Canada’s GDP is two trillion US dollars, and 5% to 7% comes from oil and the other two fossil fuels. Therefore, that’s between $100 and $140 billion (perhaps C$165 billion), as noted by CleanTechnica. Clearly, that is an issue as the globe is now shifting to sustainable and clean resources.
As a result, the government of Canada reportedly updated its social cost of carbon (SCC).
What is the social cost of carbon?
For those unaware, SCC is the projected economic cost of the harm brought by releasing one more tonne of carbon dioxide into the atmosphere. It considers the long-term effects of climate change, including a rise in the frequency of extreme weather events, increasing sea levels, and decreased agricultural production.
Simply put, SCC is a “tool” to identify the most effective strategy to cut carbon emissions by weighing the costs of emissions reduction strategies against the anticipated harms brought on by climate change.
Due to Canada’s continuous increase in emissions from the previous year, which causes more harm, the social cost of carbon rises essentially every year.
What are the changes in Canada’s SCC?
With the latest SCC update, Canada now officially declares that each tonne of CO2 costs society C$261.
Canada is notable for being one of the nations with carbon pricing since 2019, which has been increasing annually. In fact, the current administration has used a carbon price as a campaign strategy in three elections that it has won.
Now, the current price of CO2 in Canada per ton is C$65. It is not equal to $261. Interestingly, it may rise to nearly $261 in 2024 or perhaps by 2030. According to the report, it is projected to stop increasing in 2030 at an estimated peak of $170. Meanwhile, the social cost of carbon is expected to hit more than $294 in 2030.
Canada must make more revenue in the oil, gas, and coal than it costs climate damages
Nonetheless, the social cost of carbon methodology used in Canada is now, at least, in line with that of the US EPA. Therefore, Canada has not yet set a suitable price for carbon, and it doesn’t appear that it will. However, it must at least make significantly more money from the oil, gas, and coal it sells than it costs the county in climatic damages.
In 2019, Canada’s oil, gas, and coal industries produced 950 million tons of CO2 throughout their lifecycles. That equates to approximately $250 billion in social costs due to CO2 if multiplied by $261.
The societal costs associated with the CO2 that the oil and gas industry releases appear to cost Canada’s oil and gas sector about C$85 billion annually. Undoubtedly, Canada must be making efforts to reduce emissions from its oil and gas sector, and there must be some outcomes.
The oil and gas sector emissions have grown so significantly that Canada’s overall greenhouse gas emissions have barely changed. Canada is somewhat off by a manipulated metric, although it is primarily due to COVID-19 and not strict climate policies.
In hindsight, Canada’s greenhouse gas emissions increased by 13.9% in 1990, or around 82 Mt CO2e. In 2021, Canada has cut its emissions by 8.4%, or around 62 megatons.
Are present carbon prices and markets keeping up if the social cost of carbon is C$261 for every nation in the world? On February 21, 2023, the EU’s ETS carbon trading price was €100.34, or almost C$151. Much better than Canada but still far below the $261 mark.
A few Canadian provinces engage in California’s cap and trade system, which has a price per ton of US$51.92 to $66.71 or possibly C$81, rather than following Canadian federal policy. That is encouraging because California’s economy makes up around 12% of the US economy and is about 1.7 times larger than Canada’s current price.
See Also:
- Uber expands sustainable EV ride service to 14 new markets in US and Canada
- Electric vehicles are anticipated to match gasoline car prices in 2023
- Adoption of zero-emission vehicles is reportedly increasing, but more effort is required
- The automobile industry opposes strict European emissions regulations
- Electric cars could challenge gasoline cars in price this year
It must be noted that global carbon pricing is insufficient compared to the price per ton Canada emits now. The following generation will bear that cost. The progress is still two steps ahead and one step back, though.
