A Welcome End to Emission Limits is Possible in 2025

  The federal and two provincial governments (Quebec and British Columbia) are preoccupied with climate change. They aim to reduce greenhouse gas (GHG) emissions, principally carbon dioxide (CO2), to limit […]
Published on January 30, 2025

 

The federal and two provincial governments (Quebec and British Columbia) are preoccupied with climate change. They aim to reduce greenhouse gas (GHG) emissions, principally carbon dioxide (CO2), to limit future global warming. What if this goal is not only wrongly concocted but will also become irrelevant in this new year – or even defunct? It is beginning to look this way, and happily so.

The incoming U.S. Trump administration has withdrawn again from the Paris Agreement. The Agreement binds participating nations to mutually imposed timetables for GHG emission restrictions. The accords’ goal is the nirvana of Net Zero. (GHG emissions will equal GHG withdrawals.)

The United States is the world’s second-largest GHG emitter and Canada’s largest trading partner (63.4 per cent of Canada’s total global trade in 2022, according to Statistics Canada). Canada already imposes an $80 per tonne carbon tax, slated to leap to $95 on April 1st of 2025, raising costs for households and businesses. (Only one U.S. state, California, imposes a broad carbon tax).

Increasing costs for Canadian exporting companies reduces their competitiveness with the U.S. and other foreign rivals. The tax increase will reduce the cash flow available for productivity-raising capital equipment. As noted by the C.D. Howe Institute (and others), Canada already has a productivity growth deficiency mainly caused by a decline in corporate capital investment.

According to the federal government, GHG emissions in 2023 fell to their 1998 level, which sounds like a victory for climate warriors. Yet, the Parliamentary Budget Officer’s October 10th, 2024, report (pp 30-37) shows the cost. The annual net cost per household ranges from $152 (Manitoba) to $399 (Ontario) and will range from $133 (Saskatchewan) to $477 (Ontario) in the next fiscal year (2025-2026, starting April 1st). (British Columbia and Quebec tax carbon, but Ottawa does it instead for the other provinces.) The carbon tax magnifies the unaffordability Canadians already experience.

After this year’s election, Ottawa will likely become far less dedicated to GHG emissions reduction. Indeed, the Conservative Party platform promises an end to the carbon tax. There is ambiguity over whether this applies to industrial emitters, but it appears unlikely that their carbon levy would rise.

The Canadian Pathways Alliance, a group of large oil sands producers in northern Alberta, has voluntarily taken steps to lower gross CO2 output, principally through carbon capture and storage (CCS or CCUS, carbon capture, utilization and storage). A pilot project has already sequestered 7.7 million tonnes of CO2 underground in the Cold Lake area of Alberta.

The International Institute for Sustainable Development notes, “In Canada, there are seven commercial CCS projects currently operating ‒ five in the oil and gas sector, one in coal-fired electricity generation, and one in the agricultural sector ‒ capturing only 0.05% of national emissions.” This is negligible compared with total CO2 output. The Institute also observed that “[c]omparing the experience rates ‒ decrease in cost with increased development and deployment ‒ of CCS with other energy technologies, such as solar and wind, shows that CCS cost reductions have been slow, despite being in use commercially for more than 50 years.” Therefore, CCS is unlikely to substantially contribute to reducing net emissions.

Pathways estimated the cost of gathering, transporting by pipeline, and sequestering the majority of carbon emissions of the alliance members at $16-billion. The alliance is seeking financial support for this project from the provincial and federal governments (taxpayers), despite its questionable cost-effectiveness, noted above.

Consulting firm Wood Mackenzie estimates proposed CCUS projects worldwide will rise from 50 million tonnes per year (mtpa) in 2023 to 370 mtpa in 2033, a total cost of $216-billion. They also warn of cost escalation ‒ to as much as $365 per tonne of CO2. Canada’s oil and gas production emissions alone are 270 million tonnes annually (less than one-third of all emissions). A worst-case scenario would generate total annual costs of $ 98.6 billion, exploding provincial and federal deficits.

By year-end, Canada will be free of the onerous war on carbon. GHG emissions are rising rapidly in Asia because undeveloped economies have a get-out-of-jail card courtesy of the Paris Agreement. Canada emits just 1.6 per cent of global GHGs. Emissions will fall if nuclear energy is allowed to expand.  In contrast, the Heartland Institute estimates that an unaffordable $72 billion in battery storage is needed to ensure no blackouts for every 1,000 MW of solar capacity.

It is senseless to penalize Canadian households and businesses when China, India and even our largest trading partner, the United States, are unrestricted.

 

Ian Madsen is the Senior Policy Analyst at the Frontier Centre for Public Policy.

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