Questionable costs of climate-plan compliance in Canada

I haven’t been able to find the Pricewaterhousecoopers study on the costs of complying with Canada’s greenhouse-gas targets that the Globe and Mail reports on here, but if it’s as advertised, I’m pretty skeptical. (There’s a press release, but it’s only the same material in corporatespeak.)

PWC concludes that it’s much cheaper for a heavy emitter in Canada to cut emissions rather than to buy offsets or contribute to the government’s technology fund.

Between now and 2020, for instance, PWC figures that cutting emissions by 100,000 tonnes of CO2 would typically cost $504,000, while buying offsets would cost about $4.5 million.

At the higher end of the emissions scale, cutting 2.5 million tonnes of emissions would cost $12.6 million, while buying offsets would cost $113 million.

But this conclusion rests on two giant assumptions that render it … less than useful. Here they are:

  1. The emitter has no increase in production, and is therefore unable to use any of the wiggle room offered by the intensity-based regime the Canadian government proposes, and
  2. That cutting emissions costs $15 a tonne, period.

In a mature, competitive industry, the first point is not necessarily crazy. It’s the second one that’s the real killer. Basically, it appears, PWC is suggesting that an emitter could pay $15 to make one tonne of problems go away forever, or pay $15 to $20 each year to maintain that problem.

If the assumption about the price of permanent emissions reductions is true, it seems to me the conclusion is, let’s say, a no-brainer. You don’t even need the back of an envelope to make the calculations for that. If the assumption is false, which I suspect it is, the conclusion is not valid.

I’m open to correction on all this if someone can extract the actual study from PWC’s clunky website.


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