THE BIG GRAB Part 1: Knock, knock. The low-carbon future is here

Ready or not, the low-carbon future is at Canada’s doorstep. And most Canadians have begun to embrace it.

Recent polling shows that solid majorities of Canadians, across all provinces and across all political parties, want their federal government to act on “very serious” climate change.

Majorities also support paying up to $50 a month in carbon taxes or cap-and-trade -- many times more than B.C. residents have been paying since 2008, when that province's pioneering carbon tax kicked in. And three-quarters of all Canadians have already joined a joint cap-and-trade effort with several American states, including California, whose economy alone is the size of Canada’s.

The Conservative government says “climate change is one of the most serious environmental issues facing the world today.” Prime Minister Stephen Harper committed the nation to matching U.S. climate-pollution cuts of 17 per cent from 2005 levels. As Harper and others have said many times, Canada’s economy can’t afford to be out of step with the U.S. on climate action.

”The integration of our economy with the United States means that Canada will be forced to limit industrial emissions to keep pace with U.S. action on the issue.”
– “Divided We Fail” report

The good news, according to Canada’s latest greenhouse-gas (GHG) inventory, is that from 2005 to 2008, the combined emissions of all the provinces -- except Alberta -- fell by 10 million tonnes a year. Most Canadians now see the threats and opportunities posed by climate pollution. Most are already taking action. And most want more action now.

Americans are doing even better

Unbeknownst to most Canadians, America under presidents Bill Clinton, George Bush and Barack Obama has been quietly but steadily removing climate pollution from their economy much faster than Canada.

In 1990, Canadians made the same amount of money per tonne of carbon dioxide (tCO2) as Americans. Not anymore.

Now, Americans make hundreds of dollars more per tonne, and the average American now takes home a $5,000-a-year bonus as a result. More than a third of the world’s clean-tech venture capital reportedly flows into California alone.

The gap between the U.S. and Canada in reducing both total CO2 and CO2 per capita has been widening for decades. The average American’s climate-pollution footprint has fallen over 20 per cent in the last decade and is now down to 1964 levels. In fact, Americans are already most of the way to meeting our shared target of a 17 per cent national cut by 2020.

The U.S. "carbon tax"

What many Canadians don’t understand is that Americans have been spurred on by a powerful, de facto “carbon tax”. It is not official -- but it is just as real as an official tax.

On oil

At $90 a barrel, the average American spends $1,000 a year on imported oil.¹ This money siphon -- $1.3 trillion in the last four years -- has grown to represent nearly half the U.S. trade deficit. The rise in oil prices over the last month alone is estimated by economists to be enough to knock at least half a percentage point off the growth of the U.S gross domestic product (GDP).

“The United States’ continuing addiction to oil presents a serious threat to our national security and economy.”  It's a refrain heard almost daily across the U.S. Even the American military, the biggest single oil consumer in the world, has committed to huge percentage of oil cuts by 2020. Oil, not coal, is the main source of CO2 pollution in the U.S. -- and Americans are paying dearly for it. Their oil comes with a large de-facto economic penalty, and they want out.

“Why should a dried-up little country like Libya with a crazy dictator play havoc with America's economic security?"
-- former California governor Arnold Schwarzenegger

On coal

Burning coal for electricity is the second biggest source of CO2 in the U.S. And again, there are significant built-in costs to Americans for this emissions source.

Several recent studies from places like the American Lung Association, the National Research Council and Harvard Medical School show that coal emissions cost Americans hundreds of billions of dollars a year. These costs are estimated to be equivalent to a carbon tax of $50 to $250 per tCO2.²

The international Deutsche Bank sees the coal share of U.S. electricity dropping nearly 30 per cent by 2020. Kevin Parker, global head of asset management for the bank, says that "Coal is a dead man walkin' ... Banks won't finance (coal-fired plants). Insurance companies won't insure them. The (Environmental Protection Agency) is coming after them." 

Meanwhile, the U.S. is seeing other cleaner electricity sources become cheaper than coal. New U.S. electrical generation is becoming cleaner because it is cheaper to be clean. Natural gas is one example. But more surprising to most people is that solar has been the fastest growing new power source for years, and that since 2007, wind has averaged 35 per cent of all new electricity sources – double that of new coal and new nuclear combined. In fact, new wind is now significantly cheaper than new coal and has recently hit price parity with natural gas: about 6 cents/kWh.

U.S. vs Canada

The Canadian government’s National Round Table on the Environment and and the Economy (NRTEE) recently released a “Climate Prosperity” report with up-to-date economic analysis and modeling. The study shows that because Canada has so much more left to do, it now needs an official carbon price 45 per cent higher the U.S. does to reach our shared 2020 goal.

NRTEE recommends that Canada institute an official carbon price now, even if the U.S. doesn’t create its own official price. Without doing so, Canada risks falling even farther behind. The roundtable modelling shows clearly that delay will bring greater risks and end up costing us more in the long run.

Other nations are acting too

The U.K. has cut emissions by 19 per cent since 1990. The British government says that green energy is cheaper than fossil for the U.K. at the point when oil reaches $100 per barrel.

The 41 Annex-1 nations under the Kyoto Protocol have collectively cut emissions by 10 per cent since 1990. And the European Union is on track to cut emissions 25 per cent by 2020. A recent study showed that even increasing the target to 30 per cent would boost the EU's GDP and create millions more jobs.

“The longer we wait, the higher the cost will be ... As oil prices keep rising, Europe is paying more every year for its energy bill and becoming more vulnerable to price shocks. So starting the transition now will pay off.”
– EU climate commissioner Connie Hedegaard

Even Australia, the only one of the 17 OECD (Organisation for Economic Co-operation and Development) nations to be trailing Canada in low-carbon prosperity efforts, has a prime minister promising an economy-wide carbon tax starting next year as a transition measure until a full cap-and-trade system can be set up. That nation is reeling from a summer of extreme weather damages.

“Today, we must embrace another moment of decision for the future of our nation: a decision to cut carbon pollution and build a clean energy economy for the 21st century … No opinion poll can change the fact that climate change is real. It is caused by human activity. And we must cut carbon pollution ... In a nation rich in fossil fuels, I wish it were not so. But it is … I will not trifle with our nation's future. We cannot afford to be stranded with an outdated high-emissions economy … None of this means we have to lead the world, and we have not. At the same time, we cannot afford to be left behind, yet we are. While Australia delays, our peers and competitors are on the move … We're going to have to work hard if we don't want to be left behind.”

– Australian Prime Minister Julia Gillard 

While not always in a straight line, the lower-carbon reality is marching inexorably forward. The threat to Canadians’ future prosperity is very real if the country continues to fall ever farther behind.

As the rest of the Big Grab series will detail, the efforts by most of Canada to prepare for the lower-carbon future are being crushed by the actions of one industry in particular: Alberta’s oil sands.

NEXT UP:

“Elbows out, hogging the pie” digs into data from Environment Canada, industry and other sources to show just how big a grab the oil sands are planning to make on other Canadians' fair share of the country's carbon pie … and what that means for the rest of us. (more...)