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Let’s Talk Carbon Tax… Again

(This piece originally appeared on the Carbon Talks blog)

Except for a brief but quickly scuttled attempt in the early 1950s, taxation on tobacco products didn’t really take off in Canada until 1981. Rates rose dramatically until 1992, with the Canadian government increasing taxes on tobacco by 500%, subsequently leading to a significant decline in consumption of cigarettes. These taxes have been one of the highest profile Pigovian taxes – that is, a tax that is designed to discourage activities that generate negative externalities. In tandem with bans on advertising, warning labels, and other widespread campaigns, taxes on tobacco have caused consumption in Canada to plummet, decreasing from some 40% of the population in 1981, to just over 15% today.

This didn’t happen without opposition. A strong tobacco lobby fought for years to keep taxes low, arguments were made that such taxes were regressive and unfairly targeted lower income families, and increased smuggling due to market imbalances forced the government to rethink the entire system in the mid 1990’s. For anyone who has followed the discussion on the carbon tax in Canada, this will all start to sound familiar.

Relative frequency of “carbon tax” as a Google search, 2004-Present. The world really started to take notice of the concept when Australia introduced its own carbon tax in 2012

Though we’ve been talking about tobacco taxation for decades, it was only in 2008 that “carbon tax” became a commonly heard phrase in Canada. The introduction of the BC carbon tax in February 2008, followed by the Liberal Party of Canada campaigning on their “Green Shift” plan, meant that Canada was getting its first taste of something that Europe had been talking about for years: a sensible, modest, revenue-neutral price on carbon emissions. While the BC plan has since shown itself to be successful, at least in its currently frozen form, the “Green Shift” spelled doom for the Liberal Party of Canada, and carbon pricing has become a tool for political division rather than the basis of a discussion on progressive environmental policy.

So it came as a surprise last week when the Alberta government announced a proposed expansion of their own carbon pricing scheme. The proposal, dubbed 40/40, would charge a levy of $40 per tonne for up to 40% of a company’s emissions. This proposal has been welcomed by most in the environmental sector, but many have argued that it still does not go far enough. When compared to BC’s carbon tax, for example, it remains relatively weak: companies in Alberta will actually be paying $16 per tonne (40% of $40), almost half of the $30 currently in place in BC. All of these prices are easily within the range of the shadow price per tonne that almost all oil companies operating in Canada use to determine if a project makes economic sense. In other words, this proposal is very unlikely to shock the industry.

It is no coincidence that this proposal was released the week before Alberta Premier Alison Redford traveled to Washington to lobby for approval of the Keystone XL pipeline. The relative weakness of the proposal (despite it being much stronger than what anyone expected), combined with carefully chosen wording by Energy Minister Ken Hughes: “we have to earn the social license and the respect of other Canadians,” suggests that the proposal isn’t so much about emissions as it is about social and political capital. In fact the 40/40 proposal may not even see the light of day, as Premier Redford said “I wouldn’t characterize anything as a plan.” If this is simply an exercise in public relations in order to increase the chances of building an additional pipeline, then it doesn’t really get us much closer to the goal of reducing emissions; if Canada is to meet its climate goals by 2020, it’s estimated that a carbon price of $100 per tonne is necessary. So what is the goal? Emissions reductions, economic stimulus, social capital, public relations, or some combination thereof?

Until we are all speaking the same language, and working toward a common goal, then we remain on the lower rungs of a very tall ladder. At the bottom is the status quo. At the top is a national price on carbon strong enough to effect significant emissions reductions, wrapped in a mechanism that is predictable, effective, and understood. Alberta’s proposal, while welcome for its potential, is just one small step up, with many steps to go.

Until other jurisdictions catch up, it is unlikely that Alberta, BC, or any other province or state in the region will be able to implement a truly effective carbon tax. We may then find ourselves in a situation that affected tobacco taxes in 1994; with increased smuggling, the Canadian government decreased taxation in an effort to reduce illegal imports. Although those taxes eventually returned and surpassed 1993 levels, it has been a long process. Implementing a price on carbon will be a similarly long process, but there’s one vast difference between GHG emissions and the dangers of cigarettes: when it comes to climate, we’re all in this together.

(Icon photo courtesy of PremierofAlberta/Flickr, graph courtesy of Google trends)

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Stephen Harper’s Love of Uncertainty

“Despite the global economic uncertainty all around us, Canada remains an island of stability and a hope for people the world over.” Thus it was that in his Christmas message at the close of 2012, Stephen Harper gave us all a gift by using one of his favourite words. It’s a word that he seemingly carries in his breast pocket, ready for use whenever the situation arises. It’s a convenient word, because it plays upon our anxieties, our stresses, and our concerns. It’s a post 9/11 word. It’s a word of fear. Stephen Harper’s favourite word is uncertainty.

This wasn’t the first time Harper had invoked the spirit of uncertainty. In his bid for re-election in 2008, Harper urged Canadians not to panic about the economy, as Canada was well-placed to deal with the “period of economic uncertainty.” He won that election, and very soon after noted that his number one job would be protecting Canada’s economy during this time of “global economic uncertainty.” The word has since permeated through the government communications channels; when the Finance Department came under fire for spending millions on ads promoting Canada’s Economic Action Plan, a spokesman said “in an uncertain global economy, it is important that Canadians are aware of the measures and programs in the EAP and how they will lead to jobs, growth and long-term prosperity.”

It should come as no surprise then, that the first words from the Conservatives upon hearing of the coronation of Justin Trudeau as the new leader of the Liberal Party of Canada were “Justin Trudeau may have a famous last name, but in a time of global economic uncertainty, he doesn’t have the judgement or experience to be Prime Minster.” This is certainly not the last time that we will be presented with this message: that nobody but Stephen Harper can safely guide our ship through such turbulent and uncertain waters.

This is not to say that the global economy is in fact stable or that Harper is fundamentally wrong: the Eurozone is still in its state of perpetual collapse, the US is in the midst of its sequester games, and nobody is quite sure what will happen with Canada’s international energy markets. There is something to be said for acknowledging that the global economy is troubled, though one may reasonably ask if there’s ever been a time when that hasn’t been the case. What is objectionable about Harper’s uncertainty messaging is that it seems to consistently be used not as an objective description of the global economy, but rather as a means of shoring up Conservative support and attacking political opponents. It is being used to make the Canadian electorate fearful of change. If this messaging works, then we should feel as if Canada is constantly on the brink of disaster, that the maelstrom of economic turmoil brewing just outside our quiet borders may soon spill over into our simple lives. To borrow another of the Harper Government’s words: it is made to make us fear that the barbarians are indeed at the gates.

Justin Trudeau may very well be inexperienced, though perhaps not any less experienced than Stephen Harper was when he assumed leadership of the Canadian Alliance in 2002, and it is not surprising that this is the first point of attack for the Conservative Party. However when the next election arrives, Justin Trudeau will have been a Member of Parliament for seven years, and the leader of the Liberals for two, not to mention his years of civil society work previous to being elected in Papineau. He will have surrounded himself with a leadership team and potential cabinet that certainly have the experience and policy expertise necessary to support him as a leader. If attacks on his inexperience already ring hollow, imagine how they will sound in 2015.

So as Trudeau gains experience, then all the Conservative communications team has left is the surety that Stephen Harper can keep us safe. How long will the Canadian electorate accept the premise that uncertainty is forever knocking? In a similar country, half a world away, former Prime Minister of Australia John Howard famously invoked the fear of terrorism in countless speeches following 9/11. For a few years, this was undoubtedly helpful, and again was a successful strategy for him leading up to the Iraq war. But by 2007 the Australian people had had enough. They knew that the terrorists weren’t around the corner, and they were tired of being told that they should be in a constant state of fear. If Stephen Harper wants to be Prime Minister after 2015, he may want to take fewer lessons from Howard or Bush, and more from Obama, Layton, and Trudeau. The people are tired of fear and uncertainty. They want hope.

(Feature photo courtesy of World Economic Forum/Flickr)

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Green Homes and Neighbourhoods: Not Just for the Wealthy

This post originally appeared on the Carbon Talks blog.

In a study out of Seattle, researchers have claimed that rates of childhood obesity are linked to access to healthy food, proximity of playgrounds, and the walkability of a neighbourhood. The results hold true when controlling for the weight of the parents, and demographic factors; that is, regardless of level of education, income, or health of the parents, children in these neighbourhoods are still less likely to be obese. At the same time, a new study by the Canadian National Research Council (NRC) shows that green buildings score higher not only on quantitative measurements like energy efficiency, but also mood, night-time sleep quality, and overall satisfaction.

At first glance, this is all nothing but good news. When talking about green cities and communities, sometimes health and quality of life benefits get forgotten in favour of energy savings and efficiency. However a modern, low-carbon, green city is inherently healthy: with improved pedestrian infrastructure and public transportation, there is more incentive to walk or bicycle; with greater access to local, healthy food, there is less reliance on convenience food; and with high-density living, there may be a stronger focus on community involvement. All of this suggests that savings are not just to be had in terms of energy, but also public health and social capital.

The problem arises if we get stuck in a feedback loop. While it has been shown that green buildings are not necessarily more expensive than conventional builds, this may not hold true for rents. Increased rents, despite the promise of lower energy costs, can deter lower income families and small businesses from moving into a certified green building. If lower-income families are therefore locked out of green neighbourhoods by such market forces, they will be prevented from enjoying the same health and well-being benefits that are increasingly becoming associated with such developments. Given the already clear inverse relationship between poverty and health – high income does not guarantee good health, but low income almost always equates to poor health – this should be worrying. Is the new trend of building green perpetuating health and income inequality?

To ensure this does not become the case, there are already a number of programs in place to encourage the construction of affordable green homes:

These kinds of programs are a necessary first step in ensuring that green buildings are not a premium product. We are a long way from green buildings becoming normal, as existing building stock in Canada is likely to last for another generation before being replaced with modern, energy efficient buildings. However we can already try to ensure that any efforts to increase affordability are aligned with efforts aimed at increasing energy efficiency. This can be as simple as innovative design or as complex as changing codes and standards. Whatever the strategy may be, ensuring that low-income families enjoy the same benefits of green homes as all other Canadians will make Canada a healthier, and therefore more economically productive, country to live in.

(Feature photo courtesy of Mikael Colville-Andersen/Flickr)

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Financing Your Green Home

This post originally appeared on the Carbon Talks blog.

In the world of Monopoly – the board game, not the concept – a green house was the only choice. Given the cut-throat capitalistic tendencies of Monopolites such as Rich Uncle Pennybags, I think we can safely assume it had nothing to do with energy efficiency. In reality, green houses remain anything but common.

In fact, energy efficiency is often seen as a luxury for those lucky enough to move into high-end LEED platinum certified condominiums, and the average homeowner is stuck paying high electricity bills, dealing with draughty windows, and wasting many apples-worth of kilowatt hours on inefficient water boilers. While energy efficiency in homes continues to rise due to more modern building materials, the truly innovative measures – grey-water systems, green roofs, geoexchange technology, or low-VOC interiors – continue to incur a cost premium. While the net payout of such measures may be positive over a few years, for the average home buyer, or homeowner interested in renovations, it means not much more than a higher price tag.

For those consumers who are looking to green their homes, for financial or environmental reasons, banks have seen an opportunity. The major Canadian banks are currently offering several mortgage opportunities that at least purport to be designed around energy efficiency and environmental sustainability; the degree to which these mortgages are economically sensible rather than simply greenwashing is up for debate.

  • BMO’s Eco Smart Mortgage gives a relatively low rate with a long amortization period, but has a series of requirements. For example, a single family home would need to meet 6 of 7 features, including a high-efficiency heating system, ENERGY STAR windows, or good quality attic insulation.
  • The RBC Energy Saver Mortgage uses a different strategy, offering a $300 rebate on a home energy audit. However the mortgage offerings themselves are standard fixed rate or variable rate mortgages with no added benefits.
  • While TD Canada Trust has offered green mortgages in the past, it is unclear whether they make up part of their mortgage offerings any longer.

The logic behind these tools is that due to increased energy efficiency, homeowners will pay less on their monthly bills and therefore free up cash to pay down their mortgage. This is based on the assumption that extra room in the budget will automatically lead to larger mortgage payments.

Other options for financing green homes include:

  • PACE or PAPER programs, whereby a loan for retrofits is repaid via an assessment on property taxes;
  • Tax credits for homes that perform above a certain threshold, though this would require ongoing monitoring measured against some performance standard like the BOMA BESt program (not currently available for single-family homes);
  • Simple rebates for homeowners who perform an energy audit and develop a plan for improving energy efficiency

All of these options have their drawbacks. PACE depends on the ability of local government to secure loans, yearly tax credits would involve a complicated system of monitoring and verification, and rebates require consistent political will. Ultimately, homeowners must decide what is in their best interest (pun intended) whether that be based on financial considerations, or a desire to do their part for emissions reductions.

Green mortgages and other financial instruments may be possible options, but there’s nothing stopping an individual from paying for an audit, doing up a simple retrofit plan with a reasonable budget, and marching into the local bank to request a loan. Maybe all we need is a push out the door.

(Feature photo courtesy of woodleywonderworks/Flickr)

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BC’s Carbon Tax: Coming to Terms with the “T” Word

This post originally appeared on the Carbon Talks blog.

British Columbia’s Carbon Tax has been getting a lot of media attention in the last few days, and rightly so. While it is not without its skeptics, much of the opposition seems to grow out of a misunderstanding of how the tax works. This stems from an unfortunate reality when it comes to taxes: the public always wants less. What may be an easy talking point for a government – a promise to lower taxes – can end up being a very complicated policy action, resulting in shifting tax burdens, complex tax codes, and regressive taxation schemes.

Put very simply, the BC Carbon Tax adds a tax of $30 for each tonne of C02 emitted. This is collected at the source – those businesses who are vendors of fossil fuels – and those costs will get passed on to whomever is buying the fuel. But it’s not just about rising fuel costs. The next three examples show how the Carbon Tax is currently working in BC, for better or for worse, and serve to illustrate the possible benefits of “tax”, something often considered a dirty word.

A carbon tax means more wood-oven pizza?
A carbon tax means more wood-oven pizza?

LJ’s Pizza

Laura Jane is a young entrepreneur who owns and runs LJ’s Brick-Oven Pizza and deliveries make up a significant part of her business. With the carbon tax, Laura will be forced to pay higher prices for gasoline. This doesn’t sit well with Laura. LJ’s Pizza has very small profit margins; with staff to pay and rising costs for ingredients, a small increase in gas prices means a significant reduction in profits. Laura gets upset, blames the government for gouging her with taxes, reads an op-ed in the local newspaper that suggests the carbon tax is hurting the economy, and votes accordingly.

Jenny’s Farm

Jenny considers herself an environmentalist. After settling down in the interior a number of years back, she and her family have had quite a lot of success growing and selling organic produce. Jenny tries her best to be energy efficient and use environmentally friendly products. What Jenny has no control over however is shipping costs. Jenny pays for a private trucking firm to pick up her produce and deliver it to market a few times per week. Faced with increasing fuel costs due to the carbon tax, the trucking company inevitably has to raise its rates, and this gets passed on to Jenny’s Farm. Although she doesn’t like it, Jenny understands that paying this little bit extra is the price she has to pay for her province to go green. She doesn’t really understand what happens to that money, but she has faith in her government.

Gord’s Trucking

Gordon has been operating a trucking business in the lower mainland for over thirty years. He knows the ins and outs of the industry and runs a tight ship. He keeps his nose buried in newspapers, market reports, and the goings-on of the provincial government. When Gord hears that the BC Carbon Tax will increase his fuel costs substantially, he heads to his financial advisor. With the right advice, Gord makes a plan to retrofit his fleet to run on liquid natural gas (LNG), resulting in an estimated annual tax savings of $300,000. At a retrofit cost of $10,000 per truck, Gord realizes he can quickly turn those savings into profits.

Each of these three scenarios, and countless other variations, are playing out in BC right now. What could LJ do differently? She could start by changing her delivery schedule and routing to be more efficient, perhaps through a small investment in GPS technology. She could also stop using automobiles for delivery, and instead invest in a small fleet of LJ’s Pizza scooters. How about Jenny? Perhaps she could look for more affordable shipping options, like starting a shipping co-op with other farmers in the area. Gord has clearly done well for himself, and can either pocket the profits, or invest in even more efficient equipment, leading to additional savings.

Now what if all these three actors worked together? Jenny decides to switch to Gord’s Trucking in order to take advantage of his recently reduced rates, and be able to market her produce as being shipped by LNG. Thanks to these savings, Jenny is able to expand her business and starts focusing on new customers. She gets in touch with LJ, and becomes the main supplier of LJ’s Brick-Oven Pizza. LJ is now able to advertise local, organic produce, enabling her to slightly raise her prices; she now has room in her budget to buy that fleet of scooters. Her gasoline bills plummet, and that cash gets funnelled back into her business.

This very simplistic example just shows how a carbon tax can encourage efficiencies and eventually contribute to economic growth; it has also deliberately ignored the fact that a carbon tax has helped to keep income taxes and corporate income taxes to national lows. LJ, Jenny, and Gord’s employees will all be paying less in taxes – which means more money to spend on delicious brick-oven pizza.

This revenue-neutral tax is a model for other jurisdictions around the world. While the three-letter T word conjures up nightmares for most of us, we must step back from such reactions and see the tax for what it is: a way of decreasing our impact on the environment, while encouraging innovation and efficiencies, and overall tax savings to every resident of British Columbia.

(Feature photo courtesy of Stephen Petit/Flickr, pizza photo courtesy of Basheer Tome/Flickr)

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Comparing Apples and… Kilowatts

This post originally appeared in the Carbon Talks blog.

I admit it, I don’t look too closely at my electricity bill. It always seemed to me to be an esoteric jumble of rates, charges, definitions, and explanations. As long as the dollar figure didn’t climb too high, it didn’t bother me much. However effort to save electricity translates directly into cost savings, not to mention possible emissions reductions, no matter how small. It’s hard to argue with a virtuous act that also saves me money.

A typical electricity bill will tell you the number of kilowatt-hours that you used during the billing period (or an estimate of that number, based on previous patterns of usage), along with a rate. But what does that really mean? What is a kilowatt-hour? How much electricity do my various appliances and habits use? If I wanted to decrease that amount, what’s the most efficient way to do so? To answer these questions, we need a little bit of math.

In the context of electricity, the basic unit of measurement for energy is the kilowatt-hour (kWh) – if you use 1000 watts in one hour, then you’ve used one kilowatt-hour. A kilowatt is one thousand watts, and a watt itself is a measure of power – that is, how much energy is used over a certain period of time. To put things in perspective, one kWh equals approximately 3.6 million joules, or approximately 860 nutritional calories; that’s just over a dozen apples.

Is it turned off? Think again
Is it turned off? Think again

So how many apples of electricity do I use per month? To determine how much electricity a particular appliance or piece of equipment is using, first you need to determine its wattage. Most of us grew up with typical incandescent light bulbs, and those almost always have the wattage printed directly on the bulb; an average bulb may be 60 to 100 watts. Let’s say you use the bulb for roughly five hours per day; over the course of a month, this would add up to approximately 150 hours. We then divide 150 hours by the wattage of the bulb (let’s say it’s 60 watts), working out to 2.5 kilowatt-hours (or thirty apples, for those of you still counting in fruit). Larger appliances like a refrigerator may use 50-160 watts on average, yet spike to 700 watts when the compressor is running. An average window unit air conditioner runs somewhere around 1000 watts. An electric water heater can draw a remarkable 3800 watts.

Sometimes your device doesn’t list wattage, but only amperage and voltage. In this case, you’ll need to multiply these two numbers together. For example, my laptop draws 3.65 amps at 16.5 volts, which works out to about 60 watts. This is the maximum draw, however, and when your laptop is sitting idle or sleeping it could be significantly less.

Standby power, or the more romantically descriptive “vampire power”, is electricity consumed by an appliance when it’s plugged in, but not necessarily turned on. This includes not only a laptop, but also devices like a charging phone, an idle stereo system, or even the clock on the microwave.

In 1999, the International Energy Agency launched the One Watt Initiative with the goal of ensuring that all new appliances sold by 2010 would use only one watt in standby mode. Governments followed their lead, and in 2007 California enacted appliance standards limiting standby power to just 0.5 watts. In 2010 The European Commission put into force a regulation limiting regular standby power to 1 watt, and standby for any equipment that is displaying information or status to 2 watts.

In Canada, we are phasing in our own specific regulation on standby power; Natural Resources Canada estimates that we use between 5 and 6 terawatt-hours of standby power per year. That’s 5.5 billion kWh, or… 460 million apples.

The question of electricity cost is complicated, and depends on a number of factors not limited to where you live. The time of day, your peak usage, tiered pricing, and demand charges can all drastically affect the cost you’re paying per kilowatt-hour. Here in British Columbia, we pay based on what’s called a “stepped rate” system whereby we pay 6.8 cents per kWh for the first 1,350 kWh, and then 10.19 cents per kWh above that threshold. BC Hydro suggests that this system encourages conservation, and argues that the 10.19 cents rate is a more realistic charge for current sources of electricity.

Are we taking this comparison too far?
Are we taking this comparison too far?

Now that we know how to calculate our energy usage, and how much it costs, we can think about how to bring those numbers down. Last month I used approximately 420 kWh, and so I’m on the hook for about $28 – I live alone, with heating and hot water provided by my building, so this number doesn’t accurately reflect my total home energy footprint. But how can I decrease the amount of that electricity that I do personally pay for? I could turn down the fridge, as it’s probably too cold. I could use the microwave more often, instead of the electric stove. I could use standby power conservation sockets for my computer, phone, and other electronics. And of course I could simply use less water, lighting, and heat.

These are relatively easy things to do, yet how we can take personal responsibility for shifting Canada to a low-carbon economy is something most of us are likely to ignore, purposefully or otherwise. Things like carbon taxation and legislated emissions reduction targets will happen despite our habits. Other strategies, like a home energy retrofit, increased reliance on public transportation, and greater consumption of local food, rely on a combination of market forces that make a choice economical and desirable by default. However the smallest things we can do are at home, and those things will save both energy and money. With a bit more effort at conservation, I could save myself 1200 kWh per year. That may not seem like a whole lot, but it’s the equivalent of over 14,000 apples. That’s a lot of fruit.

(Icon photo courtesy of Brendan Wood/Flickr, power button photo courtesy of Carl Smith, apples photo courtesy of diebmx/Flickr)

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Planning the Model City

This post originally appeared on the Carbon Talks blog.

American inventor Charles F. Kettering, head of research at General Motors for 27 years, gave us such thanks-but-no-thanks inventions as leaded gasoline, Freon, and aerial missiles. But along with these gifts to our health and security, he threw in a few choice quotes, including “people are very open-minded about new things – as long as they’re exactly like the old ones”, and “my interest lies in the future because I am going to spend the rest of my life there.” Despite whatever reservations I may have over Kettering’s contributions to progress and the future, his attitude resonates. No matter how open-minded we consider ourselves, we are often closed to those ideas that disagree with what we consider to be inescapable, with what we consider to be “just the way it is.”

This presents a great danger for the modern economy, when innovators and radical thinkers are dismissed. Projects that may very well benefit us all are shelved because they represent risk, and risk-aversion goes against short-term growth and unbounded economic prosperity, that swan song of the 20th century.

This holds particularly true when it affects our homes and communities. When the places in which we live are under threat of transformation and metamorphosis, may of us arch our backs and bristle with skepticism. For some cities, the issue may be bike lanes; for others, perhaps it’s smart meter technology; some communities get upset about wind turbines. Whatever the issue is, there are inevitably going to be people who cannot handle that their city is changing, and their idea of home is under siege.

As with many others of my generation, I grew up designing cities. Being a middle-class nerdy kid growing up in a quiet corner of Ottawa, along with heavy metal and soda, my main source of entertainment when I was twelve years old was video games. Out of all the games that my friends and I would play, often until dawn broke and the sugar crash landed, there was nothing more addictive, challenging, and fascinating than SimCity.

Nuclear meltdown!
Nuclear meltdown!

SimCity is more of a toy than a game. You act as the all-powerful mayor of a city, and with the tools that the game hands you (different zoning, transportation options, taxation, power, and services) attempt to build the city of your dreams. Like reality, there’s no measurable way to win. If you want to build wind turbines, vast parks, city farms and a communist agrarian utopia, go for it. If you’d rather sack all the police, burn down the fire stations, and let crime and poverty run rampant, there’s nothing stopping you.

I wasn’t nearly so creative, and my own cities reflected my teenaged understanding of economics. I found that if I set low taxes on high-tech clean business, and compensated with high taxes on dirty industry, then it would encourage growth in the sectors that were attractive to me. But because the game required a diversity of economic drivers, I was forced to build some heavy industry, and put low-income housing next door. Without even thinking about it much, I would soon have a segregated city with high crime, heavy industry, and poor infrastructure near the power plant, and high-density apartments, office towers, and parks and plazas on the waterfront.

Simcity 2013: Games have evolved since I was a teenager
Simcity 2013: Games have evolved since I was a teenager

What I didn’t understand then is that the game had rules built in that were relatively inflexible. While real urban planners have to deal with their own structure of criteria, legislation, policies, and regulations, there is also room for creativity and innovation. Yet because of the risk-averse nature of financial institutions, government, and corporations, we are often stuck within a rigid set of rules just like the mayor of a SimCity.

The newest version of SimCity due out in 2013 will evolve to reflect a new reality of urban planning. Resources are now limited, neighbouring cities and their behaviour affects how your city grows, policies can encourage energy efficiency, and power plants are appropriately beneficial and harmful as you would expect. These are all welcome improvements, and maybe it will encourage children (of all ages) to think more critically about how our cities can evolve. But no matter what improvements are made by game designers, barring massive advancements in gaming and computer science, the player remains locked in a fixed set of rules.

Back in reality, we need not be so inflexible; the Platonic form of a city that we share is up for discussion. As more and more people move to cities over the coming decades, our cities must grow and evolve in response. Only the most open-minded community leaders will see the potential for positive change. The rest of us will be stuck with pre-fabricated cities built on a rigid set of rules that belong to an earlier time. That’s fine for a game, but in our own homes and communities, surely we can do better.

(Feature photo courtesy of Wikimedia Commons)

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The Dream of Unlimited Growth

This post originally appeared on the Carbon Talks blog.

Economics is a brittle science. Indeed I’m wading into a debate by calling it a science at all, but despite being able to modestly predict and forecast markets, economics has a history of spectacular failure. As human creations that do not exist outside of our own collective consciousness, anybody who would claim to have built a model for infinite, or at least sustained and long-term economic growth, is simply – and I say this with honest respect for the great economists – guessing. The physical sciences, on the other hand, are built upon testable hypotheses and repeatable experiments. Over the centuries we have developed laws and theories that we can use to accurately, if not always precisely, predict outcomes.

So when we marry these disciplines together, there is an inherent conflict. In the realm of energy and fuel production, economics and the physical sciences – such as biochemistry, geophysics, or meteorology – trade off between cooperation and hostility. Cooperation when science gives economics what it needs for continued growth, and hostility when the opposite is true.

Estimated US energy consumption, 1650-present
Estimated US energy consumption, 1650-present

In a 2011 post that quickly became an internet classic, UC Professor Tom Murphy described the impossibility of the continued growth of energy consumption. In his post, titled “Galactic-Scale Energy”, Murphy uses intentionally absurdist arguments to show how our current trajectory of energy use is completely untenable. He says that given a 2% annual increase in energy consumption (a reasonable estimate given historical trends) we will need to cover all the land on Earth in solar panels by 2385. That leaves no room for cities, forests, roads, farmland, or open pit mines; literally every square meter of land would be devoted to collecting energy.

Murphy is the first to admit that his predictions are cautionary, rather that realistic. We should take comfort in the assumption that world population growth will slow and plateau. Combined with the assumption of increased energy efficiency, and surely we will be in the position to meet energy demands without covering every last plot of land in solar panels. But how valid is that assumption?

If our current efforts are any indication, there is cause for concern. This week, corporate mega-giant Walmart released its 2012 global responsibility report titled “Beyond 50 years: Building a sustainable future”. Being the world’s largest retailer brings with it a certain degree of responsibility, and to be fair, Walmart is doing its part. Since 2011, among other listed accomplishments, the company has claimed to have reduced waste by 80%, turned almost entirely to locally grown produce, and moved to LED lighting. Thanks to these efforts, their GHG emissions per dollar of sales are declining steadily. Unfortunately that’s a combination of economic and physical measurements, and the result is misleading; total GHG emissions are actually rising by some 0.5 million tonnes of C02 per year (reaching 22 million tonnes total for 2010).

Charting emissions per dollar of sales is a nice metric for showing increased efficiency, but it’s not unlike countries such as China that prefer to measure their emissions reductions in terms of emissions intensity. While such numbers can describe relative increases in economic efficiency, they completely mask the reality of overall increased energy usage.

We are using more, and there are more of us. When my parents were born, there were 2.5 billion people on Earth; we’ve now passed 7 billion. Many of those billions are now driving cars, using phones, demanding imported goods, and buying into a consumerist lifestyle that encourages obsolescence and replacement. The Walmart example shows us that despite commendable and impressive efforts to increase efficiency, energy consumption will continue to increase if we do not change our habits.

While economists can happily predict a higher standard of living for everyone, with sustained and measured economic growth, they can’t break the laws of physics. There is a limited amount of energy in play, and we are using too much of it. Home retrofits, increased reliance on public transportation, high-density living, local food movements: these are areas where we can save energy. It is only a combination of investment in such innovative technologies and systems with a serious and dramatic cultural paradigm shift, that will allow us to prove the economists right.

(Feature photo courtesy of Daquella manera/Flickr, graph courtesy Professor Tom Murphy)

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The Danger of Monologues

This post originally appeared on the Carbon Talks blog, and in an edited form in The Mark.

These days, Canada seems to be a country of monologues. On complex and multifaceted issues like the environment, or the economy, we are increasingly dividing ourselves along partisan lines, pushing our own agendas, and entirely dismissing any counterarguments, debate, discussion, or dialogue. This week’s federal budget is a dangerously subtle example of this trend.

On the subject of environmental reviews – notably the Northern Gateway Pipeline – when the government proposed dialogue and consultation, there was an expectation that it would have more than one side. The groan-worthy cliché applicable here is that it takes two to tango. Or, I suppose since this inevitably revolves around Alberta, it takes a whole room of folks to line dance. But if you lock your date out of the hall the night of the big dance, then why bother advertising the event in the first place?

The Canadian federal government seems to be a bit nervous about its dance partners. The 2012 budget is earmarking an additional $8 million for the Canada Revenue Agency (CRA) for “education and compliance” with the goal of ensuring that charities “provide more information on their political activities, including the extent to which these are funded by foreign sources.” For those who have been living under a rock (or a pile of sticky, toxic, bitumen sludge) this is in response to allegations that certain Canadian charities are accepting foreign funds to finance their opposition to the oil sands.

To be clear, there is absolutely no law, policy, or regulation preventing non-profit groups from accepting foreign funding. But by even suggesting that there is some impropriety in accepting such funds, the government is stifling these groups.

The issue of how much charities can engage in political activities is a bit trickier. Under the existing regulations, whereby the CRA interprets the Income Tax Act, charities can utilize up to 10% of their human and financial resources engaging in non-partisan political activity. What exactly contributes to that 10% is not entirely clear to many, including myself, and that lack of clarity is likely to discourage charities from engaging in any public advocacy at all.

My own experienced contact tells me that with appropriate and accurate accounting and reporting, most charities will likely find that their allowable political activities account for far, far less than 10%. But that requires taking the time to understand the rules and document all activities; this is something many smaller, cash-strapped charities may not feel they’re in a position to do. To put things in perspective, the CRA page that defines political activities has 14 sections and 2 appendices, clocking in at just under 10,000 words.

Protesters in Bella Bella this week, making their voices heard
Protesters in Bella Bella this week, making their voices heard

The size of the charitable sector in Canada is likely grossly underestimated by many of us. According to the CRA’s own numbers, in 2007 there were a staggering 2.4 million Canadians employed by charities, accounting for about 7% of our GDP. This compares with the oil and gas industry, which employs about 800,000 Canadians and accounts for about 4.8% of our GDP. By hampering the ability of charitable organizations to do their work through forcing them to devote more resources to accounting, the government may very well be harming the Canadian economy. Given that this is the justification given for monitoring these organizations in the first place – to ensure the oil and gas industry can move forward reasonably unhindered for the sake of economic growth – forgive me for being a tad confused.

Again and again, we are told that advocacy against the oil sands is threatening the stability of the Canadian economy, but that’s only true if you subscribe to an absolutist definition of what our economy is based on. Just because my version of Canada differs from someone else’s, doesn’t mean that they are necessarily wrong, it just means that we’re approaching a word, and the notion of our nation, from a different perspective; that’s a wonderful thing, and it’s shameful that our government is trying to avoid it. Monologues on either side of the debate, whether they are by extremist back-to-nature environmentalists, or free-reign deregulation capitalists, are both dangerous and unproductive for our country.

I’ll leave you with a thought upon one more small part of the budget for your own moment of Zen reflection. The National Round Table on the Environment and the Economy, a government initiative meant to report on Canada’s efforts on greenhouse gas reduction, is being abandoned. According to the budget, this is because there is now a “mature and expanded community of environmental policy stakeholders” who are demonstrating “the capacity to provide analysis and policy advice for the Government of Canada.” And who might these stakeholders be? Those are the environmental charities, of course. Joseph Heller would be proud.

Following comments sent along to me, this post has been edited to reflect the distinction between public advocacy and political activity; my confusion over that distinction, at least as far as it applies to the CRA regulations, is undoubtedly shared by many others – CG

(Feature photo courtesy of Financial Post, Bella Bella photo courtesy of Janet Sawatsky)

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Financing Retrofits: Show Me the Money!

This post originally appeared on the Carbon Talks blog.

The stereotypical image of the environmentalist as someone who is trying to escape society, go back to nature, build a log cabin in the woods to live off the land, and escape the monstrous and oppressively capitalist economic machine is becoming quickly outdated. As a society, some of us are beginning to accept that the neoliberal notion of progress – by some embraced as the most efficient tool for economic growth, and by others condemned as a noose tightening around the necks of the less fortunate – is not entirely incompatible with the goal of protecting the environment.

That’s not to say that money, and the pursuit of wealth, haven’t been major players in digging us into the hole where we stand now; I’m not sure anyone could argue otherwise with a straight face. But it does suggest that money, and again the pursuit of wealth, may be major players in returning us to the sunshine. This hole is deep, no doubt, and it’s filled with both the spoils and waste of the unfettered pursuit of progress, that ephemeral and elusive goal. However the tool that we used to dig ourselves into this hole, may in fact be not dissimilar to that we must use to dig ourselves out. That tool is simple: appeal to our wallets.

To encourage homeowners to retrofit their homes for energy savings is a daunting task. The up-front costs of home energy retrofits are large, whether that be a new furnace, insulation replacement, or draft-proofing. Anybody who wants to take advantage of the energy savings inherited from such a project must be confident that the investment will pay off. If you own your home, or are confident that you will be in the same house in ten or twenty years, then there’s no question. But if you’re young, unsure about future plans, or simply don’t have the financial stability to make such an investment, then it likely seems too risky.

Current governmental mechanisms, such as ecoENERGY and BC’s LiveSmart, provide grants to homeowners for retrofits, however uptake has been low, conditions for qualifying are stringent, and money for grants is limited. Other existing systems are based on bank loans and other private financing. While some banks are offering “eco-mortgages” and “green loans”, these rely on traditional credit mechanisms that are risky, long-term, and not accessible to low-income earners

This is where governments can step in and implement mechanisms to make the decision easier. In the United States twenty-seven states have adopted a model called Property Assessed Clean Energy (PACE) by which local and municipal governments provide loans to homeowners for retrofits (the 2008 financial crisis has stalled these plans, but many are likely to live again). Critically, these loans are repaid via a property tax assessment. This means that if you sell your house, the loan goes with it – it’s inherited by the buyer.

This system takes the risk out of retrofit projects. A well-planned retrofit can immediately produce energy savings, and by design these savings offset the increased tax payment. The homeowner saves money almost immediately, the value of the property potentially increases, and there is no long term risk.

Up here in Canada, the discussion on PACE-style mechanisms has been quiet but growing. A comprehensive report by the David Suzuki Foundation in 2011 examined the need for a financing mechanism for home energy retrofits similar to PACE. The report concludes that current Local Improvement Change (LIC) mechanisms present in municipalities across the country – designed for public infrastructure such as sidewalks, streetlights, and local parks – could be modified to apply to home retrofits, producing a made-in-Canada approach called Property Assessed Payments for Energy Retrofits (PAPER).

The hurdles in transitioning a LIC-type mechanism to PAPER lay mainly in terms of ensuring municipal governments have the legal and administrative power to make it happen. That is, it’s not so much a question of whether we can make this work, it’s a matter of working out the details.

No matter how we frame our politics, most of us spend at least a few minutes a day worrying about money; in the economic system that we’ve been born into, it inevitably influences the choices we make. In working to promote a low-carbon economy, we should recognize this system, and use it to our advantage. Everyone wants to spend less. With the right mechanisms in place, Canadians will not have to be forced to reduce their energy costs, they’ll do it because it leaves more money in their wallets. As long as those cost savings aren’t channeled toward a new Hummer, then everybody wins.

(Icon photo courtesy of phototouring/Flickr)