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Economic Modelling Study Shows Canada Can Meet Global-Warming Reduction Targets While Growing Jobs and Economy

1 November 2009

Jacquard1
Emission reduction actions for the more aggressive scenario (25% below 1990 by 2020). Source: Pembina. Click to enlarge.

Canada can succeed economically while meeting targets to reduce greenhouse gas emissions, according to an economic modelling study commissioned by the Pembina Institute and the David Suzuki Foundation.

“Climate Leadership, Economic Prosperity” is the first Canadian study to show regional impacts on employment and gross domestic product, and the first to comprehensively examine how Canada can meet a greenhouse gas reduction target for 2020 that goes beyond the federal government’s target.

Economic modelling firm M.K. Jaccard and Associates, on behalf of the Pembina Institute and the David Suzuki Foundation, conducted an in-depth study of federal and provincial policies needed for Canada to meet two targets to reduce its greenhouse gas emissions. The firm modelled how Canada can achieve both the federal government’s current target (20% below the 2006 level by 2020) as well as a more ambitious target (25% below the 1990 level by 2020). The second target is derived from analysis of the emission reductions needed to limit average global warming to 2 °C.

Far stronger policies than the federal government has proposed to date must be implemented, according to the modelling study.

Meeting either target requires governments to put a significant price on global warming emissions broadly across the economy, and to back this up with strong complementary regulations and public investments. The study indicates that Canada can implement much stronger climate policies than the US and still prosper economically.

—Matthew Bramley, director of climate change for the Pembina Institute

The analysis shows that the most important technological approaches needed to achieve major reductions in Canada’s GHG emissions are:

  • Capture and storage of carbon dioxide from the oil and gas industry and power plants.

  • Reduction of “fugitive” emissions from the oil and gas industry and from landfills.

  • Increased energy efficiency throughout the economy (e.g., in vehicles and buildings).

  • Increased production of renewable energy (e.g., wind power accounts for 18% of electricity generated in 2020 when meeting the 2 °C target)

  • Replacement of fossil fuels by cleaner electricity (e.g., for heating buildings).

Key findings of the Jaccard study include:

  • Canada’s gross domestic product would continue to grow at 2.1% per year on average between 2010 and 2020 while meeting the 2 °C target, compared to 2.2% for the government’s target and 2.4% under business as usual.

  • Canada’s total number of jobs would grow by 11% between 2010 and 2020 while meeting either target—essentially the same rate as under business as usual.

  • The reduction of very high emissions in Alberta and Saskatchewan would significantly reduce projected growth rates in these provinces. However, Alberta’s per capita GDP would continue to be much higher than that of any other region, and Saskatchewan’s per capita GDP would stay close to the Canadian average.

  • To meet the 2° C target, a carbon price would start at C$50 per tonne in 2010 and reach $200 per tonne by 2020. To meet the government’s target, the carbon price would need to reach $100 per tonne by 2020, or $145 per tonne if Canada does not purchase any international credits.

  • Almost half of carbon price revenue can be returned to Canadians through reductions in income tax. Revenue from carbon pricing can also fund major public investments to reduce greenhouse gas emissions, such as building smart grids and transit infrastructure.

  • Technological approaches to achieve major reductions in Canada’s greenhouse gas emissions range from increased energy efficiency and renewable energy to carbon capture and storage.

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November 1, 2009 in Canada, Climate Change, Policy | Permalink | Comments (14) | TrackBack (0)

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Of course everything is relative. This may only work if international treaties, export and import of comparable products/services are supported, and all else remains equal (stable health, economy, and politics - environmental concerns always take a back seat to these issues) are implemented similarly throughout the World. The problem of course is that few countries are willing to take the lead and even fewer industries or companies. The costs and risks are too great - the shift in values and thinking is so profound. I doubt that there is adequate political or democratic will to implement these ideas. People seem to be more comfortable with adapting than acting come what may.

If Canada continues with oil sands development then we will be having some significant economic problems in 15 years. Interestingly, the current situation with Canada producing oil and selling it to the US results in a massive transfer of wealth from the US to Canada. This is resulting in strong economic growth right now, which is being responded to with high levels of immigration to fill that void.

Interestingly, in 10-15 years when the oil industry collapses as the whole world converts over to electric vehicles, Alberta will be feeling the economic pain, and along with this, the rest of Canada (no matter how low the price of oil goes, an EV powered with Nickel metal hydride batteries will always be significantly less expensive, and there is no shortage of Nickel to supply the world with EV's).

This is the classic case of boom and bust economics. The people in power right now (the oil industry and land owners in Alberta, and the various governments) are making lots of money off this short term economic boom. They care nothing about the impacts of this 10-20 years down the road. Unfortunately it is the rest of Canadians who will be paying the price in 15 years when the oil economy collapses. We engaged in unsustainable economic growth that we knew was not sustainable, and seem to be doing very little to develop other areas of our economy to take up the slack when the oil industry collapses.

In contrast, in 15-20 years, the US will have largely abandoned its gasoline-powered car culture. Almost everyone will be driving EV's or plugin hybrids, and their demand for gasoline will be a small fraction of what it is now. So then the US will be feeling the economic benefits of this.

It's interesting. Right now Canada benefits economically and the US loses. In 15-20 years it will be the reverse.

Mark...

Canada has a lot more to export than crude from tar sands and NG.

Sustainable greener electricity from huge wind power potential + untapped hydro coupled with huge fresh water reserves will progressively replace polluting crude from tar sands after 2030.

The advantage for Canada is that the new saustainable exports (fresh water and clean electricity) will come from most provinces and territories, not just from Alberta. Export fees of one cent/Kwh and a few cents/litre of fresh water could replace current oil and NG royalties.

.


Models...

LOL!!! Models also said that we would have massive death and destruction from the Global Warming® (since rebranded Climate Change®, then rebranded CO2 Pollution®, next rebranding to come after the marketing surveys are complete) that is not taking place! Models also said that the number and intensity of hurricanes should have increased over the past five years, not decreased. Lets try living in the real world, please.

Praise be unto Algore.

.

Copy and paste don't make an original post Goracle. Let us know when you have something original or susbstantive to say.

Why can't the US deal with its own problems instead of relying on Canada as a crutch. I do not support this massive economic growth we are experiencing.

There won't be any water flowing south from BC, this would destroy salmon runs and would be political acceptable suicide. Where else could the US get it from? The prairies? Divert some of our rivers south instead of north? That's unlikely to happen, we have our own water problems in the prairies. And in the East ... well the US has access to the Great Lakes just like Canada does.

I guess the prairies have lots of wind energy potential and we seem to be moving in that direction but I fail to see how that's going to take up the slack from the collapsed oil industry within 10-15 years. And the US can produce its own wind energy.

I suppose they could flood some more northern rivers and turn them into hydro dams. Not very politically or environmentally acceptable in my opinion.

Jer makes a very accurate assessment.

Saying that the transfer of wealth into a country only leads to ruin later is like saying earning a wage just sets you up for disaster when you get laid off – so just let the government support you.

Come on ToppaTom!

You know that is not what jer meant! The only problem Jer has with that massive wealth coming in is that it is not sustainable because it come from oil which is supposedly not there to stay. So in that sense he (or she) is right: there will be a downturn.
If, and that is the crucial assumption, oil really won't be needed any more in 20 years time.

Alberta existed before oil, NG and tar sands exploitation and could do well without those short term products.

People will have to eat and drink (water) to survive and Alberta can produce both neccessities for centuries.

Future energy can come from Sun, Wind, Hydro, Nuclear etc. when oil, NG and Coal have run out.

However, Albertans should use the current high demand for Oil and NG to accumulate enough funds ($$$$B) to pay for the switch to future more sustainable essential energy products. Many oil producing countries have been doing it for many years via huge sovereign funds.

MarkBC,

US would buy their oil from other countries if Canada was not so accommodating. But your projections are mostly accurate. In 20 years the demand for oil for transportation will be a fraction of what it is today. From year 2012 we can expect US oil demand to decrease significantly.

But you point out a couple good areas for future growth: fresh water, electricity and potentially NG. If Canada was to embark on a large scale program to export cheap NG and install Co-gen, CHP units in US and Canadian residences - they would be creating a huge new market. NG resources in NA are enormous. There is also cheap gasification potential. IF Canada and its booming oil industry built a plan to become a major supplier of NG to the US - and they seed the market with very low cost CHP units - they would be creating a huge future energy market.

This would take big picture vision from Canadian energy people. But the numbers favor success. Since CHP from NG, especially in cold northern climes, will be cheaper and cleaner than electric/oil-only heat and power. Canada can be a major provider of the hardware and NG for millions of Residential Power Units. Energy security. Reduced cost of grid/power generation. Energy efficiency. Energy independence. Courtesy of Canada Inc... err, Canada collective.

Harvey is right about the need for sovereign funds; unfortunately the Albertan government has never been too keen on collecting what it could. The royalty rates for the oil sands are too low. That's more, they've been spending what little they do collect almost as fast as they get it and not setting any aside for the future.

I said “Jer makes a very accurate assessment.”

Others, not Jer, say that the transfer of wealth into a country only leads to ruin later - and that is foolish.
What a country must not do is squander its wealth, whether it is has a little or has a lot.

If they think a windfall (like Canada’s oil or China’s exports) is bad, then do they think a hemorrhage is good?

Is this the reason we should impose cap-and-trade ?

It’s like a salesman turning down a sale today because he might not make another one tomorrow.

Ridiculous.

Alberta should already have a multi $$$ B fund from oil and NG royalties to cover future transition cost to other forms of energy, whenever sales of oil (and NG) start to go down.

The current oil royalties level is much too low and could be doubled without major effects on $80+/barrel oil price.

There is nothing wrong with a $1 T to $2+ T foreign type fund from fossil fuel sources. Many oil producing countries have been doing it for years.

A new Alberta/Canada progressive royalty of about $2/barrel to $10/barrel could rake in as much as $50+ M/day or up to $20+ B/year within a bout 5 years. A similar progresive royalty could eventually be applied to NG, Coal, fresh water, lithium, iron, wood, electricity etc.

Some made call those royalties reversed import duties and why not. Producticing countries deserve it.

Sorry ToppaTom,

Misunderstood you there, thought it was irony.

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