Changing the Climate of Uncertainty

It’s difficult to have confidence in the federal government on climate change when they’ve been so unclear.

In a recent letter to La Presse, Conservative MP Maxime Bernier remarked that “it would be irresponsible to spend billions of dollars … to solve a problem whose gravity we still are not certain about.”

That problem, of course, is climate change. But to whom were his comments directed?

Likely not to sixteen of Canada’s largest industries, including the oil and gas sector, which spent over $1.2 billion in 2002 to reduce greenhouse gas emissions and another $955 million in 2004, according to Statistics Canada’s most recent figures.

Nor was it probable he was talking to the investors that, according to the World Bank, voluntarily spent over $1 billion between 2007 and 2008 to purchase emissions offsets through the Chicago Climate Exchange and other markets.

In fact, certainty has never been a prerequisite for acting on climate change – or on anything else for that matter. Each year, the world responsibly invests trillions based on imperfect information. And then it spends trillions more to hedge these bets. In 2008, insurers collected nearly $4.3 trillion in premiums – an amount surpassing six per cent of global GDP.

Admittedly, even if we make investments with uncertain information, we still need reasonable confidence in the information we do have. However incomplete the sketch, the few lines must be vividly rendered.

So let's compare our confidence in two sources of information that impact how Canadians will tackle climate change in the coming years: the federal government and climate scientists.

In the past ten years, the federal government has inspired little confidence in its climate policies. The Liberal government first proposed capping greenhouse gas emissions from large industrial emitters in 2002. The plan unfortunately had few details, leading UBC Professor Kathryn Harrison to describe it as “a plan to develop a plan.”

Many of Canada’s largest companies agreed. Energy giant Suncor disclosed in 2003 that the impact of Canada signing the Kyoto Protocol remained subject to many uncertainties, including “the outcome of discussions between the federal and provincial governments … and other details of Canada’s implementation plan.”

Since then, not much has changed. Successive federal governments have scrapped four plans to cap greenhouse gas emissions, leaving Canadian businesses to stumble through the rubbish pile. This year, another energy giant, EnCana, disclosed that missing details in Canadian climate policy still leave it “unable to predict the total impact of the potential regulations upon its business.”

So while Canadian companies have spent billions to address climate change, they have done so without clear or coordinated guidance from the federal government. As a result many have lost confidence in how today's investments will benefit them tomorrow, when new regulations finally hit. When replacing aging pollution control equipment, it helps to know the emissions limits you will have to meet.

In contrast, Canadians can be increasingly confident in the climate scientists.

Back in 1995, the Intergovernmental Panel on Climate Change for the first time concluded unequivocally that human activities were having an impact on the earth’s climate. Two reports and 12 years later, the IPCC’s findings have become more robust. Its fourth assessment highlighted – with 90 per cent certainty – that human activities have caused most of the global temperature increase since the mid-20th century and that heat waves and heavy precipitation will become more frequent.

There's a reason why climatologists have become more confident – they tirelessly debate the uncertainties in their work. The IPCC reached its recent conclusions after decades of “science as a contact sport,” according to Stanford climatologist Stephen Schneider. The debates have been hard fought, but they have produced conclusions of confidence. Tellingly, in response to the so-called Climategate scandal, the IPCC requested a third party review of its working procedures.

The Canadian government should transpose such vigorous dialogue into the policy arena, especially now that so much discourse on climate change is sliding off the bell curve of scientific opinion. It’s the only way to build confidence in Canada’s climate policies.

To start, the government should initiate public consultations on the design of a future cap-and-trade system for greenhouse gases. All major federal parties and most provinces now agree on this policy, at least in principle.

In Washington, these discussions are already far along. Congressional committees have solicited the advice of countless economists, lawyers, scientists, and other experts during the past year. Even if the Senate rejects current climate proposals, valuable consideration has gone into them – consideration unmatched north of the border.

Bringing sophisticated policy debate to Canada is important, even if we ultimately harmonize our policies with those of the U.S. There are details – about how to allocate emissions permits across Canada or how to credit carbon offset projects – that the Americans cannot decide for us.

This course may be uncharted and on tumultuous seas, but its navigation will leave Canadians with a map – the guidance companies need to spend their next billion on climate initiatives wisely.