A realistic plan for reducing emissions

Hey there, time traveller!
This article was published 23/12/2020 (1928 days ago), so information in it may no longer be current.

SEVERAL weeks ago, the federal government announced a plan to make Canada “carbon neutral” by 2050 (”Net-zero emissions target to become law,” Nov. 20). This news, not surprisingly, was pushed aside by ongoing COVID-19 concerns. More telling, public reactions appeared less outwardly positive or negative, and more toward exasperated resignation, a collective “Here we go again.”

A core problem is the federal Liberals’ penchant for using aspiration as a substitute for action. This is especially apparent on environmental issues. The ongoing response appears to involve announcing newer and ever more grandiose, albeit unrealistic, plans. While signalling of specific virtues can be a legitimate part of “brand” development, it needs to be backed by performance, which is where the Liberal veneer falls to pieces.

It is now true that average annual emissions under Justin Trudeau are actually higher than under Stephen Harper, whom Liberals love to demonize. The trend will not change soon, with data clearly identifying Trudeau as a climate failure, and Canada falling deeper into an emissions hole.

Recent analysis shows carbon taxation, implemented by the federal Liberals as their chief method to reduce emissions, is failing badly. There is over-reliance on the tax, too, with expectations for reductions of 80 to 90 million tonnes by 2022 now appearing fantastical.

Carbon pricing is extremely elegant in theory, but inadequate in practice, for good reasons. National data show no appreciable reductions due to carbon taxes. Indeed, British Columbia, the poster child, has since 2005 exhibited one of the flattest emission profiles of Canadian provinces, and has not declined. This is a cautionary tale, especially for Manitoba, which began toying again with the idea.

Criticism is easy, but less helpful. Our situation needs to change, but how? The same recent analysis above shows that something else has worked well to demonstrably reduce emissions in several provinces, namely decarbonizing the electricity grid. Significant reduction room remains nationally, with additional opportunities. The benefits of focusing on electricity are not just environmental, but economic as well.

The net value of Canadian electricity exports to the U.S. has declined steadily, dropping one-third since 2015. Given the presumed priorities of the new Biden administration, our prospects will diminish further as the U.S. focuses on its internal grid. Unlike petroleum resources that we can potentially export overseas for revenue if they can reach tidewater, we have no other options for electricity, except to better use it ourselves.

Some might suggest we need to become more like Norway; however, curiously, that would require almost doubling oil volumes. Under the radar, Norway exports oil too, and is much more reliant on such revenues.

Many in Manitoba have at least heard of the “East-West” grid, a concept whereby electricity flows are better integrated across the nation between provinces. Potential benefits are enormous, but would require monumental efforts, both infrastructural and political, something akin to building a national railway.

The federal Liberals did offer notional lip service, but negligible money, which means no real action. As such, this represents a distinctive opportunity available for any of the federal political parties to chart a more realistic and effective course ahead to reduce emissions.

Within Manitoba, focusing on electricity leads directly to electric vehicles. They can be economical here, but only if kept fully 12 years, which most initial buyers do not. Thus, they remain overly expensive. The answer is further modest incentives to help bridge the cost gap. But how can this be afforded, given our financial circumstances?

A novel and particularly bright solution was identified through earlier Green Plan processes: a modest $100 levy at registration on each new truck, van, sport-utility-vehicle, etc. — in other words, the modern gas-guzzlers. Roughly $4 million could be raised annually on a temporary basis, without imposing hardship. The target vehicles are more expensive already, and the levy is lower than an existing federal tax, so small everyone is likely to forget.

As a near- to medium-term measure, this could allow, to the limit of available funds, three actions: first, a modest $3,000 purchase incentive for each new hybrid or electric vehicle; second, co-funding for Winnipeg Transit’s move toward electric; and third, support for demonstrating heavy-duty freight electrification, something already mentioned by the Manitoba Trucking Association.

What about economics? The Keeyask project comes online soon, accompanied by a slew of expensive electricity. Viability of electric vehicles is well known as insensitive to electricity price (see California), and electric vehicles represent an important new high-value domestic market with additional advantages — more reliable and manageable compared to U.S. power exports.

We also simultaneously reduce imports of refined fossil-fuel products, a still-growing economic leakage.

Further analysis suggests each electric vehicle, over its lifespan, reduces carbon emissions by close to 50 tonnes, and provides back more than $4,000 net to the Manitoba government. There are many opportunities for a win-win on electricity.

Robert Parsons teaches sustainability economics and quantitative analysis to graduate business students at the I.H. Asper School of Business, University of Manitoba.