Sunday, October 7, 2018

GHG Policy in BC - Need for a Different Approach

If it wasn’t clear before the LNG Canada announcement, it should be clear now that there is a problem with British Columbia’s greenhouse gas (GHG) policy – a problem that will become even clearer and more acute if LNG Canada or others propose additional liquefaction facilities in the province.

The policy sets out fixed GHG emission reduction targets by specified dates. The problem is that government set these targets without careful consideration of what we would have to do to meet them and what costs that would entail.

British Columbians are prepared to incur significant costs to reduce GHG emissions and contribute to the fight against global warming and climate change. Widespread acceptance of the carbon tax is evidence of that. For most people, however, the costs have to be demonstrably well-considered and reasonable. But there is little reason to believe that the emission targets the government has established, particularly with new and potentially growing liquefaction activity in the province, are either well-considered or reasonable.

The government has stated that to make room for the GHG emissions from liquefaction and related gas industry activity, BC households and industry will have to ‘tighten’ their belt – reduce their emissions even more than they would have without the LNG Canada project. Exactly what that requires and what it will cost is as yet unclear. All we know for sure is that whatever we would have done without LNG, we will have to do more with it. And if there are other new LNG developments in the province, we will have to do even more still. Whether all of the additional measures will be feasible and reasonable to implement, and if they are, why they weren’t called for in the first place, with or without LNG, is unclear.

The problem is not just that we don’t know what the required ‘belt-tightening’ will entail or cost, we’re not even sure why we should be called on to do it. Government policy may set out fixed emission reduction targets for British Columbia. But what people logically care about is our contribution to global emissions because it is global, not just B.C. emissions that will determine the extent and consequences of global warming and climate change.  

There is some uncertainty as to the impacts that LNG exports from B.C. will have on global emissions. LNG proponents have argued B.C. LNG will enable recipient countries to displace higher GHG-emitting coal-fired generation. Opponents say LNG could displace emission-free renewable power. Arguably the most likely scenario, assuming BC production does not significantly affect world gas prices and recipient country energy plans, is that LNG exports from B.C.  will displace natural gas and LNG production elsewhere.  If that is the case, there would be no increase in global emissions as a result of LNG exports from B.C.; indeed there would likely be some reduction because of the relatively low carbon intensity of LNG Canada as compared to alternative global sources of gas supply.

The question naturally arises: why should British Columbians be called on to tighten their belts, whatever that may mean and cost, to accommodate a project that may not cause any increase in global GHG emissions – that may in fact contribute to reducing them? Why should we be governed by emission reduction targets that were set without well-considered regard to their implications for British Columbians and their link to global emissions?

British Columbia needs to take a fresh look at its GHG policy in light of recent and possible future gas industry developments. We need to recast our commitment in terms of what costs we are willing to incur to reduce emissions, and be clear it is reduction in global emissions, not just emissions in B.C., that we want to achieve.

A major improvement for the efficiency and transparency of our emission reduction efforts would be for government to establish a dollar cost of carbon that will govern a ‘reasonableness’ test for its GHG reduction policies and measures. Public debate will be required to determine exactly what that cost should be – whether it should be $50/tonne, $100/tonne or more. It certainly will have to take account of the amount of emission reductions we are seeking by specified dates, but it will also have to take into account what opportunities there are to reduce, capture or offset emissions; what technological improvements are expected; what other leading jurisdictions are doing; and other factors.

An explicit determination of the cost we are willing to incur to reduce carbon emissions will enable government to move forward in a rational, understandable way. The dollar cost will inform people of the adequacy of and need for increases in our carbon tax. It will help government allocate its GHG policy expenditures to the most cost-effective emission-reduction electrification and other initiatives. It will help screen regulatory initiatives to bring some consistency with what is being called for in different sectors.

Most importantly, an explicit dollar cost of carbon will preclude a call for ‘belt-tightening’ without regard to what that may mean or cost. And it could be applied, with appropriate policy and tax design, to the cost of British Columbians’ contributions to global emissions, not simply emissions in B.C.

British Columbians want to be leaders in the fight against climate change. That doesn’t have to mean leaders in the establishment of targets that aren’t well-considered or reasonable. We can be leaders in the development and application of very thoughtful policy that will significantly contribute to reductions in global emissions and at the same time promote widespread public understanding and support.