BC Business Matters:
Jock Finlayson >>
Is BC Really a Laggard on Climate Change?
In recent months, a number of groups have been advancing the message that BC is falling behind other jurisdictions in adopting policies to address climate change.
We find the claim deeply misleading.
On any reasonable assessment, BC remains a North American pacesetter on a number of important aspects of climate policy, with industry and government continuously improving policies and operational efficiencies through the availability of new innovations.
- BC was the first province/state in North America to price carbon emissions, with a broadly based carbon tax instituted in 2008. As the Business Council has documented, the effective carbon price charged in BC is far higher than the analogous price in the handful of other provinces/states that have chosen to price emissions – or, like Ontario, that have signalled an intention to do so by the end of the decade.
- BC has achieved overall carbon neutrality in the provincial public sector, something very few other jurisdictions have managed, or even sought, to accomplish.
- Within North America, BC is also a leader in the use of non-carbon electricity, with ~97% of electricity generated in the province coming from renewable sources.
What about the future? The nub of the criticism voiced by some is that BC’s greenhouse gas emissions look set to rise over time owing to economic and population growth, the provincial government’s ambition to develop a significant liquefied natural gas (LNG) industry, and the decision to freeze the carbon tax at $30/ton.
In thinking about this, the starting point matters for any kind of sensible policy evaluation. As noted above, BC gets almost all of its electricity from renewable sources. This means many of our energy-intensive industries are already carbon efficient compared to their competitors in other jurisdictions – a point rarely acknowledged by environmental advocates. In fact, endowed with a largely carbon-free power sector, BC arguably should have a brand advantage. Even if, as some posit, BC’s overall GHG emissions climb by almost by 40% by 2030 (a highly questionable assertion – see below), our province still ranks as a relatively low-emitting jurisdiction, comparatively in Canada (see figure below) and vis-à-vis many US states.
GHG Emissions by Selected Provinces, 2014
In looking at the options to limit or reduce GHG emissions available to different jurisdictions, the baseline is important. Proponents of more aggressive climate action assert or assume BC’s hydroelectric assets are the result of geography and political decisions made long ago and have little to do with fighting emissions today or tomorrow. Yet the reality is, almost without exception, other jurisdictions that have achieved sizable reductions in their GHG emissions have done so mainly by fuel switching in the electricity sector.
The large reported reductions in greenhouse gas emissions in the United States resulted in large measure from the logical and economically beneficial substitution of natural gas for coal in the electricity sector. In fact, ~49,000 MW of installed US coal capacity have been retired or converted since 2005. The US Energy Department expects another 60 GW of coal retirements by 2020. Alberta still generates 82% of its electricity from fossil fuel sources; it has lots of room to cut emissions by transitioning from coal to natural gas and by adding more renewables to the power system. Ontario has succeeded in phasing out coal-fired generation – a significant milestone – but still generates 28% of its electricity from natural gas; thus, it also has room to reduce electricity sector GHG emissions by shifting to renewables.
British Columbia does not have fuel switching options in our power sector. Instead, any reductions in CO2 emissions must come from the transportation sector, the built environment, and industry. In the BC context, cost-effective options to reduce emissions in these areas are few in number, difficult to identify, and complicated to implement.
Therefore, all discussions about reducing GHG emissions in the BC context must recognize these basic facts and stop characterizing the province as a laggard. The claim is disingenuous. After all, BC’s existing carbon price is the steepest in North America and among the highest in the world in terms of applicability and scope. Moreover, as an early mover on carbon pricing, most of BC’s energy-intensive industries have become more energy efficient, and less GHG-intensive, over the last 8-9 years. Other jurisdictions in North America are either just getting started on the path that BC began in 2008, or else have yet to implement meaningful mitigation policies — which is the situation in most of Canada’s provinces and a large majority of US states.
Second, many projections of BC’s future GHG emissions, including those cited by the critics, include CO2 created from an emerging LNG industry. This is an uncertain prospect. It is far from clear whether BC will be home to a large-scale LNG industry in the medium-term. It is true that the presence of an LNG industry would expand BC’s greenhouse gas footprint. However, one must maintain a broad perspective when thinking about energy matters. Oil, natural gas and other forms of energy from BC and Canada as a whole play a role in helping to meet global energy demand. If LNG is produced in BC and shipped to Asian markets, it will be used to generate power, thereby displacing coal-fired electricity and contributing to lower global GHG emissions relative to business-as-usual projections.
Third, and related to the point just made, if the critics are honest, they will acknowledge that world-wide demand is growing for Canada’s and BC’s energy and other natural resources, coincident with the rising global population and a steady increase in the number of middle-income households in Asia. This drives the trade flows on which a robust Canadian economy depends. BC happens to be Canada’s gateway to the Asia-Pacific, which translates into economic activity from serving the wider North American market and produces incremental GHG emissions domestically. One can argue that it would be irresponsible, on environmental grounds, for BC and Canada not to develop and sell these resources — after all, production (and consumption) of energy will occur with or without us, and from competing oil and natural gas-producing jurisdictions that often have lower and less transparent environmental standards than we do in Canada.
Finally, there is much that BC can do to accelerate the use of new processes and technologies to further reduce emissions and lessen the impact of human activity on the environment. Areas for possible action include new measures to tackle methane emissions, moves to bolster energy efficiency in the built environment and the industrial sector, efforts to encourage the use of electric vehicles, and collaboration between government and industry to electrify upstream oil and gas extraction. These kinds of strategies, along with the prospect of an emerging LNG industry considerably smaller in size than originally forecast a few years ago, mean the province’s GHG emissions are unlikely to rise anywhere near the 40% figure cited by proponents of misleading advocacy.