I join with most Canadians who have come to accept the reality of climate change and with those who agree that the emissions from burning fossil fuels–mainly coal, oil, and natural gas−are a major cause of such change. I also join with most Canadian by asking: What can we do to keep our climate from harming us all with its undesirable changes?

A conversation with my grandson

The other day I discussed these issues with my grandson, who has real fears about what his world will be like when he is my age—a long time past my time, but well within his, and his soon-to-be-born children. He suggested: “We Canadians should drastically curtail our production of fossil fuels, especially petroleum. We could stop building oil pipelines and maybe retire the oil sands.”

“An interesting idea,” I replied. “Let’s think about what would happen if we did this. If we only stopped building pipelines, more oil would be shipped by rail, and since spills of oil from rail cars are much more frequent than spills from pipelines, that may not be such a good idea. Of course, there may be other good reasons for opposing particular pipelines, such as the Trans Mountain expansion, but reducing the world’s production of oil is not one of them.”

Heaving a sigh, he replied: “Yes, as you keep telling me. Bringing in only a part of what would be an effective package might do more harm than good. So let’s cut the production of oil as well as the pipelines, making that a package deal.”

Canada’s actions

“There is one big problem with your plan,” said I. “The world is awash with oil producers—Russia, Saudi Arabia, Iran, Iraq, United Arab Emirates, Kuwait, and China, to name but a few—many of whom would love to sell even more oil than they are now producing. So, if Canada cuts its production and sales, all that will probably happen is that other countries will fill the gap by producing more. This Canadian action will influence how much oil the rest of the world produces; not the total world production of oil.” (Although some have argued that other countries would not completely fill the gap, I am skeptical about their arguments and am sure that the gap would be mainly, even if not fully, filled by others.)

So, if we follow that plan, we will earn fewer royalties and employ fewer people in the oil industry while other countries earn more royalties and employ more people in that industry. The result is that we may feel good about our actions, but these will have done no good with respect to curbing the emissions that are causing climate change.

My grandson’s eyes lit up and he said, remembering one of the economics lessons I had taught him: “I get it, we can do little or nothing by acting on the supply side but surely we can do something on the demand side.”

Feeling good, doing good

We thought about this for a while and agreed that if we Canadians cut our consumption of greenhouse-gas-emitting fuels, there is nothing that would cause those in other countries to fill up the gap by consuming more, leaving total demand unchanged. So, unlike cutting supply where others fill the gap that we create, cutting demand has real, worldwide effects. We could accept carbon pricing, make our cars and buildings more fuel efficient, encourage new green energy technologies, and do other things to curtail our consumption of fossil fuels and the resulting greenhouse gas emissions. Those things would make a real reduction in the world’s total consumption and emissions—to say nothing of providing a lead to others to do the same.

Now we both agreed we had found a way of feeling good by actually doing good.

About the Author

Richard Lipsey is a Professor Emeritus at Simon Fraser University in the Department of Economics, as well as a Commissioner of Canada’s Ecofiscal Commission.