Another federal mandate, another increase in costs

The Trudeau government’s grand plan to cut Canada’s greenhouse gas emissions to “net-zero” by 2050 has spawned yet another set of policies that will harm Canadians. This time, the government plans to raise the costs of government by raising the costs of what government builds or purchases—think infrastructure projects such as highways, and purchasing of supplies for vast number of government facilities.

Beginning April 1, 2023, any Government of Canada supplier wanting to fulfill government procurements equalling or exceeding $25 million must disclose their greenhouse gas (GHG) emissions and set reduction targets. And government construction contractors must now report and reduce the carbon footprint of all new major government construction projects, starting with concrete.

The government will generously grant compliance status for the new standard to companies that have already embraced its supposedly voluntary “Net Zero Challenge,” in accordance with the government’s definition of voluntary—basically, if you want to keep doing business with the government, one of the biggest buyers in Canada, you must do this, this and this.

And lest you think it will end with forcing construction companies to buy “lower-carbon” concrete, think again. According to the government, “the Net-Zero Challenge will not only be for businesses, but also for cities. We are committed to expand the program to public entities and local government to ensure all parts of the economy are moving toward net-zero.”

How will this new concrete initiative translate into higher costs for infrastructure and government for Canadians?

Before we answer that, several organizations have wrongly suggested the shift to low-carbon concrete will be low cost. For example, Rocky Mountain Institute, an U.S. environmental group, suggests cost increases of as little as one per cent in the shift to low-carbon concrete. Admittedly, one per cent doesn’t seem like much, but considering the amount government spends on concrete infrastructure, that would add up quickly. According to Statistics Canada, capital investment in infrastructure assets totalled about $108 billion in 2021, and much of that involved concrete. So, bumping that by 1 per cent would add about $1.1 billion to the roadway construction bill.

But what does real-world experience suggest? The state of Oregon conducted a pilot project, Low-Carbon Concrete in Residential Construction, and found a “5% cost premium for the concrete work in this project” and that the “concrete sub-contractor reported that he may bid future jobs with a 7-10% premium dependent on the supplier and experience of the finishers.” Given government’s limited history of frugality, the government would likely get hit with that 10 per cent premium tacked onto the low-carbon concrete builds, which for Canada (based on that StatsCan data) in 2021 would have added a cool approximate $11 billion to Canada’s bill for transportation infrastructure. That’s infrastructure Canadians pay for with their taxes. A billion here, half a billion there, and soon you’re talking real money.

And for those wondering about benefits, it should be noted that Canadian GHG emissions from the industrial sector’s use of cement was only 4.7 metric tonnes (MT) of carbon dioxide equivalent in 2019, out of total Canadian GHG emissions of 738 MT in 2019 or 0.6 per cent of Canadian emissions. If there’s an environmental benefit here, it’s vanishingly small.

The Trudeau government’s new mandate for low-carbon concrete is simply one example of how this fixation on GHG emission reductions will raise the costs of what Canadians do in even the most prosaic chores such as repaving the driveway. But writ large, as government expressly states is its intent, government’s carbon crusade will saddle Canadians with higher costs across the board, including higher costs for government and its infrastructure. Something to think about when government proclaims yet another “investment” in infrastructure.