Friday, October 25, 2019

Guest Post: Climate Implications of the Canadian Election

Guest post by: Layzej

In a recent episode of "Patriot Act", Hassan Minhaj took Canadian Prime Minister Justin Trudeau to task for the Liberal government's apparently inconsistent position on climate change.

Speaking to the United Nations General Assembly in New York, Trudeau proclaimed "There is no country on the planet that can walk away from the challenge and reality of climate change."

But Minhaj pointed out that just months earlier at an energy conference in Texas he said, "No country would find 173 billion barrels of oil in the ground and just leave them there."

"Does he think you can just do both of those things?" Minhaj asked "Because we did the math and there is no overlap."

On policy the Liberal government appears just as conflicted. On the one hand they have implemented a revenue neutral carbon tax to curb demand for fossil fuels. The tax would encourage consumers to adopt alternatives to fossil fuels and stimulate the development of alternative technologies. Since the tax is revenue neutral, all profits generated would be returned to the taxpayer in the form of rebates. Economists largely agree that a carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary.

But at the same time the Trudeau government is working aggressively on an oil pipeline expansion that would triple the existing pipeline's capacity to 890,000 barrels a day and bring Alberta's oil to an international market. This effort included nationalizing the pipeline project at a cost of $4.5 billion, after the company that owned the pipeline threatened to cancel the project in the face of mounting opposition.

Canada's oil sands are the third largest oil reserves in the world -- they account for 10% of the world's oil reserves. Some have argued that fully exploiting the Canadian reserves would mean "game over" for the climate. According to Prof James Hansen, "We are getting close to the dangerous level of carbon in the atmosphere and if we add on to that unconventional fossil fuels, which have a tremendous amount of carbon, then the climate problem becomes unsolvable."

In the “Patriot Act” interview, Trudeau justified the apparent contradiction by claiming that the intent was not to increase production, but only to ship the product more efficiently. While it is true that a pipeline is a more efficient means of delivery than tuck or rail, it is not true that tripling pipeline capacity would not result in increased production. Trudeau did not provide a coherent defense of his government’s position.

But the position is defensible. Canada is doing its part to curb its own fossil fuel demand. If every country followed Canada’s lead and implemented a carbon tax, we could start to move more aggressively towards the new energy economy. It is true that Canada could diminish the global supply of oil by leaving its resources in the ground, but eliminating 10% of the world’s oil would not go far in diminishing the global appetite for fossil fuels.

It seems unreasonable for Americans Hansen and Minhaj to ask Canadians to not only address their own fossil fuel consumption, but to bear the burden of reducing global consumption as well. The United States is a country without a national climate strategy. Canada has demonstrated a strategy that can work. It’s time for America, and the world, to catch up.

Layzej is a long-time commenter on this site.


David Appell said...

Layzej: Do you see the election results as any kind of victory for the idea of a carbon tax? Or at least not a defeat?

Layzej said...

I don't know. The election has been referred to as a referendum on climate change "Andrew Scheer’s Conservatives bet hard against climate-change action – and lost. Two-thirds of the seats in Parliament are now occupied by members whose parties want a price on carbon"

It survived. That's a good sign. About 70% of households will get more back in dividends than they paid in carbon tax. The longer it survives the better its chances.

On the other hand, the carbon tax is a stab in the back to those out west whose livelihood depends on the oil sands. There's a growing separatist movement and “Wexit” rallies are planned in Calgary, Red Deer and Edmonton next month. They feel betrayed.

I'm hopeful that the Liberal government can get the pipeline built and let folks out west know that Canada stands with them.

I'd be curious to hear from someone out west though.

JoeT said...

Excellent article and thanks also to David for allowing space on his blog for it.

A question though: I’m still not quite sure why the carbon tax is a stab in the back to those out west. Isn’t most of the oil going for shipment overseas? How does the tax affect export?

William M. Connolley said...

The mistake was to buy the pipeline. That sort of govt intervention is almost always wrong, and it looks to have been wrong in this case.

Layzej said...

I’m still not quite sure why the carbon tax is a stab in the back to those out west.

It's true that the oil goes to export and domestic consumption doesn't really drive demand, but it's seen as a symbolic attack on their livelihood.

The mistake was to buy the pipeline. That sort of govt intervention is almost always wrong, and it looks to have been wrong in this case.

Maybe. Is there never a case for nation building infrastructure projects like joining the east and west by rail or road? Is this any different?