On today’s episode of The Raitt Stuff, the Hon. Lisa Raitt provides an update on Day 1 of COP26, and discusses Biden’s plans to get to net zero by 2050 and the transformations required to get there.
Lisa Raitt: Thank you for tuning in to The Raitt Stuff. I'm your host Lisa Raitt, former cabinet minister in Stephen Harper's government from 2008 to 2015. I'm here now at CIBC Capital Markets and in this podcast, I'm going to share insights on current hot topics in the areas of public policy, politics and business with some guests along the way.
Lisa Raitt: Welcome back everybody to The Raitt Stuff. Now, normally I have a guest with me and we have a conversation, but today I'm going to fly solo and I hope that you'll stick around to hear what my thoughts are about COP26 and what we're seeing here on day one of COP26, because I think it is interesting in that it is worth discussing the path forward. Just to set the stage, as you may know, China produces about 27% of the total GHG emissions in the world, and the US is about 11% and Canada comes in far, far lower than that. That being said, all countries have committed to reducing GHG emissions, and many of you may remember that the striving goal right now is to go to net zero by 2050. COP26 is seen as a very important time for the world to come together to assess whether or not they are hitting their emission reductions that they had promised in the Paris Agreement, which was just six years ago in 2015. Journalists are going to be writing about what they're seeing and what they're hearing over the next two weeks. And at the moment, there is a lot of discussion about whether or not this is going to be a flop in terms of the world coming together.
It's still worth noting, though, that some of the big countries have come out with their net zero plans, and that's going to have an impact on Canada, and it's going to have an impact on how we do business around the world. So COP26 will be important to the Canadian economy. It just may not be what everybody had hoped it was going to be in terms of the world coming together. If you were to ask somebody who writes in the climate field, what do you think are the five things that you're going to keep track of on a scorecard to determine whether or not COP26 is a success? I would submit it's the following five things. They're going to be looking for higher commitments from countries. And of course, you may note that Prime Minister Justin Trudeau is increasing the Canadian commitment. Number two, they're going to be looking for rules for a global carbon market here at CIBC. We're working hard on just that. Number three, they're going to be looking for $100 billion in finance for developing countries. Canada was part of an announcement last week talking about it, but I haven't seen much coming out of it since. Number four, they're going to look for commitments regarding the reduce of coal use. And lastly, they're going to be looking for commitments reducing methane emissions.
So if in those five categories there are or is some movement, I think that COP26 can be viewed as a success. Today is Monday, November 1st, and the US President Joe Biden has revealed the US long term strategy to get to net zero in 2050. It's not a long document, only about sixty five pages long. But in it, it does indicate how they plan on moving forward on getting to net zero by 2050. So it's worth a read. On day one of his administration, Biden re-entered the Paris Agreement and on day one of COP26, he is indicating how he plans on getting to net zero by 2050 through a whole of government approach. It's interesting to note that the first big milestone that the United States will be holding themselves to happens in 2030, only nine short years away, and what they'd like to do is reduce their GHG emissions 50 to 52% below 2005 levels. They say in the document that this is what is needed in order for them to ensure that they hit net zero by 2050. Now, to give you some context around that number, the US in 2020 was actually at 17% reduction from 2005 GHG emissions. So it's a fair distance that they have to go between now and 2030. So the big question is how. How is the United States going to get to these? Well, they do recognize that there are multiple pathways for them to achieve these emissions not only at 2030 but also in net zero.
But all of these routes involve five key transformations. First, they plan on decarbonizing electricity, actually getting to 100% by 2035. Second, they are going to be relying upon electrification of other end uses and as well the development of other clean fuels. I think it's good to note that under electrification, they recognize that CCS (carbon capture and storage) and nuclear power are included as routes in order to achieve electrification. On the other clean fuels, there's a recognition that for aviation and shipping, electrification may not be the path forward. So what they're looking at there are sustainable biofuels and carbon free hydrogen. The third key transformation the United States thinks is needed is to cut energy waste. We always used to say at Natural Resources is the best energy you save is the one that you save yourself. Energy efficiency can come through uses of technology, uses of AI, buildings, homes, all places that you normally would think about energy efficiency. That's where they plan on focusing. The fourth key transformation is to reduce methane and other non CO2 emissions. And basically, they plan on getting there through research and development. And finally, they believe that there's going to be a scaling up of removal.
This means that they recognize that agriculture just simply has emissions that aren't going to be abated. So carbon removal is an answer. Of course, with these major transformations, there's always caveats, and they do know that all of these things depend upon the evolution of technology. They're simply, there is some technology that hasn't been invented yet in order to achieve the transformations that they're setting out. They also note that policy and regulatory issues will come into play, whether or not the lawmakers in the United States can keep up with what is going to be needed in order to move nimbly between now and 2030 and again until 2050. And they also note that factors like economic growth, sociodemographic shifts and market prices for commodity fuels actually will have an impact on all of these pathways to net zero. And finally, they put a call to action out to everybody, essentially in the United States, to work together on this. Federal leadership has to work together with private sector and innovation, non-federal leadership in the states, tribal communities as well as municipalities. And then, of course, all of society and NGOs and other smaller businesses pulling together on the climate file. What I find interesting is the fact that the caveats that have been given about factors like economic growth is already being seen in a very specific issue right now.
Prior to COP26, the G20 met in Italy. And you would think that with climate being the number one concern and rolling into COP26 that the biggest outcome for the G20 would be a statement around methane gas or a statement around climate. It wasn't quite that way. What they agreed to as their communique for the G20 was first and foremost to maintain energy security, and they're going to maintain energy security while addressing climate change and guaranteeing a just an orderly transition of energy system that ensures affordability. Obviously, energy prices and supply chain concerns really are worrying the leaders of the G20, and it makes a lot of sense because when you're faced with ever increasing prices at the pumps, in transportation Canadians really don't have a lot of options. You can take transit if it's available to you. You can cut back on your driving and do more work from home, or you can pay the price that's listed. And as that price increases, it actually cuts into what people have for their disposable income. Electric vehicles, while going to solve a lot of the issues with respect to emissions and transportation, they're just not within reach for most Canadians right now. All of this puts pressure on our leaders. Prime Minister Trudeau, for his part, positioned Canada as a reliable exporter of oil and gas.
And Mr. Macron said that the G20 needs to stabilize energy prices or risk a supply breakdown which jeopardizes economic recovery and social cohesion. So going into COP26, the leaders of the G20 seem to basically be calling for an increase of production of fossil fuels, which is completely in the opposite direction of what the climate change strategists hope to happen coming out of this meeting in Glasgow, Scotland. It's very interesting for me to see how the Canadian government will react to what's been happening. The first step, of course, is there has been promised a long term climate strategy, telling us how we plan to get to net zero and the pathways which Canada will use. I think it's pretty apparent that there aren't a lot of options when it comes to getting to net zero, and the United States has put out their long term strategy for a whole bunch of reasons. You can probably see the Canadian ideas following and matching closely with how the United States plans on moving forward when it comes to reducing both to 2030 and again to 2050. It's something to watch for all of us, and at the end of the day, something that's going to have a huge impact on economic growth in our country.
Lisa Raitt: Thanks so much for tuning in. Now, if you have any questions or comments or even requests on topics to discuss, drop me a line at lisa.raitt@cibc.com. Your interactions actually will make this better. I'm your host, Lisa Raitt, and this has been The Raitt Stuff. I'll talk to you next week.
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