The New Energy Economy: Should Canada Lead or Wait?

Posted by John Streicker on 6 November 2009 | 0 Comments

Next month the world will be convening the largest economic summit ever. The plan is to try and lay the groundwork for transforming the global energy economy over the next 40 years.

Prime Minister Stephen Harper won’t be going to the summit. Neither will Finance Minister Jim Flaherty, Raitt (Natural Resources) nor Cannon (Foreign Affairs).

We are sending our Minister of Environment, Jim Prentice. He will be taking the message that Canada is not yet ready to reach an agreement. Other countries are losing respect for us.

The summit is the UN Conference on Climate Change and it has been in preparation for the past 4 years. The outcome of the meeting will have a profound economic impact on Yukoners, Canadians and everyone else for that matter.

Of course climate change is not just about the economy, any more than it is just about the environment. For this column though, I want to focus on the economic choices we face because they are by far our sticking point.

I respect that some of you don’t agree that global warming is happening, or if it is that it is not man-made. However, whether or not you agree with the science of climate change, you can bet that all of the economic choices we make will have an impact.

Several years ago I was asked to act as an expert witness to a parliamentary committee  looking at how to shift the energy economy. That day, I presented alongside of two economists - one was a scientist who does not believe in climate change and the other did.

Not surprisingly to me though, their solutions to shift the economy were pretty similar. Both called for a price on emissions.

Last week, the second professor - Dr. Mark Jaccard released a major report outlining how to shift Canada to a lower carbon economy over the next decade.

Minister Prentice responded to the report saying that it went too far, that we could expect a price of $28 per tonne of carbon emissions. Earlier this year Harper addressed the U.K. Chamber of Commerce, “our plan will effectively establish a price on carbon of $65 a tonne, growing to that rate over the next decade.”

To relate this into day to day terms for us as Yukoners, $28 per tonne is like paying an additional $0.07 per litre of gas. $65 per tonne will mean paying an additional $0.16 per litre at the pumps.

During the last federal election, the Conservatives claimed that their climate change solutions would not result in any new taxes.
True, the costs being discussed won’t be a tax, but they will be transferred from industry to all of us as consumers. In fact, I know that this spring, industry leaders met with senior politicians and confirmed that costs would be passed on directly.


The Jaccard report says that with the prices that Prentice and Harper are talking about, we won’t address climate change and we won’t meet our targets. Again.

And these are the new weaker targets Canada has been arguing for over the past few years and which are leading to the failure of overall global negotiations. Canada is now getting booed by other countries when we stand up to speak.

Back to the economy, Canadians wonder how they can afford to pay such a high price for fossil fuels? My simple answer is that we will have to anyway.

The price of oil and gas may jump around, but over the long term it will inevitably go up. And now as we seek to stimulate our economy, we could begin investing in our energy future, not our energy past.

This is the big exposure of the Yukon: we are very dependent on fossil fuels. Despite all of the talk about investing in new green power here in the territory lately, our heating and transportation demands are more than 5 times the energy of hydro.

Right now, our homes, our mines and our hospital(s) all rely on fossil fuels. In order to have a secure energy future we need to move to renewable sources.

The good news is that an economy that focusses on conservation, efficiency and renewables typically has more jobs. Jaccard’s report estimates the creation of 1.8 million new jobs over the next decade.

Going on a low carbon diet now will impact the economy, but less than most of us picture. For example, if we leave the energy economy as is, Canada’s GDP is projected to grow by 24% over the coming decade. But if we cut our emissions according to what the world is asking for, our GDP is projected to grow by 21% by 2020.

And for those of us that agree global warming is happening, don’t forget that there are costs associated with the impacts. Sir Nicholas Stern, past chief economist of the World Bank, estimated that in the coming decades, the cost of climate change was a 5% to 20% loss of GDP globally per year!

So if our political leaders have been informed about all of this, why aren’t they doing something? Why haven’t we figured out how to create a renewable energy economy over the past 5 years? 10 years? 20 years?

The reason is that we need to invest now, while the return on that investment - or the costs associated if we don’t invest - are down the road. Faced with that type of choice, most politicians pick NIMTOO - not in my term of office.

But now is the time. Finally, some of the real economic debate is under way. The simplest question is: should Canada lead or wait?

My opinion is that our economic future is renewable. We need to set emission prices now and allow the market to innovate. Waiting has already cost us far too much.

It will take real leadership, foresight and fiscal responsibility.

Note to readers who agree with the climate science: remember, we have all been relying on oil / fossil sunlight. I encourage respect as we call for action - it is a shared responsibility.

Note to readers who disagree with climate science: thank you for reading to the end. Skepticism is an essential part of science. 1 in 10 climate scientists (or 1 in 20) does not agree with the conclusion that global warming is real, serious and man-made. However, 9 in 10 scientists do agree.

I encourage everyone to draw their own conclusions. My suggestion though is that you seek out credible and objective sources. The Northern Climate ExChange at the college is a great source of independent information. Being informed makes for a better democracy - it is a shared responsibility.