The UN Copenhagen climate summit appears to have inflamed deeply held emotions about the Canadian federation. Being born and raised in Alberta, I am well-schooled in the rhetoric of western Canadian isolationism and arguments for separation. Oddly, a few years back, I awoke one morning wondering how the Trudeau era National Energy Policy had caused simultaneous economic collapse in Denver, Colorado and Houston, Texas as well as in Calgary. That seems to have broken the illusion for me. On the other hand, our long-held regional biases are proving to be alive and thriving if comments on the CBC website are any indication.
It seems that the potential for a climate change treaty terrifies some Albertans - including Ed Stelmach, Stephen Harper and Jim Prentice. They paint it as some sort of power-grab where Ontario is going to steal everything from Alberta - again. Much of this is based on popular misconceptions, and I would like to clear up one of these. It is often asserted that Alberta provides oil for all of Canada - like Ralph Klein's famous quote "Let the Eastern bastards freeze in the dark". While it’s true that Canada is the world's 15th largest oil exporter - and most of this oil comes from Alberta - most of Canada actually relies on imported crude.
According to Stats Canada, for 2006 : Total crude oil supply was 103,974.1 thousand cubic meters with 49,284.9 or over 47% of that being imported. Large imports of crude were purchased from Algeria, Iraq, Saudi Arabia, Nigeria and Venezuela, the UK and Norway. Alberta's oil pipelines run dominantly North to South and the overwhelming majority of Alberta's oil goes directly to the United States. For many conservative Albertans, their loyalty seems to do the same thing.
It seems some Albertans believe they deserve credit and respect for the oil that lies deep underground within provincial borders. It's worth considering that the oil was generated millions of years ago. Alberta’s power and wealth are largely an accident of nature combined with arbitrary political boundaries drawn on a century-old map. When I compare what successive Tory governments have done with Alberta’s oil resources to what Norway has done with theirs, it makes me want to cry. Being third generation Albertan, it sometimes seems like the conservatives have been around forever, but compared to that - it's hardly a drop in the barrel.
On the other hand, if the global warming predictions are correct and Albertans like Harper and Prentice can block an effective GHG reduction treaty, then the Alberta Tory legacy will truly last forever.
Thursday, December 17, 2009
Another open letter to Stephen Harper on his way to Copenhagen
Dec 16, 2008
Prime Minister Stephen Harper
1600 90th Ave. SW
Calgary, Alberta
T2V 5A8
SJ: Canada should be a leader in the Copenhagen UN Climate Summit
Dear Prime Minister Harper,
I am writing to ask you to be a leader in the climate talks in Copenhagen. Recent news reports indicate that your government would like to weaken Canada’s GHG commitments by giving special treatment to the oil and gas industry. This is clearly not realistic - the oil industry can’t opt out of Canada’s greenhouse gas commitments any more than Canada can opt out of the international community. There is one atmosphere, and like it or not, we all share it, regardless of nationality, political party or industry affiliation.
You may think of this as a regionally polarized issue and expect you can motivate your base of support in Alberta through shunning international agreements. This may be true in some cases, but this one is too important to play politics. As for me, I am a third generation Albertan who is also second generation in the oil and gas industry. In my career I had the opportunity to work on several projects in the tar sands and CO2 sequestration at Weyburn - as well as several years working internationally. Unfortunately, the current policy direction of the Alberta PC government brought me to the point where I could no longer work in the industry and keep my integrity. Please bear in mind that even Premiere Peter Lougheed, one of my personal heros, called for a moratorium on future oil sands development back in 2006.
In summary, you have the obligation to represent all Canadians - not just the ones you agree with. If you continue to block progress at Copenhagen, you will damage Canada’s reputation on the world stage and ultimately risk international tariffs and sanctions if the rest of the developed world reaches a positive consensus. You are leading Canada at a critical time - your legacy will be defined by the actions you take at this moment. Please move forward to a sustainable and equitable future rather than attempting to undermine a growing consensus while defending a clearly unsustainable past.
Sincerely,
Keith Hirsche
1161 Chapman Road, Cobble Hill BC
V0R 1L7
(250) 929 5586
cc: Jack Layton Leader NDP
Gilles Duceppe Leader BQ
Elizabeth May Leader Green Party
Michael Ignatieff Leader Liberal Party
Prime Minister Stephen Harper
1600 90th Ave. SW
Calgary, Alberta
T2V 5A8
SJ: Canada should be a leader in the Copenhagen UN Climate Summit
Dear Prime Minister Harper,
I am writing to ask you to be a leader in the climate talks in Copenhagen. Recent news reports indicate that your government would like to weaken Canada’s GHG commitments by giving special treatment to the oil and gas industry. This is clearly not realistic - the oil industry can’t opt out of Canada’s greenhouse gas commitments any more than Canada can opt out of the international community. There is one atmosphere, and like it or not, we all share it, regardless of nationality, political party or industry affiliation.
You may think of this as a regionally polarized issue and expect you can motivate your base of support in Alberta through shunning international agreements. This may be true in some cases, but this one is too important to play politics. As for me, I am a third generation Albertan who is also second generation in the oil and gas industry. In my career I had the opportunity to work on several projects in the tar sands and CO2 sequestration at Weyburn - as well as several years working internationally. Unfortunately, the current policy direction of the Alberta PC government brought me to the point where I could no longer work in the industry and keep my integrity. Please bear in mind that even Premiere Peter Lougheed, one of my personal heros, called for a moratorium on future oil sands development back in 2006.
In summary, you have the obligation to represent all Canadians - not just the ones you agree with. If you continue to block progress at Copenhagen, you will damage Canada’s reputation on the world stage and ultimately risk international tariffs and sanctions if the rest of the developed world reaches a positive consensus. You are leading Canada at a critical time - your legacy will be defined by the actions you take at this moment. Please move forward to a sustainable and equitable future rather than attempting to undermine a growing consensus while defending a clearly unsustainable past.
Sincerely,
Keith Hirsche
1161 Chapman Road, Cobble Hill BC
V0R 1L7
(250) 929 5586
cc: Jack Layton Leader NDP
Gilles Duceppe Leader BQ
Elizabeth May Leader Green Party
Michael Ignatieff Leader Liberal Party
Saturday, December 12, 2009
7 Days of fasting for world leaders at the Copenhagen Summit
I am very concerned about what will happen in Copenhagen over the coming week. Negotiators have been hard at work for the past seven days, but now the environment ministers have come to the conference. Each of them carrying their political agendas. Towards the end of the week, heads of state from 110 countries -including the 15 biggest CO2 emitting nations -will appear in Copenhagen to add their diverse and often competing viewpoints to the mix. On one hand, this is very encouraging because a little over a month ago, only 65 leaders had committed to attend - and this did not include Stephen Harper or Barack Obama. The fact that Harper is even going is a testament to the power of public pressure.
The past week has not been easy. Several times the talks have run into major snags. One of the draft agreements was leaked, leading an African delegate to weep when it was his turn to speak. The USA and Canada are pushing India and China to make serious emission reductions, and at the same time, they are not willing to commit to the targets proposed for developed nations. The hypocrisy of this position is not lost on China and India - since North America is responsible for a major portion of the current CO2 emissions and a large percentage of the total atmospheric CO2 is the legacy of our creating modern industrialized societies. Now as we have become service and information based economies, we want China to produce all our manufactured goods without emitting CO2 in the process. It often looks like real progress is impossible.
On the bright side, over 100 world leaders will soon be in Copenhagen - including Stephen Harper. Climate gate, massive fraud in the carbon trading market and leaked draft agreements have not scuttled the talks (yet). People are arguing about what action to take - not whether to take action. All of these things - especially Stephen Harper going to Copenhagen - are miracles in themselves.
Seven days of fasting has not been easy, but I suspect it is nothing compared to what lies ahead for world leaders who have the courage to stay at the negotiating table. My thoughts and prayers are with them all as I am hoping for an even bigger miracle to emerge from Copenhagen - the city that has already done so much in creating a sustainable future for the people of Denmark.
On the other hand, if the Copenhagen Summit isn't able to slow global warming, I am completely confident that peak oil will - and it certainly won't be pretty. It's Nature's way.
The past week has not been easy. Several times the talks have run into major snags. One of the draft agreements was leaked, leading an African delegate to weep when it was his turn to speak. The USA and Canada are pushing India and China to make serious emission reductions, and at the same time, they are not willing to commit to the targets proposed for developed nations. The hypocrisy of this position is not lost on China and India - since North America is responsible for a major portion of the current CO2 emissions and a large percentage of the total atmospheric CO2 is the legacy of our creating modern industrialized societies. Now as we have become service and information based economies, we want China to produce all our manufactured goods without emitting CO2 in the process. It often looks like real progress is impossible.
On the bright side, over 100 world leaders will soon be in Copenhagen - including Stephen Harper. Climate gate, massive fraud in the carbon trading market and leaked draft agreements have not scuttled the talks (yet). People are arguing about what action to take - not whether to take action. All of these things - especially Stephen Harper going to Copenhagen - are miracles in themselves.
Seven days of fasting has not been easy, but I suspect it is nothing compared to what lies ahead for world leaders who have the courage to stay at the negotiating table. My thoughts and prayers are with them all as I am hoping for an even bigger miracle to emerge from Copenhagen - the city that has already done so much in creating a sustainable future for the people of Denmark.
On the other hand, if the Copenhagen Summit isn't able to slow global warming, I am completely confident that peak oil will - and it certainly won't be pretty. It's Nature's way.
Friday, December 11, 2009
CWF and TD reports on GHG policy and the economy - discussion points.
Two recent reports predict economic impact of climate change legislation in Canada. The first (Oct 29, 2009) by TD bank economists, together with David Suzuki Foundation and Pembina Institute (DSF/Pembina). The second (Dec 10, 2009) is a critique of this report by the Canada West Foundation.
The TD report shows results of detailed economic modeling performed by MK Jaccard and Associates (MKJA). TD considers the analysis to be robust.
MKJA made forecasts of economic performance assuming two reduction targets; the government’s proposed 20% below 2006 by 2020 and a more stringent target of 25% below 1990 levels (like Kyoto). Forecasts were made at national and provincial levels.
Results indicate that Canada could meet either emission target and the economy would continue to grow between 23% and 25% from 2010 to 2020.
Climate change legislation would result in improvements to public transit, the electricity grid, refunds to homeowners and manufacturing to offset higher energy costs, investment in domestic agriculture, lower income taxes and higher employment relative to a “do-nothing” scenario.
Alberta would be hardest hit, but would still lead all provinces with economic growth between 38% and 45% of GDP over the decade. In context, growth over the past 10 years was 43%.
The CWF report expressed concern with model assumptions, but provides no new economic modeling. Their critique is based entirely on their interpretation of the MJKA predictions.
CWF states that the DSF/Pembina report underestimates very substantial economic consequences for western Canada and if policy is perceived to be unfair, it will not be effective. It will also weaken Canada’s political union. No support is given for these statements.
CWF uses modeling results to demonstrate that the government’s recommended emission targets would reduce Alberta’s 2020 GDP from $296 to $274 billion -a loss of $22 B in one year alone relative to doing nothing.
CWF does not mention that Alberta’s GDP/capita with carbon tax is predicted to be $80,000/person which is 50% higher than Ontario’s at $52,000/person.
The CWF report uses 2020 projections to argue that reducing carbon emissions would cause Alberta pre-tax salaries to fall by 6.2% relative to no legislation. Ontario salaries would only fall by 0.2%.
Tables in the CWF report show Alberta maintains the highest salary level in Canada regardless of the carbon reduction scenario. Using the government proposed target, average salaries in 2020 would be $61,182 vs $65,890 without reductions. By comparison, Ontario salaries are predicted as $57,321 and $57,453. This is not noted in the report text.
The DSF/Pembina study recommends that 36% of carbon tax revenue be allocated to personal income tax reduction and 10% allocated to offsetting higher household energy costs. According to CWF, this results in a net cost of $1,318/Albertan/year because a higher proportion of the taxes are collected in Alberta (the main source of carbon) and the benefits are distributed to Canadian citizens - ( with 90% of these living outside Alberta).
CWF argues this distribution of the carbon taxes across Canada will result in a bigger wealth transfer than the current federal equalization system and it primarily affects Alberta and (to a much lower extent) Saskatchewan. Sadly, CWF does not seem to recognize that carbon emissions do not recognize provincial boundaries.
CWF claims that there will not be sufficient re-investment of carbon tax revenue in the energy sector - ( “energy sector” clearly means “fossil fuel sector” ) and Alberta/Saskatchewan are left to fund Carbon Capture and Storage without outside assistance.
Somehow CWF seem to have missed recent headlines that the federal government has committed their $1 billion dollar “clean energy fund” to subsidize CCS projects in Alberta (this has resulted in the federal government canceling their renewable energy subsidy programs in favour of promoting oil and gas).
The CWF report simply disputes some of the DSF/Pembina assumptions and then proceeds to interpret the MKJA model results in a biased and provocative manner.
CWF emphasizes each case that can be seen as Ontario being unfair to Alberta and ignores any information that looks beneficial for Alberta.
The CWF report confuses differences in potential economic growth with real economic costs.
CWF ignores the real economic risks associated international penalties, tariffs and sanction - as well as economic risks associated with un-mediated climate change.
The CWF report indicates that the MJKA economic models were run assuming a constant oil price of $46.48/bbl over the 10 yrs. Recent DOE forecasts suggest prices will run between $100 and $200 /bbl. during this decade. Canada has the least energy efficient economy in the developed world and oil prices at these levels will damage our economy far more than any carbon tax.
The status quo is not an option, it is time to make a change.
The TD report shows results of detailed economic modeling performed by MK Jaccard and Associates (MKJA). TD considers the analysis to be robust.
MKJA made forecasts of economic performance assuming two reduction targets; the government’s proposed 20% below 2006 by 2020 and a more stringent target of 25% below 1990 levels (like Kyoto). Forecasts were made at national and provincial levels.
Results indicate that Canada could meet either emission target and the economy would continue to grow between 23% and 25% from 2010 to 2020.
Climate change legislation would result in improvements to public transit, the electricity grid, refunds to homeowners and manufacturing to offset higher energy costs, investment in domestic agriculture, lower income taxes and higher employment relative to a “do-nothing” scenario.
Alberta would be hardest hit, but would still lead all provinces with economic growth between 38% and 45% of GDP over the decade. In context, growth over the past 10 years was 43%.
The CWF report expressed concern with model assumptions, but provides no new economic modeling. Their critique is based entirely on their interpretation of the MJKA predictions.
CWF states that the DSF/Pembina report underestimates very substantial economic consequences for western Canada and if policy is perceived to be unfair, it will not be effective. It will also weaken Canada’s political union. No support is given for these statements.
CWF uses modeling results to demonstrate that the government’s recommended emission targets would reduce Alberta’s 2020 GDP from $296 to $274 billion -a loss of $22 B in one year alone relative to doing nothing.
CWF does not mention that Alberta’s GDP/capita with carbon tax is predicted to be $80,000/person which is 50% higher than Ontario’s at $52,000/person.
The CWF report uses 2020 projections to argue that reducing carbon emissions would cause Alberta pre-tax salaries to fall by 6.2% relative to no legislation. Ontario salaries would only fall by 0.2%.
Tables in the CWF report show Alberta maintains the highest salary level in Canada regardless of the carbon reduction scenario. Using the government proposed target, average salaries in 2020 would be $61,182 vs $65,890 without reductions. By comparison, Ontario salaries are predicted as $57,321 and $57,453. This is not noted in the report text.
The DSF/Pembina study recommends that 36% of carbon tax revenue be allocated to personal income tax reduction and 10% allocated to offsetting higher household energy costs. According to CWF, this results in a net cost of $1,318/Albertan/year because a higher proportion of the taxes are collected in Alberta (the main source of carbon) and the benefits are distributed to Canadian citizens - ( with 90% of these living outside Alberta).
CWF argues this distribution of the carbon taxes across Canada will result in a bigger wealth transfer than the current federal equalization system and it primarily affects Alberta and (to a much lower extent) Saskatchewan. Sadly, CWF does not seem to recognize that carbon emissions do not recognize provincial boundaries.
CWF claims that there will not be sufficient re-investment of carbon tax revenue in the energy sector - ( “energy sector” clearly means “fossil fuel sector” ) and Alberta/Saskatchewan are left to fund Carbon Capture and Storage without outside assistance.
Somehow CWF seem to have missed recent headlines that the federal government has committed their $1 billion dollar “clean energy fund” to subsidize CCS projects in Alberta (this has resulted in the federal government canceling their renewable energy subsidy programs in favour of promoting oil and gas).
The CWF report simply disputes some of the DSF/Pembina assumptions and then proceeds to interpret the MKJA model results in a biased and provocative manner.
CWF emphasizes each case that can be seen as Ontario being unfair to Alberta and ignores any information that looks beneficial for Alberta.
The CWF report confuses differences in potential economic growth with real economic costs.
CWF ignores the real economic risks associated international penalties, tariffs and sanction - as well as economic risks associated with un-mediated climate change.
The CWF report indicates that the MJKA economic models were run assuming a constant oil price of $46.48/bbl over the 10 yrs. Recent DOE forecasts suggest prices will run between $100 and $200 /bbl. during this decade. Canada has the least energy efficient economy in the developed world and oil prices at these levels will damage our economy far more than any carbon tax.
The status quo is not an option, it is time to make a change.
A more detailed comparison of the TD and CWF reports on the impact of GHG regulation on Alberta's economy
In parallel with the UN Copenhagen climate summit, two reports have emerged which attempt to predict how carbon dioxide emission regulation might affect the Canadian economy. This note provides a brief comparison of these reports, the first published by TD bank economists and the second by the Canada West Foundation.
On October 29, 2009, TD bank economists, Don Drummond and Craig Alexander released a report entitled “Answers to key questions about the costs of combatting climate change”. Their report summarizes the results of a David Suzuki Foundation/Pembina Institute (DSF/Pembina) modeling study that addresses the potential economic impact of reducing carbon dioxide emissions in Canada. The modeling was performed by MK Jaccard and Associates (MKJA) and policy information was provided by DSF/Pembina. Two carbon reduction targets were analyzed; the current Canadian government proposal to reduce CO2 emissions to 20% below 2006 levels by 2020 (this is equal to a 3% reduction from 1990 levels), and a stricter, Kyoto-compliant emission reduction of 25% below 1990 levels by 2020. The modeling indicated that these emission reductions could be achieved and Canada’s economy would still grow between 23% and 25% over the 10 yr. period. It also suggests that climate change legislation would result in improvements to public transit, upgrades to the electricity transmission grid to better incorporate renewable energy systems, refunds to homeowners and manufacturing to offset higher energy costs, investment in domestic agriculture, lower income taxes and improved job creation over the existing policy environment. However, the forecasts also indicated that Alberta would be more adversely affected than the rest of Canada. Nevertheless, Alberta would still lead all Canadian provinces with GDP growth between 38% and 45% between 2010 and 2020 - even with Kyoto style reductions. In context, Alberta’s overheated economy only grew 43% between 1999 and 2009. While not endorsing the report, or any particular set of emission cuts the TD economists declare the MKJA analysis “appears to be robust”.
On December 10, Dr. Roger Gibbins of the Canada West Foundation released a critique of the DSF/Pembina report titled “Sharing the Load - Addressing the Regional Economic Effects of Canadian Climate Policy”. While Dr. Gibbins expressed concern with some of the assumptions used in the MKJA modeling, he provided no additional economic projections and all of his policy criticism is based entirely on the MKJA results. His primary argument is that the DSF/Pembina report “identifies and likely underestimates very substantial negative economic consequences for western Canada, and for Alberta and Saskatchewan in particular”. Based on this assessment, he argues that regional differences must be accommodated in Canada’s climate policy and “If we fail to do so, climate policies will not be effective, their economic impact will be exacerbated unnecessarily and the political union in Canada will be badly strained”.
To support his claims, Dr. Gibbons uses the MKJA model predictions to demonstrate that the government of Canada emission targets would result in Alberta losing $11.6 billion (from $113.4 to 101.8 billion) in investment income in 2020. On the other hand, investment in Ontario would increase from $175 billion to $184 billion. For comparison, the total capital investment for Canada in the year 2020 is projected to be $510 billion, but somehow Dr. Gibbons concludes that Alberta with 10% of the population receiving 20% of Canada’s total investment dollars is somehow “the clear loser in capital investment”.
The MKJA results are further used to indicate that Alberta’s GDP would be $296 billion in 2020 if no action is taken to reduce CO2 emissions. If emissions were reduced to the current government target of 20% below 2006 levels, Alberta’s GDP would only be $274 billion - for a loss of 22 billion dollars in that one year alone. For comparison, he indicates that “the loss in Ontario is zero”. Oddly, Dr. Gibbons does not point out that Alberta’s 2020 GDP/capita projections are the highest in Canada and range from $80,000 to $70,000 /person while Ontario’s are 34% to 50% lower at $52,300 person. Over the 10 year period, Ontario’s economic growth ranges between 2.1% and 2.2% GDP growth/yr for the various emission targets, compared to Alberta’s growth which ranges between 4.4% and 5.7%.
Referring again to the 2020 projections, Dr. Gibbons continues, “Pre-tax salaries are expected to fall 6.2% or $4,069 in Alberta, and 1.7% or $811 in Saskatchewan; in Ontario, the fall is predicted to be 0.2% or $132.” However, he does not mention that average Alberta salaries are projected to be $65,890 in the “business as usual” case and $61,821 with government emission targets whereas average salaries in Ontario only range between $57,453 and $57,321. According to the MJKA predictions, Albertans would maintain the highest average salary level in Canada even with Kyoto style emission targets.
The DSF/Pembina study predicts that in the year 2020, $17.2 billion in “carbon revenue” would be collected in Alberta and only $12.3 billion would be returned. Dr. Gibbons concludes that “this is a difference of about $5 billion or a net cost of $1,318 per Albertan in 2020”. By comparison, each person in Ontario only loses $432. Gibbons then equates this to a revenue shifting proposal that “dwarfs the (federal) Equalization and is likely to have all sorts of unintended consequences that could generate tension in the federation ... Over a third of the revenue raised by a carbon tax or a cap and trade system (36%) will be returned to Canadians through reduced personal income taxes. In essence, hit one region hard and then distribute the bounty.”
The DSF/Pembina study recommends that 10% of the carbon tax revenue should be returned to home owners to offset higher household heating and electricity costs. Dr. Gibbons writes that “the revenue extracted disproportionately from Alberta and Saskatchewan will be used to ensure that Canadians in all regions do not face higher home heating costs. This makes no sense with respect to energy conservation, but it does assure Canadians that, as far as home heating and electricity goes, the reduction targets are cost-free.” He further states, “When we look at the combination of revenue raising and revenue distribution, the Pembina/Suzuki approach is to raise revenue disproportionately from Alberta and Saskatchewan and then use the revenue for tax reductions and spending across the country, thereby focusing the pain as much as possible on Alberta and Saskatchewan.” and “What we don’t see is any plan to use revenues for re-investment in the energy sector... It would make more sense to invest in energy research than provide rebates for home heating costs.”
Dr. Gibbons claims it is unfair that all Canadians would benefit from reduced income taxes and home utility rebates while Alberta and Saskatchewan would have to pay the entire cost for the development of Carbon Capture and Sequestration. He states, “It is important to note that the regulated cost of carbon capture and sequestration will not be covered by the carbon tax revenue and Alberta and Saskatchewan will bear virtually the entire bill for this new infrastructure”. Somehow Dr. Gibbons seems to have missed several news headlines over the past few months; “Alberta to spend $495 M in carbon capture pipeline - Ottawa invests $63M” (CBC news Nov 24, 2009) or “Feds, Alberta pledge $779M to carbon-capture project “ (CBC News Oct. 14, 2009). Oddly, he doesn’t seem to have noticed that the federal government has pledged to spend the vast majority of their $1 billon dollar “Clean Energy Fund” funding Alberta’s CCS projects.
The Canada West Foundation report adds no new information on the potential impacts of CO2 emission regulation on the Canadian economy. It simply disputes some of the assumptions of the DSF/Pembina study without offering concrete alternatives and then proceeds to interpret the MKJA modeling results in a biased and provocative fashion. The report emphasizes every result that can be interpreted as Ontario being unfair to Alberta and it ignores any beneficial data in an attempt to polarize public opinion and cater to an underlying feeling of Alberta’s alienation. Canada West Foundation adds nothing new to the debate except to state that implementation of a carbon trading system would strain the Canadian federation. The author suggests that “Big Oil” is being used as a convenient target for climate change legislation but cautions that “ People will lose their jobs, see the value of their homes go down and be forced to uproot and move.” It then appears to suggest that these possible sacrifices are more important that the potential victims of human-induced climate change. In it’s conclusion, the report states “Either we are all in this together or we are not. If we are not, no matter how much you want to address climate change, the nature of Canadian politics will scuttle the plan.” Unfortunately, it seems clear that unless you agree with the Canada West Foundation position that it will be very difficult to be together.
Finally, the Canada West report appears to confuse differences in potential economic growth with actual financial penalties. Regardless of the carbon policy framework, Alberta would continue to have the fastest growing economy in all of Canada. However, it must also be repeated that the model predictions are only as good as the underlying assumptions. One of these key assumptions is that oil prices will remain constant at $46.48 throughout the ten year period. Unfortunately, the most recent US Department of Energy Outlook report indicates that oil prices will likely be between $100 and $200 per barrel. As we have recently seen, oil prices at this level will likely do more damage to Canada’s and Alberta’s economy (which are the least energy efficient in the developed world) than any of the proposed carbon emission regulations.
On October 29, 2009, TD bank economists, Don Drummond and Craig Alexander released a report entitled “Answers to key questions about the costs of combatting climate change”. Their report summarizes the results of a David Suzuki Foundation/Pembina Institute (DSF/Pembina) modeling study that addresses the potential economic impact of reducing carbon dioxide emissions in Canada. The modeling was performed by MK Jaccard and Associates (MKJA) and policy information was provided by DSF/Pembina. Two carbon reduction targets were analyzed; the current Canadian government proposal to reduce CO2 emissions to 20% below 2006 levels by 2020 (this is equal to a 3% reduction from 1990 levels), and a stricter, Kyoto-compliant emission reduction of 25% below 1990 levels by 2020. The modeling indicated that these emission reductions could be achieved and Canada’s economy would still grow between 23% and 25% over the 10 yr. period. It also suggests that climate change legislation would result in improvements to public transit, upgrades to the electricity transmission grid to better incorporate renewable energy systems, refunds to homeowners and manufacturing to offset higher energy costs, investment in domestic agriculture, lower income taxes and improved job creation over the existing policy environment. However, the forecasts also indicated that Alberta would be more adversely affected than the rest of Canada. Nevertheless, Alberta would still lead all Canadian provinces with GDP growth between 38% and 45% between 2010 and 2020 - even with Kyoto style reductions. In context, Alberta’s overheated economy only grew 43% between 1999 and 2009. While not endorsing the report, or any particular set of emission cuts the TD economists declare the MKJA analysis “appears to be robust”.
On December 10, Dr. Roger Gibbins of the Canada West Foundation released a critique of the DSF/Pembina report titled “Sharing the Load - Addressing the Regional Economic Effects of Canadian Climate Policy”. While Dr. Gibbins expressed concern with some of the assumptions used in the MKJA modeling, he provided no additional economic projections and all of his policy criticism is based entirely on the MKJA results. His primary argument is that the DSF/Pembina report “identifies and likely underestimates very substantial negative economic consequences for western Canada, and for Alberta and Saskatchewan in particular”. Based on this assessment, he argues that regional differences must be accommodated in Canada’s climate policy and “If we fail to do so, climate policies will not be effective, their economic impact will be exacerbated unnecessarily and the political union in Canada will be badly strained”.
To support his claims, Dr. Gibbons uses the MKJA model predictions to demonstrate that the government of Canada emission targets would result in Alberta losing $11.6 billion (from $113.4 to 101.8 billion) in investment income in 2020. On the other hand, investment in Ontario would increase from $175 billion to $184 billion. For comparison, the total capital investment for Canada in the year 2020 is projected to be $510 billion, but somehow Dr. Gibbons concludes that Alberta with 10% of the population receiving 20% of Canada’s total investment dollars is somehow “the clear loser in capital investment”.
The MKJA results are further used to indicate that Alberta’s GDP would be $296 billion in 2020 if no action is taken to reduce CO2 emissions. If emissions were reduced to the current government target of 20% below 2006 levels, Alberta’s GDP would only be $274 billion - for a loss of 22 billion dollars in that one year alone. For comparison, he indicates that “the loss in Ontario is zero”. Oddly, Dr. Gibbons does not point out that Alberta’s 2020 GDP/capita projections are the highest in Canada and range from $80,000 to $70,000 /person while Ontario’s are 34% to 50% lower at $52,300 person. Over the 10 year period, Ontario’s economic growth ranges between 2.1% and 2.2% GDP growth/yr for the various emission targets, compared to Alberta’s growth which ranges between 4.4% and 5.7%.
Referring again to the 2020 projections, Dr. Gibbons continues, “Pre-tax salaries are expected to fall 6.2% or $4,069 in Alberta, and 1.7% or $811 in Saskatchewan; in Ontario, the fall is predicted to be 0.2% or $132.” However, he does not mention that average Alberta salaries are projected to be $65,890 in the “business as usual” case and $61,821 with government emission targets whereas average salaries in Ontario only range between $57,453 and $57,321. According to the MJKA predictions, Albertans would maintain the highest average salary level in Canada even with Kyoto style emission targets.
The DSF/Pembina study predicts that in the year 2020, $17.2 billion in “carbon revenue” would be collected in Alberta and only $12.3 billion would be returned. Dr. Gibbons concludes that “this is a difference of about $5 billion or a net cost of $1,318 per Albertan in 2020”. By comparison, each person in Ontario only loses $432. Gibbons then equates this to a revenue shifting proposal that “dwarfs the (federal) Equalization and is likely to have all sorts of unintended consequences that could generate tension in the federation ... Over a third of the revenue raised by a carbon tax or a cap and trade system (36%) will be returned to Canadians through reduced personal income taxes. In essence, hit one region hard and then distribute the bounty.”
The DSF/Pembina study recommends that 10% of the carbon tax revenue should be returned to home owners to offset higher household heating and electricity costs. Dr. Gibbons writes that “the revenue extracted disproportionately from Alberta and Saskatchewan will be used to ensure that Canadians in all regions do not face higher home heating costs. This makes no sense with respect to energy conservation, but it does assure Canadians that, as far as home heating and electricity goes, the reduction targets are cost-free.” He further states, “When we look at the combination of revenue raising and revenue distribution, the Pembina/Suzuki approach is to raise revenue disproportionately from Alberta and Saskatchewan and then use the revenue for tax reductions and spending across the country, thereby focusing the pain as much as possible on Alberta and Saskatchewan.” and “What we don’t see is any plan to use revenues for re-investment in the energy sector... It would make more sense to invest in energy research than provide rebates for home heating costs.”
Dr. Gibbons claims it is unfair that all Canadians would benefit from reduced income taxes and home utility rebates while Alberta and Saskatchewan would have to pay the entire cost for the development of Carbon Capture and Sequestration. He states, “It is important to note that the regulated cost of carbon capture and sequestration will not be covered by the carbon tax revenue and Alberta and Saskatchewan will bear virtually the entire bill for this new infrastructure”. Somehow Dr. Gibbons seems to have missed several news headlines over the past few months; “Alberta to spend $495 M in carbon capture pipeline - Ottawa invests $63M” (CBC news Nov 24, 2009) or “Feds, Alberta pledge $779M to carbon-capture project “ (CBC News Oct. 14, 2009). Oddly, he doesn’t seem to have noticed that the federal government has pledged to spend the vast majority of their $1 billon dollar “Clean Energy Fund” funding Alberta’s CCS projects.
The Canada West Foundation report adds no new information on the potential impacts of CO2 emission regulation on the Canadian economy. It simply disputes some of the assumptions of the DSF/Pembina study without offering concrete alternatives and then proceeds to interpret the MKJA modeling results in a biased and provocative fashion. The report emphasizes every result that can be interpreted as Ontario being unfair to Alberta and it ignores any beneficial data in an attempt to polarize public opinion and cater to an underlying feeling of Alberta’s alienation. Canada West Foundation adds nothing new to the debate except to state that implementation of a carbon trading system would strain the Canadian federation. The author suggests that “Big Oil” is being used as a convenient target for climate change legislation but cautions that “ People will lose their jobs, see the value of their homes go down and be forced to uproot and move.” It then appears to suggest that these possible sacrifices are more important that the potential victims of human-induced climate change. In it’s conclusion, the report states “Either we are all in this together or we are not. If we are not, no matter how much you want to address climate change, the nature of Canadian politics will scuttle the plan.” Unfortunately, it seems clear that unless you agree with the Canada West Foundation position that it will be very difficult to be together.
Finally, the Canada West report appears to confuse differences in potential economic growth with actual financial penalties. Regardless of the carbon policy framework, Alberta would continue to have the fastest growing economy in all of Canada. However, it must also be repeated that the model predictions are only as good as the underlying assumptions. One of these key assumptions is that oil prices will remain constant at $46.48 throughout the ten year period. Unfortunately, the most recent US Department of Energy Outlook report indicates that oil prices will likely be between $100 and $200 per barrel. As we have recently seen, oil prices at this level will likely do more damage to Canada’s and Alberta’s economy (which are the least energy efficient in the developed world) than any of the proposed carbon emission regulations.
Tuesday, December 8, 2009
A open letter to PM Harper - fasting for Copenhagen Summit
Right Honourable Stephen Harper
Office of the Prime Minister
80 Wellington Street
Ottawa, K1A 0A
SJ: Fasting for progress in reducing GHG Emissions at Copenhagen
Dear Prime Minister Harper,
I am writing to thank you for attending the UN Climate change summit in Copenhagen. I also want you to know that thousands of Canadians, including myself, are united in fasting and prayer on your behalf. As a Christian, I believe the Copenhagen summit is a call to honour and respect God’s creation. This call was originally given when God created Adam (Humankind) and put him in the garden to tend and care for it (Gen. 2:15).
I also understand that the negotiations will be difficult and there are many competing interests. According to media reports, it seems that you believe climate change legislation will damage Canada’s economy. Please rest assured that this need not happen. TD bank economists recently forecast (Oct. 29, 2009) that Kyoto-style emission reductions (25% below 1990 levels by 2020) are achievable even if Canada acts without our trading partners. The report forecasts a modest reduction in GDP growth (about 0.4% per year from 2010 to 2020) but it also predicts that this will result in improved public transit, better electricity infrastructure, investment in domestic agriculture, refunds to homeowners to offset higher energy costs, lower income taxes and improved job creation over the “business as usual” case.
If you don’t believe these predictions are possible, please take the opportunity to tour the city of Copenhagen. While the Danish people enjoy a very high quality of life, often ranking above Canada in the UN “happiness” index, they emit about 1/2 the CO2 and use about 1/2 the energy per person as the average Canadian. This is due to the far-sighted action of the Danish government during the late 1970s. After the Arab oil embargo and increasing energy prices devastated their economy, the Dane’s chose to artificially inflate energy costs through taxation and use the resulting funds to become world leaders in energy efficiency and renewable energy.
As Canada slowly recovers from the economic collapse that was caused - at least in part - from 2008’s record high oil prices, we have the same opportunity to act by implementing realistic carbon taxes and using the revenue to make our economy more energy efficient. This will prepare Canada for the future, where the 2009 US Department of Energy forecasts that oil prices could reach $200/bbl before 2020.
I realize that it will be difficult to make commitments that will lower CO2 emissions and many people will be unhappy with this decision. Nevertheless, reducing emissions and conserving non-renewable resources is the right thing to do for Canada and for the world. While it won’t be easy, please be confident that I, along with my family and countless other Canadians, are fasting and praying on your behalf. May God grant you the wisdom, courage and foresight to respond appropriately at this critical time.
Sincerely,
Keith Hirsche
1161 Chapman Rd.
Cobble Hill, BC
V0R 1L7
250 929 5586
cc: Jim Prentice Min. Environment
Lisa Raitt Min. Natural Resources
Jim Flaherty Min. Finance
Jean Crowder MP Nanaimo-Cowichan
Jack Layton Leader NDP
Michael Ignatieff Liberal Leader
Ed Stelmach Premiere Alberta
David Swann Liberal Leader Alberta
Office of the Prime Minister
80 Wellington Street
Ottawa, K1A 0A
SJ: Fasting for progress in reducing GHG Emissions at Copenhagen
Dear Prime Minister Harper,
I am writing to thank you for attending the UN Climate change summit in Copenhagen. I also want you to know that thousands of Canadians, including myself, are united in fasting and prayer on your behalf. As a Christian, I believe the Copenhagen summit is a call to honour and respect God’s creation. This call was originally given when God created Adam (Humankind) and put him in the garden to tend and care for it (Gen. 2:15).
I also understand that the negotiations will be difficult and there are many competing interests. According to media reports, it seems that you believe climate change legislation will damage Canada’s economy. Please rest assured that this need not happen. TD bank economists recently forecast (Oct. 29, 2009) that Kyoto-style emission reductions (25% below 1990 levels by 2020) are achievable even if Canada acts without our trading partners. The report forecasts a modest reduction in GDP growth (about 0.4% per year from 2010 to 2020) but it also predicts that this will result in improved public transit, better electricity infrastructure, investment in domestic agriculture, refunds to homeowners to offset higher energy costs, lower income taxes and improved job creation over the “business as usual” case.
If you don’t believe these predictions are possible, please take the opportunity to tour the city of Copenhagen. While the Danish people enjoy a very high quality of life, often ranking above Canada in the UN “happiness” index, they emit about 1/2 the CO2 and use about 1/2 the energy per person as the average Canadian. This is due to the far-sighted action of the Danish government during the late 1970s. After the Arab oil embargo and increasing energy prices devastated their economy, the Dane’s chose to artificially inflate energy costs through taxation and use the resulting funds to become world leaders in energy efficiency and renewable energy.
As Canada slowly recovers from the economic collapse that was caused - at least in part - from 2008’s record high oil prices, we have the same opportunity to act by implementing realistic carbon taxes and using the revenue to make our economy more energy efficient. This will prepare Canada for the future, where the 2009 US Department of Energy forecasts that oil prices could reach $200/bbl before 2020.
I realize that it will be difficult to make commitments that will lower CO2 emissions and many people will be unhappy with this decision. Nevertheless, reducing emissions and conserving non-renewable resources is the right thing to do for Canada and for the world. While it won’t be easy, please be confident that I, along with my family and countless other Canadians, are fasting and praying on your behalf. May God grant you the wisdom, courage and foresight to respond appropriately at this critical time.
Sincerely,
Keith Hirsche
1161 Chapman Rd.
Cobble Hill, BC
V0R 1L7
250 929 5586
cc: Jim Prentice Min. Environment
Lisa Raitt Min. Natural Resources
Jim Flaherty Min. Finance
Jean Crowder MP Nanaimo-Cowichan
Jack Layton Leader NDP
Michael Ignatieff Liberal Leader
Ed Stelmach Premiere Alberta
David Swann Liberal Leader Alberta
Monday, December 7, 2009
Fasting for the Copenhagen Summit
Today marks the start of the Copenhagen UN Climate Summit, or COP15. Leaders from 192 countries, including Canada, USA and China are planning to attend. Whether they can come to meaningful consensus on how to reduce world wide carbon emissions remains to be seen. In Canada and the USA, we must make some major changes. Currently we use about 22 bbls of oil/person/year to maintain our economy and our standard of living. At China's current level of economic development, they are using less than 2 bbls/person/day and India is about half that level. There is great pressure from the citizens of China and India to have a higher living standard, and if that were to occur in North American way, it would require increases in crude oil production that simply aren't available.
You'll notice that I switched from carbon dioxide emissions to bbls of oil/person/day. This was not an accident, as these two parameters are intimately linked. Countries, like Canada, with low levels of energy efficiency are also very high per capita CO2 emitters. Countries like Denmark, Germany and Switzerland who have attained a much higher level of energy efficiency in their economies are also very low CO2 emitters.
I bring this up because Canada, under the Harper government (although Cretian and Martin were not much better) is one of the worst countries for derailing consensus around climate change legislation. Prime Minister Harper, as echoing Alberta's Premier Ed Stelmach, claim that honouring legislation to reduce CO2 emissions would ruin our economy. If this were the case, why are the Western European countries so willing to commit to more aggressive cuts? Are they attempting economic suicide or have they experienced the energy security that comes from a more energy efficient economy? With all our fears about carbon taxes in Canada - which simply increase the cost of oil and other carbon-based energy sources, what will happen to us when oil prices really rise to $200? Certainly Denmark and Germany are far better prepared than we are.
Why are Harper and Stelmach so willing to keep Canada vulnerable to high oil prices and potential tariffs and sanctions for staying outside of international carbon trading systems? Is it really about the economy or are they simply catering to their corporate base of support?
In any case, all these questions won't find easy answers. In the meantime, Jan, Trevor and I are engaging in fasting and prayer over this week, asking that the national leaders will blessed with the wisdom and courage to do the right thing. We were inspired in this act by the Rev. Dr. Bill Phipps (former moderator of the United Church of Canada) who is fasting for this entire week as he posts vigil outside the Calgary offices of many prominent politicians and Darrell Belrose, President of the Community of Christ in Western Canada.
After all, social justice and stewardship of God's creation are primarily spiritual in nature.
You'll notice that I switched from carbon dioxide emissions to bbls of oil/person/day. This was not an accident, as these two parameters are intimately linked. Countries, like Canada, with low levels of energy efficiency are also very high per capita CO2 emitters. Countries like Denmark, Germany and Switzerland who have attained a much higher level of energy efficiency in their economies are also very low CO2 emitters.
I bring this up because Canada, under the Harper government (although Cretian and Martin were not much better) is one of the worst countries for derailing consensus around climate change legislation. Prime Minister Harper, as echoing Alberta's Premier Ed Stelmach, claim that honouring legislation to reduce CO2 emissions would ruin our economy. If this were the case, why are the Western European countries so willing to commit to more aggressive cuts? Are they attempting economic suicide or have they experienced the energy security that comes from a more energy efficient economy? With all our fears about carbon taxes in Canada - which simply increase the cost of oil and other carbon-based energy sources, what will happen to us when oil prices really rise to $200? Certainly Denmark and Germany are far better prepared than we are.
Why are Harper and Stelmach so willing to keep Canada vulnerable to high oil prices and potential tariffs and sanctions for staying outside of international carbon trading systems? Is it really about the economy or are they simply catering to their corporate base of support?
In any case, all these questions won't find easy answers. In the meantime, Jan, Trevor and I are engaging in fasting and prayer over this week, asking that the national leaders will blessed with the wisdom and courage to do the right thing. We were inspired in this act by the Rev. Dr. Bill Phipps (former moderator of the United Church of Canada) who is fasting for this entire week as he posts vigil outside the Calgary offices of many prominent politicians and Darrell Belrose, President of the Community of Christ in Western Canada.
After all, social justice and stewardship of God's creation are primarily spiritual in nature.
Thursday, December 3, 2009
CO2 Emissions - Porter-Hirsche's from 2001 to 2009
After calculating energy use, I decided to work through CO2 emissions for our family. I will update both of these posts with some details in the coming days. Just a couple of lines of reality check here.
First, it is much easier to heat a small house in Victoria (average temperature ~10 degrees C) than a very big house near Calgary (average temperature around ~4 degrees C). It is also wonderful to live in BC where electricity is generated using carbon-free sources (hydro) instead of Alberta which uses coal for about 90% of power generation. However, this same level of improvement can be made for Albertans by using Bullfrog Power to insure that your electricity comes from renewable sources.
Lastly, while we have finally dropped below the Canadian average of 5 tons CO2/person/year (as published by the government - more on this later), we are not done yet. Ongoing improvement to our house and much less driving (not driving to Georgia and coming back with a trailer) is planned for the coming year!
Energy Consumption - Porter-Hirsche's from 2001 to 2009
I recently worked through our records to determine how we have changed our household energy consumption over the past decade. I used the methods described by David MacKay in "Sustainable Energy without the Hot Air" to convert GJ of natural gas, litres of gasoline and cords of firewood to kilowatt hours. This is the only way to compare the relative cost of driving, heating the house, lights and conveniences. I also used MacKay's method to normalize energy to kWh/person/day.
Our Copenhagen Commitment - what are we doing?
I sincerely believe that next week's UN Copenhagen Climate Conference is one of the most important events of our lifetime. The meeting will directly address international regulations for reducing carbon dioxide emissions in an effort to avoid catastrophic climate change. Personally, I believe that unprecedented levels of atmospheric CO2 are not a good thing, and CO2 probably leads to global warming (on average). However, I'm not convinced that climate scientists can reliably predict exactly what kinds of changes will happen and when or where they will occur. My uncertainty around the accuracy of the climate modelling has not changed much despite reading several articles, attending lectures by climate scientists and following the "Climate Gate" saga as it has unfolded in the media. All of my personal research has left me with some fairly strong opinions. For example: there is way too much CO2 in the atmosphere, the planet (on the whole is getting) warmer, this warming is not caused by changes in solar radiation or changes in the earth's orbit and there are non-linear changes happening on the global climate scale that are not fully accounted for in the climate models. This means we are potentially dangerous situation and we don't really have enough knowledge to know what is going to happen next.
Beyond climate change, I believe the Copenhagen meeting is important for several related issues. These include the reality of world-wide energy shortages, environmental destruction caused by the Alberta tar sands and similar developments and increasing inequality between the haves and have-nots. It is interesting to me that most of the world's poor peoples will not be affected much by energy shortages (they never knew the conveniences so they won't miss them) but they will likely be devastated by climate change and environmental degradation. The richer nations will probably cope with climate change but they will be devastated by energy shortages. We really need a way to work together for the good of all people - and the biosphere. This is more important than national economies or how difficult it might be to give something up.
Sorry for the rant - I just want to be clear about why this whole issue is so important to me. Having done that, I suppose I should say a few words about what our family are doing to address these issues. As many of you know, we have been making various attempts to reduce our environmental footprint and improve our personal energy efficiency for the past ten years or so. The next two entries will show how we have done.
Beyond the figures, I would just like to assure everyone that our quality of life has dramatically improved. While some of the transitions have been difficult - like physically moving our mountains of stuff out of that monster house - and we have made lots of costly mistakes, like trying solar thermal to heat our house during Calgary winters and buying that fifth-wheel trailer - our quality of life is far better now than it was before. It has been a fascinating journey and we haven't reached the destination yet.
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