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Business Commentary A clean-energy future comes with significant costs for Canadians

As the U.S. government retreats from international climate diplomacy, clean-energy innovation and free trade, it leaves a gap that Canada is well positioned to fill.

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John Williamson is president of Canadians for Affordable Energy.

New policies are coming into force that will profoundly influence how Canadians make a living, heat their homes and get from place to place. They are the result of politicians accepting climate models pointing to a potentially catastrophic global crisis.

We are told that without a radical shift away from long-established practices and energy sources, our very way of life is at risk. The major policy vehicle is Canada's Pan-Canadian Framework, recently released by the federal government and designed to meet or exceed emission targets under the Paris climate agreement. Another is Ottawa's Clean Fuel Standard. Through all of this, very basic questions need to be answered: What is all of this going to cost? What will it mean for how Canadians live? And how will it affect Canadian businesses and jobs?

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A forthcoming study by the Conference Board of Canada is the first major step toward plugging the gap. Titled The Cost of A Cleaner Future, it is based on some detailed work drawing on research from the Canadian Academy of Engineering. It raises important economic questions about the electrification of energy sources and how we will be using energy in future.

Canada is looking at $2-trillion in costs to transition to a post-hydrocarbon economy. We still don't understand at all how this is going to work. The uncertainty shows up in many ways. Taxes on carbon dioxide emissions, for example, lead to higher prices across the economy and in turn reduce consumers' purchasing power. Canada will be less competitive when trading with other countries. Jobs in manufacturing and natural resources will be lost. Governments should seek to lessen these impacts through measures such as tax cuts, although we can't assume they will resist temptations to spend the money elsewhere.

Three provinces – Alberta, Saskatchewan and Nova Scotia – will have to replace 70 per cent or more of their existing generation capacity. Alberta alone will have to spend $800-billion by 2050 to replace all hydrocarbon capacity, plus the investments required to electrify most of its energy consumption. Options such as nuclear, geothermal, pumped storage, wind and solar seem to be among the leading contenders in this new imaginary economy.

Even if the whole country does those things, that will only get us 60 per cent of the way. Getting to 100 per cent post-hydrocarbon means "transformational change" in how Canadians live. None of it will be easy. Many Canadians will appreciate the idea of denser urban areas and the reduction of waste. More disruptive is the idea of less travel by personal transport within cities and dramatically higher energy costs.

Despite the scale of coming fossil-fuel-free energy investments, they are not expected to generate a large net benefit to the economy. No quantity of solar panels can ever replace the income and jobs generated by today's crude oil and natural gas exports. Another limiting factor is that the scale of alternative-energy investments will be so large it will displace spending on other priorities.

A common sense approach says energy sources that have served us reliably in the past shouldn't just be written off for the future. Over time, mitigating the negatives of energy-intense fuels must remain a priority. For example, natural gas is flexible, affordable, abundant, reliable and cleaner than alternatives. Plus, we have an ocean of oil reserves waiting to be tapped. These are valuable characteristics, given Canada's weather extremes and vast size.

Doing the right thing by the environment is a priority for Canadians, but how we do the right thing is only now coming into sharper focus. If policy makers deal in too narrow a range of policy options, costs can only go up. More citizens need to stand together and demand that the right questions be asked. And politicians should remember that voters will have the final say on their answers and results.

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