Pembina Institute

Weak Federal Policy Hobbles Industry Action

Matthew Bramley

Published in Globe and Mail (Nov. 29, 2006)*

By Matthew Bramley, Director, Research, Pembina Institute

"The most important thing for solving climate change is new technology." Versions of this statement are common in business leaders' commentary on climate change. But what if this thinking was actually a diversion from what most needs to be done to solve the problem?

Preventing the worst impacts of climate change requires global emissions of greenhouse gases to be cut by at least 30 to 50 percent from 1990 levels by 2050. For industrialized countries, where emissions per capita are the highest, reductions of 80% or more are necessary. Cuts of this magnitude require a massive shift in our energy system (the main source of greenhouse gases) towards technologies that emit few or zero emissions.

Leading emission sources like industrial facilities and buildings are long-lived, thereby "locking in" high emissions for decades. As a result, deep greenhouse gas cuts by 2050 are possible only if we begin to deploy low-emission technologies starting now. But are they available?

The clear answer is yes. In a landmark article in the journal Science in 2004, Princeton University's Stephen Pacala and Robert Socolow identified 15 technology options that can each reduce global carbon dioxide (CO2) emissions by about 7% relative to business-as-usual levels in 2050. The authors concluded "Humanity can solve the carbon and climate problem in the first half of this century simply by scaling up what we already know how to do. . . . Every one of these options is already implemented at an industrial scale."

In other words, the climate change challenge is fundamentally NOT one of waiting for new technologies, but rather one of deploying existing ones. There's no mystery about what they are. Pacala and Socolow's solutions cover the familiar ground of energy efficiency in transportation and buildings, along with low-emissions options for energy production such as renewable energy and CO2 capture and storage.

Deploying these technologies on a massive scale would not involve radical lifestyle changes or enormous costs. As shown by Sir Nicholas Stern is his exhaustive review of climate change economics, deep cuts in greenhouse gas emissions are achievable by 2050 while losing at most one year's worth of economic growth. (And Stern shows that the costs of doing nothing would be much greater.)

So what do we need to make this happen? The answer is government policy. Stern has described climate change as "the greatest market failure the world has seen." Because the costs of climate change are not properly valued by the market, the market on its own cannot solve this problem. Instead, governments must put in place a policy framework within which market forces can then drive the changes needed.

Policy action will need to be strong. The International Energy Agency forecasts $20 trillion of investment in the energy sector between now and 2030, and the bulk of these investments need to be redirected towards clean technology. This will happen only if governments put a high enough price on emissions through regulated targets combined with emissions trading - or carbon taxes. There is a role for taxpayer-funded incentives, but governments' resources are so much smaller than the investment flows involved that incentives cannot be more than a minor part of the solution.

Forward-thinking companies in Canada are already deploying low-emission technology solutions. But the leaders can only go so far before they need governments to level the playing field. In 2005, the CEOs of Shell Canada, Alcan, Falconbridge, Tembec, Bombardier and others wrote to then-Prime Minister Martin asking for a "climate regime" that "makes effective use of market-based mechanisms, economic instruments and full-cost pricing as part of an integrated regime of regulation, standards, fiscal incentives and policy measures."

Development of new low-emission technologies needs to be encouraged, but some of those who focus on new technology do so because they are unconvinced of the urgency of addressing climate change or because they are unwilling to accept that industry should incur modest incremental costs to deploy low-emission technologies today.

Unfortunately this seems to be the case with our current federal government, which plans to delay implementing greenhouse gas regulations until 2011 and set such weak targets that Canada's emissions will remain above current levels until after 2020 - putting deep cuts by 2050 out of reach. This approach is actually a hindrance to Canadian companies who want to be at the forefront of solutions to climate change.


Copyright © The Pembina Institute. All rights reserved.