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energy and materials research group
Canada’s Failed
Greenhouse Gas
Reduction Policies
Mark Jaccard
School of Resource and Environmental Management
Simon Fraser University
September, 2007
9/2007
Jaccard-Simon Fraser University
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energy and materials research group
Canada’s policy failure
•
Since 1988 Canadian governments have set several targets
for reducing future greenhouse gas emissions and have
implemented policies to achieve them. But none of the targets
have been met. In fact, emissions have continued to rise.
•
In spite of this unequivocal evidence of failure, our
governments boldly claim that their new targets will be
achieved and their new policies will be successful. Amazingly,
much of the media and public still seem to accept these
claims, as evidenced by editorials and public opinion polls.
•
As an independent researcher, I have focused for 20 years on
assessing policies that seek to influence technological change
toward reduced energy use and/or reduced energy-related
emissions. I report here on some of the findings of research by
myself and others and its relevance for past and future
Canadian climate policies.
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Recent publications
2006
2007
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Targets, policies, emissions
Greenhouse gas emissions
(megatonnes of CO 2 equivalent)
900
800
700
600
Green
Plan
ecoENERGY
G7, Rio
500
Kyoto Protocol
target
World Conference on
Changing Atmosphere
400
300
200
100
Solid line shows actual emissions;
dashed line shows forecast emissions.
0
1990
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National
Action
Program
Action Climate
Project
Change Plan
Plan
Green
for Canada
2000
1995
2000
Jaccard-Simon Fraser University
2005
2010
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Canada’s Kyoto performance
energy and materials research group
Exceeding commitmentsFailing commitments
Canada
New Zealand
United States*
Japan
Australia*
Liechtenstein
Norway
Switzerland
EU-15*
Slovenia
Czech Republic
Iceland
Slovakia
Hungary
Poland
Russian Federation
Romania
–40
–30
–20
–10
0
10
20
30
Actual emissions relative to Kyoto Protocol commitment (per cent)
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Broad lessons from the
evidence
•
Targets are meaningless without the simultaneous implementation of
effective policies.
•
The predominant reliance on non-compulsory policies – information
programs and subsidies – is the reason why emissions have not
declined. This evidence is counterintuitive to some industry experts,
government officials, politicians and environmentalists. Subsidies
appear to be effective, information programs appear essential.
•
It is highly unlikely that emissions will decline until government policy
places a value on using the atmosphere – charging a financial penalty
for emissions (a carbon tax) and/or restricting emissions by regulation
(an emissions cap with tradable permits). These policies must have
economy-wide application to be effective.
•
The latest concern for Canadian climate policy is that government will
finally implement taxes and/or emission caps but in a watered-down
format that will still produce ineffective outcomes.
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A quick reminder: actions to
reduce greenhouse gases
• Energy efficiency (if using fossil fuels)
• Fuel switching (away from carbon-intensive
fuels)
• Pollution control (carbon capture & storage,
process changes to reduce emissions,
landfill gas recovery)
• Changes in agriculture and forestry (to
prevent emissions and store carbon)
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•
•
•
•
•
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A quick reminder: the policy
options
Information (labeling, ads, awards)
Financial carrots – subsidies (tax credits,
grants, low-interest loans)
Command-and-control regulations
Financial sticks – taxes (GHG taxes,
equipment levies)
Market-oriented regulations (cap and
permit trading, niche market regulations)
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Energy efficiency: the favoured
action to reduce emissions
“Focusing on energy efficiency will do more than
protect Earth’s climate – it will make businesses
and consumers richer – Amory Lovins, Scientific
American, Sep. 2005”
Problem 1: Global energy use will climb. So energy
efficiency effort must not divert from effort toward
near-zero emissions energy systems.
Problem 2: Strong evidence shows that energy efficiency
not as easy to accelerate as its advocates maintain.
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Full micro-economic costs of
energy efficiency
Issue #1 – overlooks risks and quality differences in
technologies (transit vs. cars, lightbulbs)
•
ignores new tech and long payback risk (option value)
•
ignores consumers’ preferences (consumers’ surplus) as
technologies are rarely perfect substitutes
If losses of option value and consumers’ surplus are
included, efficiency cost can increase significantly.
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Full macro-economic effects of
energy efficiency
Issue #2 – misplaced optimism about the aggregate effect of
energy efficiency actions
•
rebound effect relates to individual services and may be
small in many cases but large in some (air mobility)
•
mega-rebound effect: more generally, gains in energy
productivity drive economic growth, spill over to other
energy services and foster the creation of new services
(decorative lighting, patio heater, desk-top fridge, wine
cooler, beer cooler, water cooler)
If all rebound factors are included, the net energy reduction is
less.
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The example of lighting
services: UK from 1800 - 2000
Year
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1800
2000
GDP
A
A x 15
Lighting
service cost
B
B x 1/3,000
Per capita
consumption
C
C x 6,500
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What limit to energy
services?
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What limit to energy services?
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Policy challenges to energy
efficiency
• ineffectiveness of information and subsidies
• information limitations
• subsidies and free-riders
• political challenge of higher prices and
regulation
• energy taxes versus emission taxes
• economy-wide emissions regulations
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Efficiency advocates and
the policy assessment gap
Identification and estimation of an idealized technico-economic potential
using service-specific analysis
most analysis
stops here
Integrated energy system simulation model using only technico-economic
data to estimate potential with simple feedbacks
cognitive barrier
Estimation of full micro-economic costs of efficiency actions, including
quality, risk and time preferences of decision-makers, and stock turnover
Avoid or
ignore
analysis
here
Estimation of effectiveness of each policy option to induce efficiency
actions; estimate total costs
Estimation of full, long-run macro-economic and technological response
to energy productivity gains, including direct, indirect, macro-economic
and innovation
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Forecasting policy
effects
Canada and other countries need transparent
tools, with independent review, for assessing
the effect of emission reduction policies
e.g., US EIA with NEMS model
In the absence of this, our research group has
conducted simulations of Canadian policies
using modeling tools and parameters that are
internationally recognized.
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The last Liberal plan:
Project Green
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Greenhouse gas emissions
(megatonnes of CO 2 equivalent)
1,400
1,200
1,000
Emissions after policy
implementation
800
600
400
200
0
2005
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Business-as-usual emissions
2015
2025
Jaccard-Simon Fraser University
2035
2045
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The Conservatives respond
to public pressure to act
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Latest government policy
initiative
EcoAction and Regulatory Framework for Air Emissions – to
reduce GHG emissions below current levels by 20% in
2020, and on a path for 65% reduction by 2050
• Various subsidy and information programs
• Potential regulation of vehicles
• Intensity-based cap and trade for large industrial
emitters (early action, technology fund, offsets – 10 %
overseas, 100% possible domestically)
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The recent Conservative
effort: Eco-energy
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Our simulated policies
energy and materials research group
• Gradually rising greenhouse gas tax with revenues recycled
100% back to regions equal to tax contributions
2010
Less aggressive policy$15
More aggressive policy$15
2015
$20
$20
2020
$60
$60
2025
$100
$120
2030
$120
$180
2035
$120
$180
2040
$120
$180
2045
$120
$180
2050
$120
$180
• Emission caps on industry combined with either: (1) further
caps on small emitters, or (2) GHG tax on small emitters.
• Market-oriented regulations on emissions and technologies
in individual sectors (vehicle performance standards,
building performance standards, carbon management
standard, etc.)
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Moderate and more
aggressive scenarios
2010
2050
2050
2050
BusinessMore
Less
as-usual aggressive aggressive
policy
policy
178
23
35
325
117
203
194
59
93
66
22
33
Electricity Generation
127
Oil and Gas Production
176
Energy-intensive Industry
112
Non Energy-intensive
23
Industry
Residential
41
Transportation
193
Services
42
Other
100
Total
813
All values in megatonnes of CO 2 equivalent
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272
102
156
1,313
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95
33
43
400
9
136
49
43
601
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Moderate scenario
energy and materials research group
1,400
Agriculture,
waste, and
other
Greenhouse gas emissions
(megatonnes of CO 2 equivalent)
1,200
Business-as-usual
emissions
1,000
800
Fuel switching
600
Efficiency
400
Emissions
after policy
implementation
200
0
2005
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Carbon
capture and
storage
2010
2015
2020
2025
2030
2035
2040
Jaccard-Simon Fraser University
2045
2050
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More aggressive GHG
price increase
energy and materials research group
1,400
Agriculture,
waste, and
other
Greenhouse gas emissions
(megatonnes of CO 2 equivalent)
1,200
Business-as-usual
emissions
1,000
800
Fuel switching
600
400
0
2005
Efficiency
Emissions
after policy
implementation
200
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Carbon capture
and storage
2010
2015
2020
2025
2030
2035
2040
Jaccard-Simon Fraser University
2045
2050
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Electricity bills in Alberta
$160
$120
$40
$20
Less aggressive policy
$60
Aggressive policy
$80
Business as usual
$100
Actual
Average monthly electricity bill
$140
$0
2005
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2050
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Policy lessons for the public
If politicians set targets, but do not explain how they will be
achieved, assume failure.
If politicians set targets, and talk of the need for consumers to
change behaviour and businesses to invest, assume failure.
If politicians set targets, and implement information and subsidy
programs, assume failure.
If politicians set targets, and implement regulations with large
opportunities for those who are regulated to grow their
emissions while paying others to do so-called offsets,
assume failure.
If politicians set targets, and then implement intensity targets with
no transition to absolute emission reductions, assume
failure.
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