By Michael O’Neill
Climate change is front page news, and it is undoubtedly a hot topic in British Columbia’s Fraser Valley. A torrential downpour delivered a month’s worth of rain in less than two days, turning rivers into torrents and leading to catastrophic flooding. The storm triggered landslides which closed highways and railways.
The damage comes on the heels of the 26th Conference of the Parties, better known as the COP 26 Climate Change Summit. Around forty-thousand delegates from 147 nations attended the conference, hoping to reach an agreement for net-zero carbon emissions by mid-century and limit global warming to 1.5C.
The sheer number of private aircraft and security vehicles used by leaders and uber-rich attendees likely pushed the 1.5C goal to somewhere in the 25th century. But their hearts are in the right place.
The final agreement took aim at coal and oil. A line in the draft statement that said “phase- out” coal and fossil fuels was changed at the behest of China and India to “phase-down” unabated coal power and inefficient fossil fuel subsidies.
That’s because both countries have an insatiable appetite for coal as it fuels 1,082 coal-fired power plants in China and 282 in India. These two nations account for 37.2%% of the world’s total CO2 emissions. But they get a pass.
The United Nations is unable to force any country to comply with climate change targets and China knows that. President Xi Jinping aspires to rule longer than Chairman Mao and he has zero intention of doing anything to jeopardize domestic growth and his popularity.
Domestic growth is not a concern for the Canadian government. They were all over COP 26 like smog in New Delhi.
Canada flew 277 bureaucrats to the Glasgow summit. Blacklock’s Reporter said the number did not include “the prime minister’s official photographer, official videographer and lead speechwriter, 17 press secretaries and communications directors, four CBC reporters and the entire Green Party caucus comprised of two MPs.”
They are tripping over themselves to eradicate the scourge of Canada’s energy industry. The Canadian government plans to cut oil and gas greenhouse gas emissions to zero by 2050, claiming they account for 26% of Canada’s total emissions.
That sounds bad until you realize that Canada’s total emissions are a mere 1.3% of the total emissions from the seven largest polluters. Unless China, India, and the United States do the same thing, the impact of Canada’s efforts on climate change will be like using a leaky garden hose to extinguish a forest fire.
The Bank of Canada (BoC) is into climate change in a big way. Governor Tiff Macklem said, “To fulfill its monetary policy mandate of keeping inflation low and stable, the Bank needs to understand the potential impacts of climate change on the macroeconomy and price stability. Climate change and the transition to a low-carbon net zero economy will have significant macroeconomic consequences, touching every region and sector of the Canadian and global economies. It will also have implications for structural change, the growth of potential output, and price stability.” Future employees may need a Ph.D. in atmospheric science.
Should you be worried? Most certainly!
The BoC has demonstrated that it has been unable to fulfill its core monetary policy obligation of keeping “inflation, low, stable and predictable.” Inflation has been above target for over two years, which looks a tad more perpetual than transitory.
Now they want to add another unquantifiable variable to the mix. There is no doubt that climate change is occurring, but it is not part of their mandate despite what BoC officials believe.
The BoC plans to develop new models to “better understand climate-related physical and transition effects on the economy.”
They would be better served developing models to gauge inflation accurately.
Canada CPI rose 4.7% y/y in October, up from 4.4% in September. Excluding food and energy, CPI rose 3.8% y/y. However, the Bank of Canada’s preferred measures of core-inflation, common, medium, and trim are unchanged. Huh?
If Shakespeare were alive today, he might revise his “something is rotten in the state of Denmark,” to “something is not right in Ottawa.”
Transitory or not, inflation is rising, and Canadians are getting poorer. Consumers will not recover the money they spent paying inflated prices, even if inflation drops to the BoC target of around 2.0%.
The climate may be changing but are Canadian attitudes towards the BoC’s ability to manage inflation cooling as well?