EnviroEconomics.ca

FCM released a report completed by myself and Seton Stiebert today on opportunities and costs for reductions from municipalities. See the report here and coverage here.

Below are some summary points from the report.

There are important reasons that suggest there are strong rationales to focus our climate policy efforts at the municipal level.

1. Canadian municipalities have a large influence on Canada’s emissions. In the past, and moving to the future, emissions originating from Canadian municipal operations and within their borders are significant, totaling in the order of 40% of Canada’s national inventory. This is about equivalent to the emissions of all of Canada’s large industrial emitters.

2. Municipalities have started down the road of reducing emissions and realizing local benefits. Canadian municipalities, representing 41% of Canada’s population have set emission reduction targets, with local action implemented in municipalities covering 12% of Canada’s population. This has resulted in small and verifiable reductions to date in the order of 1.3 Mt. Small yet positive.

3. But there is significant potential still on the table that is very low cost. Our analysis indicates that municipalities could deliver, in the short-term significant low cost reductions. The stock of potential is significant, in the order of 50Mt, and low cost, with about two thirds of this at prices below $25/tonne. This stock of potential is about half of the required reductions from the large industrial emitters under Canada’s Turning the Corner climate plan, at costs that are much lower than competing technologies such as carbon capture and storage.

These three points lead to the conclusion that there are strong rationales to jump-start emission reductions in municipalities.

1. Significant reductions are ready to go. Canada could demonstrate progress in the short-term with abatement opportunities that can be implemented now, with proven technologies. The stock of this potential is significant and could do much to contribute to Canada’s carbon aspirations.

2. These reductions are low cost, which is key to the carbon solution. Carbon policy requires significant shifts in how we use energy and deploy technology. If we are to achieve our carbon objectives, low cost solutions are necessary. In looking at the costs for reductions from municipalities, it is clear that they are a key to early and low cost reductions.

3. Importantly, benefits are local. With investments in low carbon technology and the associated reduced energy use and emissions, we can expect important economic, social and health benefits. These include lowering our costs making us more competitive, improving living conditions and thereby raising our collective welfare, and finally improving health outcomes through improved air quality. These are not diffuse benefits accruing in remote parts of the globe, but rather real and tangible benefits where we live.

But, there are barriers,

1. First the lack of a unified carbon price across Canada has not signaled that carbon is valuable and should be managed. This missing ingredient then lowers expectations and does not send the signal that action should be taken. We then have lower localized benefits that we should which speaks top a need to get going and set expectations.

2. Second, municipalities lack capital to get going. Most projects require upfront investments that can pay off in the longer term. But that initial capital is scare. Taking a longer term view results in cost savings, which ultimately pay off. Mindsets have to change to take a longer view that balances increased capital costs with long-term energy savings.

Municipal contributions to carbon reductions in Canada seem an essential element of cost-effective climate policy. A sharper focus on the role of municipalities in Canadian climate policy would help by shifting the climate policy debate in Canada to that of thinking about local actions and local benefits.