There is no doubt the surprise election of Donald Trump as president of the world’s second-largest greenhouse gas emitter will deal a blow to international efforts to cut emissions.
His past statements and tweets suggest he denies the scientific consensus behind anthropogenic climate change. His administration is expected to scrap most efforts of the current administration to reduce carbon emissions and push the international community to do the same.
This has led to calls for Canada to pause on the recently announced federal plan to bring about a harmonized national price on carbon starting at $10 in 2018 and rising to $50 over five years. The main reason cited for doing so is the fear it could make our industries uncompetitive with our trading partners.
A well-designed price on carbon, however, can resolve that concern. For one thing, most of our industrial activity is not trade-exposed. A report last year by Canada’s Ecofiscal Commission, an independent coalition of Canadian economists, found that about three-quarters of gross domestic product comes from the services sector, which has little trade exposure.
More-exposed sectors that could be affected, such as oil and gas production, ranged from 1% in Quebec to 18% in Alberta and Saskatchewan, leading to the commission’s conclusion that competitiveness issues are overstated.
Moreover, those sectors of the economy that are trade-exposed are typically compensated for under a carbon pricing policy, since adding costs threatens to send the emissions elsewhere rather than to reduce them. That is the model in Alberta, where producers will receive rebates on the carbon tax they pay. And since the rebate is based on production, and the tax is based on emissions, the tax will actually reward the most efficient producers, providing an incentive over time for the industry to become more efficient and increasingly competitive.
The evidence also shows that a price on carbon is the most economically efficient means to bring about emissions reductions. And despite what the U.S. might do over the next four years, there is no stopping the trend toward lower-emissions energy production. Nor should there be, because low-carbon and renewable technologies are not only the future, they are increasingly driving economic growth today.
In the U.S., the Advanced Energy Economy Institute said the market for renewables and energy storage, building and vehicle efficiency and clean-tech manufacturing is worth US$200 billion, surpassing the pharmaceutical industry.
The solar sector alone, with almost 210,000 jobs and growing, now accounts for more jobs than oil and gas extraction, or coal mining, while the fastest-growing occupation is wind turbine technician, according to the U.S. Bureau of Labor Statistics. Indeed, efforts to tackle climate change should be viewed not as a cost, but as one of the biggest wealth creation opportunities of our time.
With the U.S. relinquishing any sort of leadership on the climate file, all eyes will be on other major polluters, amid fears international agreements like the Paris climate accord will unravel. But early indications are the U.S. may simply further alienate itself politically even as it threatens to be left behind economically by the clean-energy revolution – ironically, perhaps relinquishing the mantle to China. Already a global leader in the manufacture and installation of renewables, China appears ready to stay the course on climate with or without the U.S.
“China’s influence and voice are likely to increase in global climate governance, which will then spill over into other areas of global governance and increase China’s global standing, power and leadership,” Zou Ji, deputy director of the National Centre for Climate Change Strategy and a senior Chinese climate talks negotiator, told Reuters.
Canada has long been a laggard on climate, missing virtually every emissions reduction target we have set. A nationally harmonized price on carbon won’t be enough to get us to our latest target, but it’s a start. It will do little to affect our competitiveness, it will keep us in line with most of the international community and in the long run it will help us build the clean-energy economy of the future.
The last thing we want to do is create more uncertainty about its future. •
Maurice Smith is technology editor at JWN Energy.
