The case for carbon budgets on the road to net-zero

New IEA report calls for end of all fossil fuel production, a come-to-Jesus moment for Canada’s oil and gas industry. Canada needs to get budgeting.

Photo by Jiri Rezac via Greenpeace

Maybe it’s me, but I’ve long found the standard policy shorthand for carbon reduction to be frustratingly inscrutable when it comes to figuring out just how well or poorly we’re doing relative to our climate change goals.

You know the equation, of course: [Country X]’s target is to reduce emissions to [Y%] below [year-in-the-past] levels by [year in the future].

This formulation dates to the Kyoto Protocol, from the early 1990s, but each iteration confuses a new generation of concerned humans, likely because the goal posts always seem to be shimmying around the field. If we were supposed to get to 20% below 1992 levels, but then the baseline got shifted to 2006 with some smaller reduction target, was there progress or did we all somehow fall for that old statistical trick that involves resizing the units on the y-axis?

The issue of the legibility of climate policy, always important, came into even starker relief this week with the release of the International Energy Agency’s hefty Net Zero by 2050 report. The Paris-based organization took direct aim at the global energy sector by laying out a “roadmap” for the magnitude of carbon reduction – about 420 gigatonnes (Gt) of carbon dioxide – that will be required to prevent average temperatures from rising by more than the 1.5°C threshold, beyond which damage to the atmosphere becomes irreversible. Current global emissions come to about 4.3 Gt. (One Gt is equivalent to 1 billion tonnes.) Canada emitted well over half a gigatonnes in 2019.

The IEA report calls for “nothing less than a complete transformation of how we produce, transport and consume energy.” Cleaving to the IEA’s 30-year-goal means a “massive expansion” in renewables, electric vehicles, battery storage, clean hydrogen, and an end, by as soon as 2021, of the approval and construction of any new oil, gas and coal production – a come-to-Jesus moment for Canada’s oil and gas industry. Aware of the risk of drifting priorities, the IEA also urges national governments to set “near term milestones to get back on track.”

The particular challenge with these sorts of mega-targets is disaggregating the big numbers so individual countries and their governments know what they need to do. For years, of course, there have been fraught political and scientific battles about how to divvy up responsibility, what mitigation efforts look like, what gets measured, appropriate policy levers and so on. What has been mostly absent, however, are actionable benchmarks that clearly articulate whether government policies are actually making a difference. Instead, we fudge the way we account for progress and then wonder why we fail to make any.

In 2008, a Labour government in the United Kingdom came up with an elegant solution that was striking in its simplicity and has, in the 13 intervening years, illustrated why clarity of measurement leads to actual reductions in carbon emissions. In a pioneering piece of legislation, the Climate Change Act, the British Parliament decreed that the government must establish “carbon budgets” – a precise accounting of how much carbon can be emitted each year over a specified period, with the caps stepping down annually until the country reaches its net-zero target. The act allows some flexibility, and also provides penalties. The U.K.’s sixth carbon budget was released last December, proposing accelerated reductions over the next 15 years.

A carbon budget is basically like a savings account or an annuity that will one day run out. You have a certain amount at your disposal. You can spend it on trips or a condo or appliances you don’t need. But once used, the money won’t come back. The approach is relatable to anyone who’s ever had to stretch their savings from one payday to the next. It is the climate-policy embodiment of the old accountant’s adage about not being able to manage what you don’t measure.

Some European Union countries have adopted carbon budgeting, but Canada has been a holdout. While the Liberals have accelerated their national carbon pricing schedule through 2030 and introduced legislation establishing national carbon reduction targets through 2050, they don’t appear to be willing to impose the kind of rigour that has characterized British policy.

The so-called Canadian Net-Zero Emissions Accountability Act, tabled last November and currently moving through Parliament, “will establish a legally binding process to set five-year national emissions-reduction targets for 2030, 2035, 2040, and 2045, as well as develop credible, science-based emissions-reduction plans to achieve each target.” But instead of mandating carbon budgets, the law provides only for five-year “progress reports,” mostly geared at federal measures, and continues to invoke the fuzzy language of targets.

Since its first carbon budget, the U.K. has cut emissions consistently and will have achieved a 35% reduction relative to 1990 levels without wrecking its economy by 2020, according to a study commissioned by our federal government: “The United Kingdom (UK) Commission on Climate Change reports that U.K. carbon budgets have had little or no negative impact on business competitiveness and carbon leakage, and that evidence shows that climate change policies increase the competitiveness of the U.K. in the long term by encouraging greater innovation and efficiency.” To get there, Britain has invested heavily in offshore wind to replace fossil-fuel-fired electrical generation, as well as transit, low-emission vehicles, green buildings and other high-return initiatives.

The U.K. has a few other advantages over Canada: no natural resources sector to speak of, mild climates and a unitary system of government that doesn’t require the kind of wrangling that has long characterized federal-provincial relations here. While the recent Supreme Court decision that upholds Ottawa’s right to regulate and price emissions is a giant step forward (thanks, Doug Ford!), the federal government is still limited in how far it can project its policy intentions (for instance, land-use planning, which is a major driver of emissions, is entirely under the control of the provinces).

But a 2015 brief advocating for carbon budgets, by lawyer Andrew Gage, of West Coast Environmental Law (WCEL), laid out a road map for the implementation of this approach in Canada, including measures such as regular reporting of government progress, independent audits and regulations requiring the disclosure of the impact of any new policies on carbon budgets. To circumvent the jurisdictional impasses, Gage proposed an approach based on the Canada Health Act, which offers up funding in exchange for provincial cooperation in meeting carbon budget targets.

WCEL isn’t the only group calling for this kind of accountability measure. Both the Green Party and the federal NDP favour carbon budgets, as do various environmental organizations and think tanks. “We know we have a limited carbon budget,” Mark Carney, central banker turned investor-focused climate advocate, said in an interview a few years ago.

If only Canadians could actually see it for themselves.




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