Eric Campbell (00:08):
Hello and welcome back to another episode of “Smart Prosperity: The Podcast”. It's a bi-weekly show about the green economy in Canada, the current affairs, the politics, the people, the business, the technology, and the ideas at the intersection of the environment and the economy. I'm your host, Eric Campbell.
Eric Campbell (00:27):
Now I want to start by sharing a fun fact. Did you know that the word “bi-weekly” officially has two definitions, and not only that, but two completely contradictory definitions? If you look up the Webster's dictionary, it will tell you that the word “bi-weekly” can either mean occurring once every two weeks or occurring twice in one week. Isn't that crazy? Well, this is a bi-weekly podcast that occurs once every two weeks. So thanks for tuning in, and we've got an exciting show for you today.
On today's show, decarbonizing transportation, the cars we drive and the trucks that move goods along the highways account for one quarter of all Canada's greenhouse gas emissions, Merran Smith from Clean Energy Canada walks us through a comprehensive approach for changing that. Then, does paying $2 to plant a tree undo the emissions of your last flight or of driving your car? Nic Rivers is here to walk us through the prickly world of carbon offsets. After that we'll hear a 60 second summary of a major new report and Mike Moffett caps it off with his usual list of 5 things happening in the green economy this week. That’s today’s agenda let's get started.
*internal combustion engine sounds*
Eric Campbell (01:48):
That of course is the sound of an internal combustion engine. Now multiply that by roughly 35 million and that's the number we have on the roads here in Canada. And whether those internal combustion engines run on gasoline, diesel, or compressed natural gas, whether they are cars, SUV's trucks or tractors, they are the second biggest source of carbon pollution in Canada, the number one source in the US, contributing to climate change and local air quality hazards. So what do we do about the internal combustion engine and how do we make transportation in Canada healthier and less polluting? My next guest has a three point plan for making it happen. She's the executive director at Clean Energy Canada, a national think tank based at Simon Fraser University. She's also the co-chair of the government of British Columbia’s Climate Solutions Council. Merran Smith, thanks for being on the show.
Merran Smith (2:39):
Great to be here. Thanks for having me
Eric Campbell (2:42):
Now, Merran, I was going to use a fact that you often cite in my intro, but then I thought, no, I'm going to let Merran share it. You have an astonishing fact from the International Energy Agency that you sometimes share. What is that?
Merran Smith (2:57):
Well, I think all Canadians need to know that we drive the most polluting cars in the world, thanks to our appetite for SUV's and trucks. And, you know, it's not really something to be proud of that we are worse than Americans. We are worse than Russians. We have the most polluting cars in the world.
Eric Campbell (03:18):
I love that. Well, I love and hate that fact, but it really captures it all. That we drive the dirtiest vehicles in the world here in Canada. So Merran, how do we cut pollution from the transportation sector in Canada?
Merran Smith (03:31):
So what we need to do is three things. First off, we need to scale down the emissions from the old technology, from the gas vehicles. And we do that through light duty vehicle regulations and a clean fuel standard. So that's going to reduce the emissions coming out of the tailpipe of the cars. Secondly, we need policies that are going to help us create market conditions for the technology change. So policies that are going to increase the number of electric vehicles on the road. So for that, we need a ZEV mandate, a zero-emission vehicle mandate, or a standard something like that, that sends a market signal to the auto suppliers. You need to get these into the market place. It creates some market certainty for them. And then thirdly, we need policies and investments into the industry of the future, into the electric vehicle auto manufacturing sector. We need to help build out the supply chain for those electric vehicles and the battery manufacturing. So we need to focus on getting that off the ground in Canada so we're creating jobs here in the auto sector while we're purchasing those EVs. We can be able to buy EVs made here in Canada or in North America.
Eric Campbell (04:52):
I really like it. A very tidy three-point plan. Let’s talk about each of those prongs. The first one, as you note, you know, there's a growing share of vehicles that are electric that people are buying in Canada. But it's going to be some years until it's a hundred percent of the vehicles that Canadians are buying. So in the meantime, there's the need to clean up our conventional vehicles. How do we do that?
Merran Smith (05:23):
Yeah, you're absolutely right. You know, even if we put a big porch on EVs we are not going to have enough on the road by 2030 for it to really be impacting our carbon pollution. So we need regulations like light duty vehicle standards. So that's the CAFE standards that we have with the United States but make those gas-powered vehicles more efficient, so they consume less fossil fuels that put out less carbon pollution. And another policy that we can use there is a clean fuel standard. So the government of Canada has started the process of getting a clean fuel standard. So that's got biofuels or renewable fuels mixed into the fuel, which means that there's cleaner fuels, means less carbon pollution coming out of your tailpipe. And so between now and 2030, these regulations are critical to cut carbon pollution. They’re the things that are going to really scale down the emissions while we continue to drive gas vehicles.
Eric Campbell (06:32):
Okay, and in the meantime Canada is going to be scaling up adoption of electric vehicles. That's the second prong in your three-point plan. What do we need to do in order to accelerate the use of electric vehicles in Canada?
Merran Smith (06:49):
A study was done recently in Canada looking at all the car dealerships. And if you went to one, could you actually test drive or buy an electric vehicle? And it found that the majority of the dealerships did not have an electric vehicle on the lot. So if you wanted to buy it or even test drive it you didn't have an opportunity. And that really limits the sales of electric vehicles. Most people aren't going to shift to a new technology without even getting a chance to test drive this. So in order to make it so that the cars are available, so that every manufacturer has cars that you could go test drive or buy, there's a thing called a zero-emission vehicle mandate or zero emission vehicle standard, which requires the car dealerships to have there. We have one in British Columbia. There's one in Quebec. What we find is actually the sales of electric vehicles here are much higher than in the rest of Canada, getting close to 9% in British Columbia and about close to 8% in Quebec. And that's because of this zero emission vehicle mandate, it's sending the signal to the auto suppliers that they need to have the car there, and this is absolutely necessary. And I would say that we need one at a national level.
Eric Campbell (08:14):
Okay. So prong one is a couple key regulations to clean up our gas fueled cars. Prong two is about accelerating electric vehicle adoption in Canada, and a key policy tool there being this electric vehicle mandate. What's the third prong of your plan here?
Merran Smith (08:33):
Yeah. So the third prong is making sure that we land this manufacturing for EVs, the EV parts and the EV batteries here in Canada. So we need policies and investments into this industry of the future, into the electric vehicle auto supply chain. So that I'd say is a huge opportunity for Canada. We interestingly have all the metals and minerals that are needed to make EV batteries. And that's a big part of the electric vehicle supply chain, is the batteries. So we've got those in Canada. We’ve also got clean electricity here to power the auto manufacturing sector. And increasingly we're seeing cars like BMW, Tesla, they want to be able to say that they're low carbon cars. They want to be able to source their metals and minerals from places where they are being extracted in low carbon and sustainable ways, and they want to be able to source their energy to power the plants from clean, renewable energy. So here's an opportunity for Canada. If we work together in a cross-border alliance with the United States I think that we'll have, it'll be the markets that will have more opportunity. And I think we need to really be exploring the idea of a North American EV auto pact, like we had the auto pact of the past. Let's make a new electric vehicle auto pact.
Eric Campbell (10:06):
I'm a big fan of this plan. It sounds like the first two parts of it are really about achieving those climate benefits and the environmental benefits. And then the third which is, you know, ensuring that Canada is supplying these vehicles to the world, is really about the economic opportunity. So it's a very nice plan. Thanks for sharing it with us today, Merran, I really appreciate you being on the show.
Merran Smith (10:32):
Great. Wonderful to be here, Eric.
Eric Campbell (10:34):
That was Merran Smith from Clean Energy Canada. Merran shared her three-point plan for transforming the transportation sector on a webinar hosted by Smart Prosperity Institute earlier in the week. For a link to that webinar and two for Clean Energy Canada's other great work on transportation, go to podcast.smartprosperity.ca. You've maybe seen the option before to tick a box and pay a bit more to undo the carbon pollution associated with some activity. Maybe it was on your last flight, when renting a car or in the past few months at the gas station with Shell, being the first gas retailer to offer you the chance to voluntarily pay a fee that offsets the emissions from the fuel you're buying at the pumps. This is the world of carbon offsets. On paper it makes sense. You put one tonne of carbon emissions in the atmosphere, you can then cover your tracks by paying for a service like planting a tree or capturing other emissions, like from landfill gas, that ultimately takes one tonne of emissions out of the atmosphere.
Eric Campbell (11:35):
But my next guest says it's not that simple. And as carbon offsets are about to become a formal part of the federal government's climate efforts, we need to ask if they're just a free ride for big polluters or if they can actually get the job done. I'm welcoming Nic rivers. Nic is an associate professor at the University of Ottawa. He's a Canada Research Chair in climate and energy policy, and he's a member of the Smart Prosperity international research network. Nic, thanks for being on today's show.
Nic Rivers (12:03):
Hi Eric, thanks for having me.
Eric Campbell (12:05):
Nic, so what is a carbon offset and how is it meant to work in principle?
Nic Rivers (12:10):
Okay so the basic idea of a carbon offset is that it allows you to pay someone else, some other entity, to reduce carbon emissions on your behalf. And you might do that if you wanted to reduce your emissions but found it really difficult to do so or really costly to do so. So it was something that precluded you from reducing emissions yourself, but you still wanted to help the planet and so you could pay someone else to reduce emissions.
Eric Campbell (12:35):
Now you know, in the intro, I mentioned some examples of where Canadians may have seen carbon offsets before. Are there other examples of what these carbon offsets can look like?
Nic Rivers (12:48):
That's a great question. So you've mentioned a couple of examples of offsets that will be traded in a voluntary market. So here no one's telling me that I have to reduce emissions or pay for offset credits when I fly, but I can volunteer to do so. So this is one part of the offset market, and the larger part is the compliance market, and what's the compliance market? Well, in some cases we have regulations that require firms to reduce their emissions, and in some cases, firms find it costly or impossible to reduce their emissions. And so in those cases, regulations often allow them to use offset credits so they can, instead of satisfying the emissions regulations themselves, they could pay another entity to reduce greenhouse gas emissions on their behalf. And so this would be a compliance market. They're using offset credits to comply with the regulation. They're going to keep on producing their own emissions, but pay someone else, pay another entity to reduce emissions on their behalf.
Eric Campbell (13:52):
Okay. So the carbon offsets that average Canadians may see in their everyday life are from a different or are of a different variety than maybe the kinds that matter most, these compliance offsets that the big polluters need to buy. Nic, you say that carbon offsets do not qualify as environmental policy. Why is that?
Nic Rivers (14:18):
So what is a compliance market offset? Just to remind us, it’s when a firm that is required to reduce emissions says, “instead of reducing my own emissions, I'm going to pay someone else to reduce emissions on my behalf”. So a forest manager say, or a landfill gas operator. What does that mean? That forest manager is going to go out and try to reduce emissions, and it's going to produce an offset credit, and it's going to sell that offset credit to me, the regulated firm. And that means I can increase my emissions, I can offset the emission reductions. So in the best-case scenario, there's no net change in emissions when I pair an offset system with the compliance market. The no net change in emissions, I would call a best-case scenario because there's a number of reasons to believe that offset credits don't represent -always- real or permanent emission reductions. And in some cases, the very presence of offset credits may give rise to unintended consequences. So that's why I think this is not, shouldn't be painted as an environmental policy because the very best case we can expect is to have no effect on emissions.
Eric Campbell (15:30):
That's the best case scenario, no net change in emissions. Can you explain the reasons why carbon offsets could lead to an increase in emissions?
Nic Rivers (15:38):
The first thing is that offset credits may not always represent real emission reductions. The reason there is that what we're trying to do is give people credits for emission reductions. And so there always has to be some effort to, you know, figure out what the baseline would have been without the offset credit. So you can kind of make an assumption about what the emissions reductions were. There’s different ways that this has done in the kind of early offset markets it was done on a case-by-case basis. And the UN clean development mechanism represents the largest of these early cases. Analysis of this large offset system found that many, if not, most of the emission reductions that were claimed were not actually real emission reductions.
Eric Campbell (16:32):
Hmm, okay. So issue number one has to do with whether offset activities are truly leading to new emissions reductions. What's issue number two?
Nic Rivers (16:41):
The second issue is associated with permanence. A lot of these offset credits are provided to either farmers or forest managers for storing carbon in trees or in soils, and that's great. That's one of the actions we need to encourage to hit our greenhouse gas targets. But the concern with providing offset credits for these activities is that they may not reflect permanent carbon storage. The forest can burn down, and forest management practices can change. And even if a forest manager manages to store carbon for a hundred years, if the fire forest burns or they change management practices at 105 years from now, we still get a net increase in carbon emissions in the atmosphere.
Eric Campbell (17:24):
Okay. So the issue of whether your carbon offset can store away carbon dioxide, as permanently as that drop a fossil fuel, that you're about to burn. What's issue number three, Nic?
Nic Rivers (17:35):
Right. The third challenge I see with these offsets is that they, in some cases, can result in perverse or provide perverse incentives or unintended consequences. And we've seen in the past that just the presence of offsets, offset credit system, ends up encouraging the very activity that offset credits are trying to prevent. So that sounds weird. Let me give you an example. The kind of headline example that a lot of people who are in this field know about relates to the UN credits, UN offset credits. And some of those credits were provided for the destruction of HFCs, which are very greenhouse - like an enormously powerful greenhouse gas that's associated with use from refrigerants. Because they're such strong greenhouse gases the UN was willing to pay a very large sum of money to destroy these greenhouse gases. And as a result of this offset credit, there were factories that sprung off or else continued operating for longer than they would have with the very purpose of creating these gases in only in order to destroy them later on.
Eric Campbell (18:39):
So if the offsets are too lucratively priced, then you end up with a constituency that wants more pollution so that they can keep selling offsets. Nic, this all has particular real-world relevancy right now because the federal government is currently developing a carbon offsets framework that will support Canada's climate efforts. What are you on the lookout for as that framework gets finalized?
Nic Rivers (19:03):
Right. So the protocols are in development. The carbon offset system will be one of the ways that firms can comply with the federal greenhouse gas emission reduction policy. I mean, we'll see what happens. There are four protocols, offset protocols under development at the federal level. But they look fairly similar to the kinds of offsets that we've seen be problematic in other jurisdictions. So the details matter of course. The best-case scenario I see would be if offsets were limited to activities that we really thought were completely additive and completely permanent. And I think that the set of activities that we're sure is additive and permanent, and also not already regulated is very small. And it would really constitute carbon removal, like taking carbon out of the air or out of the ocean and putting it underground permanently. And so my concern again is that if these protocols aren't completely watertight, you know a hundred percent, if these offsets don't represent a hundred percent permanent and a hundred percent additive emission reductions, then pairing this offset system with the, or making it one of the compliance options for these firms will result in a net increase in emissions.
Eric Campbell (20:23):
Nic, thanks for taking the time to explain some of these carbon offset concepts to us today.
Nic Rivers (20:29):
Thanks. It was a pleasure to be here.
Eric Campbell (20:31):
That was Nic Rivers, Canada research chair at University of Ottawa. To read more about carbon offsets, the arguments in favor, the arguments against, go to this episode's webpage podcast.smart prosperity.ca
Eric Campbell (20:50):
Now, it's time for the 60 second report. It's something we do every show. It's where we invite the author of a major new report to sum it all up in 60 seconds or less. This week, I'm welcoming Maryam Shekarrizfard from the Atmospheric Fund who is summarizing their new report “Reality Check: Carbon Emissions Inventory in the GTHA”. Maryam, your minute starts now.
Maryam Shekarrizfard (21:15):
At the Atmospheric Fund, we publish an annual inventory that measures the carbon emitted in the greater Toronto and Hamilton area. This year's report is a major reality check showing that following Ontario's coal phase out in 2014, emissions are slowly increasing across the region and increased 5.2% year over year reaching to 55.5 megatonnes. Buildings and transportation continue to be the main culprits. This 2018 data may feel like ancient history given the pandemic context, but any dips in emissions caused by COVID-19 will not affect the trajectory of our carbon problem. In fact, without dramatic and immediate intervention, emissions and climate change will get worse. Sharing this data allows decision makers across the GTHA to measure and influence the urgency and direction of climate actions. Find out more at TAF.ca
Eric Campbell (22:16):
Thank you, Maryam. For a link to that new report from the atmospheric fund, you can visit this episode's webpage at podcast.smart prosperity.ca. Now it's time for that last segment of every show. It's our rapid-fire rundown of the 5 most important things happening in the green economy this week. It's courtesy of my colleague, Mike Moffatt. He's the senior director of policy here at Smart Prosperity Institute. Mike, over to you, what have you got for us this week?
Mike Moffatt (22:49):
Here are the 5 things I'm watching this week. Number one, Nova Scotia's new premier Iain Rankin has committed to accelerating action on climate change. The government's throne speech pledge phasing out coal plants by 2030, 10 years ahead of schedule and promise to make Nova Scotia Canada's first carbon neutral province. Number two, the Alberta and federal governments announced a joint working group for a carbon capture and storage strategy, which would enable the oil and gas sector to reduce its carbon emissions at the source. Media reports suggest Alberta is requesting $30 billion of federal investment into the technology. Number three, Bank of Montreal announced plans to deploy $300 billion over the next four years to help clients achieve net zero carbon emissions. This follows a similar commitment last month from RBC. Number four, Bill Gates issues a warning that Bitcoin is the most energy intensive payment transaction method on Earth. The data bears this out as the Dutch based Bitcoin energy consumption index now pegs the cryptocurrencies electricity usage at about 100 terawatt hours, equivalent to the usage of the entire country of Norway. And number five, a new United Nations report finds countries are not allocating enough spending towards a green recovery. The $14 trillion being spent by the world's top economies, less than 20% is focused on climate friendly economic growth. I'm Mike Moffett, and those are the five things I'm watching this week.
Eric Campbell (24:14):
Thank you, Mike. If you'd like to have a second glance at those stories, the top 5, and the green economy this week, and be able to click through on some links, we've got them written out for you at podcast.smart prosperity.ca.
Well, that's it for today's show. Let me know what you think! You can email me, you can @ me on Twitter, you can even troll my boss. All that contact info is at podcast.smart, prosperity.ca. I hope you'll join again next time for more guests, more ideas, and more exploration of the most current issues in the green economy. That episode is out March 31st, I hope you’ll tune in then.
My name is Eric Campbell. Thanks again for listening.