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False climate solutions are showing their true colours

Shift Storm newsletter—May 2024 edition

June 27, 2024

9-minute read

The following is a re-print of the March 2024 edition of Shift Storm, the CCPA's monthly newsletter which focuses on the intersection of work and climate change. Click here to subscribe to Shift Storm and get the latest updates straight to your inbox as soon as they come out.

A false climate solution is a technology or policy that appears to reduce greenhouse gas emissions in the short term, but is actually intended to perpetuate the production and consumption of fossil fuels over the long term. Carbon capture, carbon offsets, hydrogen fuel and liquified natural gas are all prime examples of “solutions” advocated by the oil industry in place of meaningful reductions in production and/or emissions levels.

Fortunately, the sheen is starting to wear off some of these ideas for both environmental and economic reasons.

A new report from Greenpeace, Selling Hot Air, exposes the gross inefficacy of one of Canada’s few operating carbon capture projects. The Shell Quest project, which is intended to capture emissions from the Scotford oil sands refinery, has been paid for with 93 per cent public money. Shell has also received hundreds of millions of dollars in carbon credits for emissions that it never actually reduced. Ultimately, the public has spent more than a billion dollars to capture less than one per cent of upstream oil sands emissions, even as overall oil production and GHG emission levels have continued to rise.

Perhaps due to the obvious failure of pilot projects like Quest, the Alberta-based electricity operator Capital Power Corp. recently cancelled a proposed $2.4 billion carbon capture project because it was not financially feasible. The decision highlights the simple fact, repeatedly argued by experts, that CCUS is not viable at scale without massive public subsidies. Instead, the only way to meaningfully reduce fossil fuel emissions is by cutting production and consumption levels. The billions of public dollars set aside for carbon capture would be far better spent on transitioning to renewables.

Turning to liquified natural gas, the Institute for Energy Economics and Financial Analysis has published its latest Global LNG Outlook, which warns that demand for LNG is declining and the market will soon be in oversupply. That’s disastrous news for the seven commercial LNG projects currently in development in Canada at a cost of over $100 billion. By the time these facilities are operational, they will be competing in a shrinking global market and may very well end up as stranded assets. It’s another clear example of the wastefulness of false climate solutions. Imagine how much clean energy capacity we could build with $100 billion.

It’s worth reiterating, as a recent blog from the Canadian Climate Institute points out, that LNG is not actually a climate solution. Even in a scenario where Canadian LNG exports displace coal burned elsewhere—a questionable and unproven assumption—it’s not clear that will lead to a net reduction in global emissions. Instead of trying to swap one fossil fuel for a marginally cleaner one, we should be spending our money to move away from fossil fuels entirely.

That’s a lesson the federal government needs to remember as it works to finalize its sustainable finance taxonomy, which will determine what counts as a “green” investment moving forward. An aptly-titled new report from Environmental Defence, Gas is not Green, makes a strong case for why natural gas (a.k.a. methane gas) must be excluded from the taxonomy despite the efforts of industry lobbyists to label it as clean.

Finally, the City of Edmonton’s climate expert committee warned against the adoption of hydrogen-fueled buses in the city, which it says will do little to address either affordability or climate concerns. Hydrogen fuel is inefficient at best and emissions-intensive at worst, especially when battery electric buses are on the table.

And that’s all just in the past month! The evidence against false climate solutions is mounting and it’s time our governments took notice.

What else was published in the past month? A lot, actually! Let’s get into it.

Storm surge: this month’s key reads

Environment commissioner calls out ineffective federal clean tech subsidies

The Commissioner of the Environment and Sustainable Development within the Office of the Auditor General performs a crucial role as an independent assessor of federal climate policy. The commissioner’s latest round of reports includes an important investigation into the Net-Zero Accelerator, an $8 billion subsidy program for industrial emission reductions.

The first key takeaway is that the projects funded through the program have promised only modest greenhouse gas emission reductions. Most projects were not required to meet emissions targets at all, and even for those that were the government used sketchy emissions accounting methods that oversold the program’s benefits.

Second, to the extent the program has led to emissions reductions, it has come at a high cost—an estimated $523 per tonne of emissions reduced—that may have been better spent on other climate policies.

Third, and most importantly, the auditors found that the NZA “was not part of any coherent and comprehensive horizontal industrial policy.” Long-time readers will know I’ve been banging this drum for a while, but it’s increasingly evident that the federal government’s scattershot approach to climate policy is not sufficient for driving the kinds of deep economic transformations we know are necessary to achieve net-zero.

My conclusion reading this report is not that the Net-Zero Accelerator was the wrong idea in principle—we need to use public money to accelerate clean tech development—but that we need stricter oversight of private projects receiving public funding and we need to ensure those projects are consistent with a broader industrial decarbonization strategy.

Oil companies remind us that they are no friends of oil workers

A new book from academics at the University of Regina, Unjust Transition, explores how fossil fuel companies are using the premise of a clean energy transition to attack labour and undermine working conditions.

The book focuses on the case study of Regina’s Co-op Refinery Complex, which locked out its unionized workforce for six months in 2020 under the pretense of cutting costs to compensate for Canada’s emission reduction policies. During that period, workers were threatened and arrested for blockading the refinery. Unifor Local 594 ultimately made a deal with the refinery owner that included concessions to workers’ pensions.

The crucial lesson here is that workers are not the enemy of climate action. There is opposition to climate policy within some sections of the Canadian workforce, no doubt, but that resistance is motivated overwhelmingly by economic concerns. The Regina strike highlights the need for a just transition plan for the fossil fuel industry—one that offers workers a path to economic security in cleaner industries.

Without a plan, we will inevitably see more such disputes as demand for Canadian oil and gas dries up in the coming decades and businesses try to shunt the costs onto workers.

Research radar: the latest developments in work and climate

Oil and gas industry now produces more than 30 per cent of Canada’s emissions. Canada’s latest national emissions numbers are out and, for the first time, the oil and gas extraction industry makes up more than 30 per cent of the country’s total greenhouse gas emissions. There is some good news in these figures. Overall, national emissions are decoupling from economic growth, which means well-being can increase even as we produce less pollution. But the bottom line is emissions are not falling fast enough—largely due to the oil and gas industry—and we are still a long way from meeting our climate targets.

Unmitigated climate change could cut global economy in half. Your latest reminder of the stakes of climate action comes from the National Bureau of Economic Research in the U.S., which has published a startling new study, The Macroeconomic Impact of Climate Change, that finds global warming of three degrees could cut global welfare by more than 50 per cent by 2100. The silver lining of climate change being so expensive—they estimate the current social cost of carbon at over US$1,000 per tonne—is that climate action becomes much more cost-effective in comparison. So cost-effective, in fact, that the paper suggests “unilateral decarbonization” is economically rational for large economies like the U.S. even in a straw-man scenario where no other countries follow suit.

Inflation and affordability concerns are pushing climate off the radar. The 2024 update to Re.Climate’s What Do Canadians Really Think About Climate Change? report finds that while most people remain concerned about climate change, it is falling down the priority list in the face of short-term economic concerns. The report also highlights the pernicious effects of misinformation surrounding climate policy, which undermines support for otherwise effective government action.

Workforce development must explicitly address equity. The U.S.-based Urban Institute has published a new report, Equitable Access to Quality Climate Infrastructure Jobs, that explores the barriers preventing women, racialized and Indigenous workers from participating in the growing clean economy. It’s an important issue both for building a more inclusive economy and for ensuring we have enough workers to meet projected labour demands. The report makes a variety of recommendations to governments and employers, but the bottom line is that equity must be made an explicit priority rather than an aspirational “nice-to-have” in policy development.

California oil town pioneers its own just transition. A fascinating long-form investigation in Grist magazine describes how Kern County, California is grappling with the future of the local oil extraction industry. It is both a hopeful example of grassroots transition organizing—an essential component of a just transition, as I’ve argued before—and a cautionary tale about doubling down on false climate solutions peddled by the oil industry. I’m left wondering how higher levels of government can better support the communities having these important discussions.

California oil refinery workers need a just transition plan, too… Elsewhere in the state, workers must contend with the inevitable shut-down of many oil refineries. The World Resources Institute has a deep dive on the the stakes for thousands of California refinery workers, most of whom currently enjoy good, unionized jobs.

…and so do UK gas workers. The UK’s Institute for Public Policy Research released Skills Matter, which investigates transition options for the more than 100,000 workers in the UK gas sector. The way forward, according to the paper, starts with a green industrial strategy that provides clarity for workers about which of their current skills will and won’t be needed in a cleaner economy. The paper also recommends a stronger role for trade unions in planning for the transition and supporting workers.

Maximizing economic benefits of transition requires local manufacturing capacity. A paper from the Robert Gordon University Energy Transition Institute in the UK, Delivering Our Energy Future, makes the important observation that many of the job benefits associated with the transition to renewable energy—in this case, from offshore oil to offshore wind—are not in operations but rather in manufacturing and construction. That’s not a novel finding, but it has important implications for how countries design their economic transition strategies. For example, the paper recommends the UK bring in more local content requirements—akin to U.S. “Buy American” provisions—throughout the wind power supply chain.

The just transition discourse is picking up in China. It’s been interesting to watch the spread of “just transition” language around the world over the past decade. The latest hotspot appears to be China, which has cropped up a few times in recent newsletters. A report from the UN Development Programme and Peking University, Navigating the Path to a Just Transition, highlights the more than two million coal jobs at risk in that country over the next few decades. The report makes welcome recommendations around social support, but comes up short on advocating for worker empowerment in the transition.

Compensating coal workers in developing countries is essential, but could cost trillions. Speaking of the coal transition, a new article in the journal Nature Communications finds that if EU-style compensation packages were offered to coal workers in India and China it could cost more than US$3 trillion. The key takeaway is not that such an effort would be categorically too expensive—compensation of some kind is essential, say the authors—but rather that developing countries won’t be able to foot the bill alone. It’s another reminder of the necessity of climate finance to help manage the global transition to net-zero, which is a good segue into…

A new tax on fossil fuel production could foot the bill for crucial climate finance. In a new report, The Climate Damages Tax, a group of international ENGOs propose a global tax on fossil fuel producers based on the carbon content of each barrel of oil (or tonne of coal, etc.) that they extract. In contrast, Canada’s current carbon pricing scheme only accounts for upstream emissions and ignores the emissions embodied in our fossil fuel exports. According to the report, a levy starting at US$5 per tonne of embodied carbon that increased by US$5 each year could raise nearly a trillion dollars within a decade. The report recommends that 80 per cent of this revenue be allocated toward developed states’ international climate finance obligations. It’s an elegant solution for raising necessary revenues without asking governments to increase direct aid spending.

Clean tech mineral mining rife with allegations of abuse… Every few months we get a new study linking the extraction of critical transition minerals to human rights abuses. This time, the UK-based Business & Human Rights Resource Centre has published a report, Fuelling Injustice, that describes hundreds of labour abuses in Eastern European and Central Asian mining projects, including dozens of worker deaths. The report calls for greater oversight from both governments and international investors.

…but demand for minerals is not slowing down. The International Energy Agency has released its 2024 Global Critical Minerals Outlook, which finds that projected demand for many minerals, such as copper and lithium, is significantly higher than projected supply. As foreign capital rushes into the sector, the IEA warns that many producer communities are not benefitting from this investment.

Canadian banks among world’s worst fossil fuel financiers. The latest Banking on Climate Chaos report published by a coalition of global ENGOs calls out every one of Canada’s big five banks for their outsized support for the fossil fuel industry. Based on the latest data, RBC is the 7th biggest fossil fuel backer in the world while Scotiabank has the 2nd highest share of fossil fuel–related assets. Canadian gas darling Enbridge holds the distinction of receiving more financial support from the banking sector than any other fossil fuel company last year—a casual US$35 billion in financing for its expansion plans.

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