Bold claims need bold action to back them up . . . are we there yet?
When it comes to climate, the federal government would have us believe Canada is well on its way. In releasing its budget earlier this month, and then again while attending U.S. President Joe Biden’s leaders summit on climate, the feds asserted we will not just meet, but exceed Canada’s greenhouse gas emission targets for 2030.
To recap, under the 2016 Paris Agreement, Canada committed to reduce its emissions by 36 per cent by 2030 from 2005 levels. Prime Minister Justin Trudeau now asserts we will do one better, with reductions of 40 to 45 per cent by 2030.
The question, of course, is how?
The climate measures unveiled in the budget received mixed reviews, as just about any aspect of any budget is wont to do. Take columnist Dylan Penner, writing for not-for-profit social advocacy group The Council of Canadians:
“The 2021 Federal Budget relies on magical thinking when it comes to the climate crisis. Instead of a real plan to begin a managed wind-down of the fossil fuel industry, it doubles down on business as usual with the window dressing of carbon capture and storage, a false and unproven ‘solution.’ ”
Aside from anyone’s views on the merits of carbon capture and storage, even attempting to hit that ambitious new target of 40 to 45 per cent does point to one irrefutable fact – change is coming.
I believe it can be done, but only if we change how we live our lives and conduct our businesses.
A car leaves a big footprint
In my view, one key place to start is with the personal motor vehicle.
Sure, there is heavy industry and the emissions of large commercial craft like planes, trains and cargo ships to address. But, our society for over a century has been built around the fact that most people rely on one or more personal vehicles.
According to the U.S. Environmental Protection Agency, a typical passenger vehicle emits about 4.6 metric tons of carbon dioxide per year. This carbon footprint from regular use is only a fraction of the equation.
There is also the environmental impact of all the resources extracted and the heavy industry involved in the manufacturing. Then there is the reliance on the traditional fossil fuel industry that is the source of much of the energy to make all this possible.
We can’t really expect people to just stop driving their cars, trucks and SUVs, but we do need to make it easier and more affordable for them to adopt something other than an internal combustion engine (ICE).
The right carrot
Let’s be frank. People need a carrot and the ideal is one that fits their wallets.
The sticker price of an ICE alternative can’t provoke shock – future alternatives need to be price-sensitive. Also, the means to easily refuel or recharge must also be readily available.
I have a small car that can get me to the East Coast on two tanks of gas and a two-day drive. Having to stop and take the time to recharge an electric a couple of times a day on the way would be a big disincentive for me to buy one.
Having said that, I’m a real optimist and a firm believer that innovative people are more than ready and able to come up with effective alternatives. They just need to be encouraged and liberated to invent.
Whether it’s by continued advances in battery technology for faster recharge and longer mileage or advances in hydrogen fuel cell design, we need to provide reasonable ICE alternatives. I’m sure this is doable.
Another thing that I’m certain about, and what might be one outcome of the feds’ budget piece on infrastructure, is that we need the future refuelling/recharging infrastructure in place, as ubiquitous as the typical gas station is today.
Lessons from the past
Change on the wholesale scale called for by Canada’s emission targets requires two things – money and a sense of urgency.
I do believe a price on carbon is necessary to provide the cash. Compared to other industrialized nations aside from the U.S., our gas prices at the pump are still cheap, even with a carbon tax added on.
I think back to World War II, when government invested in a host of R&D projects for new technological innovations, fully understanding that many or most would fail. Eighty years ago, this was a war where losing was not a good outcome.
Today, we need the same kind of liberated creativity to quickly figure out what will work for a suitably green future. Putting a price on carbon is one way to pay for that.
Government, however, must always walk that fine line as an enabler of innovation without taking such an active role in the execution that it becomes a hindrance to progress thanks to its bent for red tape and bureaucracy.
The charge must ultimately be led by the private sector. Government must know when to get out of the way while providing the framework within which creativity can race ahead.
If the pandemic has taught us anything . . .
Then there is the need for urgency.
If the past year has taught us anything, it’s that smart people can do amazing things when they are unfettered by the status quo and conventional thinking. We went from zero to several viable COVID-19 vaccine candidates within a matter of months because of a sense of urgency.
It’s nothing short of remarkable.
To address the climate challenge, we need the same collective drive, the same sense of urgency, that has marked the global fight against the pandemic. The past year has proven it can be done.
In fact, I would argue that in many respects, addressing the climate challenge is less of a challenge than this pandemic has been.
But what of real estate?
As always, real estate will be in the crosshairs, as old industries decline and new ones emerge, as we invest in new infrastructure to reduce our reliance on increasingly outdated technologies such as the internal combustion engine.
Where will new industry locate is a question that will have profound impacts on real estate and its value.
When it comes to real estate investment, there will be winners, there will be losers and there will be some quite painful lessons learned by those who cling too tightly to the past.
To discuss this or any valuation topic in the context of your property, please contact me at [email protected]. I am always interested in your feedback and suggestions for future articles.