Ross McKitrick Research Archive

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CANADA'S PROPOSED BUILDING ENERGY EFFICIENCY TARGETS SHOULD BE SCRAPPED

Canada's Proposed Building Energy Efficiency Requirements, part of its GHG Emission Reduction Plan, will require all new homes to be 65% more energy efficient compared to 2019 by 2030, and commercial buildings 59%. In a 2023 report for the Fraser Institute I argue that this is a grotesquely inefficient form of climate policy.

McKitrick, Ross (2023) Wrong Move at the Wrong Time: Economic Impacts of the New Federal Building Energy Efficiency Mandates. Vancouver: Fraser Institute.

I show that the proposed rules will boost home-building costs by about 8%, they will have very little effect on GHG emissions, and any reductions achieved will cost about 50 times the value of the carbon tax, making them very cost ineffective. At a time when we face a serious crisis of housing affordability this is a particularly bad policy idea, although the policy would be stupid even without the housing crisis.

SEPTEMBER 12, 2023

NEW BUILDING ENERGY EFFICIENCY RULES SHOULD BE SCRAPPED

Newspaper Columns, Commentary and Other

TEMPERATURE TRENDS IN CANADA SINCE 1888

We hear a lot about climate change. Would someone who lived in, say, 1918 notice much change in the average weather conditions compared to today? Once you delve into temperature data you will see that it's very hard to offer a simple answer to such a question. Patterns vary over time, by season and by place. For those Canadians who are curious about how the climate might have changed near where they live, I have written a rather lengthy report on the subject.

McKitrick, Ross R. (2018) Temperature Trends in Canada since 1888

Or rather, I wrote an R program that generated a lengthy report. I analyze long term records on monthly average daytime highs in Canada, in various segments based on collections of stations available back 40, 60, 80, 100 and 130 years. There are also some nice graphs. If you think you know what "climate change" looks like in Canada, now you can test your perceptions against the data. The R program is here.

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Yourenvironment.ca

The idea of this site is very simple: to build the complete environmental record of every community across Canada. The site currently shows air emissions by source (back to 1990), air contaminant levels (back to 1974), monthly average high temperatures (back to 1900) for hundreds of places across the country, and water pollution records for several provinces.

The layout is self-explanatory and it's very easy to use. The data are all from government agencies, but most of it has not hitherto been disseminated in a usable form to the public. All my sources are linked and the data I use are easily-downloadable.

So the next time you find yourself in a conversation about some aspect of the environment and you wonder what is actually going on, look at yourenvironment.ca to find out.

Recent Journal Articles and Discussion Papers

ADAPTATION SHOULD BE A HIGHER PRIORITY IN CLIMATE POLICY

I have published a paper through the MacDonald-Laurier Institute discussing why climate policy should be oriented more towards adaptation than mitigation.

McKitrick, Ross R. (2023) Adaptation needs greater focus in climate policy. Ottawa: MacDonald-Laurier Institute, June 2023.

I discuss why adaptation was considered a controversial option 20 years ago and remains so today, yet mitigation is largely a costly failure and adaptation has proven successful and relatively inexpensive. Moreover I argue that we are going to have to adapt anyway, so we need to judge carefully if mitigation policies actually impede effective adaptation. There's a choice to be made, you can't necessarily make a priority of both.

ECONOMIC IMPLICATIONS OF A PHASED-IN EV MANDATE IN CANADA

Like many jurisdictions Canada has announced a plan to outlaw Internal Combustion Engine Vehicles (ICEVs) by 2035, requiring everyone to by electric vehicles (EVs) instead. And like many jurisdictions Canada has no idea how this will be done or what the economic implications are, or for that matter what the benefits for the environment (if any) will be. I have written a paper presenting both a partial equilibrium analysis and a numerical general equilibrium analysis on the Canadian economy.

McKitrick, Ross R. (2023) "Economic Implications of a Phased-in EV Mandate in Canada" University of Guelph Department of Economics and Finance Discussion Paper 2023-1, April 2023.

My paper focuses on the phase-in period under different assumptions about the pace of cost reductions in EV manufacturing. During the interval when both types of cars are available, auto companies will overproduce EVs and earn windfall gains (scarcity rents) on ICEVs that partially offset what will be a large overall revenue due to the mandate. The economic harm will be temporary if technology improves so rapidly that the mandate is effectively unnecessary. But if the mandate outpaces achievement of cost parity the economic consequences will be quite severe and make it unlikely the policy could be maintained. For example it would likely cause the auto manufacturing sector in Canada to shut down entirely. This is a Discussion Paper version and comments are welcome.

RESPONSE TO COMMENT ON "Climate sensitivity, agricultural productivity and the social cost of carbon in FUND"

In a 2020 paper, Kevin Dayaratna, Pat Michaels and I showed that updating the ECS parameter distribution and the CO2 fertilization effect in an Integrated Assessment Model substantially reduced the Social Cost of Carbon (SCC) path through the 21st century. In December 2022 Philip Meyer published a comment questioning some of our modeling decisions and recommending use of a new ECS distribution by Nic Lewis. Meyer didn't recompute the SCCC distribution however. Kevin and I have published our response here in which we go through Meyer's comments and recompute the SCC according to his recommended parameterizations:

Dayaratna, Kevin and Ross McKitrick (2023) "Reply to comment on “climate sensitivity, agricultural productivity and the social cost of carbon in fund” by Philip Meyer" Environmental Economics and Policy Studies 2023 link.springer.com/article/10.1007/s10018-023-00364-2

In a nutshell, taking all of Meyer's comments into account (even the ones we don't agree with) hardly changes the SCC. His preferred parameters yield a value of the SCC of $3.39 in 2050, with a 33% chance of it being negative mid-century.

CHANGING THE DISCOUNT RATE BY ADJUSTING THE PURE RATE OF TIME PREFERENCE

One of the most influential parameters in Cost-Benefit Analysis is the discount rate. It is common in policy discussions to decompose it using the Ramsey formula into the pure rate of time preference ("rho") and an additive part that adjusts for the effect of consumption growth, then to consider different discount rates based on different assumptions about the magnitude of rho. In an new paper coauthored with Jamie Lee and Thanasis Stengos we show that the two don't vary on a 1:1 basis, that is, the relationship is not linearly additive as is commonly assumed.

Lee, Jamie, Ross McKitrick and Thanasis Stengos (2023) Changing the Discount Rate by Adjusting the Pure Rate of Time Preference. Review of Economic Analysis forthcoming.

We show that as rho changes, the discount rate changes by slightly less than rho, although in the long run steady state the derivative converges on 1 from below. We estimate the relationship on US data and show that it is about 0.9 currently. We also show that the value of rho after 1980 is about 1.6. This analysis has results for debates like the one sparked by the Stern Review on the Economics of Climate Change. Stern argued for an extremely low discount rate based on assuming rho is 0.

ECONOMIC ANALYSIS OF THE 2022 FEDERAL CLEAN FUELS STANDARD

I have published, through LFXAssociates.ca, an analysis of the proposed federal Clean Fuels Standard over the interval from 2021 to 2040.

McKitrick, Ross R. (2022) Economic Analysis of the 2022 Federal Clean Fuels Standard. Toronto: LFX Associates Inc.

This is the first application of a new version of the LFX Canadian Model which I started developing in 2020. This version embeds many new features including recursive dynamics and endogenous savings behaviour. My analysis shows that the CFS will be a drag on output and growth, so that by 2030 the economy will be 2.8 percent smaller than it otherwise would be and labour demand will be reduced by 72,000 jobs nationally. If compliance can be achieved through creation of credits at a capped price of $275 per tonne the costs in terms of lost GDP are roughly halved and the employment losses are about a third. While Canadian GHG emissions at the consumer stage drop, since US-based ethanol has the same lifetime GHG emissions profile as gasoline, no net global GHG emissions reduction occurs.

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Recent Journal Articles and Discussion Papers