Carbon Change

By Dennis McConaghy

Carbon Change
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An investigation into the scale and costs of transitioning our energy systems to achieve net-zero emissions.
Canada and the rest of the developed world have committed to decarbonizing basic energy systems, but do this country’s citizens and governments truly understand the ... Read more


Overview

An investigation into the scale and costs of transitioning our energy systems to achieve net-zero emissions.
Canada and the rest of the developed world have committed to decarbonizing basic energy systems, but do this country’s citizens and governments truly understand the sacrifices ahead and are we willing to accept those sacrifices in the name of reducing the impact of climate change? Will the rest of the developed world take on the necessary costs, and will Canada forge ahead with decarbonization, even if other countries do not?
Carbon Change explores this most visceral of public policy choices for Canada, with a deep dive into recent North American energy and climate policy, the enduring impact of the Covid-19 pandemic, and political processes across the developed world with respect to dealing with climate change risks. It offers a dispassionate analysis of the scale and cost of trying to realize the aspiration of decarbonization. Dennis McConaghy asks if a more balanced and nuanced approach is possible to mitigate the effects of climate change, while still optimally using hydrocarbons to maximize global human welfare.

Dennis McConaghy

Dennis McConaghy is a Canadian energy executive who has nearly forty years of industry experience in infrastructure development and is the author of Dysfunction: Canada after Keystone XL and Breakdown: The Pipeline Debate and the Threat to Canada’s Future, which won the Donner Prize. He lives in Calgary.

Excerpt

Chapter 1 - The UN Climate Process: How We Got to Decarbonization
The UN formed its Intergovernmental Panel on Climate Change (IPCC) in 1988 to prepare “a comprehensive review and recommendations with respect to the state of knowledge of the science of climate change; the social and economic impact of climate change; and potential response strategies and elements for inclusion in a possible future international convention on climate. ” This occurred shortly after Dr. James Hansen, director of NASA’s Institute for Space Studies, made his seminal testimony before the U. S. Senate Energy and Natural Resources Committee, proclaiming the onset of “global warming. ”
Participation in the IPCC is open to all member countries of the World Meteorological Organization (WMO) and the UN, and today, virtually every country in the world has representation on the IPCC. Its main task is to complete various assessment reports, which have evolved to include major components from three “working groups,” examining, respectively, the physical science of climate change, the effects of climate change on nature and society, and methods for adaptation and mitigation. Each group issues its own report, prepared by lead authors who are nominated by governments and selected on the basis of evidence of active participation in a relevant research area. Each group is accountable for the content of specific chapters, relying primarily on review of relevant peer-reviewed literature. Subsequent review occurs with a broader array of experts for most subject areas, with the ultimate objective of providing a balanced synthesis of the present state of scientific knowledge and related uncertainties relating to global climate change.
Significantly, the actual IPCC panel is not comprised of content experts, but of individuals nominated by their respective governments at their discretion, presumably to reflect their countries’ climate priorities as much as to ensure the intellectual integrity of the entire process. The panel ultimately creates a “Summary for Policy Makers” (SPM). In many respects, this summary serves as the key deliverable of each assessment report cycle, and gains wide media and political attention, serving to frame the deliberations of the UN process itself. The SPM is as much a politically compromised document as a dispassionate summation of scientific findings.
In 1992, at the “Earth Summit” in Rio de Janeiro convened by the United Nations, the UN Framework Convention on Climate Change (UNFCCC) was established to reduce emissions and foster adaptation to change. Initially, 154 countries signed on, and as of 2021 there were 197 parties to the convention, including Canada and the United States. A key component of the convention was the commitment to an annual meeting, which has come to be known as the Conference of the Parties (COP), to advance both policy and action to meet the mandate. But more substantively, UNFCCC enshrined the principle of “common but differentiated responsibilities and respective capabilities. ” In other words, it acknowledged both that the developed world was culpable for climate change and that the developing world was constrained in its capacity to help diminish the effects. The process internalized a North-South dynamic, notwithstanding its stated purpose to “stabilize greenhouse gas concentrations at a level that would prevent dangerous anthropogenic interference with the climate system…within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened, and to enable economic development to proceed in a sustainable manner. ” Developed countries expected to carry the burden of dealing with the climate change risk were itemized in Annex I on the convention’s original treaty document. And perhaps as profoundly, the UNFCCC decided to accept a consensus-based decision-making process, not one prioritizing those who would carry the burden of mitigation.
The UNFCCC’s ambitions culminated in 1997 with the negotiation of the Kyoto Protocol, which required developed economies to reduce emissions, by 2012, to 5 percent below 1990 levels. This reduction level was viewed at the time as consistent with the 2°C temperature containment objective, although that was not explicitly cited. The protocol created an international trading system whereby countries with surplus emission allowances could “sell” them to other countries — one of the North-South adjustments that typified the ethos of the protocol. Kyoto did not expect, let alone compel, major current emitters, such as China or India, to reduce their emissions. Although under the Clinton administration the United States had signed the protocol, Congress never ratified it, mostly because the agreement required no reduction commitment from China. Other countries, including Canada, ratified the protocol but later withdrew, essentially when they recognized that the required emissions reductions were never going to materialize within the required timeline of the first reporting period in 2012. From the protocol’s inception until the end of its anticipated first commitment period in 2012, global emissions grew steadily.
The 2009 COP took place in Copenhagen, burdened by the enormously ambitious objective of replacing Kyoto with a new binding global agreement to realize the stated goal of the UNFCCC itself, to reduce emissions and adapt to the effects of climate change. The parties achieved no such agreement. They could not overcome fundamental disagreements about how the reductions ought to be allocated, the aggregate number of those reductions, or financial assistance for developing countries to cope with the impact of climate change. The parties settled on a non-binding document that was “taken note of,” not adopted —UN speak for something more than total meltdown.
The Copenhagen Accord acknowledges that global temperatures should not increase by 2°C (3. 6°F) above pre-industrial levels. Representatives from developing countries sought a target of 1. 5°C(2. 7°F). Still, certain countries did embrace the 2°C global temperature containment goal explicitly for the first time, Canada and the United States among them. Both Canada and the United States, also, in keeping with that goal, accepted an emissions reduction objective of 5 percent below 2005 emission levels by 2030, albeit on a non-binding basis. But thereafter, not surprisingly, Canada’s emissions proceeded to grow steadily up to November 2015. The targets never reconciled with reality because of energy markets at odds with climate aspirations, for both Canada and the United States.
COP21, held in Paris in November 2015, was to represent the culmination of the Obama administration’s climate diplomacy. In the Kyoto Protocol and during subsequent efforts at Copenhagen, the parties had allocated emissions reductions to each developed country in order to reach sufficient global reductions consistent with a specific temperature containment goal. For the Paris Accord — an agreement, not a treaty — countries offered pledges of their own devising, specifying their emissions reduction goals out to 2030. Whatever the sum of those pledges, they would be accepted, even if the sum could not achieve 2°C containment — which was presumably the explicit objective of the Paris Accord itself. Canada and the United States maintained their Copenhagen reduction goals; however, China and India’s positions remained problematic. Neither country submitted any explicit emissions goal, only statements that their countries would reach “peak” emissions by 2030. This clearly underwhelming outcome was the best the UNFCCC could practically achieve without the Paris talks breaking down entirely. According to apologists of the UNFCCC and Obama administration, Paris was still a laudable foundation to build on. Implicitly, they expected the parties’ emissions reductions to grow more ambitious over time.
Perhaps most importantly, the Paris Accord foreshadowed the emergence of a 1. 5°C temperature containment target — essentially, the call to decarbonize. The accord defines its basic objective as “holding the increase in the global average temperature well below2°Cabove pre-industrial levels, and to pursue efforts to limit the temperature increase to 1. 5°C” (Article 2. 1). The document also introduces the concept of “zero net emissions. ” In its AR5 Assessment Report, the IPCC had projected a global temperature increase of 3 or 4°C, unless the world embraced new and more drastic emissions reductions. At best, the actual Paris emissions reduction targets, if achieved, promised temperature containment on the order of 2. 7°C. Carbon pricing remained peripheral to the Paris Accord. The parties tried to perfect a system for a global market for the “buy/sell” of offsets, but those efforts were incomplete, to be carried forward to subsequent years. From the Copenhagen climate meeting, the accord retained the concept of transferring money from North to South—specifically,US$100 billion annually, to deal with climate change impacts, by 2020. (As of November 2021, the developed world had clearly not met that commitment. Even the measurement of what transfers or financings had been achieved since Paris would prove to be contentious. Finally, the Paris Accord was still fundamentally non-binding, with no explicit enforcement mechanism or financial consequence for non-compliance.
As of November 2017, sufficient countries had ratified the Paris Accord for it to come into effect in November 2020. However, in June 2017, U. S. president Donald Trump announced his intention to withdraw the United States. That meant roughly 11 percent of global GHG emissions were no longer subject to the terms of the accord. Trump claimed that the accord had been unfair to the United States, demanding excessive emissions reductions that would harm the nation’s economy, while other major world economies, most notably China, enjoyed exemptions from any comparable obligations. Again, China had pledged merely that its emissions would peak by 2030, an imbalance justified by its comparatively small historic culpability for atmospheric accumulations of GHGs and its status as a developing nation. Because the Obama administration had treated the Paris Accord as an agreement, not a formal treaty requiring Senate ratification, the accord had always been vulnerable to some future administration withdrawing, and Trump did just that. Meanwhile, Obama’s original attempt to finesse the accord around the U. S. Congress had demonstrated the country’s tenuous political support for any international reduction commitment, at least in the Congress and Senate. Still, ironically, with no federal climate legislation, and without participating in the Kyoto Accord or Paris Accord, the United States saw its GHG emissions decline to 5,500 gigatonnes per year by the end of 2019 — in other words, by 13 percent since 2005— primarily thanks to substituting natural gas for coal in electric generation via market forces, not government decisions.
In 2018, at the request of the UNFCCC, the IPCC issued a special report on 1. 5°C temperature containment. One of its primary findings was that, in order to achieve that goal, the world would have to reach net-zero emissions by around 2050. Otherwise, the report warned, temperature increase would exceed 1. 5°C containment around 2030 and would exceed 3°C by midcentury. If that occurred, the IPCC expressed “high confidence” that tropical areas would face frequent severe heat waves and that the world would suffer from other extreme weather events and mounting impacts on global biodiversity. The report emphasized that these impacts would fall disproportionately on the poor and vulnerable. According to the report, the difference between 1. 5°C containment and 2°C containment brought specific risks, including ten times likelier Arctic ice-free summers, a 23 percent increase in the world population exposed to “highly unusual” hot days, one hundred million more people exposed to severe drought, double the percentage of plants and animals losing their range of habitat, the disappearance of most coral reefs, and a 15 percent increase in global population exposed to sea-level rise—up to eighty million people. The report’s most alarmist contention was that, on the other side of 1. 5°C, the world could reach a “tipping point,” after which sudden and calamitous climate change would rapidly speed up. As for cost, the IPCC’s special report estimated that decarbonizing would require $3 trillion to $3. 5 trillion per year over the next three decades. The report included no cost/benefit analysis on the relative merits of decarbonizing versus adapting to other temperature containment objectives.
Even with a Trump administration indifferent to the UN process, this galvanized more developed countries to embrace the net-zero emissions goals, as least aspirationally. At the next COP meeting, in Glasgow in 2021, that goal would presumably manifest in more ambitious national targets than might otherwise have been expected. How far and how credibly would the developed world go before the actual deliberations of COP26 in Glasgow in November 2021?
Since the inception of the UNFCCC, it has not relied on conventional cost/benefit analysis, integrating economic and physical considerations, to provide guidance for policy makers. The UNFCCC process emphasizes potential catastrophic impacts and existing regional and intergenerational inequities that might otherwise be undervalued by accepted cost/benefit methodology, most notably via discounting and the conversion of impacts to financial equivalents; these factors are more ignored than explicitly rejected as a basis for decision making. Conceptually, cost/benefit analysis amounts to a netting out of the costs of climate change mostly represented as damage, versus the costs of abating those damages. What is the net cost or benefit? How is the net benefit optimized? At what level of temperature containment?

Reviews

Dennis McConaghy's treatise provides a wonderful review of the evolution of climate policy in Canada. While most Canadians support the eventual energy transition, McConaghy makes clear that decarbonization by 2050 will be expensive and unlikely feasible. Whether one agrees or not, his book challenges us to consider an alternative approach with an objective to keep temperatures rising no more than three celsius by the end of the century.

Jack Mintz, President's Fellow School of Public Policy, University of Calgary

The must-read book about Net Zero by 2050, the massive “energy transition” that without workable technologies requires decarbonization. This can only be achieved by government control and fossil fuel rationing, dramatically affecting everyone. What makes McConaghy’s analysis timely is the last big undertaking by central planning, COVID pandemic lockdowns. Benefits indeed, but at what cost? Not a climate change denier, McConaghy proposes carbon taxes and markets as the only fair and workable solution to this global challenge.

David Yager, Calgary oil service executive, oil writer, energy policy analyst and author of From Miracle

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