Budget watchdog says meeting climate targets won't ruin economy
Report says reducing emissions could lower projected annual income by up to $1,900 per person by 2030
A new report by Canada's Parliamentary Budget Office refutes claims that a carbon price would ruin the Canadian economy.
However, the report, released Thursday by Jean-Denis Frechette, says aggressive measures could lower GDP growth by 1 to 3 per cent by 2030.
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It could also lower the projected average Canadian income by up to $1,900 in the year 2030, the report found.
"This should not be dismissed as trivial, but it would also not substantially alter the Canadian economy," said the report.
"This would still leave incomes significantly higher than they are today but lower than what they would have been in the absence of carbon pricing."
The document, called Canada's Greenhouse Gas Emissions: Developments, Prospectus and Reductions, outlines the economic impacts and potential costs of meeting Canada's international climate commitments.
It concluded that to meet Canada's international target of 30 per cent reduction in GHGs by 2030, Canada will have to bring its emissions down by 208 million tons.
This is equivalent to taking more than all the gasoline and diesel-powered cars and trucks in the country — including off-road vehicles — off the road.
And so far, the report pointed out, Canada doesn't have the plans in place to do that.
"The actions undertaken so far by various levels of government, though substantial, will not be sufficient to achieve that target," it warned.
'Significant cost:' Conservatives
The Conservative opposition said the budget watchdog's report is a clear indication the Liberal government hasn't been upfront about the cost of its plan to price carbon.
"As you know, the Liberals have suggested that their plan for reducing greenhouse gas emissions would result in a net benefit in terms of economic growth and GDP," Conservative environment critic Ed Fast told reporters Thursday following the release of the report.
"In fact the PBO's report says something quite differently — there will be a significant cost to Canadian families over the next 20 years if they implement the kind of plan they are proposing."
Canada's current target, which is the subject of the PBO report, was set by the Conservative government in May, 2015. At the time, the federal government didn't have a detailed plan on how those targets would be met. It told the UN Canada's approach would be to meet its targets through a mixture of domestic regulations and the possible purchase of international credits.
Fast said he thinks the "market" should be allowed to decide what technologies are needed to reduce emissions and do it in a time frame that won't cost Canadians.
"We're suggesting that the Liberal government come forward with a plan that will ensure ongoing economic growth that will not penalize families, that will not penalize businesses, that is focussed on a having a very real impact on reducing carbon emissions in Canada."
Fast said the Conservatives will be establishing their opposition plan for climate change over the coming months.
"We're having broad consultations right now with Canadians, broad consultations not only within our caucus but with our party members and over the next months as part of our leadership process (to) see a vigorous debate on the issue, but don't forget it is the Liberal government that is now responsible for coming forward to address this challenge," he said.
$100 a ton carbon price — or less?
To appreciate the scale of the work required, the report recommended there would have to be a carbon price as high as $100 a ton to force consumption of fossil fuels and the resulting emissions down dramatically.
However, the report also points out that a price on carbon may not have to be quite that high if industries continue to operate using new technologies that lower their emissions.
The report used the Boundary Dam project in Saskatchewan as example. The project took an old coal plant and cleaned it up using carbon capture and storage (CCS). The process captures carbon emissions from the plant and reuses them in the oil industry or stores them underground.
The cost of that project was equivalent to a carbon price of about $57 a ton, leading the report to conclude CCS has potential to reduce emissions while reducing the impacts of meeting climate targets on the overall economy.
"A number of sectors would potentially benefit from its ongoing development and deployment; for example, electricity generation, cement, chemicals and iron and steel. Over the long term, it could account for a large share of emission reductions."
The report also goes on at length about the need for any new policies and carbon prices to be consistent across the country — a bit of pointed advice for Prime Minister Justin Trudeau and his provincial and territorial colleagues, who are spending the next six months trying to craft a national climate plan that will include some sort of carbon pricing.