Call for a New Climate Test

As Canadian Prime Minister Justin Trudeau prepares to head to the White House to talk climate policy in March, environmental groups are urging both countries to adopt a new, climate-focused method of evaluating energy infrastructure projects.  Ten U.S.- and Canadian-based groups released their proposed “climate test” Tuesday, a set of guidelines that they say would help ensure that both countries keep their infrastructure developments — including oil and gas pipelines and export terminals — and policies in line with their climate goals.

Energy policy must align with climate science.  The Climate Test will use the latest climate science to evaluate all proposed energy supply and demand policies and projects in light of the globally agreed goal of limiting global warming to 1.5˚C, informed by the spirit of global cooperation that made Paris successful.

To date, environmental assessments evaluate the impact of new projects in a business as usual or “reference case” energy scenario.  Commonly used energy projections such as the U.S. Energy Information Administration’s Reference Case, the International Energy Agency’s Current or New Policies Scenario, the Canadian National Energy Board energy supply and demand projections, or energy outlooks produced annually by oil companies such as Exxon or BP, assume global energy markets that are consistent with 4˚C to 6˚C of warming.

This means that our most important national energy supply and demand projections are assuming continued failure to achieve internationally agreed climate goals.  However, if Canada and the United States expect to achieve these goals, they must aim for success – and must measure policies and investment opportunities against a path that leads to climate safety.
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Despite rapidly changing global policy context, decision-makers in North America do not currently have the information or analytical tools to properly evaluate whether a given project or policy is needed in a global market that is transitioning to lower carbon emissions consistent with the Paris Agreement.  The low-carbon transition affirmed in the Paris Agreement will dramatically shift both national and global energy markets away from business as usual scenarios.  The implications of that transition will be of great relevance to Canadian and U.S. policymakers conducting economic and environmental reviews to inform decisions on long-term energy projects and permits.

In an international market consistent with the Paris climate commitments, demand for fossil fuels will peak in the near future and decline, resulting in progressively weaker prices for coal, oil and natural gas.ii Incorporating an assessment of global energy markets in a climate safe scenario will allow policymakers to consider project and permit decisions in scenarios consistent with success in meeting international climate objectives, and help them avoid public and private assets being economically threatened by the global transition away from fossil fuels.

A credible, robust climate test will provide United States and Canadian decision-makers with the tools necessary to ensure they are able to position their economies to thrive in a global market that is transiting to clean energy and a climate safe future.

A rigorous, cross-border climate test will provide decision-makers with the tools to more accurately assess the economic and environmental impacts of major project and permit decisions.  As U.S. and Canadian policymakers take action to incorporate a climate test into their long-term decision making process, the credibility of that test will rest on its adherence to the following broad principles:

• Energy decisions must be guided by climate science.
• Decision-makers must develop and consider models that are consistent with a global economic transition away from high-carbon fossil fuels.
• Environmental review processes must assess the need for projects and policies in the context of global energy supply and demand scenarios consistent with international climate goals.
• Environmental review processes must assess a project or policy’s greenhouse gas emissions.

Read more at Call for a New Climate Test