Smart Prosperity The Podcast: Episode 12.
The End of Carbon Tax Politics and Sucking Climate Change out of the Air.
Eric Campbell (00:07):
Hello and welcome to another episode of Smart Prosperity the Podcast. It's a bi-weekly show about the green economy in Canada, the politics, the business, the technology, the people, and the ideas at the intersection of the environment and the economy. I'm your host, Eric Campbell.
Eric Campbell (00:25):
On today's show Canada's highest court says yes to the Trudeau government carbon price. What now? We hear from a collection of extremely smart people, including Dianne Saxe, Gerry Butts, and Ken Boessenkool. Then, how close are we to being able to suck climate change right out of the air? One of the world's leading experts on carbon removal technologies Dr. Jennifer Wilcox gives us an update, and we hear from a Canadian innovator in the space. After that, we'll hear a 60 second summary of a new report, and Mike Moffatt caps it off with his list of five things happening in the green economy this week. It's a packed agenda, so let's get going.
News Reporter Clip (01:07):
We begin with a precedent setting ruling from Canada's top court upholding the federal government...
Eric Campbell (01:13):
It made headlines across Canada and even around the world last week, after almost six months of deliberations, Canada's Supreme court determined that the federal government's carbon price is in fact constitutional, case closed. That's a relief for Justin Trudeau's government which has made carbon pricing the centerpiece of its plan to fight climate change. It's a disappointment though, for premiers in Alberta, Saskatchewan, and Ontario, who were the provincial holdouts challenging the law in court. And of all the political parties at the federal level, only the Conservative Party continues to oppose it. So what now? To help make sense of the legal and political ramifications, here are the highlights of two panels hosted by Smart Prosperity Institute over the last couple days. First, let's start with Stewart Elgie, he's one of the lawyers who argued the case in the Supreme court. He's got a brief explanation of the court's decision.
Stewart Elgie (02:11):
Well the thing was they upheld the federal carbon pricing law. What they found was the federal government has the power to set minimum national standards for pricing greenhouse gas emissions. And they found that that fell within the federal power over matters of national concern under the constitution. The ability for the federal government to deal with matters of international or national importance as part of the peace order and good government power. It was a big decision. It was probably the most important environmental court decision ever in Canada. Look what the court did here is it struck a good balance between federal and provincial power. This is a good decision for the climate, and it's also a good decision for Canadian federalism. It allowed both orders of government to play an important role in tackling climate change. The federal government can deal with its part, which is ensuring Canada meets its global emissions targets, reducing its overall emissions. Only the federal government can do that, but it also let the provinces have flexibility to tailor their legislation to meet their local circumstances. Each province has different energy systems, different industry systems, and they can decide how to reduce their emissions as long as each one is doing their fair share.
Eric Campbell (03:21):
And now here are some political and policy perspectives beginning with Ken Boessenkool former chief of staff to BC premier, Christy Clark, and a former advisor to prime minister Stephen Harper.
Ken Boessenkool (03:33):
My first point is policy by judges is bad and we had an election in 2019, we have another election coming and I think the issue such as climate change should be subject to a debate and then we should move on. We settled the GST this way, we settled deficit reduction this way, we settled free trade this way, and we should ultimately settle how we're going to address climate change this way. In my view, both Jason Kenney and Doug Ford should do the right political thing. The right political thing is both of them should not allow Justin Trudeau to continue to collect money from their citizens and decide how to redistribute it back to their citizens. Instead, both Jason Kenney and Doug Ford should take this revenue into their own coffers and decide themselves how to spend it. Climate policy should be driven by the provinces and not from the federal government and now Jason Kenney and Doug Ford have a chance to do that and adapt climate policy and carbon pricing according to their own provincial economies and their own provincial priorities. If Jason Kenney and Doug Ford do this, if they take control of climate policy, if they take control of carbon pricing before a federal election, this issue will go away for Erin O'Toole. Erin O'Toole and the leadership campaign said that he would allow provinces to lead and if Jason Kenney and Doug Ford lead, this will no longer be an issue in the federal election and we can all move on.
Eric Campbell (05:07):
And now here is Gerry Butts, former principal secretary to prime minister Justin Trudeau.
Gerry Butts (05:13):
The question is what happens next? And I think I got that question as much as you did after this decision. Now my first reaction to that question is that if a changing climate doesn't change the way people think about climate change, then I doubt a Supreme Court decision will either. The politics of climate change will get more and more difficult for the recalcitrant because it's impact and reality will be more and more obvious to citizens and voters. And for those who want to stake out leadership positions in both managing and mitigating the downside impacts of climate change, which are many as we all know, and those two would respond with increasingly innovative policy tools. It's going to get more competitive. And I think that that's going to happen. That's a good thing. And I think it's going to happen both between or among and within the parties. Leadership really matters on this issue. This is not an issue where the politics are straightforward. It's not one where you're always going to win votes. It's one where you're often going to have to tell your supporters things that they don't want to hear. And unless the leader that you're supporting sees this as one of the two or three reasons she or he gets out of bed in the morning, then they're not going to make much progress on it.
Eric Campbell (06:41):
Next let's hear what Dianne Saxe has to say about the carbon price. She's the former environmental commissioner of Ontario and current deputy leader of the Green Party of Ontario.
Dianne Saxe (06:50):
We've had a long fight. We've spent three years haggling in Canada over the whole question of carbon pricing. It's, you know, it's like running to get your kids out of a burning house and there's someone climbing their teeth on your ankle just as you start to run. Well, we've spent three years to get that teeth off our ankle. Now our leg's free, that's great, but we're three years behind and the kids are still in the burning house. It's been a sideshow, it's been really important sideshow. We've got tremendous work ahead to do fast. Okay, we have a fairly small carbon price, great, but that's not nearly enough to deal with the problem. It clearly isn't enough to bring our emissions down. And to me the mainstream parties just keep going along as if the scientists can be ignored without consequences. As if we have so much time that just tinkering at the edges like this carbon price was going to be enough.
Eric Campbell (07:43):
And finally here is Brian Topp. Brian is the former chief of staff to former Alberta premier, Rachel Notley. Here's what Brian has to say about the Supreme Court's thumbs up to the federal carbon pricing policy.
Brian Topp (07:55):
Federal government has taken on a big job here and I'll say that, you know, it's not dissimilar to the task the federal government gave itself with the Canada Health Act to enforce minimum standards in healthcare. The federal government, you know, reached for an important role here and it's now going to live the pleasures of victory and in particular, the you know, the national responsibility to see to it that the country is meeting these minimum standards - to be clear are very necessary and appropriate - and that is going to be a tough job. A very tough job. You know, a new set of landmines has been strewn in federal provincial relations that will keep us all busy at federal-provincial meetings for a long time to come. One of the interesting ones is the difference between the two basic models that the federal government is going to be watching here, carbon pricing but it's fairly clear, and cap and trade programs including provincial only cap and trade programs that are highly ambiguous, I would argue more gameable, and hard to quantify in terms of their effect. And so how do you actually police and enforce a national framework with such divergence?
Eric Campbell (09:08):
There you go. A lightening fast summary of the importance of the carbon pricing decision on Canadian climate policy and politics. All those clips were taken from two virtual events hosted in recent days, if you're a legal junkie or a political junkie, and you just can't get enough, you can link to the full recordings of those discussions on this episode's webpage at podcast.smart prosperity.ca
Eric Campbell (09:45):
So a few episodes ago we did a segment on negative emissions technologies or carbon removal technologies. I get really excited about these. These are technologies that can remove carbon dioxide from the atmosphere. In other words, they have the ability to undo climate change. Whereas up until now, our only hope has been to stop polluting the atmosphere and live with the climate change that's already baked in. These technologies give us the means to potentially un-pollute the atmosphere. Now, let me give you a quick summary of what we covered on that last segment. There's three main approaches to carbon removal. One is nature based where you use trees and soil to lock away more carbon dioxide naturally. A second is called mineralization where you lock the carbon dioxide away in rocks. And the third is called direct air capture where chemicals and machines trap carbon dioxide and take it out of the air.
Eric Campbell (10:41):
Sounds amazing. Doesn't it? The question is when will the costs become competitive? And that's what we want to cover today. Luckily, my next guest is the international authority on carbon removal and she's going to give us an update on the economics of direct air capture in particular. Dr. Jennifer Wilcox is the principal deputy assistant secretary in the office of fossil energy at the US Department of Energy, a role she's had since January this year. And she's on leave as presidential distinguished professor of chemical engineering and energy policy at the University of Pennsylvania and in 2018, she delivered the definitive TedTalk on carbon removal. Dr. Wilcox thanks for being here with me today.
Dr. Jennifer Wilcox (11:24):
Thanks for having me,
Eric Campbell (11:26):
Dr. Wilcox in 2018 when you delivered your TedTalk you pegged the cost of direct air capture at between 600 and a thousand dollars per ton of carbon dioxide. Has that changed?
Dr. Jennifer Wilcox (11:38):
There's a company out of Switzerland called ClimeWorks that has 15 projects globally. At that stage in 2018 ClimeWorks was very public about the costs of carbon removal through direct air capture. And it was about $600 per ton. Not much has changed since then. There are estimates that go lower than $600 a ton, but those have not been proven out yet. And so we're still waiting for those plants to be deployed, and until those plants are deployed it's going to be very difficult to know truly what this costs today outside of $600 a ton.
Eric Campbell (12:15):
And to contextualize $600 per ton for our listeners, most existing policies and regulations in the US and Canada right now, including California's low carbon fuel standard and Canada's price on carbon, price carbon pollution at between $50 and $170 per ton. So a big discrepancy there. How are direct air capture companies making ends meet right now given that?
Dr. Jennifer Wilcox (12:40):
When you look at these projects and you're a company maybe like ClimeWorks, or even another one that's based out of Canada called Carbon Engineering, you have to ask yourself, you know, if I do dedicate a storage of CO2, which by the way is what you want to do for climate first and foremost is you want to permanently remove that CO2, but if there's not enough economic incentive to do it, then you have to think about something else. You have to be creative and you have to ask yourself, okay, there's not enough money to put carbon in the ground. Nobody's paying enough for us to put carbon back into the ground today. So what else can we do with carbon? Can we turn carbon into something that has value such that that can help finance the project. And so some of the projects that ClimeWorks is participating in is turning the CO2 into fuel. And so you can make these synthetic fuels, but recognize that when you put it in the airplane, when you put it in the invested infrastructure and internal combustion engine, you're simply burning that fuel and putting the carbon back in the atmosphere.
Eric Campbell (13:47):
...And you put the carbon back in the atmosphere
Dr. Jennifer Wilcox (13:49):
It's at best neutral, not negative. You've got to put the carbon back into the ground in order for it to truly be removal.
Eric Campbell (13:57):
So Dr. Wilcox, when do you think we'll start seeing the economics of direct air capture improve?
Dr. Jennifer Wilcox (14:02):
Now you can look at the deployment pathways and recognize that if we could get, you know, for instance, you know, Carbon Engineering has their plant that's estimated to start construction in 2023 and may take three years to build that plant. But what I would be excited to see is five carbon engineering plants being built, because the more we build, right, the more we learn and the quicker we move down that cost curve. So the first of a kind plant, may be very expensive, maybe, you know, I think they estimate that maybe it'll be $250 per ton for their first of a kind plant. But they also are, they benefit from economies of scale. So when they built that first plant, it's actually going to capture a million tons of CO2 per year. They really benefit from using large pieces of equipment. It's a very different technology than ClimeWorks. ClimeWorks can couple to low grade heat and waste heat, and they capture on the order of thousands of tons of CO2 per plant. And so both technologies are very different. Both technologies are going to be essential to meeting climate goals because they fill different voids.
Eric Campbell (15:20):
Dr. Wilcox thank you for taking the time out to speak with me this morning.
Dr. Jennifer Wilcox (15:23):
Absolutely. Thanks for having me.
Eric Campbell (15:26):
That was Dr. Jennifer Wilcox from the US Department of Energy.
Eric Campbell (15:34):
Okay so you heard Dr. Wilcox refer to carbon engineering. One of the darlings in the carbon removal space, well-established with investments from Bill Gates among others, and Canadian, but I'm not going to speak to them. Instead I thought it would be interesting to speak to a newcomer in the Canadian carbon removal space. One that is still working out the wrinkles in its technology and in its business model to show us what it's like at the front lines of this merciless win-big, fail-fast startup world of carbon removal ingenuity. I'm welcoming Mike Kelland, he's the co-founder and CEO of Planetary Hydrogen, which recently set up its first lab in Halifax, Nova Scotia. Hi, Mike, welcome to the show.
Mike Kelland (16:14):
Eric Campbell (16:14):
Mike, in a few words, how does Planetary Hydrogen's carbon removal technology work?
Mike Kelland (16:20):
So we take advantage of the ocean's ability to capture and store carbon in order to take carbon dioxide out of the air. And what our technology does is that we essentially have an electrolyzer. So, you know, these electrolyzers from green hydrogen production, you know, we take water and we split it in half using electricity into hydrogen and oxygen, but we do something a little special with that in that we add a mineral into that process and that mineral and the process is also split and allows us to produce something called hydroxide. Hydroxide is a really neat chemical. It's a fairly common industrial chemical, but you can kind of think of it just like a base, like a chemical base or alkalinity. And we use that base in order to capture and store carbon directly from the air. And so you mentioned Carbon Engineering, and it's a very similar process on the front end to their process where carbon dioxide combines with hydroxide to produce bicarbonate or essentially baking soda.
Mike Kelland (17:19):
We then take that bicarbonate and we add that into ocean chemistry. And the beautiful thing about ocean chemistry is that when you add a bicarbonate to ocean chemistry, it locks away that CO2 in the oceans chemistry for a hundred thousand plus years in terms of sort of like geological storage. The side benefit of all of this is that bicarbonate is an alkaline substance. It's what makes our oceans a little bit more basic than pure water. And so it helps to reduce some of the ocean acidification that we're seeing around the world as climate change increases. That sounds like a really neat technology. I'm interested in your take kind of from the front lines of the carbon removal space in Canada. What does it look like from your vantage?
Mike Kelland (18:02):
It's a really exciting time and carbon removal is really hot right now, there's a lot going on in the space, but what we're seeing in the Canadian space is that there's a lot of investors that are really interested in this space. We're seeing carbon crediting markets grow and be established around the world. Canada seems to be taking a leading role with, you see the the Canadian Clean Fuel Standard for example, that's talking about a $350 per ton of CO2 price. The carbon pricing generally at $170 per ton of CO2, and those are really important policy decisions that help to drive forward towards those goals and those outcomes. And those are things that are encouraging I think a lot of things to happen in this space. We also see that there's a lot of companies in Canada that are really, really interested in taking carbon removal to the next level.
Mike Kelland (18:55):
So innovative companies like Shopify we're seeing really leading the charge and we've got a relationship with them around the purchase of the carbon that we're going to remove. But also companies in the natural gas space, in the oil and gas space across the country are really looking at carbon removal and saying, "hey this is interesting". And I think a lot of that is being driven by the fact that it looks like demand for carbon removal as we head towards the sort of the tipping point on all these net zero pledges we keep hearing about is going to radically outstrip supply. You know, McKinsey did a report recently about this and the numbers are kind of crazy, you know, talking about billions and billions and billions of dollars in just voluntary removals in order to hit goals, not even counting sort of the price on carbon out there. So it's a really exciting space. There's a lot happening in it. But on the flip side, what we're seeing is that there's a tremendous amount of technology and R&D support in Canada. A wide range of government and private bodies have been really supportive of what we're doing and are actually one of the major reasons that we're building a technology that was originally developed in the US up here in Canada.
Eric Campbell (20:04):
Mike, really exciting stuff that you're working on out in Halifax. Thanks for sharing some of it with us today.
Mike Kelland (20:08):
Thanks, Eric. It was a lot of fun.
Eric Campbell (20:11):
That was Mike Kelland, CEO of Planetary Hydrogen.
Eric Campbell (20:24):
Now it's time for the 60 second report where we invite the author of a major new report to sum it all up in 60 seconds or less. This week we're welcoming Jack Froese. Jack is the mayor of the township of Langley and the chair of the National Zero Waste Council. He's summing up the National Zero Waste Council's new report, "Waste prevention: the environmental and economic benefits for Canada". Mayor Froese, over to you.
Mayor Jack Froese (20:51):
On a per capita basis, Canada ranks among the highest generators of waste in the world. We can and must do better. Waste prevention is not well understood, but is the first step in the waste hierarchy and of a circular economy. Waste prevention represents an important shift away from business as usual. It involves innovative solutions, designing products differently, and using new technologies that prevent waste from being created in the first place. In the National Zero Waste Council's new report, 15 business cases frame the environmental and the economic benefits of adopting waste prevention actions in Canada. Each business case created for six sectors in the Canadian economy, estimates the potential to prevent waste, reduce greenhouse gas emissions, create jobs and generate new revenues or reduce costs. The report provides the information businesses and governments need to move on investment and policy decisions that will create opportunities for a circular low carbon future in Canada.
Eric Campbell (21:50):
Thank you Mayor Froese. For a link to that new report from the National Zero Waste Council you can visit this episode's webpage at podcast.smartprosperity.ca. And last but not least on today's show, it's this podcasts version of the weather report. There are green economy winds blowing in all sorts of directions every week here in Canada and around the world. And we count on our weatherman Mike Moffett to help us make sense of them. Mike is the senior director of policy here at Smart Prosperity Institute. Mike, what are the five things you're tracking for us on the weather radar this week?
Mike Moffatt (22:28):
Here are the five things that I'm watching this week. Number one, Alberta and Saskatchewan will be Canada's fastest adopters of renewable energy through 2023. According to a new report from Canada's Energy Regulator, the short-term forecast shows the two provinces renewable electricity capacity growth to 26% and 33% respectively, while Ontario's production is forecast to slow down. Number two, the world's largest banks that finance fossil fuels to the tune of $3.8 trillion since 2015, showing that the finance sector is misaligned with the international direction on climate. That's according to a new report by a group of climate organizations. Four Canadian banks that crack the top 20 worst defenders. Number three, delegates at last week's Conservative Party of Canada convention voted against language that acknowledged climate change is real. Party leader Erin O'Toole was forced to defend its position on the issue and continues to promise a serious and comprehensive climate plan in due course. Number four, Lion Electric announced it will build a battery manufacturing plant in Quebec. The factory, which will cost $185 million and be supported by Quebec and federal governments, will manufacture lithium ion battery packs and modules to support Canada's growing electric vehicle manufacturing industry. And number five, Oxford Economics forecast that electric vehicles will make up 44% of global sales by 2030. By the middle of the decade electric vehicles are forecast to be cheaper than their gas counterparts which will drive up adoption rates. I'm Mike Moffett, and those are the five things that I'm watching this week.
Eric Campbell (24:08):
Thanks Mike, for a list of those five stories with links go to podcast.smartprosperity.ca. Well, that's it for today's show and hey, I have time for some quick thank yous! Thank you to my volunteer editorial board for our list of those clever people you can go to podcast.smartprosperity.ca. Thank you to Smart Prosperity Institute for being the brains behind the programming on this podcast. And thank you to the University of Ottawa for outfitting me with the podcast studio. I also want to recognize that this podcast is broadcasted from the lands traditionally stewarded by the Algonquin Anishinaabe People. Thanks again for listening, my name is Eric Campbell. The next episode of Smart Prosperity the Podcast is out April 14th. I hope you'll tune in again!