Energy policy: redirecting the conversation.

Author:Lightfoot, Steven

Modern Canada's social justice and social cohesion have been largely been built on the back of a continually growing economy, fuelled by affordable and abundant energy available to pretty much everyone. Affordable and abundant energy allows us to lead the lives we lead. The growth of individual home ownership and the rise of personal mobility via the automobile are two obvious examples. We take available and abundant energy for granted.

It may not always be that way. Not only will rising levels of greenhouse gases in the atmosphere have potentially intolerable effects on the world's climate, but by the mid-21st century the world may also begin to experience a serious decline in the availability of petroleum. To preserve pluralism, social justice and cohesion in a modern Canada we must take seriously our need for affordable and abundant energy resources.

Numerous international economic studies show that national GDP per capita is directly correlated to energy use per capita. This is more than correlation. It is causation. Rich nations are rich because they have efficient infrastructure and firms and well-educated workers and consumers able to use more energy than poorer nations. (1) Energy buys many of the important staples of our civilization such as public and private sanitation, clean water and air, safe and abundant food, health care, medicines and hospitals, housing, roads, bridges, airports, newspapers, television, computers, telecommunications, cars, trucks, trains, ships, airplanes and the heating, cooling and lighting of buildings. The list is virtually endless.

While there is no fundamental risk of lack of supply of energy sources to generate electrical power (coal, natural gas, uranium, water), this does not hold true for the services currently dependent on petroleum products. We have heard a lot about reducing our reliance on petroleum to reduce carbon dioxide emissions, but not because it may become scarce. (2) The result of a reduced oil supply will be very high fuel prices. And the world as we know it will be turned upside down. Our world will be smaller and we will be poorer. The importance of abundant and affordable energy, and especially petroleum, to our societies cannot be overstated. The very pluralism, social justice and cohesion that define modern Canada are at risk.

Options to reduce energy use

Policymakers have been thinking seriously about energy, and our society's use of it, since the Arab oil embargo of 1973. Since the Rio summit of 1992, policymakers have also been considering how to reduce greenhouse gas emissions, especially C[O.sub.2] emissions, which are inextricably linked to our intense employment of carbon-based fuels. They have considered various methods to induce our society to emit less C[O.sub.2] and, by extension, use less carbon-based fuel (3):

* Moral suasion--the use of communication tools to appeal to citizens' sense of moral or civic duty to change energy-consuming behaviour.

* Regulation--the use of legislation to force consumers or industries to change energy-consuming behaviour.

* Subsidies--the use of government funds to encourage advances in emission reduction or energy-related technologies.

* Taxation--the use of taxes to discourage activities that produce emissions.

* Emissions trading schemes (ETS)--the use of a mixture of regulation (cap) and free market principles (trade in emission permits) to influence consumer and industry behaviours.

Two examples of emission control policies that have been successful in reducing emissions other than C[O.sub.2] are:

* the Montreal Protocol, an international treaty designed to protect the ozone layer by phasing out the production of CFCs (Freon--used as the working fluid in refrigeration systems). This is an example of regulation-type policy, whereby the production of a substance is progressively phased out and then ultimately banned. It has been successful in reducing CFC production and subsequent releases into the atmosphere.

* the Acid Rain Program, an emissions trading scheme developed by the U.S. Environmental Protection Agency to reduce emissions of sulfur oxides (S[O.sub.x]) from coal-burning power plants. S[O.sub.x] emissions are a leading cause of acid rain. This program works by capping S[O.sub.x] emission levels, and then building a trading scheme around emissions whereby polluters can buy or trade emission credits, creating a market incentive to reduce emissions because doing so reduces costs. This scheme has been successful in reducing S[O.sub.x] emissions from coal-fired U.S. power plants by about 35 per cent since about 1990.

Economists and politicians frequently cite these two programs as precedents to reduce the use of carbon-based fuels. The Kyoto Protocol, for example, is partially based on an ETS. According to ETS advocates, once an ETS program gets beyond its growing pains, it will likely succeed in reducing C[O.sub.2] emissions to targeted levels. (4)

However, the reason for the success of these two programs is usually misunderstood. The Montreal Protocol was successful largely because chemical alternatives to CFCs were readily available or easily developed. There were two significant factors in the success of the Acid Rain Program: (a) exhaust gas scrubbing technology was widely available or easily developed, and (b) many utilities switched from burning coal to burning sulfur-free pipeline natural gas. (5) The...

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