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Other countries have carbon budgets. Why not Canada? (Shutterstock)

Canada’s next budget update should include carbon

Imagine, for a moment, a country where climate action, accountability and social justice are required for a healthy economy.

The 2018 federal budget has been criticized by fiscal conservatives for failing to pay down the debt during a prosperous period. But since the health of the economy is dependent upon a stable climate, shouldn’t we also be concerned about carbon?

What if our budget also kept Canadians apprised of our progress towards meeting international climate commitments?

And what if Canada’s carbon budget was taken seriously enough that exceeding the carbon budget, like the fiscal budget, resulted in a debt that could only be erased by spending that improved the well-being of vulnerable communities within our country and abroad?

If you are having trouble imagining this, try harder. Because this is exactly how seriously we need to take the climate challenge.

Total CO₂ emissions matter

Humans have been warming Earth’s climate since the dawn of industrialization. The single largest contributor to global warming is carbon dioxide (CO₂) emissions, from burning fossil fuels, cement production and deforestation. Every trillion tonnes of CO₂ we emit causes the climate to warm by about half a degree, an insight that comes from about a decade of increasingly robust science.

But what does this mean for policy?

National climate policies typically focus on decreasing the annual rate of emissions over time. But it’s the total amount of CO₂ we emit — not the rate — that determines how much warming will occur. By extension, emissions must fall to zero if we are to stabilize temperatures at any particular level.

The Suncor oil sands plant near Fort McMurray, Alberta, (Suncor Energy/flickr), CC BY-NC-ND

In other words, there is a finite amount of CO₂ that we can emit to keep temperatures below a target amount of warming, whether that’s 1.5°C or 2°C above pre-industrial temperatures. That’s our carbon budget.

Estimates of the global budgets vary considerably but we likely do not have much more than a trillion tonnes of CO₂ emissions remaining.

That’s equal to about 25 years of current annual emissions if we want to meet the “well below 2°C” target of the Paris climate agreement.

Re-orienting climate polices

Emissions targets in Canada take the form of a targeted future annual emissions rate, with no explicit route specified for how we get there. Currently, our national target is to decrease emissions by 30 per cent from 2005 levels by 2030, and by 80 per cent by 2050.

However, this approach allows for many possible emissions pathways between now and 2030 or 2050, which could result in a large range of total emissions. This leads to considerable ambiguity with respect to the actual climate implications of current national emission targets.

By contrast, a national climate policy based on cumulative emissions would be much less ambiguous. Some countries have begun to incorporate this idea into their target-setting framework.

The United Kingdom, for example, was the first country to adopt a carbon budget that controls the total amount of greenhouse gases it can emit over a five-year period.

During its first budget period (2008 to 2012) it came in under budget. The country’s net carbon output was 2,982 million tonnes of CO₂ equivalents — 36 MtCO₂e below the government’s target. The government has now set a target for its fifth carbon budget period (2028-2032) at 1,725 MtCO₂e.

France has also adopted a carbon budget to reduce its national carbon footprint, by targeting reductions in specific sectors, such as transportation and construction.

With an approach like this, based on targeted short-term national budgets, it is possible to track progress and (potentially) hold governments accountable for their climate policies.

So why not Canada?

Many in the climate community in Canada are skeptical of the Trudeau government’s ability to meet the targets they inherited from the previous administration.

If we adopted a carbon budget approach, we’d be able to evaluate the current government’s action on carbon emissions relative to our long-term goals.

But there is also the question of whether Canada’s current policies represent a fair contribution to our global climate targets. Independent research organizations, including those behind the Climate Action Tracker, have criticized Canada for its lack of ambition to meet the goals of the Paris climate agreement. Here, carbon budgeting can also play a role.

There is a well-developed body of scientific literature focused on defining what level of national ambition represents a fair contribution to the global effort to remain below 1.5°C - 2°C.

National “fair-share” emissions budgets are therefore informed by principles of equity, such as the premise that individuals in all countries should have equal access to the remaining global carbon budget.

Canada’s fair-share budget can therefore serve as a baseline against which to compare our current emissions targets. As with global budgets, national fair-share budget estimates vary widely; the most generous (but least equitable) allocation for Canada’s 2°C fair-share budget would give us a bit less than nine billion tonnes of CO₂-equivalent emissions, or about 12.5 years of current annual emissions.

Canada’s emissions targets and projections significantly exceed even low-equity national fair-share budgets for 1.5°C or 2°C. Five-year carbon budget targets could help track our progress in decreasing emissions, and inform climate finance policy.

Repaying our carbon debt

And what if our actual emissions exceed our fair share of the global budget?

If this were quantified via an annual carbon budget update, any overuse of our fair share of emissions would represent a carbon deficit, which over time would lead to an accumulating carbon debt.

This carbon debt could then serve as guidance for how much we might invest in climate finance, such as programs that improve the welfare of vulnerable communities bearing the brunt of climate change impacts.

If Canada’s emissions were to follow government projections towards our 2030 target, total emissions for the five-year period from 2015-2019 would come to about 3,600 MtCO₂e. This is a tangible cumulative emissions target that could be evaluated in a national carbon budget update.

However, our national 2°C fair-share budget for this same period is at most 3,300 MtCO₂e. In this scenario, we will have accrued a national carbon debt of 300 million tonnes over this five-year period.

At US$40 (in 2007 dollars) per metric tonne CO₂, a conservative estimate of the current social cost of carbon, this five-year carbon debt would be valued at $15.5 billion today.

It’s time for Canada to lead

We already have the institutional infrastructure needed to budget our finances — why not apply those same methods to budgeting our emissions? The outcome of an annual carbon budget update would serve to hold our government accountable to its emissions pledges, and would provide a baseline against which to ratchet up ambition over time.

A carbon budget would also show the world that we are taking our commitment to the Paris climate agreement seriously enough to evaluate and track our progress towards contributing our fair share of the global mitigation effort.

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