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