut income tax rates by anything near enough to make a difference, economically or politically—certainly not enough to support claims of revenue neutrality. The tax cuts, such as they were, have long since been forgotten.

It should be mentioned that the Conservatives have had helpers: the New Democrats, whose environmental policy is a similar mix of cap-and-trade and subsidies, and who, like the Tories, have successfully demonized the carbon tax, while pretending their own plan will cost no one but a handful of “big polluters.” As Laval University economist Stephen Gordon has written, it is an alliance between those with “a visceral hatred of taxes” and those with a “visceral hatred of corporations.”

But it is the Conservatives who have been the demagogues-in-chief in this affair. Among the long-term costs will be Conservative credibility. The same Conservatives who have told us for years that prices, in a market economy, are to be preferred to regulation as a means of changing economic behaviour, suddenly forget their economics when it comes to pricing carbon. The same Conservatives who have long insisted that tax rates are critical to incentives seemingly cannot comprehend the logic of shifting taxes from income to carbon. And the same Conservatives who have long lectured us that “corporations don’t pay taxes, people do”—that any costs imposed on business will inevitably be passed on, usually to consumers—would rather we forgot they ever mentioned it.