Spending the Federal Surplus

Much has been written and said recently on what to do with the Federal surplus.  Last year, it was almost $14 billion.  In the first 5 months of this year, it was over $8 billion.  The Conservatives want to cut the GST by 1%, which will cost $5 billion, and which most Canadians will barely feel in the pocketbook.

Meanwhile, carbon dioxide emissions in Canada continue to increase.  We are now well over 30% above 1990 levels, and the increase continues.  We know there is a cost to climate change – we are seeing the cost now, whether it is the pine beetle infestation, California wildfires, drought in Australia’s wheat belt, or Katrina.  Insurers are aware of the increase in intense storms, and therefore claims, and rates will be higher, costing us all.  We might save 1% on the GST, but how much do we pay in government compensation to victims, or higher insurance rates?  We have a fiscal surplus but a huge environmental deficit.

Yet our politicians continue to dither, and say that we can’t afford to do anything about climate change.  But we can afford a GST tax cut that won’t be felt by anybody.

Wind energy is the single most underutilized resource in the fight against climate change.  Canada, the world’s second largest land mass has installed about 1600 MW of wind energy, half of what tiny Denmark has installed.

How far would $14 billion go to reducing our emissions?  It would build about 6500 MW, enough to produce 17 TWh of power per year.  Thermal plants (coal and natural gas) produce about 153 TWh of power per year, so emissions from generation of electricity would decrease by about 11%.  From 1 year’s Federal surplus.  Since electricity accounts for 20% of Canada’s CO2 emissions, emissions would decrease by about 2.2%.

But of course the government shouldn’t fully fund the construction of wind turbines.  It needs only to create incentives so that most of the funds come from the private sector.  Today, federal incentives cover only about 10% of the cost of a wind project.  If they raised that to 20%, and obtained the rest of the capital from the private sector, the federal surplus could be used to build 32,000 MW of wind, enough to reduce Canada’s carbon emissions by over 10%.  We would barely feel this in our pocketbook – it would be using funds that we don’t have today anyways.

This is not to say that all of the federal surplus should go to wind.  That would be bad policy.  It would make far more sense to take a basket of technologies, and create incentives for all them – geothermal, solar hot water and heating, biomass, waterpower, photovoltaics, biofuels – they are all available, work today, and are all extremely underused.

Can we afford to fight climate change?  Yes.  And we wouldn’t even feel it.  Indeed, we may feel it more if we don’t.

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