Ottawa's clean fuel standard: overkill in your tank

How clean is your bathroom? It could be cleaner, couldn't it? Even if you think it's very clean, a team of microbiologists with microscopes and laboratory probes could probably find a lot of nasty stuff. But does that mean you should spend time cleaning it again?

Purists might say yes, but the fact is you can't spend every waking moment cleaning your bathroom. At a certain point you decide it's clean enough, based on its appearance, your tolerance for germs, and the value of your time. You have other things to do. Beyond a certain point further cleaning is overkill.

We apply the same principle — balancing costs of further action against the benefits of risk reduction — everywhere in life, including in environmental policy. We all want a clean environment. We want less pollution in the air and water and we want better technologies so they release fewer harmful contaminants. How far should we go in pursuing these things? Until we find the point where further investment in emission-reduction yields benefits that are too small to justify the costs. After that it's overkill. We typically get to that point long before emissions are at zero. Yet for some reason the discussion of climate policy has become focused on the goal of “net zero,” as if all greenhouse gas emission reductions are worth doing regardless of cost. But many aren't. Many climate policies cost far more than the benefits they provide.

Consider the proposed federal Clean Fuel Standard (CFS), which would require all fossil fuels to be blended

with biofuels and other lower-carbon sources to reduce — slightly — the amount of carbon dioxide released per unit of fuel consumed. If such reformulation were free, that would be fine, as long as fuel quality stayed the same. But it isn't free.

As shown in a recent analysis by LFX Associates (which, full disclosure, I consulted on), even if we value reductions in carbon dioxide emissions at the maximum level in the current carbon-pricing schedule, the cost of emission cuts will be at least six times the benefits. In other words, for every dollar of environmental benefit from the CFS, we lose six dollars of income and wealth. It's overkill.

It's also redundant and

inefficient. The purpose of the CFS is to reduce carbon dioxide emissions from fuel use. But isn't that what the carbon tax is supposed to do? Yes, and if fuel re-blending was an economically rational response to the carbon tax, it would happen automatically. The fact that the government is forcing it through regulation means it's not cost-effective. Forcing industry to do it anyway destroys the efficiency of the carbon tax.

Canadians already clean their fuels, mainly to purge them of local air pollutants. Gasoline is blended to remove most of the sulphur and all of the lead, and our cars have efficient engines and catalytic converters that eliminate most conventional tailpipe pollutants. Over the past 20 years, we have increased total vehicle-miles travelled on Canadian roads by about 25 per cent, yet tailpipe emissions of nitrogen oxides, particulates and carbon monoxide have fallen by more than half.

Nor is the CFS particularly effective in the context of Ottawa's decision to sharply increase Canada's population. The government has chosen immigration targets that will guarantee rising fuel use every year. According to the LFX analysis, a few years of economic growth will be enough to fully offset any effects of the CFS, leaving us back where we started, only poorer.

The CFS is driven by unthinking adherence to a net-zero mantra that says all emissions must be eliminated regardless of cost. The defenders of CFS can't rationally reassure us that while the costs will be bad, at least they won't be catastrophic. They're the ones saying: “whatever the cost.” If we do get right down to absolute net zero, economic catastrophe is inevitable. The time to reject this thinking is now, before the costs mount even further.

We avoid overkill in every other area of life because it's paralyzing. If you pick one form of risk and obsess on eliminating it, you end up with the world's cleanest bathroom while everything else in your life falls apart from neglect. The cost of obsessing on net-zero emissions is all the other public priorities that will go unfunded because we keep imposing additional environmental policies that cost more than they are worth.

CALLAGHAN O'HARE / BLOOMBERG FILES Gasoline is blended to remove most of the sulphur and all of the lead, writes Ross McKitrick, and cars in Canada have efficient engines and catalytic converters that eliminate most conventional tailpipe pollutants.