…environmental economics and the implications of environmental policy

Spam, Spam, Spam, Spam, tonnes of spammmmmmm

with 19 comments

While looking at some wonky modeling results, I received an email from the author of said results simply entitled

Whacky Shit

Which of course immediately got me thinking of Monty Python, and I stumbled on these,

The Climate Policy Argument

and this

The Ministry of Climate Policy and CCS Subsidization

To be fair to the ENGO community, I should post a link to “every ‘tonne’ is sacred”, but I think I will pass.

Never a dull moment in Canadian climate policy, eh.

Written by Dave Sawyer

November 10th, 2009 at 10:16 pm

Posted in Uncategorized

Economic Obesity … or a Supersized Free Lunch

with 18 comments

I had the pleasure of listening to Alberta’s Minister of Finance recently. She gave a good, but apologetic speech about how Alberta had to dip into the rainy day heritage (oil) fund to balance the books in the face of the global slowdown. While she is one of the luckiest finance ministers in the world, to not have to take her jurisdiction further into debt (ala Ontario), she is also one of the unluckiest. Why?

Economic obesity


At the end of the speech, she recognized an important oil type in the audience, and asked him a very good social planning question — what would you do to improve the welfare of Albertans? Well, this rather large balloon of a man slowly rose his hulk out of the chair and rumbled simply, “fix the oil royalty regime”.

And so it is no surprise to see today that the oil industry has launched a full scale marketing blitz looking for more oil subsides.

Big Oil makes case for carbon-capture subsidies

Based on calculations contained in the report, the ask is at least $3 billion in 2020, assuming a CCS cost of $150 tonne. With no national carbon price, the highest emitting sector in the country is asking for a subsidy of $85/ tonne.

While there is economic rationale due to market failures to support CCS innovation and learning by doing, the sheer size of this ask is ridiculous. Especially when so many Canadian emissions remain unpriced.

Written by Dave Sawyer

November 9th, 2009 at 10:27 am

Posted in Uncategorized

Be Patient on Climate Policy … Because we have no ambition

with 21 comments

A senior federal cabinet minister has added some long awaited clarity on where Canada is going with climate policy in advance of Copenhagen,

“I don’t think we’ve been ambiguous on this issue…”


Be patient cause we have no policy....

Be patient cause we have no policy....

This picture, and indeed the whole federal policy, is eerily paralleling the Bush administrations bold forays into climate policy … see post here

Our climate policy is this big...

Our climate policy is this big...

As always, while the feds fiddle, energy intensive industries are rolling out high emitting capital with low expectations that they will see real carbon prices,

I think there is certainly hope in the industry that they can see some clarity in the near future,” Dunbar said.

“They don’t want to see this situation with all this uncertainty drag on for years. I think the sooner they can have clarity, the better off they are and the easier it will be for people to make decisions.”

He said there are many points of view on the subject –some players wouldn’t even mind a carbon tax, for instance –but most agree they want a fair regime that applies equally to all emitters, without picking winners and losers.

Some $100 billion worth of oilsands projects for northern Alberta were deferred or canceled last year as credit markets froze and commodity prices tanked.

The only certainty in Canadian climate policy is inaction.

Written by Dave Sawyer

November 8th, 2009 at 7:46 pm

Polarizing Around the Gas Flare Burn … or back where we started

with 23 comments

Make no mistake, the Pembina/Suzuki paper was a landmine, I mean landmark for Canadian climate policy. It has effectively unleashed the polarity that exists between those that think action is rubbish with those that think a changing climate is dangerous.

While this has always been the case in Canada, what has changed is the Harper government. They have moved from paying lip service to action, as in the case of all previous governments, to calling action “irresponsible“.

It all changed when the Pembina/Suzuki report forced the government’s hand, through bringing out into the open the contradiction between the Government’s “target trash talk” and its policy inaction. As the Government suspected, they have been outed. See here for example,

Time for Tories to come clean on emissions

But this aside, the polarization is the real issue. This article sums it up nicely

The Harper government would argue it has no choice — because of hardship that would befall Alberta and Saskatchewan, in particular, should it take a hacksaw to GHG emissions, with national unity implications.

Meanwhile, environmental activists are arguing it’s time to stop coddling western energy-producing provinces and face up to the dire climate consequences of continued inaction.

The two sides have consolidated their respective positions in the wake of a report.

Now, those special interests who have been whispering in the PM’s ear, and quietly turning Canada into the North Korea of climate change, can safely come out to bask in the glow of the gas flares. So, we are back where we started folks. Take off your red leather ties and drop your Adidas bags, cause there is going to be another fight behind the school.

Written by Dave Sawyer

November 5th, 2009 at 2:51 pm

Posted in Emissions Pricing

Unlocking the cash cow contradictions

with 20 comments

Not sure how one squares this,

Killing Canada’s cash cow not the answer (here)

A report funded by TD Bank on the regional economic impact of climate change should be viewed with a jaundiced eye…it tells us that only by punishing Alberta with massive carbon taxes can the federal government meet its climate-change goal of reducing greenhouse-gas emissions by 20 per cent below 1990 levels by 2020….Shooting the cash cow is not the answer.

With this…

Oil sands billions expected to be unlocked (here)

Steadily rising oil prices will combine with lower costs to put some of the more than $100 billion in canceled oilsands projects back on the front burner, according to a new study.

It seems the golden goose can not be killed. And even if some oil sands projects become marginal with carbon pricing, as production costs fall, and oil prices rise due to scarcity, will not more wealth be left in the ground? But then again, we expect more income now and our kids can fend for themselves.

Written by Dave Sawyer

November 4th, 2009 at 2:39 pm

Posted in Emissions Pricing

Tagged with , ,

Dragging the misery out a few years longer

with 32 comments

Ross McKitrick has a good response to the Pembina/Suzuki paper here.

Ross is the type of guy to go after everything, and indeed that is what he does in this editorial – the government, the targets, the models, the ENGOS, and the science. Funny thing is, he is mostly right on all accounts. Indeed, his gives a great overview of why one should be sceptical in looking at all things climate policy.

But, does his argument mean everything is wrong? I think not. He makes an argument for precaution when thinking about climate policy and climate science, but when it comes to climate outcomes that could be really really bad, he prefers skepticism over precaution. Strange because he clearly believes risk and uncertainty dominate climate policy and science, but then implies that a little climate policy insurance is unwarranted.

This position then gives fodder to the Rhino Party Whips of the world, which perhaps says it all. (see comment 23, 8:37 pm). In the end, this all serves to drag the misery out a few years longer.

Written by Dave Sawyer

November 3rd, 2009 at 1:33 pm

Wal-Mart and Climate Change Expectations

with 24 comments

Ok, so I am back …. not sure why I left….

Below is a unedited version of a Letter to the Globe I submitted (see Here).

Standing in Wal-Mart, looking around at the Halloween mayhem, I realized just how bad it is. No, it is not consumer confidence, because the lineups were 15 deep, with all manner of folk clamoring to spend. And no it is not the brinks and mortar economy, because the shelves and isles were positively chocked full.

No, I realized that our expectations are all wrong. We expect mounds of cheap stuff to be available and ready to take home in a moments notice. And yes, we expect someone to cart it away once it crumbles shortly thereafter. And herein lies the real root problem with our Wal-Mart expectations — disposal.

All this junk has to be made, shipped, stored, bought, taken home and then dumped. All of it except for the soft bits that hit the sewage facility and then the river. And all of this activity emits carbon and other nastiness, loads of it. But no matter, the greatest trash heap of them all, our atmosphere, is handling that for free.

So, standing there in the Wal-Mart mayhem, it became clear to me that at the root of the Globe’s editorial response to the so-called “landmark climate change study” is Wal-Mart expectations. Labeling the report’s economic conclusions as “devastating” fits well with our collective expectation that we expect more for less. Or even better, we expect a free lunch.

But are we worse off with action to manage carbon and other environmental nastiness? Based on the report, I think not. Even with aggressive action on climate change as outlined in the report, and no linked permit trade with the United States to reduce our domestic costs, Canada’s economy will still be much larger than today. All economic sectors will increase in size and wealth, including that great Canadian cash cow, oil and gas. Under aggressive climate action, even Alberta’s economy is still a third larger than today.

In this “devastated” economic future, Canada will all be richer, Wal-Mart will be bigger and we can all buy more stuff.

So are we better off with action on climate change? Economically we may be marginally worse off, but our wellbeing is so much more than just economics. For starters, the growing trash heap in which we all live in may be a little smaller. And that, my friends, may just make us all better off.

Written by Dave Sawyer

November 2nd, 2009 at 2:32 pm

The Twelve Days of Carbon Pricing

with 18 comments

On the twelfth day of Carbon Pricing my government gave to me,

Twelve MTs regulatory reductions,
Eleven information programs,
Ten provincial policies misaligning,
Nine-ty MT o’trucks a-spewing,
Eight new ways of regulating,
Seven ways to avoid investing,
Six-ty MT of upgraders e-mitting,
Five gold subsidies,
Four–ty baseline megatonnes missing,
Three offset mechanisms,
Two tech fund exemptions,
And an emission accounting scheme from Enron.

Merry Christmas

Written by Dave Sawyer

December 24th, 2008 at 2:32 pm

Posted in Uncategorized

For richer or for poorer, inaction as always

with 28 comments

I have been saying lately that first we were too rich to take action on climate policy since we couldn’t kill the Golden Goose that is the oil and gas sector and the booming economy. Now, just months later we are too poor. In both cases, inaction was the watchword.

And then along comes an email from Carl Sonnen of Informetrica with the following end quote:

Due to the present economic climate…the light at the end of the tunnel has been switched off

Well said.

Written by Dave Sawyer

December 2nd, 2008 at 2:02 am

Posted in Emissions Pricing

More Secret Advice: Its the whole economy, stupid

with 16 comments

There is a good article (here) on CCS. It is essentaially a rebuttal to the CBC article blogged below. What I like about this article is the observation that the climate debate is now one that wrongly equates climate change to oil sands. Clearly, other emissions are important and other emission reduction opportunities are likely cheaper than CCS. The graph below provides a forecast of three large sources of emissions in Canada: oil and gas, buildings and transport. As can be seen, transport emissions are much larger than all oil and gas emissions. So, the observation holds: yes oil and gas emissions are large, but transport emissions are larger. And don’t forget all our buildings.


Written by Dave Sawyer

November 29th, 2008 at 4:29 pm

Posted in Emissions Pricing

Tagged with ,