Fuelling a low-carbon economy

Stewart Elgie

“For Canada, being a green economic leader doesn’t mean just building more windmills, solar panels, electric cars and so on, although these are likely to grow in importance. It also means becoming the world’s greenest producer of oil, timber, minerals, vehicles and other products.”

– Stewart Elgie

In our current struggles to balance economic growth with environmental responsibility, Stewart Elgie points out that we are ironically facing the same kind of choices as buggy and sailing ship builders did with the invention of the internal combustion engine. “We can bury our heads in the sand and hang onto the old economy,” he says, “or we can get ahead of the curve.”

He notes that in 2010, the world’s investment in clean energy surpassed that of fossil fuels for the first time. “This is the next industrial revolution,” he says. “Canada needs to position itself for a green global economy.”

Elgie should know. The University of Ottawa Common Law professor specializes in environmental law and economics, is the director of the Institute of the Environment and the founder and chair of Sustainable Prosperity, Canada’s leading green economy think tank, which is also based at the University of Ottawa.

Elgie is perhaps best known, however, as the founder of the Sierra Legal Defence Fund (now Ecojustice), Canada’s major public interest environmental law firm. An environmentalist at heart, he doesn’t mince words about how poorly Canada is doing so far at reducing its carbon emissions.

“Canada has one of the highest carbon footprints in the world. The average Canadian uses almost double the energy— and emits twice as much carbon dioxide—as the average European,” he says.

Canada’s economy relies heavily on natural resources, such as oil and mining, and other energy-intensive industries notorious for producing greenhouse gas emissions. The question is how to encourage lower carbon emissions and embrace green technology without undermining our economy.

According to Elgie, the way forward is clear. Put a price on carbon emissions and reinvest that money in innovative low-carbon technology and tax cuts to keep the economy thriving. At the same time, make Canada’s natural resource economy as environmentally responsible—and therefore globally marketable—as possible.

“Two of the major reasons why the Keystone XL pipeline is being opposed are the oil sands’ poor environmental record and Canada’s negative reputation on climate policy. If we could clean up our act and show that Canada’s oil wasn’t ‘dirty,’ there would be less opposition to new pipelines that move our oil to market.”

“For Canada, being a green economic leader doesn’t mean just building more windmills, solar panels, electric cars and so on, although these are likely to grow in importance,” Elgie adds. “It also means becoming the world’s greenest producer of oil, timber, minerals, vehicles and other products. As a natural resource exporter, Canada needs to ask, ‘what’s our competitive advantage?’ We’re never going to be the cheapest producer. Our niche is to be the most environmentally responsible. Industry knows that.”

Elgie points to the forest industry, once an environmental pariah, which has successfully repositioned itself as a global sustainability leader over the past 20 years.

The first step, says Elgie, is a carbon tax.

“Companies need to pay the real cost of the environmental harm they cause,” he explains. “This will very quickly motivate them to find innovative ways to lower their energy use and environmental impact. At present, there is little economic incentive to improve environmental performance.”

The next step is to reinvest the carbon revenues into tax cuts and green technology, both of which can help fuel the economy.

Sustainable Prosperity recently released a report showing that British Columbia’s carbon tax reduced fuel use by 16 percent in four years, even as the province’s economy continued to grow. Thanks to the revenue generated by the tax, the province has Canada’s lowest personal and corporate income tax rates. Now that its economic growth is less dependent on fuel consumption, British Columbia is less vulnerable to the volatility of fossil fuel prices.

Unfortunately, the Canadian government opposes carbon pricing, even though it’s more cost-effective than the conventional regulatory approaches it is proposing, says Elgie. Research has shown that marketbased approaches, such as carbon taxes or emission trading, make it far less expensive to reduce emissions—often lowering compliance costs by 50 percent or more. These cost savings allow government to set more ambitious environmental targets.

“To achieve the level of clean technology innovation needed to stave off dangerous climate change will require large-scale public investments,” he adds. “Where will these funds come from, in a time of record deficits? The answer, at least in part, is revenue from carbon pricing.”

“It’s the ultimate intergenerational challenge. Do we want to pass on a hefty environmental bill to our children and grandchildren? By boosting our economic wealth without recognizing and paying for the environmental cost, we’re basically stealing from the future.”

No matter what we decide to do, Elgie believes a low-carbon economy is inevitable. “We have to. The Earth doesn’t negotiate.”


by Leah Geller

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