The Dutch government has recently announced a new radical plan on tackling climate change that has shocked many in the coal industry. By canceling all current and future coal development projects, the government is hoping to spearhead an initiative that will help reduce greenhouse gas emissions to a figure lower than the 25% 1990s benchmark^1. Concurrently, the British Parliament has also recently pledged to shut down coal plants by 2025 and the Trudeau government in Canada has announced a federal carbon tax plan intended to harmonize pre-existing provincial plans^2. These policy decisions have come at the onset of a few recent reports stating that global concentrations of C02 have reached an average of 400 parts per million (ppm), a threshold regarded by many climate scientists as a scary checkpoint towards catastrophic consequences^3. These recent initiatives brought forth by some of the worlds biggest powers demonstrate a shift towards more ambitious action towards combatting climate change.
However, will it be enough? With data pointing towards a continued increase of carbon emissions into the future and Paris accord targets increasingly looking more of a long shot, global energy infrastructure must be immediately transformed if we are to mitigate the effects of climate change and move towards a sustainable system. In contrast, many are debating the wisdom of possibly endangering economic growth at the expense of climate policy. This is a dangerous scenario as it unavoidably pits the economic interest and incentives of the population against the extremely pressing issue of climate change. Upton Sinclair’s quote on pitting personal interests against long term societal goals is quite fitting in this sense, “that it is difficult to get a man to understand something, when his salary depends upon not understanding it”. However, great opportunity lies within this dilemma as the marriage of the new re-emergence of Keynesian economic policy in Canadian politics and climate policy could be incredibly beneficial for both Canadian economic growth and hitting greenhouse gas emission targets. Canada has a golden opportunity to lead the global stage concerning climate change policy and thinking of inventive ways to mitigate opposition from those who are reluctant to sacrifice economic output for what they may perceive as an overblown endeavour.
Because the current Canadian Federal government has decided to run deficit spending, the opportunity for energy infrastructure transformation is at its zenith. A cumulative deficit of over 120 billion additional dollars has been planned for the next 5 years, with infrastructure spending projects already being drawn out and implemented. By allocating money towards sustainable energy projects, the government can ultimately achieve two goals at once, all while setting up the framework for an easier transition to zero emission energy generation. The prices of solar, wind and geothermal energy generation projects have all decreased in the past decade, with wind dropping to just 6.3 cents a KwH and solar going from 8 to 3$ in less than 10 years^4. This indicates that the margin between consumer energy costs in both wind and solar and the price of transforming the infrastructure needed to harness these sources of energy is widening. Building the network required to deliver and extract this energy thus becomes the largest road bump towards a path of cheap energy and ultimately low emissions targets.
Economically, these infrastructure intensive energy projects will require an enormous amount of labour to complete, providing jobs to thousands of Canadians, stimulating demand and thus output. Furthermore, in the long run, sustainable energy initiatives will yield cheaper energy costs for businesses and consumers alike, allowing capital to be allocated towards more worthwhile endeavours and innovative projects. The economic benefits of using stimulus spending to drastically change the energy production and consumption framework within Canada is undeniably strong. By becoming a leader in sustainable development and driving the world towards a return to Keynesian economic policy, Canada has an opportunity to reinvent itself as both an energy producer and exporter of radical ideas. Who knows, if it works as well as it has the potential to, perhaps the rest of the world will follow suit.
Image- Flickr Commercial Use Permitted