Can Canada Learn from the “Green New Deal”?

Washington has been buzzing about the “Green New Deal”¹ ever since it was first proposed by newly-elected U.S. Representative Alexandria Ocasio-Cortez (D-NY)² in January 2019. A leaked draft of legislation for the Green New Deal included striking new policy measures: a call for the renovation or reconstruction of all buildings in the United States to maximize energy efficiency, and the elimination of fossil fuel powered transportation including cars, trucks, and aircraft. Nonetheless, by April 2019 the proposal had been endorsed³ by U.S. Senators Cory Booker (D-NJ), Kirsten Gillibrand (D-NY), Kamala Harris (D-CA), and Elizabeth Warren (D-MA) all declared candidates for the Democratic Party’s presidential nomination for 2020.

The Green New Deal is unlikely to become U.S. policy before 2020, but the response to it is indicative of its U.S. political appeal, despite a price tag commensurate with its ambition, estimated in one study as $93 trillion.⁴ The Green New Deal phenomenon to date offers three important lessons for energy and environment watchers.

Frustrated Moderation Begets Radicalism

Following the United Nations Conference on Environment and Development (UNCED)⁵ in Rio de Janeiro  in 1992 environmental experts and government leaders from around the world established the United Nations Framework Convention on Climate Change (UNFCC).⁶ As scientific research on the problem and forecasts of its implications grew dire, environmental activists were persuaded to unite in support of climate action, and more importantly to accept market-based mechanisms to address the problem. These market based mechanisms, principally carbon emissions trading systems and carbon taxation, were a compromise that was intended to convince the private sector and governments to take action at a more acceptable economic and political opportunity cost.

Signs of frustration with this compromise have been growing in recent years. Some activists have taken direct action to block oil and gas pipeline construction that have alienated some businesses and created political headaches for governments, particularly in Canada and the United States. The LEAP manifesto⁷ adopted by the NDP in 2016, with its demand that fossil fuels remain in the ground and unused forever, was a precursor to the Green New Deal.

One may not like the tsar, but when Kerensky stumbles you get the Bolsheviks. So it is with the new radicalism that is grabbing headlines and inspiring many younger voters in Canada and the United States. Even though the inherent difficulty of implementing such a radical package of reforms in the U.S. political system is likely to prevent the Green New Deal from becoming law any time soon, the implications of the failure of pragmatic moderation to slake the thirst for change within the environmental community are noteworthy for the energy sector.

Three scenarios now appear likely. The Green New Deal could be rejected by the public and fail politically forcing a return to moderation, perhaps following Donald Trump’s departure from the White House should he be replaced by a Democrat more open to addressing climate change. The Green New Deal might be adopted in whole or in part and then fail economically, prompting firms and governments to repeal it or revise it in a more pragmatic fashion. Or, the environmental movement might splinter into factions fighting among themselves with a tiny minority adopting resistance tactics to express their anger over the frustration of their efforts.

“As the largest energy trading partner of the United States, Canada has a reason to be concerned about this.”

U.S. Unilateralism and Self-Absorption a Bipartisan Problem

As the Green New Deal is debated in the United States, Canadians will be unhappy to see that the American appetite for unilateral U.S. actions that appear indifferent to the impact on other countries is a bipartisan problem. The George W. Bush administration imposed market access barriers to the United States in the form of bulked up border security measures. The Barack Obama administration responded domestic political concerns about the Keystone XL pipeline rather than Canadian interests. The design of the Green New Deal promises more of the same. As James Bacchus and Inu Manak have noted,⁸ the Green New Deal is based on an autarkic U.S. economy and makes no allowance for energy trade. As the largest energy trading partner of the United States, Canada has a reason to be concerned about this. Even renewable electricity from hydropower generation is not factored into the Green New Deal. To reach the climate goals of the Green New Deal, energy trade might have to end to avoid “leakage” or arbitrage as green energy prices skyrocket.

 

Elimination of fossil fuel-powered transportation will impose significant costs on Canada as the auto industry adapts, the aerospace sector is put out of business, and the 74 per cent of North American trade that moves by land⁹ searches for new ways to reach consumers.

Canada Must Defend Its Interests

Such nightmare scenarios are unlikely, but the seriousness with which they are being taken in the United States is a signal that a new threat of collateral damage to Canada from U.S. unilateral policy making has emerged. Canadian energy firms and perhaps some more moderate Canadian environmental groups should engage in the U.S. debate about the Green New Deal with the same zeal as the Canadian business community and Canada’s federal and provincial governments did in the debate about NAFTA that led to the CUSMA (aka USMCA). The best way to prevent radicalism from prevailing is a recommitment on all sides to making responsible, moderate efforts to address climate change work.  

Christopher Sands is senior research professor and director of the Center for Canadian Studies at Johns Hopkins University’s Nitze School of Advanced International Studies (SAIS).