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

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