Originally posted on Climate and Capitalism

http://climateandcapitalism.blogspot.com/

THE EMISSIONS INTENSITY HOAX

By Ian Angus

As I've written previously, the Climate Change Denial Industry is

still active despite the IPCC Report — but it's also true that it has

become unfashionable as an explicit political stance, at least in

Canada. After years of inaction, politicians of every stripe are

actively seeking to outdo each other in pledges to fight global

warming.

For Conservative Party politicians, the preferred approach is

restrictions on "emissions intensity." The idea is to encourage

industry to invest in R&D that will reduce the greenhouse gas (GHG)

emissions per unit of output. This will make Canada a leader

in "green technology" that "we" (ie, the corporations that back the

Conservative Party) can sell worldwide. Canadian capitalism will do

well by doing good.

First out of the gate was the Conservative government of Alberta, the

province whose industries generate 31% of Canada's GHG emissions,

despite having a population and GDP share just over 10%

On March 8, Alberta Premier Ed Stelmach announced a bill to require

about 100 large facilities, which together produce about 70% of the

province's emissions, to cut their emissions intensity by 12% this

year. That sounds tougher than it really is, since the plan allows

companies that don't meet the goal to instead pay $15 per excess

tonne into a government technology fund, or to invest in an "Alberta-

based offset."

Federal Prime Minister Stephen Harper (also a Conservative) stood

beside Stelmach when the "Specified Gas Emitters Regulation" was

announced, endorsing the Alberta approach. "All Canadians are looking

for a balance between economic growth and environmental protection,"

Harper told reporters. "Finding that balance is the fundamental

challenge of our time."

Harper is expected to announce his own emissions intensity program

next month. "We'll treat all regions and sectors equitably and those

will be the minimum standards we will expect in every province in

Canada," he said. (Canwest News, March 9, 2007)

It's easy to show that controls on emissions intensity don't

necessarily reduce actual emissions. If the oil sands reduce their

intensity by 12%, while increasing production by 20%, total emissions

will increase.

That's simple math — but it isn't just playing with numbers. Way back

in 1865, Stanley Jevons noted that a 66% reduction in the coal needed

to produce steel had resulted in a 1000% increase in the amount of

coal used in the steel industry over 30 years. It was more efficient,

so coal was cheaper, so the industry used it to vastly increase

production. That observation was generalized in the 20th Century into

what economists call the Khazzoom-Brookes Postulate — lower energy

costs result in increased energy use.

But we don't have to take our argument from Victorian England or from

abstract economic theory. Statistics published this month in a report

by the Chief Economist of CIBC World Markets (the

investment/brokerage arm of Canada's fifth largest bank) prove that

the processes described by Khazzoom and Brookes have been fully

operational in Canada.

In eight of the ten provinces, the Tories' much-vaunted "emissions

intensity" improved between 1990 and 2004, while actual emissions got

much worse. Canada as a whole increased its emissions by 27% (that's

33% over the Kyoto target) while intensity improved by 14%.

This CIBC chart shows the bottom line from 1990 to 2004, and extends

it to 2012, by which time Canada's GHG emissions will be 45% over the

Kyoto target, despite a 25% improvement in emissions intensity.

In the words of the CIBC report:

"To date, Ottawa has emphasized reductions in emission intensity as

the focus of its global warming fight, with intensity simply a

measure of greenhouse gas emissions per unit of real GDP.

Unfortunately, in an expanding economy, intensity targets are an

effectively meaningless tool for stabilizing, let alone reducing, the

absolute level of greenhouse gas emissions. ….

"At current rates of economic growth, achieving the Kyoto emissions

target would then require a quantum leap in energy efficiency: annual

reductions in intensity that are roughly four times the current

trend."

What the report doesn't say is that a 400% percent increase in energy

efficiency would reduce production costs for the oil sands and coal-

fired power plants and other big emitters. That would allow them to

grab more market share and radically jack up production — and

increase emissions.

That could be called that the Khazzoom-Brookes Postulate in action —

but it's actually the illogical logic of capitalism, in which the

growth of individual firms or industries always takes precedence over

the needs of society as a whole.

posted to ClimateConcern