Can we move to a fossil-free future without wrecking our economy?

As immense as the challenge seems, experts say it is possible to change the world’s energy diet
Carbon pricing and regulating carbon are key to making the switch, say energy economists | Shutterstock

Chris Ragan wants to get one thing clear.


“Oil is a wonderful thing,” says Ragan, chairman of the advocacy group Canada’s Ecofiscal Commission and a professor of economics at McGill University.


“It has allowed us over 150 years to achieve low-cost energy. Energy has allowed us to have tremendous economic progress that has lifted people out of poverty.”


And especially over the last 20 years, oil production has boosted Canada’s economy. In 2013, energy exports made up 23.3% of the country’s exports, compared to 9% in 1993. During the federal election campaign, Liberal leader Justin Trudeau was careful to show support for some oil pipeline projects while also committing to lower carbon emissions.


But consider how much that dependence on oil will have to be abated to avoid the climate chaos predicted if global emissions remain unchecked, and it’s clear we’re in for a disruption greater than anything Silicon Valley has unleashed.


In 2013, scientists predicted that at current rates of carbon emissions growth, the world was on track to get a catastrophic four degrees warmer by 2100. If nations follow through on commitments made in advance of the upcoming Paris global climate summit, warming should be limited to 2.7 degrees; the target is two degrees.


In 2015 we’ve seen the effects of climate change like never before: global temperatures at their hottest, epic droughts, raging wildfires and accelerated sea-ice melt.


Richmond farmer Bill Zylman in July 2015. Many B.C. farmers were affected by drought conditions throughout the summer | Chung Chow


In British Columbia, unusually warm weather closed ski hills and caused costly flash flooding in several towns. Firefighters, business owners and residents battled one of the worst wildfire seasons on record, and farmers struggled with drought for much of the summer.


But as immense as the challenge seems, experts say it is possible to change the world’s energy diet – in fact, it’s already happening.


Will you lose your job?

Ragan thinks the transition away from using fossil fuels won’t be very disruptive because it will happen gradually, over at least 40 years. 


“I think it will be less disruptive than the kind of changes we’ve seen in the labour market,” he said, referring to the switch to less permanent work and multiple career changes over the last 30 years.


But Tim Flannery, an Australian scientist who described the possible effects of climate change in his 2002 book The Weather Makers, believes governments will have to make an effort to help workers displaced by both climate change and the reduced demand for fossil fuels.



Handling coal at Westshore Terminals in Delta. In 2014 several B.C. coal mines were shuttered in response to low prices


Flannery gave as an example an Australian farmer he met who was no longer able to farm due to drought and had gone to work as a coal miner. But a plunge in coal prices is now putting those jobs at risk as well. 


Read: Political will needed to drive green power play  


Flannery also thinks the transition is speeding up: in response to those who believe lower-emissions natural gas could provide a 30-year “bridge” to zero-emissions technology, Flannery says renewables are quickly becoming just as competitive.


“If you are in China, like my friends who are madly building wind turbines and solar, they think that the bridge is more like three years long,” he said.


Read: The economic engine of the future doesn't run on gas


Meanwhile, clean-energy groups have attempted to show the transition could be a job creator. An October 2015 Clean Energy Canada report estimates that 270,000 new jobs could be created in B.C. if it adopts new policies to meet its 2050 climate target to reduce greenhouse gas emissions by 80%.


Can we get there from here?

Ragan believes pricing carbon emissions is key, and possibly the only policy measure needed. 


A carbon price can be a tax, like British Columbia’s $30 per tonne carbon tax. It can also be a cap-and-trade system, in which governments set an emissions limit and require organizations to track and report emissions, and organizations can either sell or buy emissions allowances. Cap and trade is currently in place in Quebec and California; Ontario also plans to adopt it.


“When you put the carbon price in place and as you ramp it up … when people are paying a $50 or $60 or $70 a tonne carbon price and they’ve been doing it for 10 or 15 years, the world starts to look differently,” Ragan said. “We will make this transition to a lower-carbon world. That will just happen because people respond to prices.”



Source: Canada's Ecofiscal Commission report, A Practical Way to Reducing Canada's Greenhouse Gas Emissions, April 2015 


Mark Jaccard, a professor of energy economics at Simon Fraser University, helped create B.C.’s carbon tax, which was introduced in 2006. Studies have shown the tax, which was designed to be “revenue-neutral,” has lowered emissions in the province and has not hurt economic growth.


But Jaccard thinks regulations the province put in place around the same time were much more effective in lowering emissions, and are politically easier to put in place than a tax. According to B.C.’s energy policy, all new energy production in the province must emit zero greenhouse gases. 



Jurisdictions with emissions trading systems (ETS) or a carbon tax in place or under consideration. Source: Canada's Ecofiscal Commission report, A Practical Way to Reducing Canada's Greenhouse Gas Emissions, April 2015 


“BC Hydro in 2005 had signed letters of intent with two groups that wanted to build coal plants and was also going to build its own huge natural gas plant,” Jaccard said. The new regulation effectively killed those projects, and there was a trade-off: B.C.’s abundant natural gas and coal would have provided cheaper electricity.


California is another example, Jaccard said. The state has a suite of regulations that work together to reduce emissions: a low-carbon fuel standard, a renewable portfolio standard, vehicle emissions standards, efficiency regulations and land-use regulations.


Meanwhile, Flannery argues that a mix of measures will be needed to successfully make the switch: carbon pricing, regulation and government support for new technologies not just to create clean energy but also to take carbon out of the atmosphere and ocean.


As “wonderful” as oil is, Ragan warned against inflating its overall importance to the Canadian economy. 


“Oil is about 3% of Canadian GDP,” he said. “It was 6% when oil was at $105 a barrel. That still leaves 94% of GDP that isn’t oil.” 


jstdenis@biv.com


@jenstden

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