‘It’s Very Misleading’: Energy Experts Critique Canada’s Rosy Carbon Pricing Report

Earlier this week, the federal government published a bombshell report on carbon pricing, predicting that a nationwide price of $50 per tonne by 2022 will cut emissions by 80 to 90 million tonnes of carbon pollution.

That’s equivalent to shutting down up to 23 coal-fired power plants or taking as many as 26 million cars off the road. In other words, a pretty big deal for the climate.

The stunning news spread quickly in online circles, shared by renown energy economists, clean energy experts and pollsters.

Journalist Justin Ling tweeted: “There’s been an incredibly disingenuous effort to suggest that carbon pricing won’t reduce CO2 emissions, or at least to contend that there’s no evidence to support the claim. So Ottawa went and produced the research.”

But nobody slowed down to check if the numbers were actually reflective of reality.

And they’re not.

The research that Ottawa went and produced isn’t really evidenced-based at all.

According to an analysis by Simon Fraser University energy economist Mark Jaccard, the federal carbon pricing policy will only reduce emissions by 10 to 15 million tonnes below 2005 levels — but it will take until 2030 to get there.

So the federal government’s claim of a 80 to 90 million tonnes reduction by 2022 is raising some eyebrows.

“When I see that, I’m like ‘oh come on guys, you’re trying to pull a fast one on us.’ ” Marc Lee, senior economist at the Canadian Centre of Policy Alternatives, told DeSmog Canada.

“People who ought to know better are just uncritically praising it.”

Carbon pricing being used as tool to justify new pipelines

This might just seem like a boring and wonkish debate over numbers. And in a way, it is.

But carbon pricing is currently playing a major role in the current climate policy landscape, viewed as the likes of Prime Minister Justin Trudeau and Alberta Premier Rachel Notley as a key bargaining chip in the campaign to get Kinder Morgan’s Trans Mountain Expansion built.

As a result, the amount of emissions that we think the policy can cut matters a great deal — especially if it’s used to justify a new pipeline and subsequent oilsands expansion.

Carbon pricing can be a very effective tool for increasing the cost of emitting. B.C. has been a shining example of a carbon tax that is both effective and popular with the public.

But disingenuous accounting has undermined faith in both the efficacy of putting a price on carbon emissions and the integrity of climate plans.

“The federal climate plan, overall, is weak,” said Laurie Adkin, political science professor at the University of Alberta, in an interview with DeSmog Canada.

“They keep trying to dress it up, and the latest assessment of anticipated gains from the federal carbon tax may be part of that effort.”

Analysis way overinflated current emissions

So what went so wrong with the federal government’s analysis?

Well, for beginners, it didn’t actually reference any specific numbers. The closest that they came to that was presenting a colourful graph with unclear metrics.

As Bora Plumptre of the Pembina Institute put it: “There are difficulties in actually assessing how they actually got the numbers that they did.”

By manually drawing a straight line from the supposed emissions reduction to the vertical axis (yes, that’s the only way of figuring it out) it appears that government assumes that carbon pricing will cut emissions to 680 megatonnes by 2022.

Given they’re predicting 80 to 90 megatonnes in savings, that means that it thinks emissions without carbon pricing would be between 760 and 770 megatonnes without carbon pricing.

But at last count, Canada’s greenhouse gas emissions were 704 megatonnes. Even the country’s highest year for emissions — in 2007, when we emitted 745 megatonnes — was considerably less polluting than what the federal government used in the analysis.

So the actual starting point appears inflated.

“This is a trick the Conservatives used many times to try to pretend their plans were actually doing a lot more than they were actually doing,” Lee said.

A spokesperson for Environment and Climate Change Canada told DeSmog Canada that they were contacting a “few different branches within the department” for more detailed methodology of the carbon pricing analysis but didn’t provide a response before deadline despite multiple extensions.

Government analysis ignored existing provincial carbon pricing

The analysis also assumed that the four provinces that currently have carbon pricing in place (B.C., Ontario, Quebec and Alberta) don’t already have them in place.

You read that correctly.

B.C. introduced its carbon tax in 2008. Quebec brought its cap and trade scheme into existence in 2013.

For inexplicable reasons, the federal government simply pretended that wasn’t the case and that four of the five highest polluting provinces in Canada didn’t already have carbon pricing. In his critical breakdown of the analysis, Jaccard wrote that it’s “grossly misleading to suggest that current provincial pricing can be attributable to federal policy.”

It also appears safe to assume that the modelling didn’t include industry exemptions and subsidies like gasoline used on farms, or natural gas burned by conventional oil and gas producers, or a large chunk of completely unpriced emissions at oilsands mines via Alberta’s convoluted output-based allocation system.

Experts suggest there’s also a chance that the federal government included significant emissions reductions accomplished by other policy measures.

“It’s very misleading, and also neglects that most of the impact is largely based on regulation, Lee said.

“We didn’t get rid of lead in gasoline because we had a lead tax that was phased in over 20 years. We just said ‘no, you can’t have lead in your gasoline after this date.’ ”

A steep carbon price needed for dramatic cuts

It’s not like carbon pricing couldn’t have these kind of reductions.

In fact, if you plug in a $50/tonne carbon price into the Pembina Institute’s nifty new climate policy simulator, it pops out 114 megatonnes in reductions by 2022.

But Plumptre caveated that by noting the simulator doesn’t include any exemptions or subsidies, and treats all carbon pricing as a tax (instead of including more complex cap and trade schemes, used in Ontario and Quebec).

Furthermore, Pembina actually uses a considerably higher baseline emissions assumption than the federal government due to recently updated global warming potential factors and higher rates of methane leakage, which puts Canada even farther from its Paris targets.

Jaccard and his team at Simon Fraser also reported in a 2016 analysis that Canada could meet its Paris target with a $200/tonne carbon price by 2030.

But they concluded rather starkly: “ It is highly unlikely that our political leaders will implement such a price, given the severe political consequences.”

So without such dramatic increases to the carbon tax and in the absence of transparent government accounting, experts are left scratching their heads at Ottawa’s latest rosy report.

“It’s all just been this black box and they’re basically saying ‘trust us,’” Lee said.

“I feel like the federal government doesn’t have much credibility on the climate file these days because they’re saying ‘we’re all in favour of climate action and we’re also in favour of pipelines,’ which we know are going to increase emissions and are specifically designed to allow the increase of production from the oilsands.”