We shouldn’t underestimate the economic benefits of climate action in B.C.

We also shouldn’t underestimate the costs of inaction, writes economist Nancy Olewiler

A number of B.C. industries are set to flourish in a world that is demanding lower-carbon goods, writes Nancy Olewiler | Acilo/Eplus/Getty Images

A number of politicians are trying to make the costs of climate action a political issue.

Pierre Poilievre’s “axe the tax”’ campaign asserts (wrongly) that carbon pricing makes life less affordable. Premier Danielle Smith’s pro-oil and gas War Room has set its sights on Nanaimo for banning natural gas in new developments, while Saskatchewan's Scott Moe opposes moving the province’s electrical grid off coal and natural gas.

And now, the Business Council of B.C. (BCBC) has opined on the costs of climate policy. In a recent Business in Vancouver op-ed, the BCBC used parts of the economic analysis in B.C.’s climate plan, CleanBC, to infer that the province’s GDP under the plan will be significantly lower than a status quo scenario ($28 billion lower, to be precise).

The problem, however, is that the BCBC arrives at their conclusions by not discussing the realities of both economic modelling and the changing world.

For starters, it fails to account for the benefits that await a British Columbia that embraces the inevitable energy transition. One estimate is that clean energy jobs in B.C. increase from 83,100 in 2025 to 400,800 by 2050 under a net-zero scenario, in a Clean Energy Canada analysis. The Mining Association of BC, meanwhile, believes the sector will add more than $10 billion in economic impact for just those critical mineral mines that are reaching final investment decisions in the next 18 months. These investments, however, are not part of the province’s CleanBC modelling, which goes unmentioned in the BCBC analysis.

Indeed, the province boasts a wealth of industries, from mining to forestry to cleantech, that are set to flourish in a world demanding lower-carbon goods. And with many of our international competitors already moving rapidly in these spaces, the CleanBC plan is key to readying B.C.’s economy to compete.

What’s more, by taking this approach, the BCBC’s analysis compares a world with the CleanBC plan in place, to one where climate change is not having a significant negative impact on the economy and wellbeing of British Columbians. This is a false choice. Extreme weather cost B.C.’s economy $17 billion in 2021. This year’s record-setting wildfires are projected to cost $1 billion alone. Doing nothing is not the path to prosperity.

The BCBC’s interpretation takes the CleanBC plan’s modelling assumptions out of context. For example, the council neglects to note that more than 60 per cent of the $28 billion inferred lower level of GDP can be attributed to one simplistic assumption taken from a placeholder transportation policy (for the eventual clean transportation action plan). This placeholder in the model capped vehicle kilometers travelled in B.C. as a proxy representation of what a future, less gas-car-dependent province could look like. If such a reduction occurred, it likely would be achieved by incentivizing travel by other means like EVs, transit, bike, car sharing, or more efficient freight movement. Instead, the BCBC’s analysis just accepts without question that there will be less travel, period. In short, the bulk of its focus on the GDP projections rely on a scenario that is highly unlikely to become a reality under CleanBC.

Additionally, the GDP assumptions are also not fully comparable because they depend on different near- and long- term GDP models from two separate reports (the 2020-to-2025 GDP forecast in the province’s Budget 2022 and a 2025-to-2030 GDP projection from the federal Parliamentary Budget Officer). However, these different models are not designed to be used in conjunction with other forecasts – including CleanBC’s – because other varying assumptions, methods, and purposes combine to likely overstate future GDP impacts.

Put simply, while economic modelling is an important tool for understanding the trade-offs that accompany any credible plan to reduce emissions, comparing one model’s outputs with those of other models should clearly communicate the limitations and caveats – something that the Business Council of B.C. failed to do.

Finally, while the BCBC critiques the climate plan, its suggested alternative is simply to delay B.C.’s emissions reduction timeline. Delay is not a plan. And while B.C.’s clean economic progress is battling these internal headwinds, our competitors are stepping up. California has a far reaching climate plan that is set to create millions of jobs in cleaner industries. Washington state has rolled out a series of climate actions in the last few years that will see it transform its power and transportation systems.

The province’s CleanBC plan will not wreak havoc on B.C.’s economy. The BCBC is correct that there are costs to pivoting our economy away from using fossil fuels, but the council is missing the forest for the trees. Without action and investments now, B.C. businesses and our economy as a whole will be disadvantaged relative to our competitors in the U.S., EU, and elsewhere – and that comes with a cost too, one we may never be able to fully recoup.

Nancy Olewiler is an economist and professor in the School of Public Policy at Simon Fraser University.