Trudeau government’s new climate target much more costly than Biden plan
During a recent climate summit, President Joe Biden committed to reducing U.S. greenhouse gas (GHG) emissions by 50 to 52 per cent below 2005 levels by 2030. Prime Minister Trudeau, emboldened by Biden’s commitment, announced a new target for Canada—40 to 45 per cent below 2005 levels by 2030.
Ottawa has yet to provide any details about how we’ll reach this new target. But the plan will put Canada at a competitive disadvantage compared to our largest trading partner because Trudeau’s seemingly less ambitious target will be much harder and more costly to achieve.
Consider electricity. Our grid is already one of the cleanest in the world—82 per cent of Canada’s electricity generation comes from non-emitting sources such as hydro and nuclear. Moreover, by decarbonizing electricity Canada has already reduced emissions by 46 per cent since 2000. In contrast, fossil fuels continue to be a large source of power for the United States accounting for 60 per cent of its electricity production.
Therefore, the U.S. will more easily reduce GHG emissions from its electricity sector, which accounts for 25 per cent of U.S. GHG emissions, as it further shifts from fossil fuels to other non-emitting sources of power whereas Canada has made greater progress in that transition.
Second, Canada’s population is growing at a much higher rate than the U.S. If we continue this pace, our population will grow by between 11 and 14 per cent by 2030. In contrast, census data project the U.S. population will likely grow by approximately 7 per cent by 2030. Population growth is a key driver of overall economic growth, which leads to more GHG emissions. The higher increase in population in Canada will make it more difficult to reduce emissions and achieve our new GHG targets.
Finally, if Canada removed all fossil-fuel cars from the roads, emissions would only drop by 5 per cent while the U.S. would experience an 11 per cent reduction, so again, the U.S. has an advantage.
So what does this mean for Canadians? Given that Canada doesn’t have much relative room to reduce GHG emissions from its electricity and transportation sectors, to achieve the prime minister’s new ambitious targets, we’d likely have to lower emissions in industry—especially the oil and gas sector, which accounts for 26 per cent of the country’s GHG emissions.
Ottawa’s current climate change plan, which includes a $170 per tonne carbon tax by 2030 and significant spending on renewables, will reduce Canada’s GHG emissions by 30 to 36 per cent (relative to 2005 levels) by 2030. Increasing our targets to between 40 and 45 per cent will require more stringent regulations and/or a significant increase in the carbon tax. (According to estimates, the $170/tonne carbon tax will cause the Canadian economy to contract by 1.8 per cent and result in about 184,000 lost jobs.)
Canada’s current policies are already much more stringent than the U.S. Further reducing GHG emissions would require even tougher policies, which would further hurt the competitiveness of our industries.
Due to the differences in our electricity grid, the nature of our economies and population growth, Canada will have to do much more to reach its new climate target than the U.S. This will place us at a competitive disadvantage and impose considerably more costs on Canadians. Ottawa should carefully consider the implications of these new targets.