We are now finally faced with what some climate advocates have long requested – direct action solely targeting and limiting the Canadian production of oil and gas to save, they say, the planet from climate change. Prime Minister Justin Trudeau announced in early November at the COP26 conference that the federal government intended to cap all oil and gas emissions at current levels, with reduction targets for 2025 and 2030, and to obtain net zero emissions by 2050. No other industry is to be so uniquely targeted for an emissions reductions regime, although the industry is responsible for only 26% of Canada’s emissions.
The Globe and Mail editorial board, eschewing its belief in the sufficiency of carbon pricing (e.g. here and here), has reversed itself and is fully on board with the new policy, claiming that there is now an “urgent need to cap oil emissions.” This reversal is intellectually incomprehensible. I therefore propose some basic questions, some of which will necessarily answer themselves. But I do provide some limited comment.
- If, as the board has argued before that all emissions are created equal and carbon pricing is the one, market-based, and comprehensive tool for reducing them, why does the board now argue for what it previously derided as “industrial strategies” and “government micromanagement”?
[Somewhat similar to the board’s previous arguments on the essentiality and sufficiency of carbon pricing, the majority of the Supreme Court of Canada in Reference re Greenhouse Gas Pollution Pricing Act found that carbon pricing was “integral to reducing GHG emissions” (at para. 170) when holding that the federal carbon pricing scheme was narrowly tailored to pass constitutional muster under the national concern doctrine of the POGG clause. The majority was induced to accept the legislation on the basis that it was, as the Concise Oxford puts it, “necessary to make the whole complete” or “fundamental.” We leave it to be analyzed elsewhere whether the Court’s majority might not now grow queasy about using POGG for this clumsier and less rational incursion into provincial waters.]
2. Why does the scheme target only one industry? Does targeting one industry possibly give political advantages to some unscrupulous political actors?
3. If, as the board alleges, the demand for oil and gas will largely disappear (and thus, impliedly, Canada will not suffer any substantial harm from reducing its own industry), why must the federal government intervene to cap the industry at all? Is one purpose of the program to have the government save the industry from itself?
[The board’s suggestion that markets will disappear is clearly not in accord with any reputable estimates. It neglects continuing world-wide demand as the developing world climbs out of poverty and there are no other energy sources or infrastructure available. See, for example: Why the energy transition will be so complicated and We need to be honest about how long the energy transition will be.]
4. Why must the government try to outthink the market? Specifically, how will government regulate the industry better than the market? And what will take the place of Canadian supply, either internationally or domestically, when the government regulates a reduction faster than demand? And if it is not going to regulate a reduction faster than the market (and a substantial one at that) what is the need for the reducing cap?
5. Is there any real distinction between emissions and production as the board insists upon? When the government’s stated goal is to cap all oil and gas emissions immediately at current levels, with reduction targets for 2025 and 2030, on the way to obtaining net zero emissions by 2050, are there not going to be substantial cuts in production as opposed to just emissions? If not, will say, reducing a few leaks in the production process satisfy the government?
6. If the goal is to actually save the planet as the board implies, how will reducing Canada’s supply of oil and gas reduce net world emissions of GHGs? Would the scheme not just simply offshore emissions instead?
[Throughout the editorial, the board refers to the need to meet “national targets” for oil and gas as rationale for the cap, with no consideration of the unique nature of it in world commerce. The board allows for no flexibility. The transition must be very simple – only a one-way ratchet downwards, according to it. The board necessarily assumes that reducing Canadian oil and gas will reduce world emissions.
But the international mitigation scheme under the Paris Agreement is structurally flawed, not reflecting the realities of such things as the collective action problem, the dynamics of world energy production, and carbon leakage, some of which are outlined by William Nordhaus in The Climate Club: How to fix a Failing Global Effort (May/June 2020). (Nobel-winning economist Nordhaus says the present international mitigation scheme under the Paris Agreement is doomed.) Canada’s goals are an imperfect realization of that imperfect super-structure. Any targets, which are self-created under the “Agreement,” are thus only superficial markers not reflecting a reality-based method to reduce world emissions. Editorial boards would do well to resist making dire predictions resulting from the failure to meet ‘national goals” in oil and gas, turning Canada into a chump nation.]
7. Does the board disbelieve the proposition that increasing the Canadian supply of gas will be beneficial for climate change? For example, might it not actually decrease the amount of coal used world-wide and thereby lower world-wide emissions? Or that Canadian oil and gas is cleaner than that provided by other countries? Or does it disbelieve, as argued by Björn Lomborg, Michael Schellenberger, and others, that reducing energy poverty generally in the world through fossil fuel use reduces poverty itself, thereby increasing the resilience to weather?
I am obviously under no illusions that the board would ever endeavour to answer these questions. The Globe itself seems now to have adopted a particular marketing scheme for pumping drastic climate change action in Canada. And I assume that the board, as evidenced by this uncompelling reversal in its editorial position, has simply fallen into line.