Thirty years ago last week, Prime Minister Brian Mulroney hosted one of the first international gatherings of climate scientists and policymakers. Over 300 people from 46 countries assembled to chart out an ambitious course of action on the emerging threat of climate change. Held in Toronto on the heels of that year’s G7 summit, The Changing Atmosphere Conference was arguably the high-water mark of Canada’s international effort to address global warming. The main recommendation out of this conference was a 20% reduction of carbon dioxide emissions from 1988 levels by 2005.
Three decades have passed and much has changed. Global carbon dioxide emissions, far from decreasing, have in fact increased over 65% since 1988. In Canada, the federal Conservatives have retreated from being internationally-respected environmental champions on acid rain, the hole in ozone layer, and sustainable development to being adamantly opposed to market-based solutions to climate change. Ontario Premier Doug Ford’s first order of business will be to scrap the cap and trade program and withdraw from the federal carbon pricing scheme.
Meanwhile, the tools available to governments wishing to address massive market failures like climate change have certainly diminished. Neoliberal economic policies have resulted in reducing the government revenues that are needed to invest in climate solutions, the privatization of many crown corporations that could have led the charge towards decarbonization, and free trade policies that have hamstrung the ability of governments to implement environmental policies that may hurt a foreign company’s bottom line.
Given all this, what is the role of the state in solving climate change? Like with issues such as with housing and healthcare, governments need to step up and actively shape the market to reduce hardships faced by its citizens and prepare our country for the future. Justin Trudeau’s Liberals have taken this to heart and, to their credit, have announced a flotilla of federal climate policies.
However, much to the chagrin of many Canadians and all other federal parties including the Conservatives, Canada has just purchased the 65-year-old TransMountain pipeline and the bonus expansion project, for $4.5 billion. Final costs will likely soar far higher. Meanwhile, the pollution produced from extracting bitumen, along with its eventual combustion, will eclipse the gains achieved by many of Trudeau’s new climate policies.
As investors increasingly and permanently shift capital away from fossil fuels and towards a host of other growing sectors including renewable energy, capital-intensive fossil fuel projects like the oil sands and associated pipelines will struggle to raise funds. Witness the flight of many international oil companies from Alberta: Shell, ConocoPhillips, Total, Statoil. Investment in Canada’s oil and gas sector has dropped 56% over the last three years, according to the Canadian Association of Petroleum Producers.
Trudeau’s rescue of TransMountain is not isolated. We can expect more calls for governments to bail-out or nationalize troubled fossil fuel companies. U.S. President Trump is currently preparing drastic steps to halt the closure of old and unprofitable coal power plants. MPs in Australia’s ruling conservative coalition have floated nationalizing money-losing coal power plants. As the outlook darkens for fossil fuels, the state will increasingly be sought to save the day.
If governments want to be both climate leaders as well as more involved in the business of oil, gas, and coal, they should not seek to significantly increase production of fossil fuels. Rather, they should focus on three things: support workers and communities dependent on a declining fossil fuel industry, avoid footing the clean-up bill especially for toxic oil sands tailings ponds, and give a clear signal to investors that the industry is going to wind down over the medium term. (Of course, there is more to be done but I don’t want to this post to be too lengthy!)
While a generation of politicians, bureaucrats, and business executives have come and gone since Mulroney took the podium at The Changing Atmosphere Conference, all hope is not lost. A new generation of Canadians have emerged that do not doubt the science or the urgency of climate change, despite what Doug Ford, Jason Kenney, or Scott Moe may reckon. Ford may have axed Ontario’s energy efficiency program but Trudeau could implement a long-needed national energy efficiency program. There is no federal electric vehicle policy in Canada – that door is wide open. Federal renewable energy tax incentives pale in comparison to the United States, even under President Trump. If Canada wants to be more than simply a conference venue, it must take stronger action on climate change. We cannot wait another 30 years.