Rational Energy Program creates jobs while meeting climate goals

Ottawa - September 25, 1996

Government leadership could add 1.5 million jobs to the economy while meeting Canada’s global warming commitments, according to analysis by the Sierra Club of Canada.

The Rational Energy Program is a package of initiatives designed to improve energy efficiency in the transportation, building and industrial sectors and increase the use of renewable energy in the electricity sector. Analysis of the impact of these initiatives was conducted by Natural Resources Canada; the general economy impact was completed by Informetrica Limited. Overall development of the Rational Energy Program was co-ordinated by the Sierra Club of Canada in conjunction with the Climate Action Network, a coalition of non-government groups working together to mitigate climate change.

Natural Resources Canada concludes that the Rational Energy Program would result in secondary energy demand{1} falling by 13 per cent by 2010, reducing carbon dioxide emissions 22 per cent relative to the reference case (without the use of nuclear){2}. In the process of achieving these greenhouse gas reductions, the Rational Energy Program would adjust the tax system: reducing, after the year 2000, the Goods and Services Tax (GST) to 5.5 per cent from 7 per cent, while increasing taxation on carbon-based fuels. This directly offsets most of the revenue gains accruing to governments from higher gas and carbon taxes, and neutralizes the impacts of those on aggregate costs of production and prices.

To achieve these results, federal and provincial governments must move from a primarily voluntary approach to one that includes regulating higher energy efficiency standards for vehicles, building retrofits, appliances and equipment and ensuring that deregulation of the electricity sector requires the use of demand side management, cogeneration and renewable energy.

Sierra Club of Canada is recommending that federal and provincial governments move quickly to implement the Rational Energy Program. The following steps should be considered:

1.The National Air Issues Co-ordinating Committee (NAICC - federal and provincial energy and environment departments working on air issues) is supposed to be a co-operative structure, yet has offered little that is truly co-operative in nature. The Rational Energy Program reveals that, depending on provincial fuel and economic mix, each province has a different greenhouse gas reduction potential. British Columbia, the Maritimes, Ontario and Quebec, for example, have the most potential in the transportation sector. Industrial initiatives have their greatest impact in Ontario, British Columbia and Alberta, while utility initiatives are most effective in Alberta, Ontario and Saskatchewan.

Governments should consider the following approach:

Those provinces with potential in the transportation sector agree to each undertake ONE pilot project with real potential for reducing greenhouse gas emissions. The same would be done among provinces with industrial, commercial retrofit and utility potential (Ontario, British Columbia and Alberta would also undertake in the utility, industrial and commercial sectors). Each initiative would be different and would have potential for being replicated across the country. Each province undertaking transportation, industrial, commercial building or utility initiatives agrees to share the results with all provinces.

The federal government would use the proposed infrastructure program to create a market pull at the provincial/municipal level for pilot partnerships in the transportation and commercial sectors. There could be a focus on projects in cities in Canada that have committed to reducing carbon dioxide emissions by 20 per cent by 2005 (Vancouver, Victoria, Edmonton, Regina, Ottawa, Metro Toronto and Toronto; Monteal is considering the commitment). In addition, the federal government would pursue pilot projects, either individually or in partnership, focused on Green Power Procurement, Motor Drive Challenge, Tax Incentives for Industrial Efficient Processes and commercialization of ligno-cellulose ethanol.

2.The federal government must immediately pursue negotiations with the United States government on higher fuel economy standards for vehicles. Efficiency levels are set in the U.S. by manufacturers and voluntarily adopted in Canada. A standard of 5 litres/100km for cars and 7 litres/100km for light trucks could reduce carbon dioxide emissions a total of 26 million tonnes by 2010.

3.Provincial governments must aggressively pursue electricity market reform that includes explicit requirements for energy efficiency and renewable energy.

4.The federal government must include environmental considerations in its upcoming tax reform review, including the role a neutral carbon charge could play in reducing taxes like the Goods and Services Tax. The 1997 Budget must include further tax changes which equalize the treatment of renewable and conventional energy.

Government deficit reduction efforts have reduced resources - both financial and human - which are available for programming. The Rational Energy Program requires strong government action to achieve results. The solution is to work co-operatively.

Canada stands at a crossroads. It can heed the advice of the Intergovernmental Panel on Climate Change (IPCC) and take an insurance policy approach to climate change: act now to ensure an orderly, smooth transition to a sustainable energy future, or risk higher costs and social-economic disruption by waiting for potentially disastrous climate change. Sierra Club of Canada urges a low-risk approach.


{1}Secondary energy demand is equal to end-use demand. Total energy demand is equal to primary energy demand. The difference between the two represents energy used to generate electricity, refine and transport liquid fuels.

{2}Natural Resources Canada is one of many agencies and organizations that project future energy demand using assumptions related to economic growth, interest rates, world oil prices, etc. New appliance standards, building codes, etc., are also incorporated. Reference cases are also called business-as-usual scenarios. The projection does not include actions to fight climate change. The impact of the Rational Energy Program has been compared to the 1994 Outlook by Natural Resources Canada. The Department’s analysis of measures does not imply endorsement of the Rational Energy Program.

For more information, contact:

Sierra Club of Canada