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Press Release

GPI Comments on Industry Canada Climate Change Report

GPI Atlantic Comments on Industry Canada submission to the AMG Working Group, entitled "The Kyoto Protocol and Industry Growth Opportunities"

By Ronald Colman, Ph.D


Many of the opportunities identified in Industry Canada’s paper on climate change business opportunities are excellent initiatives. So these comments do not detract from the very helpful compilation produced by Industry Canada.

However, the "growth" framework in the document may limit options and opportunities if the paper is not explicitly placed in a larger context. There are competitiveness opportunities that are not dependent on growth and that may arise from reduction, conservation, and re-allocation/re-distribution of resources. The paper's implicit assumption that "more investment is better" may subtly distort the picture by omitting a wide range of opportunities that arise from savings rather than spending.

Here are just a few examples:
1) Opportunities for increased rail freight transport are notably missing from the analysis. Instead the paper speaks of retiring old trucks and purchasing new trucks. It is questionable whether boosting and modernizing road freight through "an additional $6.4 billion for vehicle purchases" (Industry Canada, page 4) is desirable.

2) The growth/new investment framework misses business opportunities for increasing competitiveness through energy conservation cost savings. Lovins and Lovins, (1997) "Climate: Making Sense and Making Money" (Rocky Mountain Institute, Colorado), and the Suzuki Foundation (2000) have identified many such opportunities among conventional industries. (e.g. see Lovins on Dupont, Dow Chemical, Blandin Paper, etc. where sharp GHG reductions produced significant returns on investment.)

3) The Industry Canada paper includes "the expansion of many roads at an estimated cost of $2.3 billion by 2010" as a growth opportunity. The goal of providing high-occupancy vehicle lanes is laudable. However Todd Litman (1997), "Transportation Cost Analysis", (Victoria Transport Policy Institute, BC) reviews evidence that conclusively demonstrates that road expansion generates more traffic. It is highly questionable whether road expansion is an appropriate part of any greenhouse gas reduction strategy. If "growth" were not the framework for you’re the Industry Canada paper, it might have emphasized the conversion of existing roadway capacity to high-occupancy vehicle use.

4) There are also efficiency and cost saving opportunities to be gained through integrated land use / transportation planning that reduces the need for automobile use. This IS an investment opportunity for planners and builders that is not mentioned in you’re the Industry Canada paper.

5) Disincentives for large gas guzzlers (SUVs, minivans) through financial penalties (as in the UK) can also produce investment opportunities for manufacturers of smaller vehicles through corresponding financial incentives (with an overall revenue-neutral approach.) Again this business opportunity is missed in the Industry Canada paper because there is no aggregate growth, but rather a shift in opportunity from one product to another.

6) Similarly carbon taxes impose penalties on high-GHG emitters, but (if implemented through a revenue-neutral system that correspondingly reduces taxes on income and capital investment) can create significant opportunities in other sectors. Again such tax shifting may not produce aggregate growth, but can certainly increase competitiveness and create business opportunities in non-GHG-emitting industries.

7) The Industry Canada paper discusses methane recovery from landfill sites as a $320 million investment opportunity (pages 17-18), but it does not discuss reducing the amount of solid waste that goes to landfills. For example, Nova Scotia has achieved 50% diversion from landfills in just a few years, creating business opportunities in alternative disposal methods (composting/recycling).

There are other examples. In short, the paper's growth framework misses competitiveness opportunities that arise from reduction and conservation. Its fundamental "more is better" assumption may not be the most appropriate philosophical underpinning for an effective climate change strategy. On Thursday, Jan. 31, 2002, the Globe and Mail reported that the US economy was recovering and experiencing growth due to increased auto sales and federal government war and security spending. So long as we celebrate economic growth as a goal in its own right, we are unlikely to tackle climate change effectively.

None of this detracts from the excellent examples and inspiring support for green industries that the Industry Canada paper documents. So this is not an attempt to throw the baby out with the bathwater. However GPI Atlantic strongly recommends:

(a) that the Industry Canada paper be explicitly placed in a larger context that recognizes competitiveness opportunities that are not dependent on growth; and

(b) that the paper be issued alongside a companion paper that outlines business opportunities that arise from reduction, conservation, and reallocation of resources (e.g. energy cost savings, freight shifting to rail, tax shifting from income to carbon, conversion of existing road capacity, integrated transportation/land use planning, and so on.)

Such a second paper will prevent subtle distortion through omission, broaden the philosophical framework, and expand the range of industry options available.

GPI Atlantic would like to see the "opportunities" emphasis shift from growth opportunities to benefit-cost analyses of alternative greenhouse gas reduction strategies aimed at identifying "no-regrets" opportunities -- a ranking that identifies the largest greenhouse gas reductions for the smallest investment or cost. This is fundamentally different from the growth approach, because it emphasizes opportunities through "savings" rather than more "spending".

Finally GPI Atlantic has just one comment on the Bein et. al. paper on "Costing Climate Change", that was also presented to a January 31 consultation at the Climate Change Secretariat in Ottawa. The paper is an excellent and succinct review of the methodologies, assumptions, and uncertainties in costing climate change. In particular it demonstrates clearly that uncertainties may produce significantly greater costs than are often assumed, thus effectively countering the prevailing assumption that uncertainties temper the alarmism of climate change scientists.

By contrast, Bein et. al. show that uncertainties may equally be cause for greater alarm than existing conservative estimates indicate. For example, they cite discounting bias, missing interactions, the possibility of catastrophic surprises, the reality that climate change will not stop at the doubling of CO2 on which models are based, major categories of cost omissions, and so on, as examples of uncertainties that could increase damage cost estimates by orders of magnitude.

Since the authors are explicitly concerned with the impact of costing exercises on policy, it is therefore surprising that they never mention the precautionary principle. All their evidence makes a remarkably strong case for firm adherence to that principle, and it is unclear why they hesitate to state the obvious.


Ronald Colman, Ph.D
Director, GPI Atlantic
Box 489, RR1 Tantallon, NS B0J 3J0
Phone: (902)489-7007
Email: colman@gpiatlantic.org


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