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Benchmarking – Chapter 5.1

5.1 Case Studies: Benchmarking Canada to China, Norway and Australia In addition to the G8 analysis, the NRTEE conducted three separate case studies with countries having unique economic, energy, or geographic characteristics with which to compare Canada and draw further insight. These are: CHINA due to the fact that it is an emerging economy increasing its investment in low-carbon performance, making it an important future competitor; NORWAY because it is a net energy exporter like Canada, but has placed strong importance on building capacity for low-carbon competitiveness; and AUSTRALIA with a large geography and dispersed population, it also shares a number of energy and emission challenges with Canada. The following three case studies illustrate Canada’s low-carbon performance relative to these countries. Using the same Low-Carbon Performance Index categories and indicators, gives a broader sense of capacity for competitiveness in a low-carbon future. In some cases, data availability means an incomplete picture emerges, but it remains useful for comparative purposes. China’s energy and emission profile makes it a high carbon producer. It is well known as the fastest-growing carbon-emitting nation, although on a per capita basis, Canada ranks ahead of China for emissions. Still, Canada scores better on the Energy and Emissions category, but China ranks higher on the Skills, Investment, and Policy and Institutions categories. Available data is insufficient to make cross-country comparisons on the Innovation category. Of most concern for China is that while its absolute emissions have grown rapidly, its emissions intensity has increased. As a result, China faces a significant challenge in reducing overall emissions, a fact that has probably underlined its reluctance to take on binding absolute emission reduction targets. Given its coal reserves, fossil-fuel generation will continue to play a large role in China’s future energy consumption; however, it also has vast hydroelectric potential and is investing heavily in renewable technologies, nuclear power plant production, and high-speed rail in order to achieve the double dividend of lowering its carbon profile and gaining global clean technology market share. China has experienced exponential emissions growth over the past fifteen years—much faster than Canada. Despite becoming the world’s largest emitter of GHGs, China is now making increasingly large investments aimed at prospectively transitioning its economy onto a low-carbon, more resource-efficient pathway although uncertainties exist to timing and achievement. It has made choices based on the fact that energy demand is predicted to surge in the coming decades and pollution concentrations are negatively affecting quality of life. It may see significant potential to carve out a dominant position in the fast-growing global clean technology production market. China is making and attracting significant investments in low-carbon technologies, which will drive future manufacturing opportunities, relevant skills development, and job growth. On a per capita GDP basis, for example, China pours nearly double the level of investment into post-secondary education than Canada. When compared to the G8, China is the second largest IPO market, far outpacing Canada. In terms of stimulus spending, China outpaces Canada by a four-to-one margin. Its investment is directed almost entirely to high-speed rail and grid development, as it seeks to transform its transportation and electricity transmission infrastructure. China will be important to watch for its international participation and commitment to GHG emission reductions. Just two weeks before COP-15 in Copenhagen, China announced its first firm target for GHG reductions: a 40–45% reduction in carbon intensity from 2005 levels by 2020.[61] It leads globally for low-carbon stimulus spending in absolute terms, with over US$220 billion (or about 38%) allocated to building a low-carbon economy.[62] Its LCGP, the National Climate Change Program, was developed in June 2007 to achieve stated goals of developing a circular economy, protecting the environment, and accelerating the construction of an environmentally friendly society.[63] As a strong low-carbon performing nation, Norway ranks very high. Canada’s status as a net energy producer and exporter generates challenges for reducing its emissions profile. Norway is also a net exporter of petroleum, natural gas, and coal,[64] but has taken important measures to position itself for low-carbon success, and outperforms Canada across the majority of the benchmark indicators. It is the only major industrialized nation to have set a carbon neutrality target, with a 2030 achievement goal. It plans to achieve neutral status through deep cuts in carbon emissions by ramping up domestic renewable energy production (which is already significant due to its abundant hydroelectric generating capacity), and through international offset projects (e.g., reduced emissions from deforestation and degradation projects). Norway is also the only country in this report to have a national carbon tax (in place since 1991). Despite its northern climate and energy exports, Norway’s carbon productivity is four times higher than Canada’s, and has shown steady improvements over time. Its economy is electricity intensive but, like in Canada, hydro dominates its generation mix, supplying nearly 100% of total production. Like Canada, however, Norway will be challenged to achieve further low-cost emissions reductions through improvements in industrial energy efficiency. Australia provides an interesting comparison given similar challenges in geography, distance, dispersed population, transportation infrastructure, export-driven economies, and reliance on emission-intensive energy production and consumption. Overall, Canada leads Australia on most low-carbon performance indicators contained in the Index. Electricity represents 44% of Australia’s total primary energy supply, and it is heavily dependent on coal. Canada generates nine times as much low-carbon electricity as does Australia. Australia’s growth in CO2 emissions has been significantly higher than Canada’s over the past 15 years, with triple the growth rate, making it the highest rate among the countries assessed in this report. The magnitude of Australia’s challenge in reducing emissions related to power generation is underscored by the fact that it has been less successful than Canada at improving industrial energy efficiency and in shifting its generation mix to less polluting fuels such as natural gas. Australia’s economy is heavily dependent on the export of coal and uranium production, along with other mineral products. Its proportion of emissions embodied in trade is nearly eight times that of Canada, and approaches the level of Russia. As much of its natural resource exports are used for electricity generation overseas, Australia stands to be competitively disadvantaged in a scenario where its trading partners decrease their demand for carbon-intensive goods. Canada significantly outspends Australia in terms of government investment in energy R&D and private sector spending on energy research. While both countries have experienced declines in public sector R&D investment over the past decade, the gap between the countries has widened due to Australia’s faster rate of decline. Taken together with the low level of attracted VC investment and the lack of a compelling regulatory framework or price signal, Australia will be challenged to match other countries’ clean technology development performance. Looking ahead, Australia will be challenged like Canada to meet growing demand for energy from population growth while simultaneously decarbonizing the major emissions-intensive energy generating mix, in its case, coal. Australia’s federal government has made strides in more integrated climate policy development with the recent creation of a central department for climate change, potentially enabling its ability to coordinate planning across multiple ministries.