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A Failure to Risk Think: Canada’s New Net-Zero Emissions Plan

Posted in on
May 17, 2021

Author: Ron Dembo

Canada proposed new legislation on November 19th, 2020, that would force current and future federal governments to set binding climate targets for net-zero carbon emissions by 2050.

Once finalized, the Canadian New-Zero Emissions Accountability Act will put the country on equal footing with a group of others such as China, France, New Zealand, and the U.K. that have recently announced legally binding measures to go carbon neutral within half a century.

Prime Minister Justin Trudeau jumped on the idea, stating, “ignoring the risks of climate change isn’t an option. That approach would only make the costs higher and the long-term consequences worse. Canadians have been clear – they want climate action now.”

And it looks like they’ll get it. But at what cost? We all know that transitioning to carbon neutral will be good for the environment – there’s no denying that.

Yet there are risks to setting legally binding targets and forecasting their success.

A Familiar Echo?

Trudeau isn’t the first Canadian politician to set such bold objectives for scrapping fossil fuels. In fact, back in 2003 Dalton McGuinty – the former smooth-talking leader of the Liberal Party of Ontario – promised that by the end of 2007, all five of Ontario’s coal plants would be closed because their pollution had become a public health hazard.

At the time, Ontario’s coal-fired generation represented 7,560 MW of capacity, which was about a quarter of the total. And Canada was frequently referred to as one of the “biggest climate laggards” worldwide.

McGuinty’s ill-thought promise was brash and unequivocal, and it won him office.

But switching away from coal proved problematic. What was going to replace it? He’d promised nuclear, natural gas, wind, and solar. But Ontario didn’t have enough of those forms of energy, and many of its power plants were too far from gas transmission lines to import the substitute cheaply.

Just 18 months into office, McGuinty was forced to admit he’d been a bit hasty. Now, he said, he’d have to revise the deadline to 2009. Then, facing heavy criticism and growing doubts about his ability to deliver, he changed it to 2014. And, as if to seal his own fate, he signed it into law in 2006.

By the end of 2014, the Ontario Power Authority declared that Ontario had become “the single largest greenhouse gas reduction measure in North America.” And it had. But it still relied on coal for some of its generation and had mostly switched to natural gas, another fossil fuel, over wind and solar.

Poetic Justice

Meanwhile, shutting down coal meant Ontario also had to import expensive coal-fired energy from two ancient, heavily polluting generating stations in Ohio.

The net result, in addition to a 51% increase in electricity prices during 2004-2013, was poetic justice: the southern winds brought more pollution into Ontario from coal than there was before. Guelph, a bucolic college town in the center of Southern Ontario, became one of the cities with the poorest air in the province.

As reward for his effort, McGuinty was booted from office and ended up leaving the country.

Think Before You Speak

So be careful what forecasts you base your adopted targets on. In a world of extreme uncertainty forecasts are like throwing a dart at Mars and hoping to hit some predetermined rock. So, what should you do instead? Planned targets need to be based on well-founded risk analysis. We call it risk thinking. Try to capture scenarios on possible futures. Set a goal, work out a detailed plan, and declare the risks of achieving that goal.

Hedge the possible “bad” scenarios.

So, in McGuinty’s case that would have been statements like “we will strive to achieve zero coal by 2009 (say). The challenge will be to find clean substitutes quickly, to create new capacity and jobs in clean fuel. To hedge our bets we will start an aggressive program to grow our green generating capacity. The upside will be new jobs created in industries of the future.”

Someone needs to rewrite the Prime Minister’s speeches. Focus on the upside of being a leader in fuels of the future, on future proofing and rewiring the economy. Focus on the innovation it will create. Focus on leveraging Canada’s leadership in AI and tech – the new jobs it will create. And, act to address global warming. Stop talking limply about climate change and start doing something about it first. Action is needed not chatter.

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