Canada’s government wants us to pay for our GHG emissions … and everybody else’s, too

From today’s Financial Post, another look at Canada’s emissions, and again, wondering why our government portrays us as the environmental bad guys?

Early in my banking career in a discussion about statistics I was told an old joke that rang true enough that it stayed with me. The story goes like this: An interview for a job opening attracted a mathematician, a statistician and an economist. The employer asks them each to calculate the answer to two plus two. The mathematician says four. The statistician, after studying it for an hour, declared the answer to be somewhere between three and five. And several hours later, the economist raises his hand to ask: What answer would you prefer?

The joke explains why it’s so interesting to examine economic data presented in isolation of other related data. For example: the popular manner to present data related to GHG (greenhouse gas) emissions is via “per capita” output, but a better measure would calculate GHG emissions against the economic output of the country. The reason is that the impact on emissions is affected by a country’s population density, its climate and its trade (especially exports) all of which have an effect on GHG emissions.

As one example, the new NAFTA (or USMCA) is a trade deal between Canada, with a population density of four people per square mile; Mexico, with 57 people per square mile; and the U.S., with 92 people per square mile. Obviously, density per square mile will have a direct impact on GHG emissions, and the ability to get products to business and consumer markets, be they imported or exported or produced locally. Similarly, each country’s climate will impact GHG emissions. Canada is much colder than either Mexico or the U.S. It’s why Canadians who can afford it head south in the winter, while the rest of us stay home and try to stay warm by generating GHG emissions.

Canada’s GDP in 2017 was $1.653 trillion and our international trade saw us export $549.6 billion or 33.2 per cent of our GDP. We imported $573.6 billion, leaving us with a trade deficit of $24 billion. Our largest exports were “energy products,” totaling $94.8 billion, mainly crude oil and crude bitumen.

Natural Resources Canada notes of Canada’s crude oil production: “GHG emissions per barrel of oil produced in the oilsands have fallen 29 per cent since 2000” and “Canada is the fourth largest producer and fourth largest exporter of oil in the world.” It also notes that the oilsands emit about 60 megatonnes of GHGs per year. That’s 8.5 per cent of Canada’s total emissions and 0.13 per cent of annual global emissions. Eighty per cent of the emissions in a barrel of Canadian oil are emitted by the end user — almost all of it outside of Canada.

Now, if one examines GHG emissions of Middle Eastern oil-producing countries such as Saudi Arabia, UAE, Kuwait, Qatar and Oman, one finds they emit more GHGs “per capita” than Canada — and way more GHG emissions per $1,000 of GDP.

In 2017 Canada exported $444.9 billion to its biggest markets: NAFTA and China (comprising 81 per cent of all Canadian exports). Those exports generated GHG emissions of 301 kilograms per $1,000 of GDP, totaling approximately 133,915 kilotons.

Our imports from the U.S., Mexico and China amounted to $414.5 billion and represented about 181,386 kilotons of GHG emissions produced in those three countries. So, despite importing $30.4 billion less from the U.S., Mexico and China, the GHGs that those countries produced to make goods imported by Canada was around 47,471 kilotons higher than the GHGs Canada produced to export goods to those three countries — exports of which oil made up the largest share, and exports that were actually worth more in total value than the higher-emitting imports.

Despite this, Prime Minister Justin Trudeau and Minister of the Environment Catherine McKenna want to hit all Canadians with a carbon tax. In effect, they want us to pay for our trading partners’ emissions as well as our own. But if we really wanted to contribute to a global reduction in GHGs, perhaps the better way would be to build a pipeline or two in order to get our low-emission crude to foreign markets. That would generate good jobs and tax revenue for Canada while reducing global emissions. Who knows? It might even help balance the federal balance the federal budget.

Parker Gallant is a retired bank executive.

 

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What are the indirect costs of the Trudeau government carbon tax?

Families should plan now for their carbon tax — er, “pollution tax” rebate.  You might soon be told you’ll need sweaters as part of a climate action plan.

[Photo: Dan Gold]
Trying to determine exactly what the federal Liberal government is doing with their plan to tax “pollution” via a carbon tax is an exercise in total frustration. The recent announcement from Prime Minister Justin Trudeau promised taxpayers in the four* provinces that said they will not impose a carbon tax, was that he will be hitting them with “a price on pollution that causes climate change from coast to coast to coast”!

He went on to say he would help Canadians adjust to the tax by handing out rebates to 80% of the families in those four provinces and claimed “eight in ten families will get back more than they pay directly”!

What they will pay indirectly is unknown.

Curiosity piqued, I decided to calculate how much that might be.

Emissions by the four provinces total (Source: StatsCan 2016) 273.1 megatonnes so, at $20 per tonne, the “pollution” tax should** generate $5,462 billion (rounded to $5.4 billion).

StatsCan (2015) says there are 6,513,000 households in the four provinces. Trudeau said rebates in the first year to each household would be as follows: Ontario $307, New Brunswick $248, Manitoba $336 and Saskatchewan $598. The total rebates will therefore be around $1.6 billion meaning about $3.4/3.8 billion will be “indirect” *** taxes increasing the cost of other consumption by $522 per household.

So, the “rebate” will represent about 30% of the total “pollution” tax the federal government will levy under the “National Carbon Plan” or NCP. The Prime Minister claims all the funds collected under the NCP will be disbursed to other recipients such as schools, universities, municipalities, hospitals, etc. etc.

Now, forgive me if I engage in wild speculation about the future when Canadian households start to experience the NCPP (National Carbon Poverty Plan). It might be like Ontario households when they experienced the cost of electricity surging over 100% in just 10 years. I suspect we will experience rhetoric similar to that from Ontario’s various energy ministers such as Bob Chiarelli and his “It’s less than a cup of Tim Hortons’ coffee a year,” response to the $1.1 billion cost of the gas plant scandal. Beyond that Energy Minister Chiarelli also linked in to the WWF (World Wildlife Fund)**** when he and other Ontario Liberal Ministers in early 2014 joined WWF to celebrate “National Sweater Day”! The message conveyed was that Ontarians could fight climate change by Putting on a sweater and turning down the thermostat. If every Canadian turned down their thermostat in the winter we could save 2.2 megatonnes of carbon dioxide per year”.

Two years later, after Dianne Saxe was appointed Ontario’s Environmental Commissioner by the Wynne government, she issued her first report to the Ontario Legislature. In it is this statement: “the energy required to heat an existing home can be reduced many different ways (see Figure 1.1), including by:  reducing the target temperature and putting on a sweater”.

What we are liable to see in a few years, should the Justin Trudeau Liberals win a second term is a lot more about sweaters. (It’s already out there: simply Google “Justin Trudeau+sweaters”! The search will get 126,000 hits.)

Maybe Canadian households receiving the rebate in 2019 should resolve now to use the money to immediately purchase one of the many “Trudeau” variety of sweaters available in the marketplace.

PARKER GALLANT

*Manitoba, New Brunswick, Ontario and Saskatchewan.

**Larger companies will be taxed at a lower rate of 80/90% escalating to 100% over time.

***Direct taxes apply to tax on fuel for home heating and for transportation.

****Gerald Butts, senior political advisor to the PM was the CEO of WWF from 2008 to 2012