By Natasha Bulowski, Local Journalism Initiative Reporter
At a time when fossil fuel projects are part of Ottawa’s nation-building agenda, new research shows climate impacts driven by burning fossil fuels could cause more damage to GDP than previously thought.
The cost of inaction to curb growing greenhouse gas emissions could mean a 21 per cent hit to Canada’s GDP by the end of 2070, according to a new economic analysis by Timothy Neal, senior lecturer in the School of Economics at the University of New South Wales.
Previous models understated the impact of climate change — or even predicted some colder countries would benefit from increased labour and agricultural production — because they only looked at the direct impacts of predicted temperature and rainfall in a given country.
These models produced “extremely mild” predictions of GDP loss even assuming a staggering four degrees of warming, Neal said. Neal’s research factors in the effect of global weather changes and “in the revised models, everyone is affected badly to varying degrees.”
Neal explained he expanded the approach because global economies are so interconnected, and “if much of the rest of the world is in a state of prolonged recession or depression because of climate change, there is no way that Canada, on a GDP per capita basis, could really benefit.”
Examples of how climate change is impacting Canadians and driving up the cost of living are all around us, said Angela Carter, an associate professor of political science at Memorial University of Newfoundland. Her morning cup of coffee is a daily reminder of this reality. Coffee prices surged by nearly 40 per cent in 2024 largely due to disruptions from unfavourable weather driven by climate change, according to the Food and Agriculture Organization of the United Nations.
Neal isn’t the only researcher predicting staggering economic consequences.
In a pre-print study, economists from Stanford and Northwestern University estimate the macroeconomic damages from climate change are six times larger than previously thought. In January, the UK Institute and Faculty of Actuaries warned that the global economy could face a 50 per cent loss in GDP between 2070 and 2090.
“Inaction has a huge price tag, and that cost of climate inaction will hit hard and soon,” Carter said in a phone interview with Canada’s National Observer. This new research drops at a time when Carney’s government has eliminated a key plank of its climate policy — the consumer carbon price — paused the zero-emissions vehicle availability standard after pressure from the auto industry and may back away from its promise to cap oil and gas sector emissions.
“Promoting new fossil fuel projects is nation burning, not nation building,” Carter said.
“Governments must act immediately to lower emissions,” Carter said. “The sooner we act, the more Canadians can avoid staggering economic costs in our lifetimes.”
“There’s an equity issue at play here,” Carter added. “Lower-income families are going to be hit harder because they already have fewer resources to cover costs,” whether that’s the price of groceries or the cost of rebuilding a home damaged by floods or wildfire.
The other thing to keep in mind, from an economic perspective, is that if governments and people are paying more to deal with the cost of climate change that means there is less spending on other social priorities, such as the energy transition, she said.
“Is Carney taking into consideration the high cost that Canadians will have to pay if we continue expanding oil and gas extraction?” Carter wants to know. The impacts go far beyond GDP. More than 600 people died as a result of the 2021 heat dome that hit Vancouver and Western Canada.
A carbon bomb topped Prime Minister Mark Carney’s first round of major projects: the LNG Canada Phase 2 in Kitimat, BC. The project doubles export capacity and will enable the export from gas fields in BC and Alberta. These gas fields could release 12,390 megatonnes of carbon pollution according to CarbonBombs, a global initiative that tracks planned fossil fuel expansion projects.
To put that number in perspective, if Canada is to meet the higher end of its 2030 emission reduction targets — a 45 per cent reduction from 2005 levels — annual emissions must be no more than 457 megatons in 2030. The full contents of the Montney Play dwarf that annual emissions budget 27 times over.
“Canada is warming faster than the global average, with the North experiencing some of the most rapid changes on the planet,” Environment Minister Julie Dabrusin’s press secretary acknowledged in an emailed statement to Canada’s National Observer. With impacts already being felt across the country “the Government of Canada is focused on making long-term investments that grow our economy, prepare our industries for the global shift to net zero, and create good jobs right here at home.”
The fall budget, tabled Nov. 4, includes information about the climate competitiveness strategy Carney has been teasing.
This article first appeared in Canada’s National Observer.
