Mark Jaccard, The Citizen’s Guide to Climate Success: Overcoming Myths that Hinder Success. Cambridge, UK: Cambridge University Press, 2020. 304 pages.

Mark Jaccard has written a highly accessible book on the politics of climate change policy, The Citizen’s Guide to Climate Success. More than most academics in his field of national energy system modelling, Mark has provided pragmatic advice to governments interested in implementing effective policy. He played a role in the design of British Columbia’s 2008 carbon tax and its clean electricity regulation, two of the few significant Canadian initiatives over the last quarter century to curtail greenhouse gas (GHG) emissions. However, this book does not discuss climate change modelling or the costs of renewables relative to fossil fuels. Rather, it explores the multiple psychological quirks of human choice, and the dynamics of self-serving interest group behaviour. Mark is a colleague at Simon Fraser University and we have discussed these issues for many years.

Following publication of his book, Mark agreed to an email exchange. I initiated the exchange by suggesting that a better opening chapter to his book would have been to invoke the Red Queen’s advice to Alice – which, adapted to the issue at hand, is that to implement successful climate change policy it is necessary that people come to believe what they currently insist are “impossible things.” In other words, climate success requires governments with authoritarian tendencies willing to advance policy founded on what the majority think impossible – public opinion be damned. Mark disagrees. Maybe he is right.

— John Richards

John Richards

Alice laughed. “There’s no use trying,” she said. “One can’t believe impossible things.”
“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”
— Lewis Carroll, Alice Through the Looking Glass

You effectively make the case that we cannot meet the Paris Accord target (an increase in average world temperature no more than 1.5 degrees Celsius relative to the preindustrial era) without addressing political dynamics – which are subject to multiple psychological quirks of human choice and self-serving interest group behaviour. Realizing sufficiently large reductions in greenhouse gases to achieve zero net additions to the atmosphere by midcentury is, you conclude, politically very difficult. It is far from certain that we will realize the necessary reductions. I agree.

Canada’s dismal contribution to this goal deserves very little attention. Under Stephen Harper, between 2006 and 2015, Ottawa did nothing of substance. Admittedly, some provincial initiatives took place (for example, B.C.’s carbon tax and Ontario’s shutting down coal-based power plants). Under Justin Trudeau post-2015, Ottawa has talked a good deal about climate change, but not actually done much.

You begin with a detour into the two Gulf wars, the first waged by George H.W. Bush and the second by George W. Bush. Saddam Hussein attempted to persuade fellow Iraqis that Kuwait was rightfully a province of Iraq. With the levers that dictators have over public media, he persuaded most fellow Iraqis to support his invasion of Kuwait. Saddam’s delusion turned out to be an “impossible thing to believe.” George W. Bush tried to persuade Americans and allies that Saddam possessed weapons of mass destruction, a second delusion that became an “impossible thing to believe.” In other words, all of us, Iraqis under Saddam and Americans under “W,” can harbour delusions.

A better introduction, I suggest, would have been the Red Queen who, at one point, instructs Alice on the need for practice in believing “impossible things.” I suggest we need Red Queens who believe some set of “impossible things,” implement policy accordingly and hope they can persuade the electorate in due course. The 2018 report of the Intergovernmental Panel on Climate Change (IPCC) lays out four pathways, each of which achieves zero net greenhouse gas emissions by 2050 (see box). Each pathway, however, entails belief in some “impossible things” that at present the majority, like Alice, find laughable:

Pathway 1: The first scenario requires that the majority believe in the impossible forecast that innovations can simultaneously reduce energy demand and increase living standards, especially in the global South. A downsized energy system enables rapid decarbonization of energy supply. Afforestation is the only carbon dioxide removal option considered. There is no need for either fossil fuels with carbon capture and storage or bioenergy.

Pathway 2: This scenario requires naive faith in international cooperation with a broad focus on sustainability including energy intensity, human development, economic convergence, shifts toward sustainable and healthy consumption patterns (e.g., substitution of plant-based protein for red meat), low-carbon technology innovation and well-managed land systems. It requires some limited societal acceptability for carbon capture and storage, and bioenergy.

Pathway 3: This scenario implies that social as well as technological development follows historical patterns. In other words, final energy demand continues to grow. Central to this pathway is that we support universal acceptance of nuclear power. The scenario projects a fivefold increase in use of nuclear, a ninefold increase in nonbiomass renewables and a sevenfold increase in carbon capture and storage plus bioenergy. (At present, adding carbon capture from fossil-fuel power generation roughly doubles the cost per kilowatt-hour).

Pathway 4: A resource- and energy-intensive scenario in which economic growth and globalization lead to widespread adoption of greenhouse-gas-intensive lifestyles, including high demand for transportation fuels and livestock products. Emissions reductions are mainly achieved through technological means. We need faith in new technology removing carbon dioxide from the atmosphere, faith in carbon capture and storage and faith in bioenergy fuels.

We don’t have to believe all of the impossible things implicit in the four IPCC options, but to successfully implement any one of the pathways, democratic politicians will have to persuade us to believe in some things that the majority at present think are “impossible things.”

Mark Jaccard

I was not trying to explain the key causal factors of two decades of strife in Iraq-Syria. I was simply pointing out – for a U.S. readership of my book – that it is folly to assume that only people under the heel of a dictator are vulnerable to collective delusions. Even the United States, with its various checks on power to help reduce the chance of collective delusion, can be vulnerable. The people running the United States in 2001–2003, and much of the population, believed that overthrowing Saddam would lead to less strife. That was a delusion. With hindsight, U.S. intervention obviously led to more strife. That’s all.

And by the way, my scepticism about carbon taxes does not mean I am anti–carbon taxes. Read my chapter and you’ll see that I am agnostic on policy instruments for GHG reduction – other than the idea that compulsory policies (being prices and/or regulation) must play a significant role because of the plentiful reserves of cheap fossil fuels. I am not against carbon pricing. What I am against is armchair politicians (mostly academic economists) who never try to get elected themselves and never dirty themselves in supplying real-world policy advice that might win key swing ridings and defeat climate-insincere politicians who lie successfully about carbon pricing. Climate-insincere politicians have no qualms about cavalierly convincing climate-sincere politicians to paint a carbon tax bullseye on their backs, even though the bullseye is not necessary for deep decarbonization.

I find your Alice Through the Looking Glass narrative confusing and unhelpful. It certainly does not help with the message of my book. IPCC reports – like the 1.5-degree rise report you cite – are in a strange no-man’s-land. They are written to communicate complexity because the authors don’t want to exclude any bit of evidence, nor anyone’s research. But that makes them useless for the public and decision-makers. My book is a sort of anti–IPCC report. Part of my strategy is to avoid the approach you are taking, with a complicated Alice story and reference to an even more complicated page from the IPCC. I cannot imagine any audience for this.

People keep saying that they get the book’s simple message. That is my impression from how it is being used as a resource on social media. I developed each of the stories over five years, getting feedback from grad students and third-year undergrads in the two courses in which I used earlier drafts.

John Richards

Perhaps my Alice-and-Red-Queen narrative is “confusing and unhelpful,” but it summarizes my fears. For the multiple reasons you discuss, there is no present public acceptance of any policy initiative likely to achieve net zero emissions by midcentury. John Geddes writes in his (favourable) Maclean’s review of your book (“Solving the Climate Crisis Isn’t on Consumers. It’s on the People in Power,” January 30):

What’s to be done then? This is where the “citizen’s guide” part comes in. In his chapter on the limited potential for individuals to make progress by voluntarily changing how they live, Jaccard chides that “it’s time to stop feeling guilty about ourselves as consumers and start feeling guilty about ourselves as citizens.” He means we must start electing politicians who make real commitments on climate change and resolutely implement them. “We must be able to detect and elect climate-sincere politicians, and then pressure them to implement a few simple policies,” he writes, “such that any citizen can detect procrastination and evasion.”

On the assumption that we elected a climate-sincere government in 2019, how do we realize the required decarbonization of our economy? You write,

I am frequently asked by non-experts why they never hear about how to transform our energy system to prevent climate change. People are shocked at my response: energy analysts have publicly reported on this transformation with great fanfare since the 1980s …

These studies produce a consistent takeaway message. First, we need several decades to fully transform the energy system for significant GHG reductions. Second, this can occur without major technological innovations, although cost-reducing innovations will continue as commercialized technologies increase market share. Third, the cost is manageable if we prioritize the lowest cost options and transform the energy system at a pace that reflects the replacement rate of electricity plants, industrial plants, vehicles, and buildings. This is the consensus view from assessments prepared by experts crafting a compromise summary of the leading evidence.

This is an excellent résumé of scientific opinion. But there remains a dilemma: how do we elect climate-sincere politicians willing to expend their political capital on “sincerely” pursuing one or more of the highly controversial climate change scenarios summarized by the IPCC?

I am pessimistic about achieving results with normal politicians, however climate-sincere they are. To cite three examples: Gordon Campbell (B.C. premier who successfully implemented the province’s carbon tax), Ken Livingstone (London mayor who introduced road pricing), Charles de Gaulle (who in the 1960s decided France would go nuclear and limit French dependence on Mideast oil). All had an authoritarian willingness to ride roughshod over short-term public opinion and over their respective legislative colleagues, and bear the electoral consequences. Such leaders are rare. Hence, my image of the Red Queen lecturing citizens (i.e. Alice) on the need to practise belief in “impossible things.”

Mark Jaccard

You are arguing that we need exceptional politicians for deep decarbonization. I don’t agree. There are different conditions that, alone or combined, increase the chance of effective decarbonization policy:

• exceptional politicians – such as Gordon Campbell (one of your specific examples);
• policy window – a crisis that increases the chance of nonpartisan efforts (for example, Republicans and Democrats after Hurricane Katrina);
• institutional arrangements at the political level (U.S. checks and balances make it very difficult constitutionally to be proactive);
• social consensus on need for climate change policy (Scandinavia and Quebec today);
• institutions with long-term vision and regulatory authority (California today).

I resist your focus on exceptional politicians. The focus of my book is on how:

• Citizens need to create the policy support (my former student Kevin Washbrook, along with other climate-concerned citizens, did a masterful job across B.C. in helping create support for Campbell’s transformation from climate-insincere to climate-sincere).
• Policy advisers need to be realistic about the constraints when suggesting policy. As I keep saying, fossil fuels are truly fantastic – they bring major benefits and are cheap, so long as we ignore environmental costs – so this makes it tough to eliminate their use. Climate change is a global problem, so single-jurisdiction effort is constrained, especially with trade-exposed, emission-intensive industry. And we need to understand the flaws of electoral politics and policy-making (voter biases, focus on a few single-issue voters in key swing ridings, etc.).

Of course, a “great man” would be nice. But it is not an essential condition. Ironically, George W. Bush, as governor of Texas, put in a Renewable Portfolio Standard (a flexible regulation) that subsidized wind power, which in turn over the last two decades has messed up spot markets and therefore the ability to baseload coal and turn a profit. There was a general interest in renewables, and I am not sure his advisers realized how significant that policy would become. But how wonderful that people designed the policy and sold it on “the exciting technology of wind” rather than “this will kill off coal plants.” What is needed is opportunism like this and policies that don’t cause strong pushback. This is why, in the book, I explain that certain “flex-regs” are quite easy and have been implemented in many places. We need better policy advisers, who don’t simply repeat “we must price carbon” to sincere politicians.

John Richards

Yuval Noah Harari sometimes annoys me with his overly confident oversimplifications but he is, like you, a very good vulgarizer (in the positive sense of the word). He recently wrote an article in the Financial Times on the need for social trust if we are to minimize deaths arising from the coronavirus (“The World after Coronavirus,” March 19). He acknowledges that, once China’s meritocratic dictatorship stopped denying the epidemic, it seemingly halted exponential growth of cases by employing mass electronic invasion of privacy and aggressive lockdown of Wuhan. He raises the question, in this article in terms of health: can we simultaneously maintain democratic institutions and conduct effective public policy? Harari is optimistic:

We can choose to protect our health and stop the coronavirus epidemic not by instituting totalitarian surveillance regimes, but rather by empowering citizens. In recent weeks, some of the most successful efforts to contain the coronavirus epidemic were orchestrated by South Korea, Taiwan and Singapore. While these countries have made some use of tracking applications, they have relied far more on extensive testing, on honest reporting, and on the willing co-operation of a well-informed public …

But to achieve such a level of compliance and co-operation, you need trust. People need to trust science, to trust public authorities, and to trust the media. Over the past few years, irresponsible politicians have deliberately undermined trust in science, in public authorities and in the media.

How to interpret Harari? There is apparently enough social trust among G-7 electorates in scientific opinion on appropriate public health policy that all seven – even the United States with inexcusable delay – have accepted the scientific conclusion on the value of “social isolation,” the closing of institutions that bring large numbers of people into close contact and aggressive testing of potential carriers. There remains the awkward fact that Harari acknowledges without elaboration: all countries that quickly suppressed the exponential growth of new cases (South Korea, Taiwan and Singapore, to which can be added Hong Kong and Japan) are in East Asia. Their version of democracy incorporates what Lee Kwan Yew defined as Asian values: respect for family and national leaders, combined with Confucian obligations among the elite.

As we write (in early April 2020), the only public policy being discussed is the coronavirus pandemic. Hopefully, in 24 months we will have contained the virus, and done so with far fewer deaths than were caused by the Spanish flu a century ago. Let’s return to your book. You and I agree that if we fail to implement some version of the four IPCC pathways in the next quarter century, the world will face more severe climate change consequences than an uncontrolled coronavirus pandemic. I don’t see any of the leading politicians in the G-7 introducing climate change policy that qualifies as a credible commitment to some version of the IPCC pathways.

I admit that some “climate-sincere politicians” are tinkering, and some social democrats in Scandinavia deserve praise for bolder initiatives. I don’t see any in the G-7 advocating any of the Red Queen’s “impossible things.” Where are the politicians willing to support a massive increase in nuclear power and immediate shutdown (within the decade) of all fossil-fuel sources of electricity; willing to introduce sufficiently rigorous regulations (aggressive versions of your “flexible regulations”) that within, say, 15 years, eliminate all fossil-fuel vehicles; willing to discuss phaseout of the entire fossil-fuel sector in two decades and the required cost of redesigning regional economies such as Alberta; willing to tax red meat on grounds of public health and preservation of forest habitat?

There is a very low probability that you and I will die over the next 12 months as a result of the coronavirus. To minimize the low probability of death for ourselves, our family, our community, our country, we are willing to incur massive disruption of our daily lives for the coming months. One of the psychological quirks you discuss is myopia, the human tendency to discount at absurdly high rates the consequences of events that will take place, say, 50 years from now. If we apply no discount to the costs of future climate change, the consequences of “business as usual” climate policy are almost certainly worse than this pandemic. Over to you.

Mark Jaccard

My book is prescriptive. In it, I prescribe “the least-difficult strategic path for global success.” And I explain why other prescriptions, widely circulated, are more difficult because they rely on assumptions that don’t reflect what leading experts agree on. Some policy pundits say that carbon pricing is essential, yet leading experts know this is not true. Recognition that carbon pricing is not essential is important because an electoral campaign based on carbon pricing as the lead policy can enable the election of climate-insincere politicians, who once in power delay the implementation of effective climate policies.

Some policy pundits, and most governments, believe we can voluntarily achieve a global agreement with binding, effective compliance mechanisms. Diplomacy experts know that this is highly unlikely. Thus, instead of trying each year to reach this universal voluntary agreement, we need leading countries to implement carbon tariffs now, just as the Americans almost did in the mid-2000s and the Europeans are discussing seriously today as part of their Green Deal. Otherwise, Vietnam, the Philippines, Indonesia, Pakistan, India, Bangladesh, Kenya, Tanzania and other growing economies will base much of their electrification on new coal and natural gas plants. Although carbon tariffs by leading countries will be portrayed by some as a North attack on the South, they are in the best long-term interests of developing countries, which are the least able to cope with the calamities of profound and at times catastrophic GHG impacts.

These are just two of the nine delusions covered by each of my book chapters. We need to get more (not all) climate-concerned citizens and climate-sincere politicians to understand and overcome the myths I discuss if we are to increase our already low chances of success with this global challenge. To do this, we needn’t portray the challenge as requiring profound transformation of our lives (read my chapter on behavioural change!). People won’t know that their electricity doesn’t come from a coal plant. People won’t remember the slight difference between an electric car and a gasoline car (other than that my electric car has much greater acceleration!). People won’t remember if their house is heated by natural gas or electricity (35 per cent are already heated by electricity in B.C.!). We must not portray this challenge as more difficult than it is from a technical, behavioural, economic and political perspective.

Now, if we do take more serious action on climate, what will it look like from a societal and governance perspective? You use Harari’s essay on diverse responses to the COVID-19 pandemic to ask if success requires autocratic government control of citizens. I see no evidence that this is necessary. It was the Obama-led U.S. government that reached a promising bilateral agreement with the Chinese government in 2014 to link their climate targets and eventually their policies. Of course, for success, they needed to follow this with carbon tariffs. But governments of very different stripes can work together for a common global cause, just as the U.K. and U.S. joined forces with the undemocratic USSR to defeat the global threat of Nazi Germany and militaristic Japan in World War II. Similarly, China is now rapidly reducing urban air pollution and acid emissions that democratic governments dramatically reduced over a decade ago. From what I have seen, the nature of the government does not matter for the environmental outcome.

Back to prescription versus prediction. The prescription of my book is that the actions needed to decarbonize rich countries and even developing countries are not that costly, and that the (mostly) flexible regulatory policies needed to cause these actions are not that politically difficult. But my prediction – if you ask me for it – is that humanity is likely to continue with baby steps and even backward steps for far too long, perhaps even another two decades. And this means we’ll be forced to adopt “Hail Mary” technologies that block solar radiation, refreeze Greenland, shift rising seas into the Sahara, raise dikes along our coastlines, suck carbon out of the atmosphere and so on.

The reason is that delusions held by both climate-concerned and climate-unconcerned citizens make the challenge far more difficult than necessary. Self-interest motivates some people (some of them very powerful) to use delusions to convince the rest of society that we still need fossil fuel projects. But even climate-concerned people harbour delusions that make the path more difficult, such as wishful thinking biases that renewables and efficiency are lower-cost than fossil fuels (which inadvertently justifies government policy procrastination). Or holding rigid pro and con positions on our options, such as the belief that “nuclear must be part of the solution,” even though leading academic research does not support this. Or hitching agendas that make the project more ambitious than it need be, such as requiring the complete abolition of global capitalism to succeed (à la Naomi Klein).

I wrote my book to try to reduce the probability that these myths will continue to reduce our chance of success. Thank you, John, for this opportunity to elaborate.

Prime Minister Justin Trudeau and Alberta Premier Rachel Notley accuse B.C. Premier John Horgan of sabotaging Canada’s climate plan, making him responsible for our continued planet-threatening greenhouse-gas emissions. But what exactly is Mr. Horgan’s climate crime? He is resisting the Trans Mountain pipeline expansion, a GHG-increasing fossil-fuel project. George Orwell would have fun unpacking this black-is-white logic.

First, Orwell would note how three previous Canadian prime ministers made dishonest GHG promises. In 1988, Brian Mulroney made a promise for 2000. In 1997, Jean Chrétien made a promise for 2010. And in 2007, Stephen Harper made a promise for 2020. But all three failed to immediately implement the regulations and carbon prices necessary to achieve their promises. Independent experts, myself included, noted a decade before each deadline that the promise would not be kept. In 2002, I cowrote The Cost of Climate Policy,³ detailing why Mr. Chrétien would fail his Kyoto commitment. But he knew this from his own staff.

Orwell would not need energy expertise to know that emission increases from major industries cannot occur if a prime minister is to keep his promise. Yet all three, and now Mr. Trudeau, have countenanced Alberta’s oil sands expansion, the single biggest reason for missing targets. With oil output growing from one million barrels per day in 2005 to 2.5 million barrels in 2015, Alberta’s contribution to Canada’s emissions increased from 230 to 270 megatonnes of carbon dioxide. And Alberta’s emissions will reach 290 megatonnes by 2030 if projects like Trans Mountain are completed. National studies by independent researchers (including my university-based group) consistently show that Mr. Trudeau’s 2015 Paris promise of a 30 per cent reduction by 2030 is unachievable with oil sands expansion. His staff know this, so he knows it too.

Second, Orwell would note that constitutional experts agree that the Canadian government has the authority to achieve its GHG promises. If Mr. Trudeau fails, he cannot blame uncooperative provinces for his failure. He admitted as much when he told Saskatchewan Premier Brad Wall that federal climate policies will apply to every province. Thus, the Prime Minister does not need a deal with Alberta for more oil pipelines in order to meet his Paris commitment. He simply needs to quickly apply his federal authority to regulate or price emissions from electricity generation, oil sands, other industries, transportation and buildings. When he does, oil sands output will not grow, and pipeline expansion will not be needed.

Third, if Orwell consulted experts at any of the internationally renowned institutions assessing how humanity keeps the temperature increase below 2 degrees Celsius, he would note their unanimous conclusion that oil sands expansion must not occur. Global oil demand must fall from today’s 95 million barrels a day to about 65 million by 2050. As a high-cost, high-emission resource, oil sands will not expand as oil prices fall in a declining oil market.

Mr. Trudeau and his advisers know that it makes no sense, indeed is economically and socially irresponsible, to build a pipeline today for expanded production that should not occur if we are to prevent devastating climate change. Fostering increased oil sands jobs in Alberta is inconsistent with global climate goals.

Which leads to Ms. Notley’s accusation that Mr. Horgan is attacking current Albertan jobs. Oil sands production facilities are long-lived investments that, once built, are viable for decades. The halt to oil sands expansion that is essential to achieve national and global climate goals does not eliminate current oil sands jobs in Alberta.

To say that Mr. Horgan’s resistance to fossil-fuel expansion is an attack on Albertan jobs is the biggest whopper of them all. But Ms. Notley has only a year before an election she will probably lose. Her political survival depends on her finding an issue that draws Albertans to her. As Orwell witnessed in the 1930s in Europe, politicians benefit if they are seen to be protecting their citizens from external threats, even if these threats are fictional.

Orwell once suggested that politicians be required to publicly admit their untruths – at the moment they utter them. When it comes to Canada’s climate-versus-pipeline battle, this would be a great idea.

Assessing Canada’s current climate policy

For two decades, Canadian governments have set ambitious targets for reducing greenhouse gas emissions, but their policies have consistently failed. Like previous governments, today’s federal Conservative government promises that its policies are better, and claims that these will reduce Canadian greenhouse gas emissions to 20 per cent below their 2006 levels by 2020.

Our research group at Simon Fraser University has performed numerous assessments of Canadian climate policies at the federal and provincial levels.¹ Here we provide a short assessment of the main elements of the federal government’s current climate policy.

Lessons from past failures

Before turning to the specific policy proposals, it is important to note some key lessons from the failures of the past 20 years, as described in the growing research literature on climate and energy policy failures.²

1. Emission targets are meaningless by themselves and are often a red herring. Some environmentalists have applauded politicians for setting aggressive targets for greenhouse gas reduction (“stretch targets” or “aspirational targets”) and the media tend to focus on these. As a consequence, many politicians select ambitious targets even while their actual policies have negligible likelihood of achieving them.³
2. Noncompulsory policies, such as information provision (labels, advertisements) and modest subsidies, do not increase the cost of emitting greenhouse gases and therefore fail to cause substantial emissions reductions. If climate policies leave the atmosphere as a free waste receptacle in a market economy, greenhouse gas emissions will continue to rise.
3. Only compulsory policies that impose a cost for emitting greenhouse gases or for acquiring greenhouse gas–emitting technologies will reduce greenhouse gas emissions. These are regulations on technologies (like renewable electricity requirements and vehicle emissions standards), regulations on emissions (like emissions cap-and-trade) and emission charges (like carbon taxes).
4. To make substantial greenhouse gas emission reductions throughout the economy as inexpensively as possible, compulsory policies need to have economy-wide application. In the case of emissions cap-and-trade or carbon taxes, virtually all greenhouse gas emissions must be covered.
5. The two most prominent emissions pricing policies are emissions taxes and emissions caps (with permit trading). In their purest designs, they differ in that emissions caps set an absolute limit on emissions while emissions taxes fix a price for emissions. Permits totalling the emissions cap are allocated according to some criteria (such as by historical levels or by auction) and then these permits can be traded. Under the cap, the permit trading price, and thus the cost of greenhouse gas emissions, is uncertain in advance. In contrast, with emissions taxes, the cost of greenhouse gas emissions is certain, but the emission reductions that will occur are uncertain; government cannot be certain how industries (and households if the policy is economy-wide) will respond to the tax. Many researchers note, however, that policy design details when implementing cap-and-trade can blur this distinction, with some of these details reducing the quantity certainty of caps and others reducing their pricing uncertainty.⁴ Thus, the distinction between emissions caps and emissions taxes is not nearly as significant as sometimes portrayed. Emissions pricing throughout the economy is key and both policies can achieve this if designed properly.

The current government’s climate policy

In March 2008, the federal Conservative government issued its latest climate policy proposal, which modified slightly the proposal it had issued a year earlier.⁵ The key component of its policy is to cap greenhouse gas emissions from industrial plants in the oil and gas, manufacturing, electricity generation and mining sectors, which together produce 50 per cent of the country’s emissions.⁶

Unfortunately, the government’s emissions cap only applies to industrial emissions and thus excludes from emissions pricing 50 per cent of Canadian emissions. Sources of unregulated and thus unpriced emissions include residences, institutions, office buildings, light industry, personal transportation, freight transportation, urban waste, agriculture and forestry. This means that the government’s climate policy fails to apply an economy-wide emissions pricing signal, which is one of the critical lessons from the failed climate policies of the past (lesson 4 above). While the government claims that it will implement effective policies for the other 50 per cent of Canadian emissions, these have not been presented in a way to suggest that economy-wide emissions pricing will be the outcome. Claims of emissions reductions in these sectors from a combination of information programs, subsidies and a few efficiency regulations should be treated with considerable scepticism, given the similarity with the failed climate policies of the past two decades.

The government claims that the industrial emissions cap will reduce Canadian greenhouse gas emissions by 165 megatonnes by 2020 from their expected (“business-as-usual”) level. However, the policy has two attributes that cause substantial uncertainty about its effectiveness.

First, instead of an absolute cap on industrial emissions, the government is applying a cap on the intensity of emissions from industrial activities – such as emissions per tonne of steel, per kilowatt-hour of electricity or per barrel of oil. The policy calls for reductions in the greenhouse gas intensity of production of 18 per cent by 2010 (relative to 2006 levels) and then a further intensity reduction of 2 per cent per year after that. If each industrial sector grows at the rate the government expects, then the anticipated emissions reductions could be achieved. But if emission-intensive sectors grow more rapidly than expected, then the full reductions will not be achieved.

This decision to set an intensity cap instead of an absolute cap puts Canadian climate policy in a unique situation relative to the emissions caps already applied or currently under consideration in other jurisdictions around the world. If the Canadian government truly intends to hit its 2020 emissions reduction target, one has to ask why the government would not simply set this as an absolute cap, thereby ensuring an outcome that it promises will happen anyway. Since the government promises this outcome (a 20 per cent reduction in emissions by 2020), why would it not provide Canadians with the assurance that this time our policies will not fail, simply by converting the intensity cap to an absolute cap?

Second, the policy outcome is especially uncertain because of various flexibility mechanisms that allow industrial emitters to do things other than reduce their own emissions in a given year. Some critics have especially focused on the policy’s allowance of “technology fund” payments as an alternative to in-house emissions reduction – the assumption being that such payments will eventually translate into future emissions reductions once the funds are applied to special investments like CO₂ pipelines, carbon capture projects and electricity transmission lines.

This is troubling. But a much more troubling flexibility provision is the allowance for industrial emitters to purchase domestic “offsets” as an alternative to in-house emissions reduction. An offset occurs when an individual or firm pays another individual or firm to reduce their greenhouse gas emissions as a means of offsetting its own emissions. For an offset mechanism to actually reduce emissions, the offset payment recipient must reduce emissions from what they otherwise would have been. This payment is identical in practice to the subsidies that past governments provided for emissions reductions, and herein lies the problem. One reason past subsidy programs were ineffective is that it is impossible to determine definitively that an emission reduction action would not have taken place without the subsidy (or offset payment). Researchers trying to estimate these effects have found, for example, that a certain percentage of households do install better insulation when renovating their homes even in the absence of subsidy or offset policies. Yet it is impossible to know in advance who these people are, and so they are inevitably eligible for the subsidy or offset. Thus a certain percentage of subsidy/offset funds are captured by “free riders,” meaning that the assumptions about the “additionality” of the program need to be adjusted downward – sometimes severely.

This is one of the reasons that governments in other jurisdictions tend to limit the recourse to offsets to 10 to 15 per cent of the total reductions that must be achieved by regulated entities. Yet, the current government plan allows use of offsets for up to 100 per cent of the emissions reductions required by industry. To estimate the effect of the government’s claim for emissions reduction, therefore, it is necessary to estimate the percentage of offsets that industry will rely on and the likely additionality of these offsets in terms of actually reducing emissions – rather than simply paying unregulated firms and households for actions they would have taken in a business-as-usual world.⁷

The government would dramatically increase the chance of achieving its reduction targets by closing the offset loophole in its industrial emitters policy, or at least by limiting the recourse to offsets to a level that is consistent with other jurisdictions, namely in the range of 10 per cent of total required emissions reductions. This would dramatically increase confidence that the government’s policies will reduce industrial emissions to the levels it has promised, even though the policy still lacks an emissions pricing signal that would provide reductions in the other sectors of the economy.

We conclude that, as currently designed, it is highly unlikely that the policies of the government of Canada will achieve the target of reducing national emissions 20 per cent below 2006 levels by 2020. The lack of an economy-wide emissions price and the allowance for 100 per cent offsets for industrial emitters make it highly likely that emissions will be significantly higher than target levels in 2020 and indeed might even be close to today’s levels.

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