Sunday, April 11, 2010

Can Canada's Climate Change Accountability Act {Bill C-311} Spur Innovation & Market Creation?

Images:: Ecoclimatic Provinces in  Canada, before {top} and after {below} global warming

Notes from north of 49ºN

Last fall, the Federal Liberals chose not to support the NDP's effort to push Bill C-311 through the House of Commons. While the Bloc supported the NDP, the Liberal environment critic David McGuinty wanted to wait until more was known about where other nations stood on the matter::
"We need to hear more about the American position, the European position, the Chinese position."   
That's one way to go.

The bill stalled and was not voted on before UN COP15 in December. Currently, the bill is slated to be voted on, this Wednesday, 14 April. It isn't clear how the Liberals will vote.

Bill C-311 would set strict targets on greenhouse gas reduction. The summary states the purpose of the bill::
"to ensure that Canada meets its global climate change obligations under the United Nations Framework Convention on Climate Change by committing to a long-term target to reduce Canadian greenhouse gas emissions to a level that is 80% below the 1990 level by the year 2050, and by establishing interim targets for the period 2015 to 2045. It creates an obligation on the Commissioner of the Environment and Sustainable Development to review proposed measures to meet the targets and submit a report to Parliament. It also sets out the duties of the National Round Table on the Environment and the Economy."
The arguments against passing the bill are that it will have a harmful effect on the Canadian economy and that Canadian environmental policy should be synchronized with the US', given that the latter is Canada's largest trading partner.

I beg to differ. First, I think that the bill will spur green innovation and spillover effects. In the 1990s, the California Air Resources Board passed a Zero-Emissions Vehicle {ZEV} mandate that resulted in a wave of technological innovations. This issue was the focus of Chris Paine's Who Killed the Electric Car? {2006}. A policy analysis by PPIC showed the mandate resulted in a spike in innovation, but drew the conclusion that the policy should have been technologically neutral, i.e., not mandating a particular technological pathway—ZEVs.

Bill C-311 will not mandate a specific technology, but create incentives to innovate. Pew did a report on fuel efficiency standards in the US, which forced auto manufacturers selling cars in the US to have a product mix so the fleet met a baseline. The Corporate Average Fuel Economy {CAFE} standards were implemented in 1975, with progressive increments until 1984. Here's the results::

During the Reagan administration, the auto manufacturers successfully lobbied to have the CAFE standards relaxed and haven't budged since 1984. While some argue that such standards won't necessarily result in more innovation, policy can be implemented to dovetail an innovation "carrot" with the "stick" of increased fuel efficiencies. Moreover, the further development of carbon trading markets can also create incentives for technologies that measure carbon more accurately, improve efficiencies to reduce carbon footprints, and to sequester carbons. Economic modelling supports the argument that there can be economic growth, an increase in jobs, and a carbon-reduction policy {pdf}.

Secondly, aligning Canadian carbon policies with those of the US in order to limit trade barriers between the two countries is the wrong approach. That is akin to allowing trade without qualification, as long as it's good business. This reifies economic capital to the exclusion of other forms, political, natural, social, etc. While trade may be restricted due to increased greenhouse gas reducing targets, the policy will encourage both countries to work towards a more aggressive greenhouse gas policy. Given the political will of Canadians in support of fighting global warming, the stance of the Obama administration, and Canada being a signatory of the Kyoto Protocol, I don't see this as a tenable argumentPaul Krugman in the NYTimes offers some economics of how unilateral greenhouse gas reducing policies can be managed in globalization. I also think taking the lead on global warming policy will help to assert Canada as a sustainability leader in what I believe will be a new post-recession global economic order, which will be a topic for a future blog.

I do hope the Liberals consider supporting the passage of C-311. I feel there are opportunities to jumpstart green/greener innovation and spur market creation.

Here's a summary::

  1. Bill C-311 will move Canada towards compliance with the Kyoto Protocol
  2. Canadians support fighting global warming
  3. The negative economic claims aren't supported
  4. Greenhouse gas reduction can be a part of a strategy to increase innovation and further develop carbon markets
  5. Can help to assert Canada as a global sustainability leader
Twitterversion:: Canada's Climate Change Accountability Act vote:4/14.Vote should factor in innov. & mkt creation potential. #NDP #LPC #GPC  @Prof_K

Song::  Jill Sobule "Manhattan in January" at TED, Monterey, CA 2006

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