Paris accord is not good for Canada

Paris accord
Paris accord is not good for Canada
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About the Author

Chris Stoate

Chris Stoate

Chris Stoate holds degrees from Cambridge University and the University of Toronto. He founded and operated LaserNetworks, an international IT services firm in the print space with a significant environmental contribution. Chris has an interest in public education and served on the Halton Learning Foundation Board and the United Way Board, chairing the Oakville United Way campaign in 2012. He has also been an Oakville Town Councillor.

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Under the terms of the Paris accord, if Canada buys cars from a country that uses coal-powered electricity in manufacturing instead of Ontario’s  relatively clean energy, this would actually allow Canada to report lower emissions. However, the world would experience higher emissions.

Why?

Carbon emissions are reported at the point of generation rather than at the point of consumption.  This has wide-ranging implications.

First, let me clarify my own position.

We are on the verge of irreversibly triggering catastrophic climate breakdown and must act urgently. It must be in concert with everyone else to head this off.  The last thing I want to do is jeopardise a hard-won agreement between 196 countries (now 195 with US on the sidelines, but then they often come in late to major, just conflicts).

We need to reduce worldwide use of fossil fuels as quickly as possibly.

However, I am very troubled for Canada (and for that matter other resource-dependent economies) at the way the Paris accord evaluates our emissions. This way of measuring is causing dissension in the country.

Under the Paris accord Canada reports the following:

  1. The GHGs emissions, if I drive a gasoline powered car in Canada
  2. Refining emissions if the gasoline was refined in Canada
  3. Extraction emissions if the gasoline was extracted in Canada

However, if the oil was extracted anywhere else, and/or refined anywhere else, the jurisdictions where these processes took place will report the emissions.

What does this mean?

Canada can bring down the emissions it reports and get closer to its Paris accord targets by surrendering its domestic oil and gas market to other countries. However, our world realizes no environmental benefit.

Further,  if Canada competes successfully against other countries for the oil market share outside Canada it increases the emissions Canada must report.  The extraction emissions are reported by the country where they occur, rather than by the end-consuming country.  So, our environmental interests are diametrically opposed to our commercial ones.

This is a misalignment of interests.   Essentially we  choose commercial failure in a field where Canada has a comparative advantage, and demonstrated ingenuity and deep cumulative knowhow.

In oil, and in mining, Canada should absolutely compete for the biggest possible market share (in a market we sincerely hope is shrinking very fast). Canadians realise this apparent contradiction. It is a simple practical reality.  It is not much different from Xerox. They adapted to the digital document age but got as much profit out of printing and copying as they could for as long as possible. Those profits financed the transition, so  they didn’t end up like Kodak.

In Canada’s case, the financial imperative is also to keep social cohesion with education, healthcare and the other services that make the country worth living in and of a mind and with the wherewithal to protect the environment in the first place: wherewithal that comes to a great extent from our extraction industries.

The Paris accord measurement approach pits Canadians against each other.

It is little wonder that Alberta politicians’ heads are exploding.  If they successfully win Asian business, they make Canada a climate villain, and are at odds with the rest of us.

It is little wonder that Alberta politicians’ heads are exploding.

Meanwhile, Quebec buys oil from the Middle East, which is actually good for reporting our emissions.

Consider the absurdity of Norway, another oil producing country.  By 2030 they expect not to need any oil. Norwegians are paragons of climate virtue.  However, if their external customers are not, or if they take market share  away from Iran, for example, they will be charged for the emissions of their oil production, and possibly miss their Paris accord targets.

Simultaneously, oil-importing countries like Germany and France can reduce their carbon footprint by a small percentage shift to electric cars and simultaneously improve their balance of trade:  an alignment of interests.

The misalignment of Canadian interests is leading politicians to turn themselves into pretzels. They are trying to reconcile the patent contradiction we have negotiated ourselves into between the federal government and the building and worrying levels of Albertans’ anger.  A dangerously divisive situation.

Another example is the contortions proposed to get other countries to give Canada credit for the emissions they reduce when they replace coal with our LNG.  If emissions were measured at the point of consumption instead, demand for our LNG would increase, and the world would benefit.

Canada and all other resource-dependent nations should lobby to change how emissions are reported.  The end-consuming country of any product should report the emissions of the full lifecycle: from extraction through to delivery to the end-user.

All resource-dependent nations should lobby to change how emissions are reported.

The demand side must be addressed.  This change means that a signatory to the Paris accord would seek out the lowest carbon way to obtain products, regardless of the country of origin.  This would drive a reduction in the total amount of carbon emitted globally, rather than merely shifting it from country to country.

The Chinese would still be motivated to reduce their oil and coal consumption. They would also want to reduce the carbon content of the oil they do use.  All suppliers, Alberta included, would be even more motivated to reduce the carbon impact of their oil production in order to compete.   Similarly, if one cell phone has lower lifecycle carbon content, regardless of where its components are sourced or made, it would be preferred.  The carbon footprint should be reported at the end user level for the full lifecycle of the product.

Britain is a good illustration. The current perverse Paris accord incentives mean the British can claim credit for carbon emission reductions they have basically exported to other countries along with their manufacturing. Yet even more paradoxically they can buy offsets overseas and claim credit domestically.  The planet’s climate is not benefiting the way it should from what otherwise sounds like an ambitious plan.

Globe & Mail : Britain’s plan to go to zero emissions by 2050 won’t work

If carbon emissions were reported for the full lifecycle of a product or service at the point of consumption, rather than at the point of emission, these contradictions would be eliminated.

In this scenario, if Alberta sells its oil to the Asian market, the increased emissions in Canada from extraction would be reported by the country that consumes that oil. It would not be reported by the country meeting that demand.

This would be good for Alberta, but also for consuming countries.

All countries would have a new baseline emissions level against which to report emissions only on what they consume, regardless of where the emissions occur. Under such rules, oil-importing countries would get even more benefit from reducing their oil consumption. They would be credited with the reduction of the full lifecycle of the oil and not only from emissions originating from a tailpipe.  This change should be palatable to everyone.  It just makes sense.

Asking any business (let alone a whole province, and thereby a country) to surrender any shrinking market for a legal good to its competition for any reason is bound to provoke vigorous resistance.  When there is zero benefit to the global environment, the reaction will rightly be a furious inability to accept that anyone could be so self-destructive.*  With emissions caps in Alberta we essentially handcuff the industry, capping its market share.

With emissions caps in Alberta we essentially handcuff the industry, capping its market share.

The change I am proposing would allow our businesspeople in the resource sector to get on with doing their jobs in a challenging shrinking market, rather than expecting them to be schizophrenic, trying to satisfy shareholders and yet stop trying to make their companies successful.

We are at odds with each other. It is destructive to the Canadian federation, to no benefit to global emissions.  Getting this reporting issue changed should be a priority for the Federal government.  It is unfair to producing countries and will produce unintended perverse behaviour which will harm the global environment.

*This is predicated on the assumption that incremental oil extraction in Alberta is no more carbon-intensive than in other jurisdictions.

It is true that average per barrel emissions in Alberta are higher, but newer projects are as I understand it equivalent in impact to conventional oil extraction.  In fact, incremental oil from Alberta used in Canada may have a lower per barrel impact globally than oil imported by supertanker.

 

 

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Readers Comments (2)

  1. Arvis Pinkletter says:

    It ought to be reported on BOTH ends.

  2. As long as all the emissions are reported, they can either be reported at consumption or production. If we report the full lifecycle at consumption and then also at production we double count the same emissions. My proposal is that we report all emissions, from production to consumption, in the consuming jurisdiction, rather than split between the consuming and producing jurisdictions. Of course, sometimes they are the same.


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