Friday, April 18 2014

Climate change gridlock: What you can do

Last week the Council of the Federation (COF) meetings brought Canada’s 13 provincial and territorial premiers to Winnipeg to discuss issues of importance to the country. They had a full plate, and outcomes included requests for the federal government (related to launching a Canada-India economic partnership and negotiating an open skies agreement, among other topics) and some interesting new initiatives, such as endorsing a water charter and agreeing to consolidate purchases of prescription drugs and medical supplies. But the provinces couldn’t agree on a plan to tackle a major concern of many Canadians: climate change.

According to this article by PostMedia reporter Jason Fekete, while the provincial leaders could agree that action on climate change is crucial, their preferred approaches are far from consensus. It’s worth reading the article, but in a nutshell, the leaders of B.C., Ontario, Quebec and Manitoba favour a cap and trade system where companies that exceed emissions targets could purchase carbon credits from greener firms. The leaders of Alberta and Saskatchewan, on the other hand, are in favour of pursuing carbon capture and storage programs (despite the fact Alberta has a form of cap and trade already operating in the province).

Ultimately, the meeting is yet another example of political gridlock on climate change. We’ve seen this at the federal level in Canada, south of the border (which many in Canada feel needs to be settled before we can make our own plan) and internationally. Back in December 2009 The Economist proclaimed climate change as the defining issue of the century, saying: “Climate change is the hardest political problem the world has ever had to deal with. At issue is the difficulty of allocating the cost of collective action and trusting other parties to bear their share…”

So what can individuals do while we wait for political leadership on climate change? Plenty. First, simple steps to conserve energy, such as those recommended by leading environmental groups WWF-Canada and the Pembina Institute, can have a major impact when done collectively. Second, you can ensure that your elected official keeps climate change on the front burner by calling or writing your MP or provincial representative. Third, you can vote with your wallet by choosing products and services that are less harmful to the earth. To this point, by voluntarily paying just a little more (less than a dollar a day for the average home), Canadians in most provinces can make a 100% clean electricity choice with Bullfrog Power. In doing so, they reduce their electricity-related carbon emissions footprint and support the development of new wind power in Canada.

We would like to hear from you on the COF meetings. What are your thoughts on what was achieved at the meetings―and the premiers’ inability to develop a united strategy on climate change?

Theresa Howland
Vice President, Western Region, Bullfrog Power


Posted on August 10, 2010

Increasing energy efficiency in China: uncovering the hidden costs of energy

This morning’s Globe & Mail article on China’s order to close more than 2,000 antiquated and energy intensive factories is a strong reminder that the developing world understands that the world is transitioning to a low-carbon economy, in which energy prices will take into account the costs to health and the environment – costs that are currently hidden.

The Globe reports that China has ordered more than 2,000 iron, steel, cement and other energy intensive factories be shut down by the end of September. The purpose of the order is to ensure that China increases its energy efficiency and also transitions to cleaner production methods. The order will help China achieve its goal of improving energy efficiency by 20% in 2010 compared to 2005 levels.

The order is noteworthy on several fronts. It will certainly have an impact on the economy, but the Chinese are prepared to accept that short-term loss in order to support a longer-term transition to more efficient modes of production. The number of factories and industries covered, as well as the speed with which the order must be complied, also stand out.

Two other points in the story are worthy of note because they emphasize that the Chinese understand the world is moving to a low-carbon economy, in which energy efficiency will be very important and energy will be priced appropriately. First, China’s Minister Of Industry And Information Technology, Li Yizhong, is quoted as saying of the plants and factories being ordered to close: “They reflect the very crude and quantitative mode of economic growth.” This comment implicitly recognizes the importance of full cost accounting, where the health and environment costs of production are considered, rather than overlooked as an economic externality. Second, China is aggressively removing subsidies from the cost of electricity. Last week, China’s National Development and Reform Commission announced that it had ordered 22 provinces to stop providing electricity at discounted rates to high-energy consumption industries such as aluminum.

At Bullfrog, we are always interested in uncovering the ways in which energy is being subsidized here in Canada, as well as around the world. Increasingly, we’re seeing a commitment to identifying those hidden health and environmental costs that aren’t reflected in the price of energy. Which subsidies or economic externalities are you most concerned about? Can you point us to specific examples, and help us quantify the value of the subsidy?

Tom Heintzman
President, Bullfrog Power


Posted on August 10, 2010

BC shows positive carbon tax results

The early results of BC’s carbon tax are in, and the results are promising. As Stewart Elgie, one of the founders of Sustainable Prosperity notes in an op-ed in the Ottawa Citizen, the BC carbon tax has been a success on many levels:

The BC carbon tax puts a price on carbon emissions. The price is currently $20/tonne of CO2, rising at $5 annually.

Fiscally, the tax is a success because it has remained revenue neutral – in other words, the revenue raised by the tax has not added to government tax revenues. In fact, the tax has been more than matched by tax cuts and credits – in 2008 and 2009, the tax raised $846 million, and the cuts and credits for taxpayers totaled almost $1.1 billion. Furthermore, the tax does not appear to have hurt BC’s economy – BC’s rate of economic growth post-tax is higher than Canada’s, and unemployment does not appear to have increased following the tax. From a policy perspective, unlike most other taxes, the BC carbon tax succeeds in discouraging “bads” rather than “goods”, thereby incenting behaviour that is less carbon intensive. And from an environmental perspective, the projections are that the tax will lower the province’s emissions by 5%.

Tom Heintzman
President, Bullfrog Power


Posted on July 27, 2010

Monday’s blackout in Toronto reminds us again that we’re not paying the real cost of energy

The direct cause of Monday’s transformer fire in Toronto that resulted in significant portions of downtown and 240,000 residents without electricity has not yet been identified.

The underlying issue, though, is that we are not paying the cost of properly maintaining and upgrading the system that transmits and distributes our electricity. This is just another of the many ways in which electricity is subsidized.

Ontario’s electricity grid is aging, and in increasing need of maintenance and repair. For instance, as the Globe and Mail reports, at the Manby station where the fire broke out, most of the transformers and breakers are over 40 years old. As Keith Stewart, formerly of WWF-Canada and now an independent consultant, points out in the article, “You get what you pay for.”

Much of the world, including Ontario, is moving to a “smart” grid, where intelligence is embedded throughout the electricity system in order to manage the system better, resulting in higher reliability and more efficient use of energy. To make this transformative change, significant additional investment will be required.

However, reluctance to pay the real cost of energy is holding back this necessary investment. For instance, Hydro One applied for a 21.5 per cent rate hike earlier this year. The government, facing consumer reaction to rising electricity rates, asked that the increase be reduced to 15.7 per cent. The opposition, according to the Toronto Star, denounced the rate hike as “exorbitant” and then, post blackout, criticized the government for not investing in the aging infrastructure. In short, all political parties are hamstrung by consumers’ desire to pay less than the real cost of electricity.

Tom Heintzman
President, Bullfrog Power


Posted on July 8, 2010

A carbon tax to boost Britain’s economy: Interesting findings from a new Economist study

This blog has advocated for a carbon tax, but a recently commissioned study by The Economist sheds some light on the intricacies of getting the details of the tax right.

The Economist’s study examined the impact of a carbon tax on Britain’s economy. The study looked at two scenarios: one applied a carbon tax that would raise 1% of GDP by 2020; the second set the tax at a level that would guarantee the country meets its 2020 GHG emissions targets (reduce emissions 34% below 1990 levels by 2020). The study assumed that all other funding, subsidies and economic programs related to advancing renewables or adhering to climate change policies were dropped.

Results from the first scenario indicate a carbon tax would actually improve Britain’s economy. The publication summarizes the results: “electricity prices fall as expensive subsidies for renewable energy are replaced by the carbon tax [resulting in an increase in gas-fired power generation]. That provides an economic boost, the government gets an extra revenue stream, and output is 2.5% higher come 2020 than in the baseline scenario.” Read more about the results here.

According to the study, GHG emissions increase slightly in this scenario. The author is optimistic, however, and notes in the article’s addendum that the tax could be adjusted to help bring about a reduction in emissions, although presumably at the expense of some of the GDP increase.

The second scenario demonstrated that it is virtually impossible for Britain to achieve its 2020 goals because a carbon tax would have to be excessively high in order to result in the magnitude of change required. According to the addendum, the tax would reach “many hundreds of pounds per ton, far beyond anything that could be seen as politically plausible…” This scenario hints at the fact Britain may need to revisit its emissions targets. While progressive action by governments is encouraged, setting unrealistic goals can be detrimental to environmental strategies, deflating government and public support if progress is made too slowly or too late.

Ultimately, this study is helpful because it takes the carbon tax debate to the next level, and examines how it should be structured and what its impact would be. The author concludes that the first scenario is “worth a try” and still better and more efficient than Britain’s current mix of environmental arrangements.

Tom Heintzman
President, Bullfrog Power


Posted on July 7, 2010