Is the low-carbon future upon us now?

Without major technological breakthroughs, the costs of moving quickly to a far less carbon-intensive economy are painfully high

By Jock Finlayson
and Denise Mullen
Business Council of B.C.

The International Energy Agency recently estimated that the COVID-19 pandemic will lead to an eight per cent decline in worldwide greenhouse gas (GHG) emissions in 2020 compared to 2019.  This reflects the impact of a cascading series of economic disruptions across multiple countries since February.

Jock Finlayson
Jock Finlayson

Governments, including in Canada, have taken unprecedented steps to shutter large swaths of the economy, notably consumer-facing businesses in sectors like retail and hospitality, while also closing borders, largely halting travel, and prohibiting people from gathering.

In many cases, these drastic measures have slowed the spread of the virus.

Amid the pandemic, global energy demand has plunged by as much as 25 per cent, as air travel virtually ceases, many people stay at home, industrial activity is ratcheted down and commuting falls off.

Since four-fifths of the world’s energy is supplied by fossil fuel-based sources, fewer greenhouse gas emissions are a logical outcome of dwindling energy use.

Denise Mullen
Denise Mullen

Stay-at-home orders and skyrocketing layoffs have upended the consumption of many goods and services and caused sudden, unexpected declines in GHG emissions from transportation, manufacturing and many other activities.

Across the world people are consuming less, many companies have stopped producing, and citizens have discontinued much of their normal activity.

However, as economies restart, jobs return, and people start moving and consuming again, GHG emissions will rise. The only questions are how fast and by how much.

Arguably, the pandemic has made it easier to envisage a future with significantly lower GHG emissions.

But given the vast economic and human carnage caused by COVID-19, we find it hard to believe that anyone would wish for a sharp, rapid-fire energy transition, even people who favour strong action to address climate change.

The truth is that, absent major breakthroughs in energy-related technologies, the economic costs of moving quickly to a far less carbon-intensive economy are likely to be painfully high.

For context, the global 2030 GHG target established a few years ago is premised on major and sustained shifts in energy consumption and production within a comparatively short period, something that looks to be infeasible in light of prevailing patterns of energy use and current technologies. Factoring in inevitable global population and economic growth over the next decade makes the challenge even greater.

When it comes to reducing GHG emissions, British Columbia is in the same difficult position as many other places. Indeed, while the provincial government is loath to admit it, the reality is that reducing emissions will carry higher economic costs in B.C. than in most other advanced economy jurisdictions.

The main reason is B.C.’s almost entirely carbon-free electricity system – more than 95 per cent of electricity production is from renewable sources.

Most Canadian provinces and American states that have managed to tamp down their GHG emissions since the late 1990s have done so primarily by fuel-switching in their electricity sectors, replacing carbon-intensive forms of energy with less carbon-intensive alternatives.

That option is unavailable in B.C., which is another way of saying that the province has fewer low-cost means to bring down GHG emissions than many other jurisdictions. 

British Columbia’s official target to slash emissions by 40 per cent by 2030 (from 2007 levels) is equal to cutting four megatons (MT) per year for 10 years. If the estimated eight per cent drop in world GHG emissions in 2020 was replicated in B.C., it would see emissions drop by 5.4 MT this year.

Since the province’s economy was only partially shut down from mid-March through late May and is now gradually reopening, we believe a one-time four per cent drop in emissions is the most probable outcome in 2020, equating to about 2.7 MT.

Thus, even in a year when the economy was largely shuttered for three months, the province will record perhaps half of the annualized decline in GHG emissions needed to align with the NDP government’s putative legislated target.

British Columbia is not alone in dreaming of a cost-free path to a lower-carbon future.

But the unforgiving arithmetic of energy demand points to the lack of realism informing the pledges made by governments in B.C. and elsewhere to sharply curtail GHG emissions in the next decade without incurring significant economic costs.

Jock Finlayson is executive vice-president of the Business Council of British Columbia. Denise Mullen is director of environment and sustainability at the Business Council of B.C.

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