Does Canada need to cool it on climate policy?

Distinguished policy expert argues moving too fast on climate targets risks creating wide-scale poverty

Does Canada need to cool it on climate policy?

While the majority of Canadians appear to be in favour of an energy transition that would curb emissions and save the planet, pushing forward too quickly on that goal could be detrimental to the country’s welfare.

In a recent poll, the Angus Reid Institute found just over half of Canadians (54%) agreed that the federal government should make adopting alternative energy sources such as wind, solar, and hydrogen its most important priority. A large minority of one in three respondents, meanwhile, say that the exploration and production of oil, coal, and natural gas should be given equal consideration.

By all indications, the federal government wants to go full speed ahead towards a carbon-free future.

In a commentary published by the Financial Post, Jack Mintz, the President’s Fellow of the School of Public Policy at the University of Calgary, noted that Canada is moving to price carbon emissions at $170 per tonne by 2030 even as the U.S. has yet to establish a pricing policy. That’s on top of measures such as clean fuel standards, electric-vehicle substitution, building retrofits, and aggressive environmental regulations that will surely come at a considerable economic sacrifice.

“It’s one thing to pick a target; it’s another to jump ahead of other countries, especially when you account for only 1.6 per cent of global GHG emissions,” Mintz said.

“The fossil-fuel industry … could continue to be an important source of income and taxes even after an energy transformation whose details — and even broad outlines — are still undetermined.”

The inconvenient truth, particularly for stakeholders in the oil sands, is that the energy sector is a source of livelihood for many thousands of Canadians. And while Natural Resources Minister Seamus O’Regan recently promised that the federal “Just Transition Advisory Board” would make sure displaced fossil-fuel industry workers won’t be left behind by putting them at the centre of legislative action, Mintz said that’s easier said than done.

“Before the pandemic, average hourly compensation in oil and gas extraction and refining was over $90 per hour, the highest of any occupation,” he said. “Natural Resources Minister Seamus O’Regan It will be hard to eliminate high value-added oil and gas jobs without making workers worse off.”

Other countries, Mintz pointed out, are not so quick to kill off their resource development activities. As an example, he noted how Russia’s Nord Stream 2 gas pipeline to Germany has seen approval from the Biden administration, even as the Keystone XL pipeline was shut down by that same administration over climate change concerns.

And even amid the accelerating movement toward net-zero in 2050, he said, global demand for oil, gas, and coal won’t be easily displaced by new sources of energy or shifts in consumer patterns. Meanwhile, proven reserves are projected to run out by roughly three quarters, which means new investment would be necessary even as demand declines in order to head off high energy prices across the board.

“Federal policies that halt fossil fuel development too quickly can have only one result: to make us poorer,” he said. “If the federal government wants to find replacement jobs, it had better figure out how to make our other industries more productive — and fast.”

 

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