Justin Trudeau announced another of his Liberal government’s green plans in December. I have lost track of how many green plans we have had, but not a single one has met its targets. With the prime minister set to officially meet with the new U.S. president Tuesday, the Liberals’ environmental agenda looks embarrassingly unambitious by comparison.
Raising the price of carbon is one of the pillars of the government’s latest plan to reduce greenhouse gas emissions. But there are no magic bullets and piecemeal measures don’t work.
In other regions that have carbon pricing mechanisms, such as the European Union and China (with its pilot schemes), climate change abatement plans consist of many complementary measures, including stringent legislation.
New U.S. administration gets it
What is actually needed is a comprehensive annual budget that integrates economic development with sustainable development and vice versa, accompanied by robust policy and legislative agendas. Biden’s treasury secretary, Janet Yellen, gets it. She has announced the creation of a climate team under her watch.
Biden’s climate goal will likewise be included in the responsibilities of top government advisors, including the chair of the Council of Economic Advisers, the director of the Office of Management and Budget, and the director of the Office of Science and Technology Policy. And climate change has been made a priority for every government agency. The new U.S. administration has announced plans for an international climate conference led by President Biden on April 22, which is Earth Day.
The December 2020 announcement hints that the government might adjust the 2030 greenhouse gas reduction target for 2030, now set at 30 per cent below 2005 levels. Optimistic Canadian government projections are that the new plan will get us somewhere between 32 and 40 per cent below 2005 levels. However, not only are we presently off the current 2030 target, emissions went up between 2017 and 2018. By comparison, the EU leaders’ 2030 target is 55 per cent below 1990 levels, supported by US$420 billion per year.
More to the point, as Greta Thunberg said recently: “We need to stop focusing on goals and targets for 2030 or 2050.… We need to implement annual binding carbon budgets today.”
Investing in yesterday’s energy
Bill C-12, the Canadian Net-Zero Emissions Accountability Act, is a plan to make greenhouse gas reduction plans to come into effect in 2030, a delay that represents the creative ambiguity we’ve come to expect from the Liberals.
Before Biden cancelled Keystone XL, the Canadian Energy Regulator had concluded Canada cannot meet its current 2030 greenhouse gas reduction targets if both Trans Mountain and Keystone XL went forward. Between 1990 and 2018, tar sands emissions rose 456 per cent, representing 193 million tonnes of greenhouse gases, the largest source of emissions in Canada, in 2018. If the entire tar sands reserves were to be extracted and consumed, it would by itself exceed the entire world’s remaining carbon budget. The Canadian Energy Regulator has forecast that in the context of increased global action on climate change, there will be less demand for petroleum.
Trudeau, for his part, merely expressed disappointment with Biden’s January executive order to end construction of Keystone XL.
Another of Biden’s executive orders is on a comprehensive package for fossil fuel sector employees to make the transition to a green economy, demonstrating that Biden already considers the resource-based economy to be a thing of the past. This executive order includes transition funding for work benefits, support for job searches and relocation, differential funding for wage changes and benefits, training and community economic diversification.
Add Biden’s goal of Made in America electric vehicles to align with aggressive vehicle emissions legislation in the EU and China, and the prospects for exporting more low-quality and high-carbon-content Canadian tar sands oil overseas via Trans Mountain are poor. To get the U.S. electrification show started, Biden intends to electrify the entire federal fleet of 645,047 vehicles as well as state, local and tribal government fleets.
While existing vehicle emissions legislative initiatives in China and the EU only apply to the largest and third-largest vehicle markets respectively, most automakers are global firms. As such, the massive and rapid migration to electric vehicles to comply with the legislative initiatives in these two jurisdictions is global, particularly since all automakers must compete in their home markets with manufacturers with headquarters elsewhere. Plus, the European Commission is expected to propose tougher vehicle emissions regulations in June 2021. Even before any enhanced European legislation, electric models were 10 per cent of European vehicle sales figures in 2020 and are expected to rise to 15 per cent in 2021.
Since road transportation accounts for 60 per cent of petroleum consumption, the writing is on the wall. Shell concurs. Peak oil is but a few years away, and clean energy is our future. According to a Feb. 11 Shell media release, the company’s production of oil peaked in 2019. In 1980, the oil and gas industry accounted for 28 per cent of the U.S. stock market, but as of January 2021 it had dropped to 2.3 per cent. Accordingly, Kingsmill Bond of Carbon Tracker described investments in the oil sands as a waste of capital.
Since renewables are now less expensive than coal and gas, and renewables investments will exceed those of oil and gas combined in 2021, economically it no longer makes sense for countries importing oil to continue to do so. Carbon Tracker estimates it costs 10 times more to import fuel for the use of one conventional vehicle than to build the solar infrastructure to power one electric vehicle.
These developments haven’t stopped the Trudeau administration from granting approval to BP for Nova Scotia offshore oil drilling.
The $15-billion climate plan
The second pillar of Trudeau’s December announcement is the $15-billion budget over an indefinite period, up to 10 years, for addressing climate change challenges. Compared to Canada’s quarterly budget on fossil fuel subsidies, this is peanuts. The Trans Mountain pipeline alone is estimated to cost the public $13 billion to $20 billion, depending on who is counting.
Meanwhile, President Biden has given directives to end direct and indirect subsidies for the fossil fuel sectors.
Equally insulting, Trudeau boasted of his commitment to electric vehicles by referring to the $295-million federal contribution to support the conversion of Ford’s Oakville, Ontario, plant to the production of EVs. However, Canada always gives handouts to Ontario automakers when they make investments for new models.
Similar federal support for assembly plant conversions for electric vehicles are emerging for GM and Fiat Chrysler.
Canada trails in clean technology investments
Further showcasing the federal government’s indifference, when Quebec’s Lion Electric, manufacturer of e-trucks and e-school buses, threatened to construct its new battery plant in the U.S. should financing be insufficient, not a cent was forthcoming from Ottawa.
Lion has since entered into an agreement with Amazon to deliver 10,000 electric trucks to the company by 2030, and 2,500 units by 2025. As part of the agreement, Amazon will acquire 10 per cent equity in Lion for $8.6 million, purchase US$1.1 billion in products and services, and have an option to increase the order to 10 per cent of Lion’s truck production.
Prior to this deal, Lion merged with a financial partner, Northern Genesis, to get the company listed on the New York Stock Exchange. These developments have ensured the battery plant will be located in Canada, while Lion intends to construct an electric truck plant in the U.S.
Much like Lion, Toronto-based Li-Cycle, North America’s largest lithium-ion electric vehicle battery recycling firm, has merged with a special purpose acquisition company, Periodot Acquisition Company, and will soon be listed on the New York Stock Exchange. Substantial foreign financing is involved, but nothing from Ottawa. Their recycling hub is in the state of New York, where they got government support. The hub will produce battery materials at a lower cost than mined content.
By contrast, the governments of France and Germany are supporting the Automotive Cells Company joint venture of Groupe PSA (Citroën, Peugeot, Opel) and France’s Total with US$1.5 billion, which together with assistance from the European Cluster Collaboration Platform, IPCEI, brings total investments to US$6 billion. Contributing R&D to the cluster are centres in Bordeaux and Nersac. The aim is to set up battery gigafactories in Douvrin, France, and Kaiserslautern, Germany.
In February 2021, the German government announced Tesla will receive a subsidy for its battery cell production facility in Berlin, which may be in the order of US$1.2 billion. During the same month, the European Commission approved US$3.5 billion from 12 member states in coming years to support R&D in the battery value chain from raw materials to battery recycling and entailing a vast array of partners through 2028. This approval is expected to leverage another US$11 billion from other sources.
Likewise, demonstrating billions are available in the U.S., the start-up Rivian has raised US$8 billion and has an order for 100,000 electric vans by 2030 from Amazon, an order worth US$4 billion. The US$8 billion raised is more than half of the Canadian climate plan budget. Rivian will introduce new models of all-electric pick-ups and SUVs in June and August 2021, respectively.
In China, the EV start-up Xpeng, a Tesla competitor, with two factories in operation, is one to watch. It is well financed including Xiaomi, Alibaba, and Foxconn. In August 2020, Xpeng filed for an initial public offering on the New York Stock Exchange. The company raised US$900 million in its pre-IPO and US$1.7 billion in its IPO. In December 2020, Xpeng's first follow-up offering raised about US$2.5 billion. In January 2021, strategic cooperation with five Chinese banks secured a credit line of $US1.98 billion.
These few examples well illustrate that the Canadian $15-million climate plan for an indefinite period is petty. Where was the federal government to assist Lion while it was struggling to get on its feet and ensure maximum investments in Canada? Why do foreign-based companies have priority for federal largesse?
Canada’s Magna International too is active in electric vehicles, participating in joint ventures in electric vehicle manufacturing and powertrains in China, Austria, and elsewhere. It also has an autonomous vehicles centre in the U.S., but nothing like this in Canada.
We’ve seen this Liberal movie before
Furthermore, the Liberal green plan plays into the much-touted hydrogen economy. They launched the Hydrogen Strategy for Canada in January. What is not usually said of hydrogen is that the oil and gas industry majors are lobbying hard for this option because at least 98 per cent of hydrogen stems from steam reformation of natural gas and coal gasification.
Hydrogen extracted from natural gas and coal produces 830 million tons of CO2 per year, more than the entire emissions of Germany or the global shipping industry. To replace these sources with clean energy would necessitate 820 gigawatts of wind-generation capacity, 26 per cent more than current wind capacity.
This debunks the credibility of the new trend to promote green hydrogen as a quick fix. It isn’t.
A report by the Institute for Energy Economics and Financial Analysis on 50 green hydrogen projects announced in 2019 revealed only 14 of the 50 projects reviewed actually went forward to the construction stage. And yet the myths of the potential for green hydrogen use for transportation persist.
While green hydrogen may have a future for long-haul semi-trucks, Scania, a Swedish heavy-duty truck manufacturer, part of the Volkswagen Group, has concluded green hydrogen is not the way to go because “three times as much renewable electricity is needed to power a hydrogen truck compared to a battery-electric truck,” according to a company announcement. The company added that the cost of maintenance is higher for a hydrogen truck.
Finally, the Dec. 11 announcement is part of a piecemeal Liberal strategy that includes carbon capture and storage projects, which haven’t done much other than offering greenwashing for fossil fuel companies. Indeed, carbon capture and storage technologies increase fossil fuel requirements, natural gas among them, to operate a facility, are prohibitively costly, lose half of emissions captured to the air before being piped into a dried up well, and offer no evidence that the other half buried in the ground will stay there.
As for methane emissions, the feds’ green plan calls for more demanding reductions to come into effect by 2035. This represents backtracking on its methane emission reduction plan made with the Obama administration.
Lastly, though 10 per cent of oil consumption is associated with plastics, the Trudeau plan on plastics only commits to banning a half dozen single-use products by 2021.
Recognizing plastics are ubiquitous in our homes, workplaces, vehicle interiors, medical equipment and other spheres, the EU and China have ongoing circular economy plans for the petrochemical industry, developing vast sets of solutions.
As for the $15 billion of additional, but still insufficient, funding for public transit announced Feb. 10, $9 billion of that amount is for distribution in the three years beginning 2026, for inclusion in future election campaign promises. The other $6 billion is to be allotted between now until 2025. This is another cynical, piecemeal ingredient for the election offensive of the Liberal minority government.
Piecemeal measures may be useful for election campaigns but they are far too weak to address the climate emergency. We have seen this Liberal movie before and we know how it ends.