Analysts calculate the cool economic impact of the road to Net Zero 2050 by 2030

Analysts say that as Canada is about to reach net zero by 2050, some of the steps needed to reach the 2030 target are significant economic and social costs, especially for energy-producing regions. Is accompanied by.

The· Parliamentary Budget Officer (PBO)A federal spending watch said in a June 23 report that the total impact on the economy in at least 2030 would be 1.4%, almost eradicating annual economic growth under normal circumstances. This decision comes from analyzing the impact of budget 2021 and measures in the federal government’s new national climate plan, “Healthy Environment and Healthy Economy” (HEHE), announced last December.

Some of this negative impact was hit 16.2% in the transportation sector and 10.8% in the oil and gas sector.

According to the Oxford Economics (OE), the economic impact by 2030 will be exacerbated. Canada’s gross domestic product is 1.9% below the 2030 baseline forecast, even if carbon income is fully returned to homes and businesses. It is even worse at 8.2% in Alberta and about 3% in Saskatchewan and Newfoundland. This was mainly due to the significant reduction in oil production as demand declined.

The PBO states that its estimated economic impact is more serious than the federal government’s estimates based on its own HEHE modeling. The federal government did not provide an estimated impact on 2021 budget measurements for comparison.

Both HEHE and Budget 2021 aimed to exceed Canada’s 2030 greenhouse gas emission reduction targets under the Paris Agreement. HEHE’s measures are projected to reduce emissions to 31% instead of 30% in 2005 by raising the federal carbon tax of $ 50 per ton in 2022 to $ 170 per ton by 2030. I did.

Budget 2021 is projected to reduce emissions by 36% from 2005 emissions by 2030, requiring additional policies, some of which have not been identified. Then, in April, the federal government announced further cuts by 2030, 40-45% below 2005 levels, but did not provide policy details to reach that goal.

Therefore, the PBO was unable to analyze how this further reduction would affect the economy, but technologies to achieve this level of reduction, such as electric vehicles, small modular reactors, and heat pumps, are now available. But “changes make it harder to achieve.”

For example, in the case of Canadian vehicles, the changes needed to make a meaningful contribution to more aggressive reduction targets are that about half of new vehicle sales after 2022 will be zero emissions and will be charged with zero emission electricity. is.

“Only exorbitantly high subsidies were able to achieve that goal,” said PBO.

Implicit cost

The PBO Report includes price-based measures such as carbon taxes and non-price-based measures that require individuals and businesses to meet specific requirements such as regulations, building renovations, fuel standards, transportation subsidies, and carbon capture. Distinguish the effects of. ..

The PBO added that non-price measures are often more expensive than price-based measures to achieve the same emission reduction targets.

The report calculates the “optimistic cost” of non-price-based measurements by comparing them to price-based measurements that achieve the same emission reductions. The PBO will add a total of $ 50 per ton in 2022 to an additional carbon tax of $ 211 per ton by 2030, which is the sum of both types of measures required to reach the 2021 budget target. I decided that it was equivalent. $ 261 per ton by 2030.

According to the OE, one of the implications of a carbon tax hike on Alberta is the expected net migration of people out of the state.

By 2030, OE expects Alberta’s population to be 54,100, or 1 percent below baseline. Most of the transition goes to Ontario and British Columbia.

The OE states that the most obvious sign of rising carbon prices is rising consumer prices, especially for fossil fuels.

“Assuming a full pass-through to consumers, energy prices are expected to rise by an average of 3 percentage points each year above the baseline outlook for the 2022-2030 period. This is a direct and indirect heading. Push up CPI [consumer price index] Inflation is on average 0.2 points above the baseline forecast for the last decade, “said OE.

do nothing

Former Liberal Party member and president Dan McTig Canadians for Affordable EnergyContinues to blog about Canada’s path to Net Zero by 2050, stating that the goal is being enforced on Canadians who pay invoices without being informed of costs.

so June 3rd Blog, He cites the work of a senior US President Barack Obama’s energy sector official Stephen QooninIn his recently published book, Unsettled, the impact of human-induced climate change on the economy does not sound like a crisis, or it is only a slight reduction in strong economic growth.

Qoonin refers to the United Nations Intergovernmental Panel on Climate Change (IPCC)According to forecasts up to 2100, rising temperatures could hurt the economy, but that hurt is small compared to the world’s average growth rate of about 2% per year.

However, Mr. McTeig said the growth predicted by the IPCC does not explain the costly climate change measures being pursued.He gave his title blog “IPCC experts say that doing nothing is less harmful.”

The PBO warned that its analysis did not take into account any technological or productivity gains from the present to 2030 that could reduce the impact.

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