The politics of decarbonization
Jessica F. Green was among 400 Canadian climate scientists who called for the government to scrap a proposed tax credit for carbon capture last year, claiming it would underwrite the oil and gas industry. Yet policy is a key component to a successful transition away from fossil fuels — and we need regulation. In this special episode of Solve for X, the University of Toronto political scientist and environment professor sits down with host Manjula Selvarajah to discuss her research into climate policy and the impact of carbon pricing.
Featured in this episode:
Further reading:
- How research can shift our approach to climate change
- Taxpayers should not foot the bill for carbon capture
- Does carbon pricing reduce emissions? A review of ex-post analyses
- Hierarchy in Regime Complexes: Understanding Authority in Antarctic Governance
- Using Earnings Calls to Understand the Political Behavior of Major Polluters
- Follow the Money: How Reforming Tax and Trade Rules Can Fight Climate Change
Subscribe to Solve for X: Innovations to Save the Planet here. And below find a transcript to the ninth episode “Follow the money”
Lara Torvi: All the innovations in the world are not going to get us to net zero if we aren’t using them. In one way or another, we need to get the world’s biggest polluters on board. In other words, we’re going to need regulation. I’m Lara Torvi — a producer at Solve for X: Innovations to Save the Planet — a series where we explore the latest ideas in tech and science that could help us tackle climate change.
In today’s special episode, we’re going to dig into what measures can have the biggest impact and the role policy will play in decarbonization. This was recorded in front of a live audience at the MaRS Climate Impact event in Toronto. We are bringing you the conversation our host Manjula Selvarajah had with Jessica Green, a professor of political science at the University of Toronto. She explores the politics of decarbonization, and what levers and policies will have the biggest impact — and we wanted to share all of these big ideas with you. Here’s Manjula and Jessica on what it will take to transition the world economy off oil and gas, without leaving people behind.
Manjula Selvarajah: Hi Jessica — again, our first fireside chat of the day with Professor Jessica Green. We’re going to be talking about climate policy and carbon pricing, a topic I know you’re very excited about. So good to have you with us. You were one of the 400 climate scientists who called for the government to scrap a proposed tax credit for carbon capture that was earlier this year. You know the claim that was made — because I read that document — was that it would underwrite the oil and gas industry. So, if that’s not the answer, what’s the alternative?
Jessica Green: The reason I signed that letter, and the main issue is that CCUS is not yet a reliable technology. The only thing that it is really good at, is called enhanced oil recovery, which is basically getting more oil out of the ground — which is what we do not need to do right now. There was a 2020 paper in Environmental Research Letters, which found that 80 percent of the CCUS projects in the U.S. were basically stopped in midstream for technical and financial reasons — so, this isn’t a reliable technology. What we can do is invest in cheaper, easier, reliable tested technologies like renewables, like public transportation, like trains, like electric vehicles; and I think that’s really where we need to start.
Manjula Selvarajah: Do you see that promise in Canada? The lean toward those things?
Jessica Green: I think that Canada has been playing both sides here, which is to say: it is investing — you know we just saw a promise for another $10 billion to invest in renewables, and I think that’s great. But we have to deal with the supply side as well, which is the oil and gas industry. And that is a political challenge of the highest order for this country.
Manjula Selvarajah: It’s interesting. I know that you’re not pro carbon capture tax credits, but you are for other tax mechanisms. Last year you tweeted (some of us still read Twitter). I always find it interesting when I’m about to interview someone to just see what they’re publicly saying in interviews, what kind of papers they’re putting out, what they’re reading and what they’re writing. And you tweeted out this chart of emissions by wealth, and you added that taxing the ultra-rich is very effective climate policy. You also added that tax policy is climate policy. Can you elaborate on that?
Jessica Green: Yes. I wrote a paper called “Follow the Money,” which was published in Foreign Affairs, which was about this very topic. And basically, it said carbon pricing is kind of barking up the wrong tree and what we really need to do is focus on taxation and tax reform. So why is taxing the wealthy important? Because we have — in addition to wealth inequality — we have huge carbon inequality in the world. There was a report by Oxfam in 2020, which reports that the richest 10 percent of the world’s population is responsible for 52 percent of global emissions (that’s about a third of our 1.5 degree Celsius budget) and the poorest 50 percent accounted for just 7 percent of cumulative emissions. And we know that wealth and emissions are very closely correlated. So taxing wealthy individuals is an important way to basically reduce carbon emissions, and taxing multinational companies can also help. We know that multinational corporations off-shore a huge amount of their profits. That means that they basically book their profits in jurisdictions with lower tax rates. I know this is like deeply nerdy stuff, and probably unpopular, but important nonetheless, and that about a half a trillion dollars is lost every year to off-shoring. So that’s money, that’s tax dollars that can go toward decarbonization. So, we need to recapture that money at the domestic level and reinvest it in the green economy.
Manjula Selvarajah: And where do you see it being reinvested?
Jessica Green: I think it has to be reinvested in renewable technologies. So that is both the supply side — R&D, manufacturing, deployment — that means retraining people, that means building out infrastructure. We know that there’s going to be a huge spike in demand for electricity as we electrify, so we’re going to need to build more. Not only more generation capacity, but more transmission capacity, so that means more people to build more stuff. And all of that money that’s recaptured through closing these loopholes can go into those kinds of investments.
Manjula Selvarajah: What’s interesting, here you are talking about really big ideas to make change. We’re talking about policy changes, changes that governments can make, organizations can make. I’ve found this interesting over the years that there’s all this language out there about people making individual changes. As a journalist, I’ve done interviews on it, too. I’ve read tons of articles about how every little bit counts — that’s the language that we hear. I think that’s important, but to a certain extent I think that shifts the blame away from big players. How can we shift that conversation globally, or even nationally back to big polluters?
Jessica Green: That’s a great question, and this is something that I talk about with my students every year. We read this article about the “magical thinking of ethical consumerism” and the idea that if we all just make individual decisions to go green, that will aggregate up and all of a sudden will be a sustainable economy. So I absolutely agree with that, we have to shift the focus to systemic changes, which happen through policy, which happen through investment decisions. And the way I think about this is, everyone loves a good story about good guys and bad guys, right? So in this story, the bad guys are those who want to ring the last dollars out of the fossil fuel economy. And the good guys … I should not use gendered language — folks, with an x — are those who want to kickstart the renewable economy. So that’s a great story however, there’s a twist here. And the twist here is that (and everybody loves a good twist), the bad guys can become good guys if we have the right policies in place. So if the federal and provincial governments choose to invest in renewables, choose to make labour decisions, to help retrain, to help hire a new workforce to help decarbonize — because this is a massive endeavour — we have to reduce greenhouse gas emissions by 40 percent by 2030 if we’re going to meet the 1.5 goal. That is insane — so, we need all hands-on deck. And those bad guys can be brought to the good side. I think that’s how we really need to think about it — that you have to pick a side and you can come over to the helping side with the right policies in place.
Manjula Selvarajah: So it’s interesting, we’ve talked about taxation policies, we’ve talked about policies of advocacy here too. Coming back to what Yung said and you said about technology — where technology is also an important part of this — I think that Canada has to do a better job of providing domestic markets for companies that are commercialising technology. I haven’t just heard that in this space; I’ve heard that in a ton of other sectors within technology as well. And the reason that’s important is that if there’s a chance to try it out here and make it out here, it then becomes appealing to take it to markets globally. What are some of those policies, the incentives, that you think can be put in play here in Canada to encourage that?
Jessica Green: It’s a great question and it’s (I think) the critical question, right? What are the policies that we can use to decarbonize and to sort of find our place in the global economy in a post-fossil world? And I think we need to think about both the supply side and the demand side. On the demand side, what governments can do is stimulate demand through things like procurement policies.
We just saw in the U.S. that the whole mail fleet, the U.S. Postal Service, is going electric. Those kinds of policies can stimulate demand. We can create new technology and production standards to say: if you’re going to build this thing, it has to — buildings are a great example — it has to adhere to these green standards. And that is going to stimulate demand for new technologies like: no more gas in new buildings, heat pumps in new buildings, solar panels, green roofs — all these things. So, I think that one piece of the puzzle is stimulating demand. The other piece of the puzzle is how to promote supply.
So, how do we come up with these things in the first place? First, I should say that there is a lot of technology out there that we have, that we know will reduce greenhouse gases — it’s a question of deployment. And so that is where government comes in and says: we know how to decarbonize the electricity sector, why aren’t we doing it? We need more funds to do that more quickly. But on the supply side, we can do more investment in R&D. Governments can create subsidies like we’ve just seen in Ottawa, as I referenced before, for cleantech investments, tax credits. So, these kinds of things to stimulate… BDC is another example of doing lending and investing for high risk, high reward kinds of technologies — so we need those, too. We certainly will need direct air capture and all these kinds of things to basically deal with a lot of the overshoot; so we need to focus on both sides — both stimulating demand for these technologies and supply. And both of those are things that can be exported. It’s not just the technology itself that can be exported, but the know-how about how to deploy those technologies along a global supply chain. Because not everyone is going to be the world leader in producing solar photovoltaics; right now it’s China because they spent 30 years subsidizing this industry so that they could then export it. So, we need to figure out where our comparative advantage is in the supply chain so we can then export to other markets.
Manjula Selvarajah: Is it also a matter of competition? Because you’ve said that there are places in the world that have taken a little piece of the pie and sort-of really gone to town on it…
Jessica Green: Yeah, I don’t have a great answer for this question. There is a balance I think to be struck here between, making sure that we have enough domestic supply of energy — some resilience against fragility in the supply chain — but also not reinventing the wheel, or the wind turbine, or the solar photovoltaic panel. We need to leverage what’s been done before because we don’t have time to reinvent those things — I know that there’s probably a sweet spot there — but I can’t tell you exactly what it is.
Manjula Selvarajah: You’ve talked about how important it is for governments to act on procurement and really incentivizing people to create the know-how. Do you think that’s being heard? I’ve seen that you’ve been talking about this for a while. You and other scientists have been writing about this for a while and I wonder if it’s being heard — when you have governments locally, provincially, federally facing an economic downturn — and should they be?
Jessica Green: So, the question is: do we think about this problem as one of regulating tons of greenhouse gases in the atmosphere, or do we think about climate as a problem of regulating dollars circulating in the economy? And my argument is that we have to think about it as dollars circulating in the economy. This is about green industrial policy. This is about government investment. I am not going to get into a debate about the merits of Keynesian economics, but I think it’s very clear that people are hurting, they need help. I was just listening on the CBC this morning about the huge growth and demand for food banks — so we need to help them in systemic ways — and government investments can help. I’m not a politician, I wouldn’t want to have to make those decisions, but we know that austerity is not a great response, and that green austerity is certainly not going to fix the climate crisis.
Manjula Selvarajah: I think we have about a minute left so before I let you go; we need to talk about COP 27. And I’m sorry that I’m only giving you a minute to talk about that but give me a sense of what you make of the outcomes?
Jessica Green: I’m of two minds about this. I think for many of you who have followed this, you know that there was a historic decision about the creation of a loss and damage mechanism — which has been discussed since 2014, since Warsaw COP — and that is a very big deal. The creation of this — there was an overnight negotiating session the day before the COP started about whether loss and damage was even going to be on the agenda because developed countries do not want to be on the hook for this. So, the fact that it a) got on the agenda and b) the U.S. basically flipped and said — yes, we will sign onto this — is a huge deal for the developing world. A huge deal.
Loss and damage means we recognize the historical responsibility of developed countries for irreversible damage to developing countries — loss of territory, loss of culture. Now everybody says: well, are they going to pay? We don’t know. And I think that is the big question. There are many other financial mechanisms that are already in place under the Framework Convention on Climate Change under the Paris Agreement — they have been underfunded. Some of you may have heard of the $100 billion that was promised in 2009 at Copenhagen. Still, we’ve only seen about $83 billion of that. That was supposed to be a$100 billion a year, starting in 2020. We’re now in 2022 and we’ve only seen $83 billion of that. So, there are reasons to be hopeful about this — we’ve really shifted the tenor of the conversation — advocates have been tremendously successful in doing this. But at the end of the day, show me the money.
Manjula Selvarajah: So, the thought matters and you’re glad to see that it’s reflected in these conversations, but now we have to see how it plays out.
Jessica Green: Absolutely. You know, the devil is always in the details, right?
Manjula Selvarajah: You think the mechanisms are there for the global north to take accountability?
Jessica Green: One of the things they agreed to is to strike a committee to sort of discuss what this mechanism will look like in practice. I think that developed countries have traditionally been surprisingly stingy about transferring wealth, technology to the developing world. And this is just going to ramp up the pressure, which I think is really important — because we know the iron law of climate change is that those least responsible for climate change will suffer the worst effects. So, it is incumbent upon developed countries like Canada to really hue their promises and produce the funds.
Manjula Selvarajah: Jessica, a great line to end it on. Thank you so much, it’s a real pleasure to interview you. If we could give her a hand.
Jessica Green: Thank you very much.
Solve for X is brought to you by MaRS. Kathryn Hayward is the executive producer. Heather O’Brien is the associate producer. Gab Harpelle is the audio mix engineer. Steve McCann provided editing support and Mack Swain composed our theme song and all the music in this episode. We are currently planning our next season, so let us know what solutions you’re interested in — is there a certain technology that needs decoding? Send us a note at media@marsdd.com. Thanks for listening. I’m Lara Torvi.
Illustration by: Monica Guan; Image source: unsplash
MaRS Staff