Proposals for helping the environment without hurting the economy

As the world struggles to restrict carbon emissions into the atmosphere, Canada stands out. Although many countries emit larger absolute amounts of carbon, we are, among developed countries, the second-largest per capita emitter of greenhouse gases, (after Australia).
We need to recognize this status, and show leadership on carbon. If we fail to do so, our economy will attract negative attention and possibly even sanctions on our exports. Anyone who does not take this risk seriously should consider the current difficulties of the Keystone XL Pipeline in the U.S. and proposals in the EU to label oilsands products as “dirty” fuel.
Should our oilsands exports be limited, an industry that supports our national prosperity will be suppressed: whether Canada wants to do the “right thing” for the global climate, we must do the “smart thing” and manage carbon in our own self interest.
Canada agreed to extremely challenging goals for carbon reduction in the Kyoto Protocol in 1997 (to six per cent below our 1990 levels by 2012) and the Copenhagen Accord in 2009 (to 17 per cent below our 2005 levels by 2020). But we have never had a clear plan of how to get there. It should be no surprise, then, that we are not currently on track to arrive.
To change this, we will have to implement an ambitious and smart national program of carbon efficiency that will affect the life of every Canadian. Such a program must recognize one technological reality and two political constraints. The technological reality is that fossil fuels will drive our economy for the next 25 years. Renewable energy is highly desirable, but we are a few technological breakthroughs from it becoming a base fuel. Politically we are constrained by the continuing lack of consensus across the country on the causes and perils of climate change, which limits public buy-in. This problem is compounded by the fact that if big emitters such as China, India and Russia are not with the global program, Canada’s reductions will be ineffectual; we run the risk of incurring sacrifices to no significant benefit for anyone.
The solution? We must focus on energy measures that deserve to be implemented for reasons other than carbon, but that simultaneously reduce our carbon footprint:

  • Press the pedal on natural gas: Natural gas emits half the CO2 of coal and two-thirds that of oil. It is cheap, abundant, and low in other pollutants. We need to convert as many power plants, industries, cars, trucks, and trains to gas as we can. Yes, development of natural gas brings its own environmental issues; these will need to be managed carefully.
  • Invest in energy efficiency: Consumers and producers can do much more. We need to reduce consumption of electricity per unit of GDP by 15 per cent. With recent innovations such as LED lighting and smart distribution grids, this is readily doable – and required investments will more than pay for themselves with reduced power bills. We must also demand that oil and gas producers – especially the oilsands – tighten up the efficiency of their production.
  • Expand rapid transit: Canada still needs to get more people out of cars and onto rapid transit. The spinoff is obvious: less congestion and local pollution in our cities.
  • Expand small-hydro and biomass: There is very significant potential throughout the country for economic development of small hydro and biomass (biodiesel and waste). The local benefits are clear.

Supplemental measures that are desirable, but justifiable for reasons of carbon reduction only, are:

  • Promote carbon capture and se-questration (CCS): There is significant promise in sequestering carbon in underground reservoirs. Federal and some provincial governments are making large catalytic grants to pilot projects. We should double up on them.
  • Invest in innovation in renew-ables: We need to advance the day when renewables become a base fuel. More R&D is good, but the acute need is for support in commercialization of technologies. Government can facilitate initial commercial contracts through: “feed-in tariff” arrangements (as in Ontario); its own procurement programs (as in the City of Calgary); or specific project subsidies, such as the federal Wind Power Production Incentive program. There is particular untapped potential in tidal power in Canada.

Absent from the above measures is a carbon tax or a “cap-and-trade” system for emissions. In order to pack the desired punch, a carbon tax will have to be so high as to impair our economic growth. It would also slow the necessary large-scale shift to natural gas. Cap-and-trade works best for bigger point-source emitters, but regulation can address these more effectively.
This is clearly a very ambitious program. We may have withdrawn from Kyoto but there are some encouraging developments domestically. For example, in August 2011, the federal government demonstrated a commitment to a new natural-gas standard in devising regulations for coal-fired power plants. Moving beyond this will require well-directed regulation, funding and uncommon co-operation between all levels of government and the private sector. But the potential prize is a Canada that tops both the economy and environment league tables. We can get there if we try: now is the time to start.
Ian Mallory is president of Pickworth Investments LP, Calgary.