Cutting emissions won’t bankrupt us
Posted by mhudema on February 21, 2008
Recently, Premier Ed Stelmach told reporters that slowing oilsands development to actually cut emissions of greenhouse gases (GHG) would have “dire consequences” for the Alberta and Canadian economies.
Stelmach proposed that we adopt so-called “intensity-based targets” — really just a polite way of saying that we intend to continue increasing the absolute level of emissions. He went on to say that he was unsure whether Alberta would ever actually reduce the GHG emissions that are causing climate change.
The scientific research is now clear. We need to reduce emissions from current levels by about 80 per cent if we are to avoid the risk of climatic catastrophe. For Alberta, a province that has some of the highest per capita emissions in the world, this is going to be a big job and Stelmach is right to worry about the effect it will have on Alberta’s economy.
STELMACH GETTING BAD ADVICE
Of course, political leaders have to rely on advisers to counsel them on the climate-change issue. Unfortunately, whoever is advising Stelmach that real reductions in emissions will wreck Alberta’s economy is dead wrong. A simple calculation will show why.
The most recent estimates of the economic effects of combating climate change were released in November by Dr. Nicholas Stern.
Stern, formerly the chief economist at the World Bank, assembled a group of economists, climatologists and other scientists to produce a comprehensive estimate of the economic effects of climate change. The best estimate of the global cost of reducing emissions sufficiently to avoid the risk of catastrophic climate change is about one per cent of global gross domestic product (GDP) annually in 2050. This compares with costs of up to 20 per cent of annual global GDP to deal with the effects of climate change if we allow emissions to continue to grow.
What does this all mean for Canada and Alberta? To put these figures into perspective, global GDP in 2005 was about $44 trillion US. One per cent of global GDP is therefore $440 billion.
Canada’s share of global emissions is about two per cent. So Canada’s share of the global cost of combating climate change is about two per cent of $440 billion, or $8.8 billion per year.
ALBERTA ACCOUNTS FOR 30%
Alberta is home to about 10 per cent of Canada’s population, but we produce about 30 per cent of Canadian emissions because of the oilsands and our reliance on coal-generated electricity.
Thus, Alberta’s share of the cost of reducing Canadian emissions is 30 per cent of $8.8 billion, or about $2.64 billion US per year or $3.1 billion Cdn.
Can Alberta’s economy afford to devote $3.1 billion a year to cut GHG emissions and combat climate change?
The simple answer is: yes, easily. Alberta’s 2005 GDP was about $220 billion and is projected to have grown by an additional $25 billion, to $245 billion in 2006. The $3.1-billion cost represents about 41/2 days’ worth of Alberta GDP in 2006, or about one-eighth of our growth last year.
Surely this is a small price to pay to avoid the massive costs that we will face if we do nothing.
We have calculated the costs of taking action on GHG emissions, but what about the consequences of inaction?
Stern tells us the cost may approach 20 per cent of annual global GDP, but different parts of the globe will face different effects. In October 2006, Norm Henderson of the Prairie Adaptation Research Collaborative (PARC) presented research results at a public forum in Edmonton that looked at some of the consequences of climate change here in Alberta.
Under a business-as-usual scenario, by 2020 Edmonton’s average temperature is projected to rise by about two degrees — equal to the current average temperature of Calgary. Given past emissions, this rise is probably inevitable. Without global action on GHG emissions, temperatures will continue to increase. By 2050, our average temperature is projected to rise by an additional 1.5 degrees — equal to the current average temperature of Lethbridge.
DROUGHTS WILL GET WORSE
Throughout Alberta, our climate will become progressively drier and droughts will become more frequent and severe. Water levels in rivers and lakes will fall significantly.
These changes in temperature and moisture will bring about major changes in the landscape. Northern and mountain forests will be replaced by scrub bush and grasslands, while central and southern Alberta will support only short-grass prairie or desert-like landscapes.
The calculations presented here are estimates and are only meant to help us understand the problem. Although they are based on our best estimate of global costs, the costs for Alberta could be higher or lower.
But even if they were higher — say double our estimate — we could still easily afford to drastically reduce emissions without a big disruption of our economy.
Combating climate change is urgent. Stern says if we don’t turn the corner on emissions in the next 10 years, it may be too late to avoid the catastrophic effects and costs of climate change in 2050 and beyond.
Almost all the key elements for action are in place. We already have the technology to move forward and more will develop as we turn our best minds to the problem. We know we can afford to do it.
Polls tell us that the environment is the top-of-mind issue for Albertans and all Canadians. All we need to add is political leadership.
Premier Stelmach, over to you.
Paul Boothe is professor and fellow at the Institute for Public Economics, University of Alberta