Responding to homelessness in Yellowknife: Pushing the ocean back with a spoon]]>
A ‘top 10’ summary of the chapter can be found here (in English):
https://nickfalvo.ca/homelessness-among-racialized-persons/
A ‘top 10’ summary of the chapter in French can be found here:
https://nickfalvo.ca/litinerance-chez-les-personnes-racialisees/
The full chapter can be found here (English only):
https://nickfalvo.ca/wp-content/uploads/2024/01/Falvo-Chapter-7-Racialized-Persons-2jan2024.pdf
All material related to the book is available here: https://nickfalvo.ca/book/
]]>More information is available here: https://pheedloop.com/form/view/?id=FOR596K0XGYKSXE78
]]>Here’s the link: https://cihcanada.ca/calendar-by-month/calendar-by-list/
For this particular event, there will be two components: a housing tour for 2.5 days, and then a homelessness tour for 2.5 days. We expect some people will choose to register for both, while others will pick just one.
The registration fee for each component is expected to be CA$900 + applicable taxes.
Questions pertaining to registration and logistics should be directed to Mary Clarke: mclarke@chra-achru.ca
Questions pertaining to content should be directed to me at falvo.nicholas@gmail.com
]]>A ‘top 10’ overview of the chapter can be found here: https://nickfalvo.ca/homelessness-among-indigenous-peoples/
]]>Here’s my ‘top 10’ overview of the tour: https://nickfalvo.ca/ten-things-to-know-about-homelessness-in-new-york-city/
]]>This year’s CEA conference will be held in person on June 2-3, 2023 in Winnipeg. A day of online only sessions will be held in advance of the conference on Tuesday May 30, 2023. The CEA Embrace Day with workshops will be held on Thursday June 1. As usual, PEF is hosting a number of thought-provoking sessions over the three days of the conference (see below). Many thanks to PEF’s CEA conference coordinator, Anupam Das, for putting together a stellar program.
Tuesday May 30, 2023 (ONLINE ONLY)
PEF 25th Anniversary Celebration: How has Economics Changed in the last 25 Years?
10:30am – 12:00pm
Chaired By: Jim Stanford (Centre for Future Work)
Panelists:
Marc Lavoie (U Ottawa)
Juliet Schor (Boston U)
Lars Osberg (Dalhousie U)
Jayati Ghosh (U Mass Amherst)
PEF-CDHI Panel: Modern Monetary Theory in This Period of Post-pandemic Inflation: Time to Praise or Time to Bury
12:15pm – 1:45pm
Chaired By: David Pringle (Independent)
Panelists:
Brian Romanchuk (Independent)
Eric Tymoigne (Lewis and Clark College)
Mark Zelmer (Independent)
Christopher Regan (McGill U)
PEF Panel: Is a Pro-Labour Competition Policy Possible?
2:00pm – 3:30pm
Chaired By: Robin Shaban (Carleton University, Canadian Anti-Monopoly Project)
Panelists:
Kaylie Tiessen (Unifor)
Matthew Chiasson (Competition Bureau Canada)
Robin Shaban (Carleton University, Canadian Anti-Monopoly Project)
PEF: Teaching Heterodox Economics
2:00pm – 3:30pm
Chaired By: Jesse Hajer
Presenters:
Sonya Scott (York U), “How to Teach Against the World? Strategies for introducing heterodox economics into the undergraduate classroom”
Vicki Zhang (U Toronto), “Towards a New Pedagogy for Finance: Myths and Alternatives”
Salewa Olawoye (York U), “Mainstream Economics: The dangerous (intentional?) omission of exclusion and inequality”
Discussants:
Salewa Olawoye (York U)
Sonya Scott (York U)
Vicki Zhang (U Toronto)
Friday June 2, 2023
PEF Panel: Development Pluralisms: Then & Now
8:30am – 10:00am
Chaired By: Anupam Das (Mount Royal U)
Panelists:
John Serieux (U Manitoba)
Jonathan Jenner (U Manitoba)
Albert Berry (U Toronto)
PEF 25th Anniversary Celebration Event: 1919 Strike Tour! (see details below regarding sign up)
Winnipeg Downtown 1919 Strike Tour (PEF 25th Anniversary Event)
10:30am – 12:00pm, Friday, 2 June 2023
Space is limited and will be based on a first come first serve basis. Please email to confirm attendance to Anupam Das, adas@mtroyal.ca
PEF: Galbraith Prize in Economics
Walking With Giants: What Galbraith Can Teach Us About This Moment in Economic Thought
Presenter: Armine Yalnizyan
2:00pm – 3:30pm
PEF Panel: Economic Thought
4:00pm – 5:30pm
Chaired By: Fletcher Baragar (U Manitoba)
Panelists:
Bill Gerrard (U Leeds)
Robert Chernomas (U Manitoba)
Anna Klimina (U Saskatchewan)
Saturday June 3, 2023
CSLS-PEF Panel Session: Inflationary Shocks, Real Wages, and Income Distribution in Canada since 2019: Are We Witnessing a Wage-Price Spiral?
8:30am – 10:00am
Chaired By: Andrew Sharpe (Centre for the Study of Living Standards)
Panelists:
Mario Seccareccia (U Ottawa)
Danny Leung (Statistics Canada)
Tim Sargent (Centre for the Study of Living Standards)
Angella MacEwan (CUPE)
PEF Panel: John Loxley and Progressive Economics
10:30am – 12:00pm
Chaired By: Robert Chernomas (U Manitoba)
Panelists:
Jim Stanford (Centre for Future Work)
Raina Loxley (Pollock’s Hardware Co-op)
Shauna Mackinnon (U Winnipeg) and Lynne Fernandez (Canadian Centre for Policy Alternatives)
PEF Annual General Meeting
2:00pm – 3:30pm, Saturday
The full CEA programme information, including presenter bios and brief descriptions of each PEF session can be found here.
]]>The latest chapter, on health, is now available.
A ‘top 10’ overview of the chapter can be found here:
https://nickfalvo.ca/health-and-homelessness/
All information pertaining to the book can be found here:
https://nickfalvo.ca/book/
My ‘top 5’ overview of the chapter is available here: https://nickfalvo.ca/subsidized-rental-housing-and-homelessness-under-albertas-first-ucp-government/
]]>Here are 10 things to know:
In sum. When one accounts for both inflation and population growth, this budget announced several cuts, all of which would be unnecessary if provincial taxes were even modestly higher. Measures pertaining to both income assistance programs for low-income households and affordable housing will help address both poverty and a lack of affordable housing.
I wish to thank the following persons for assistance with this blog post: Jacqueline Alderton, Yale Belanger, Ron Kneebone, Heather Morley, Meaghon Reid, Sylvia Regnier and several persons whose identity is being protected.
]]>A ‘top 10’ overview of the chapter can be found here:
https://nickfalvo.ca/emergency-facilities/
The full chapter is available here:
https://nickfalvo.ca/wp-content/uploads/2023/02/Falvo-Chapter-4-Emergency-Facilities-30jan2023.pdf
And all material related to the book can be found here:
https://nickfalvo.ca/book/
This common claim is surprising, and not consistent with economic evidence. Canada’s economy is not “running hot” by any concrete measure. Here are six:
1. Final domestic demand in Canada has been weakening for over a year, and was shrinking in the third quarter of 2022 (latest data). Were it not for the export sector (with the trade balance lifted by both growing exports and falling imports – the latter itself a sign of weakness not strength), GDP growth would have been negative.
2. An enormous build-up of business inventories (the biggest in history by far) has also supplemented GDP growth over the last 2 quarters. Partly this reflects firms rebuilding stocks after the supply chain disruptions of the lockdowns. But partly it is also a sign that consumer sales are falling. This build will soon reverse as retailers reduce orders to draw down large stockpiles, and consumer spending slows further. The resulting contraction in inventories will exacerbate negative GDP results in coming quarters.
3. Real consumer spending contracted in the third quarter of 2022. The latest monthly retail sales data (for November) also confirms a decline in real retail sales. They will fall further as interest rate hikes bite into disposable income for mortgage holders and other borrowers. Indeed, extra debt charges paid by households ate up 0.6% of GDP in the third quarter (again, by far the biggest quarterly increase in history), and will take bigger chunks ahead.
4. Residential construction investment fell 15% in the third quarter of 2022, on top of a 32% fall in the second quarter. Construction has been the strongest engine of post-COVID recovery: in fact, as revealed in our recent Centre for Future Work report on weak business investment, 2021 was 1st time ever in Canada that residential investment exceeded all non-residential business investment (on structures, machinery, and intellectual property). Now it’s in freefall.
5. With all these headwinds, real GDP growth has slowed to a crawl in recent months (0.8% annualized in October, latest data). The gap between actual and trend GDP has been widening since rate hikes started. Canada’s economy is not “overheated”, operating above it’s potential. Rather, premature austerity (with interest rates rising and government spending falling) is locking in a condition of underutilization, with both aggregate demand and aggregate supply well below where it could (and should) be.
6. Even in the labour market, the evidence of an economy “running hot” is not conclusive at all. Job-creation has experienced two good months (October and December) out of the last nine. Remains to be seen whether those were blips, or whether real momentum has been reestablished after a very weak spring-summer (when employment declined).
The main data point invoked to support the “running hot” hypothesis is the unemployment rate, which at 5% is at a historic low. But the level of the unemployment rate only measures the current labour supply-demand balance. It does not indicate future economic trajectory: the economy can start with low unemployment, yet still experience a recession. And there are many factors (including demographic changes, and COVID disruptions to normal immigration patterns) which explain why the unemployment rate is relatively low, despite an economy that is actually lacking macroeconomic momentum.
An economy that was really “running hot” would have much stronger GDP growth (in the range of 4-5%, not under 1%), strong growth in leading indicators (like construction, business sentiment, and investment intentions), and rising real incomes. Canada has the opposite on all these measures. It is not credible to suggest the economy is “running hot”.
Despite this evidence, the Bank of Canada will almost certainly hike its interest rate again on Wednesday anyway. The Bank has been explicit that it targets inflation, not employment or GDP growth. Inflation is falling (for reasons unrelated to their interest rates), but nowhere near its 2% target. The Bank will keep hiking (even if economy enters recession) until its target is clearly in sight.
We can have an honest debate about whether this is the appropriate course of action. But we should be honest about the existing condition of Canada’s economy – which can be verified empirically. It isn’t “running hot.” It’s pretty cold already, and definitely getting colder.
]]>Don’t believe them. Here are a few data points on the argument that the chains haven’t actually profited from inflation, since their profit margin has (supposedly) stayed the same. Here’s why I think that argument is not convincing:
1. Grocery store margins HAVE increased notably since the pandemic. The arguments we’ve heard this week are usually based on year-over-year changes in margins, given the controversy that’s erupted in Parliament this year. They argue margins haven’t changed much OVER THE LAST YEAR. That’s true. But the BIG increase in grocery store margins was earlier in the pandemic: amidst the panic, toilet paper hoarding, and other unique circumstances of the lockdowns. Margins jumped, and have stayed high relative to historical norms — even after economic re-opening and ‘normalization’.
Here’s the industry-wide margin for food & beverage retailing from Stats Can. The margin (after tax net income as share total revenue) jumped in mid-2020, and has stayed high. The average margin since the lockdowns is three-quarters higher than in the period 2018 to 1Q 2020 (2.85% since 2Q20, vs. 1.62% before). That increase is even bigger if you use a longer pre-COVID average (eg. back to 2015). Company-specific financial data shows a similar trend (not surprisingly, since the 5 biggest chains make up 80% of that Stats Can industry total).
As shown in this graph, the MASS of profits in food retail has more than doubled since pre-COVID levels (as discussed in our new Centre for Future Work report): from $2.4 billion in 2019 to $5.2 billion over the latest 12 months (and a projected $5 billion for 2022, based on first three quarters data).
2. EVEN IF the sales margin had not increased, if the only reason revenues were growing was pure inflation in input costs, then even a CONSTANT margin would amount to supermarkets increasing their profits through pure inflation. Investors make investments based on return on equity, not sales margins. A constant sales margin on an inflating revenue base definitely translates into increased profits. (That’s why real estate agents became millionaires during the housing bubble, even though their ‘margin’ didn’t change.)
Consider this simple example. A grocery store’s expense statement, simplified, includes:
• Cost of merchandise/inventory, by far the biggest cost (let’s say $90 million)
• Operating, overhead and labour (let’s say $10 million)
Let’s assume a 2% sales margin on top of costs; total revenue then equals $102 million.
Now, if all purchased inputs grow in cost by 10%, and grocers simply pass on a 10% increase in final prices (as per the narrative promoted by the supermarkets), what happens?
• Merchandise: $99 million (up 10%)
• Other costs: $10 million
• Revenue: $112.2 million (up 10%)
• Profit = $3.2 million (2.85% margin, that’s higher).
Even if the supermarkets’ direct operating costs increased by 10% as well (and it’s not clear why they would, as a result of the supply chain issues that have bedeviled agricultural markets reently), you still get a higher mass of profit and a higher rate of profit (relative to invested capital, which hasn’t changed as a result of any of this) thanks to higher costs and a proportional increase in prices:
• Merchandise: still $99 million
• Other costs: $11 million (now also up 10%)
• Revenue: still $112.2 million
• Profit = now $2.2 million. That’s still 2% of total revenue, so the margin hasn’t changed – but profit is higher in absolute terms and also as a ratio to invested capital (which is what investors look for).
Even in this scenario, the most generous one possible for the supermarkets, the companies have increased both the mass and rate of profit by one-tenth, for doing nothing other than ‘passing along’ higher costs (and then some!) to consumers. So the argument that a constant margin means they haven’t profited from inflation isn’t valid. (More important, the margin HAS increased.)
3. The above example assumes the only thing that’s changed is the nominal value of a given amount of physical sales. If revenue growth was due to a greater volume of actual business, then it would be reasonable for supermarkets to generate higher profits (and in that case they would have had to increase investment in stores, equipment, etc. in order to supply that growing volume – so the final impact on return on equity might be a wash). But in fact, the OPPOSITE is true: the physical volume of business flowing through the supermarkets has been FALLING, not growing. There was an enormous temporary spike in sales during the lockdowns (panic buying), mostly reversed by mid-2020. Then, more recently, the quantity of sales has steadily shrunk: in part because people could eat out again, but also because Canadians have responded to record food inflation with reduced quantities of purchases (and also substitution to cheaper products).
The volume of sales in supermarkets is now lower than it was before the pandemic hit – which is unusual given population growth since then. So the MARGIN of profits, and the MASS of profits, and the RATE of profits have all increased – but all generated from a SMALLER volume of actual physical business. That is definitely proof that the industry is profiting unusually from the current conjuncture of supply chain disruptions, inflation, and consumer desperation.
4. Finally, if in fact the problem was all driven by supply shocks that supermarkets have merely been forced to ‘pass on’ to consumers, there should have been a REDUCTON in profits (however measured: margin, mass, rate), not mere constancy in margins (which in fact increased). An inward shift of the supply curve in any normal commodity market should lead to reduced volume, increased price, and reduced profit (or ‘producer surplus’). The special case in which that wouldn’t occur, allowing profits to be perfectly protected, is under perfectly inelastic consumer demand (a vertical demand curve). In this special case, quantity and profit do not change, the price rises fully in response to the shift in supply, and consumers bear ALL the impact of the supply shock (producers bear none). That is not a valid depiction of the real grocery industry: to be sure, food demand is relatively inelastic (in that any given increase in price leads to less-than-proportionate decline in demand), but it is not PERFECTLY inelastic (as proven by the above data confirming the shrinking volume of grocery sales in Canada). In this regard, even MAINTAINING a given profit, let alone increasing it, would be unusual if the source of the problem was solely higher input costs.
Can we blame the problem of food price inflation on greed? Yes and no. Greed existed before COVID came along. But the combination of greed (more politely termed “profit maximization”), along with supply chain disruptions and consumer desperation during and after the pandemic, along with oligopolistic pricing power, clearly explains much of the pattern of recent inflation in Canada (especially for the essential commodities that have been the biggest drivers of inflation: energy, housing, and food). To claim that supermarkets and other firms are innocent conduits, merely passing on higher costs, is not empirically valid. As discussed in our recent Centre for Future Work paper, supermarkets are not the worst example of profiting from inflation (the energy industry is, far and away). But supermarkets have clearly profited from the post-pandemic inflation, and richly deserve the critical attention they are receiving.
In sum, the hard numbers clearly contradict the claim that supermarket profit margins are stable and no extra profits have been earned.
]]>A ‘top 10’ overview of the report can be found here: https://nickfalvo.ca/the-co-op-difference-comparing-co-op-and-market-rents-in-five-canadian-cities/
A French version of the ‘top 10’ overview can be found here: https://nickfalvo.ca/la-difference-cooperative–une-comparaison-de-lhabitation-cooperative-et-des-taux-du-marche-dans-cinq-villes-canadiennes/
]]>A summary of the chapter can be found here (in English): https://nickfalvo.ca/rough-sleeping-and-encampments/
A French version of the summary can be found here: https://nickfalvo.ca/dormir-a-la-dure-et-les-campements/
The full chapter can be found here: https://nickfalvo.ca/wp-content/uploads/2022/10/Falvo-Chapter-3-Rough-sleeping-and-encampments-12oct2022.pdf
All material related to the e-book can be found here: https://nickfalvo.ca/book/
]]>Chapter 2, focused on theory, has just been published.
The full chapter is available here: https://nickfalvo.ca/wp-content/uploads/2022/09/Falvo-Chapter-2-Theory-and-homelessness-19aug2022.pdf
A ‘top 10’ overview of the chapter can be found here: https://nickfalvo.ca/theory-and-homelessness%ef%bf%bc/
A French version of the ‘top 10’ overview can be found here: https://nickfalvo.ca/theorie-et-itinerance/
All material related to the book is free of charge and available here: https://nickfalvo.ca/book/
]]>
A ‘top 10’ overview of Chapter 1 is available here (in English): https://nickfalvo.ca/what-causes-homelessness/
An ‘top 10’ overview in French is available here: https://nickfalvo.ca/quest-ce-qui-cause-litinerance/
The full chapter is available here (English only): https://nickfalvo.ca/wp-content/uploads/2022/04/Falvo-Chapter-1-What-causes-homelessness-4apr2022.pdf
A ‘top 10’ overview of the essay can be found here (in English): https://nickfalvo.ca/what-can-municipalities-do-about-homelessness/
A ‘top 10’ overview of the essay can be found here (in French): https://nickfalvo.ca/que-peuvent-faire-les-municipalites-canadiennes-pour-contrer-litinerance/
The full essay can be downloaded here (English only): https://munkschool.utoronto.ca/imfg/report/the-municipal-role-in-housing/
]]>My guest editorial can be found here (in English): https://ojs.lib.uwo.ca/index.php/ijoh/article/view/14810/11659
My guest editorial can be found here (in French): https://ojs.lib.uwo.ca/index.php/ijoh/article/view/14810/11660
The special edition of the journal can be found here: https://ojs.lib.uwo.ca/index.php/ijoh/issue/view/1370
]]>My overview can be found here: https://monitormag.ca/articles/ten-things-to-know-about-the-recent-alberta-budget
]]>I break it down in this ‘top 10’ blog post: https://nickfalvo.ca/the-minister-of-housings-mandate-letter/
]]>Here’s an overview of my presentation: https://nickfalvo.ca/covid-and-homelessness-ten-things-to-know/
]]>I wrote about the need for more supportive housing for semi-independent seniors.
Here’s my submission: https://nickfalvo.ca/more-supportive-housing-for-semi-independent-seniors/
]]>A summary of the report is available here: https://nickfalvo.ca/innovation-in-homelessness-system-planning-a-scan-of-13-canadian-cities/
]]>All information on the training is available here:
https://mailchi.mp/3adbcfc2fcad/e-news-cih-canada-445734?e=856cbdaeac
Here’s the link: https://nickfalvo.ca/ten-things-to-know-about-the-green-partys-housing-platform/
]]>I look at data from 1990 to 2019/20 to ensure to ensure I capture trends in the sector, which, because of its capital intensity, tend to be relatively slow-moving. I look at electricity generation mix by country based on International Energy Agency (IEA) data. I present it in seven groups: nuclear, hydro, non-hydro renewables (this includes wind, solar), natural gas, petroleum products, coal products and biomass and waste. To control for aggregate generation changes over time within a country and for country size differences, I present these in percentage terms. But these technologies are just means to an end, which is sector decarbonization – I source sector emissions directly from the respective country National Inventory Reports (NIR) submitted annually to the Secretariat to the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC format combines emissions from public electricity and heat, which is the same combined manner that the IEA presents emissions data. Ideally, we would only include public electricity emissions but relative few countries present this on a stand-alone basis. Public heat provision, generally in the form of district heat systems, is generally a few percentage points of public electricity. To control for differences over time and country differences I present sector emissions intensity (kg CO2/MWh). From an accounting perspective, so as to not “double count”, the UNFCCC does not allocate emissions from the generation of electricity from the combustion of biomass to electricity (the Energy Sector), but rather to the Land Use, Land-Use Change and Forestry (LULUCF) sector. For this analysis, given that I am focussing on the electricity sector only, and not the economy as a whole, I include emissions from the generation of electricity from the combustion of biomass to the electricity sector. Lastly, I source household electricity prices from the IEA, which include base prices, plus any consumer-oriented or taxes and specific levies, in USD(PPP)/MWh. After I provide an overview of the countries I present some initial comparative analysis, which I expect to fine tune as I cover more countries in future blogs, including with more sophisticated multivariate regression analysis.
Country Overviews: Canada, France, Germany & Japan
Starting close to home, Figure 1 shows that the technology mix in Canada has been relatively stable over the last 30 years, with a high percentage (ranging between 70% to 80%) of generation coming from zero-emissions technologies (nuclear, hydro and non-hydro renewables). This has resulted in relatively low emissions intensity over the study period, with three phases: a decrease from the displacement of coal by nuclear and hydro from 1990 to 1996; an increase as some nuclear generation went off line from 1996 to 2003; and a steady decline from 2004 to 2019 as nuclear comes back on line and non-hydro renewables are introduced and expand to 6%, which together with gas increasingly displace coal. Household prices increased moderately during almost the entire period, but started to increase in 2015, primarily due to the increase in high-contracted-priced non-hydro renewables in Ontario (see my earlier blogs).
Crossing the Atlantic, Figure 2 shows that the technology mix in France has also been relatively stable over the last 30 years. France has had an even higher percentage (around 90%) of generation coming from zero-emissions technologies, resulting in relatively very low emissions intensity over the study period. Like in Canada, changes in emissions initially relate to the addition/subtraction of zero-emission technologies, but starting in the mid 2000’s there was also substitution away from higher-emitting coal to lower emitting gas. Household prices were stable until about 2009, after which they increased by about 6% per year in the ten years to 2020.
Moving north-east in Europe, Figure 3 shows that the technology mix in Germany has been much more dynamic over the last 30 years. For the period from 1990 to about 2016 Germany had a relatively low percentage (between 30% to 40%) zero-emission generation, resulting in relatively very high emissions intensity. This is specially given the case that its largest emitting generation was coal. Emissions decreased from 1990 to about 1999 as nuclear and hydro increased and gas displaced some coal and then stabilized over the next decade until the large policy-driven decrease in nuclear (in reaction to the Fukushima accident) in 2011 resulted in a large spike in emissions that were not bright back to trend by fast-increasing non-hydro renewables until 2015-16, which by 2020 accounted for 31% of generation. Household prices in Germany were stable until about 2000, after which they increased by more than 8% per year for 13 years to 2013, after which they increased moderately at 1% per year to 2020. As in Ontario, who modeled their Green Energy Act (GEA) on the Energiewende, the increase in prices in Germany are primarily due to the increase in high-contracted-priced non-hydro renewables.
Heading to Asia, Figure 4 shows that the technology mix in Japan has also been relatively dynamic. For the period from 1990 to about 2010 Japan had a relatively low percentage (between 30% to 40%) zero-emission generation, resulting in relatively high emissions intensity. It was lower than Germany, however, because it relied on relatively lower-emitting gas and oil and less on higher-emitting coal. Emissions decreased from 1990 to1999 as nuclear increased and then increased moderately as nuclear decreased slightly until 2010. As a policy matter in reaction to the Fukushima accident in 2011, however, Japan took most of its nuclear generation offline. This decrease resulted in a very large spike in emissions, as zero-emission generation dipped to only 10%. Emissions decreased moderately to 2019 as some nuclear was brought back on line and non-hydro renewables increased to 9% of generation. By 2019 zero-emission generation, at 21% was only half of what Japan had achieved in 1998. Household prices increased moderately until after 2011, when they increased at 4% per year to 2019.
Comparative Analysis and Discussion
Figure 5 shows the emissions intensity for the four countries from 1990 to 2019. It confirms that due to their large legacy zero-emission generation grids of 70%-80% for Canada and 90% for France these are the countries that have already deeply decarbonized their electricity sectors, both hovering around 100 kgCO2/MWh in 2019. After relatively stable but relatively very high emissions for most of the study period, Germany finally broke through the 550 kgCO2/MWh threshold in 2015 and has reduced emissions intensity by 6% since then to reach 420 kgCO2/MWh in 2019. Japan had been unable to make much progress from 350 00 kgCO2/MWh before 2011, after which emissions spiked and have since slowly been reduced to about 400 kgCO2/MW.
Figure 6 plots emissions intensity against the % of zero-emission generation for every year and country in the study. To give a sense of the direction of the movement in this two-dimensional space, I identify years 1990, 2000, 2010 and 2019 for each country. The strong negative correlation (downward sloping trendline) confirms the almost linear tradeoff between the amount of zero-emission generation and emissions. The time progression, with the exception of Japan, is from higher emission down and to the right. I am interested in seeing whether this linearity holds for the USA, a country for which much of the decarbonization has been attributed to the switch from higher–emitting coal to lower-emitting gas. Stay tuned for future blogs.
Figure 7 shows household prices for the four countries from 1990 to 2020 and confirms our earlier observation that while all prices have increased after a period of relative stability, the prices in some countries began increasing earlier and faster than in others. Germany is the outlier in this respect, where prices have almost tripled since 1990.
I am interested in exploring affordable decarbonization. From this perspective, both Canada and France had already achieved this by 1990 and so the process of decarbonization, and whether it was affordable, would involve looking further back in time. For Canada that may be 1960s to 1980s when many of current large hydro-electric projects and nuclear generation stations came online to displaced emitting technologies. For France it would be from the mid 1970’s to 1990 when its nuclear fleet displaced fossil technologies. In both cases, however, given that both countries started the period as the two lowest-priced countries in the sample, it is reasonable to assume that the transition was likely affordable, and certainly no less unaffordable than the approaches adopted in Germany and Japan prior to 1990. After that year and specially for Germany from 2000 and the coming into law of the German Renewable Energy Sources Act (EEG) and the introduction of high-contracted-priced non-hydro renewables, we see very significant price increases to 2015 but no reductions in emissions until that year because, as discussed above, Germany was in parallel reducing nuclear generation.
In these last two figures I start an initial correlation analysis, which I expect to fine tune as I cover more countries in future blogs, including with more sophisticated multivariate regression analysis. In my previous blogs I have discussed studies showing that any increases in electricity prices have been mostly due to the introduction and growth of non-hydro renewables, due to their higher-than market contracted prices and broader integration costs. This is certainly the case in Ontario, Canada and Germany. I am interested if this holds in other countries and what is the likely scale of the impact. I begin with the simple correlation analyses in Figures 9 and 10.
Figures 9 and 10 separate out zero-emission generation into dispatchable nuclear and hydro and intermittent non-hydro renewables and plots them against prices to examine any corresponding correlation. To also provide a sense of the direction of the movement in this two-dimensional space, I identify years 1990, 2000, 2010 and 2019 for each country. Figure 9 shows a generally negative (downward sloping) correlation, indicating that nuclear and hydro are correlated with lower prices. Figure 10, on the other hand, shows a generally positive (upward sloping) correlation, indicating that non-hydro renewable are correlated with higher prices. Based on prior studies, we knew that for Canada (via Ontario) and Germany this non-hydro renewables/higher price association had been shown to be stronger, of statistical significance suggesting causation, but it is good to replicate this via a simple correlation analysis. Looking at Figure 9 and 10 together, this correlation also holds for France and to lesser extent Japan. Note to my inner econometrician – there could be some time effect in the last decade or two (for example the introduction of liberalized electricity markets) that could separately be contributing to higher prices and thus could be a confounding variable to the simple non-hydro renewables/higher price association… That statistical question to be resolved down the road once I review a larger number of countries.
Next Steps
I am expecting to be able to cover four other OECD countries in the edition of this series, hopefully to come out in a few weeks, time permitting. I am aiming to include the USA, either Australia or New Zealand, and two countries in Europe.
]]>It’s available here: https://nickfalvo.ca/ten-things-to-know-about-the-bloc-quebecois-housing-platform/
]]>It’s available here: https://nickfalvo.ca/ten-things-to-know-about-the-liberal-partys-housing-platform/
]]>The announcement is not surprising as some, including myself, see it as inevitable, for reasons discussed below. It will also likely be one of those campaign announcements that will face an up-hill battle in implementation, much like a proposed wealth tax. Despite a electoral mandate to carry it out, I expect that “interior” opposition and technical challenges will have this proposal barely get off the campaign platform or suffer a death of a thousand cuts in the political-bureaucratic process.
This is not to say if should not be considered.
Globe and Mail columnist Andrew Willis, who seems now to be trotted out to give op-eds in defence of the entrenched interests of Canadian finance, was wringing his hands in Friday’s paper that the election campaign “has become an attack on big business” , that bank executives feel “betrayed by the Liberals’ move” and are wondering when banks and lifecos “stopped being part of the economic solution”.
Not sure is Willis is someone who savours irony, but to the left (!) of his front page op-ed in the Report on Business is a report that “all six major banks surpassed analysts’ predictions – several of them by wide margins – as they earned a combined $15.2-billion in profit in the quarter ended July 31”.
Focusing just on banks here, the Canadian bank industry, dominated by the Big Six, is the most consistent profit centre in Canadian economic history. While other sectors, (manufacturing, oil and gas, retail distribution) have risen and fallen (and risen and fallen again, or just hollowed out and died), Canadians banks tend to post positive net income, quarter after quarter. Dividends are distributed and senior bank executives receive bonuses on top of a already high base salaries. Bonuses, or performance pay, of CEOs is often tied to meeting profitability targets.
Willis rightly notes that “bank executives (..) worked hand-in-glove with the government to provide COVID-19 relief – granting $5.5 billion in mortgage flexibility, waiving $112-million in personal banking fees”. This wasn’t an act of altuism, but of self-interest, or survival by the banks. A wave of debt default by thousands of households in the first wave of the pandemic would not only have wiped out quarterly profits but would have threatened bank stability. And with it, the stability of the Canadian economy. No more bonuses.
The banks and the federal government have been working hand-in-glove since the mid-1980s with the forging of a new bank regulatory regime, the policy response to the collapse of two Western Canada banks in 1985. This new regulatory relationship seeks to ensure continued stability of Canadian banks. We saw this when the Big Six emerged relatively unscathed from the 2008 financial crisis. But also, except for few episodes of quarterly losses experienced by some banks, the Big Six have been consistently profitable since at least the mid-80s, through the 2008 financial crisis and again through the 2020-2021 COVID crisis. The bank bargain with the Canadian state is one of “stability with profitability”. Or in the words of the Canadian Bankers Association, “when banks are profitable, they are stable. When banks succeed, the economy and communities prosper.”
It should not be missed that some of the revenues earned by the Canadian banks come from fees earned by book running the large debt issuances by the federal and provincial governments to support the large Canadian economy during the pandemic.
That a federal party is looking for the banks to pay more to play the great game of Canadian finance, a game that makes them profitable, is hardly surprising, especially given that the government sector has largely picked up the tab in this latest crisis.
]]>
It’s available here:
https://nickfalvo.ca/ten-things-to-know-about-the-federal-conservatives-housing-platform
I’ve written a ‘top 10’ overview of the housing components of the platform. My overview is available here: https://nickfalvo.ca/ten-things-to-know-about-the-federal-ndps-housing-platform/.
]]>Here’s a ‘top 10’ overview of the final report: https://nickfalvo.ca/supporting-indigenous-residents-at-horizon-housing/
]]>But let us set aside that financial disaster for now…. In this post I want to focus on climate, and specifically on greenhouse gas (GHG) emissions and carbon-pricing schemes (carbon “tax” or “taxes” for short). Despite grave governance errors and poor policy implementation that resulted in Canada’s highest electricity systems costs, one very significant Ontario achievement was that in a short decade it was able to wean itself off coal generation and reduce sector GHG emissions by more than 90%. However, as a result of a series of recent operational and policy decisions, Ontario is in danger of losing some of these hard fought gains.
The relative and absolute success of Ontario’s achievement to eliminate coal from the electricity grid is evident from Figure 1, which shows GHG emissions intensity of the 10 provincial electricity grids and of Canada as a whole from 2005 to 2019. In 2005 Ontario was at the Canadian average intensity of around 0.200 tCO2/MWh, but after a 90% reduction by 2019, Ontario is now one of six very low emission provinces, along with PEI, Newfoundland, Quebec, Manitoba and BC. On the other side of the ledger are New Brunswick, Nova Scotia, Saskatchewan and Alberta, all of which still have significant coal, coke and oil generation (combined ratios of 18%, 52%, 30% and 42% for 2019, respectively for each of these four high-emission provinces).
Gas Electricity Generation
Now that coal generation has been eliminated in Ontario, the only GHG emitting source in the electricity sector is gas generation. Figure 2 shows gas generation in Ontario from 2005 to 2020, and projections to 2030 based on the average of Scenarios 1 and 2 from Ontario’s Independent Electricity System Operator (IESO) 2020 Annual Planning Outlook (APO).
Figure 2 shows that coming out of the 2002 Ontario electricity crisis, gas capacity was running at around 5 GW. However, based on a series of Ministry of Energy (MoE) directives, the monopoly government procurement agency, the Ontario Power Authority (OPA) – whose functions have been folded into those of IESO – procured additional gas plants so that capacity doubled from 2007 to 2012, to the current range of between 10-11GW. Output doubled as well, but the average capacity factor (the % of actual vs. potential output if the plant was to run 24/365) remained around 20%. With declining output over the last 5 years, the capacity factor has now dipped to 10%.
Modern gas plants are designed for, and in most other countries run, at much higher capacity factors. The unnumbered figure below for the USA as a whole shows the distribution and average capacity factors for gas plants for 2005 and 2015 (increasing from 35% to 56%). From a post-facto perspective, it is clear that much, if not most, new MoE-centralized procurement of gas generation in Ontario after 2005 was socially unnecessary. As I have argued in the past, this over-procurement resulted in excess generation capacity in the grid that still has to be paid for and is one of the main drivers of why Ontario has the highest electricity system costs in Canada.
Emissions and Carbon Taxes
Now back to the future… and other acronyms….
Along with creating OPA and IESO, the Conservative sector reforms of 2002 also split up the provincially-owned Ontario Hydro into a generation-only corporation (Ontario Power Generation (OPG)) and a transmission entity, Hydro One (which also retained the distribution networks of rural areas not served by the 70-odd municipally-owned local distribution companies (LDCs)). OPG remains a 100% provincially-owned Crown corporation (Canadian terminology for what is generally referred to as a “state owned enterprise” (SOE), while Hydro One has been 51% privatized.
In 2019 OPG announced that it had decided not refurbish its Pickering Nuclear Generating Station (PNGS) and to shutter it in 2024-25. Ontario will need to replace that 20-23 TWh of output to make sure the lights stay on. Figure 2 shows that IESO projects that nearly all of that “missing output” will be taken up by increasing gas output from current gas plants, increasing gas output from the current 10 to 30 TWh by 2030. This will push Ontario gas capacity factors to a “record” 30% by 2030 – still 5% below what the USA achieved in 2005 and 26% below 2015 levels!
Figure 3 shows the emissions impact of this move away from nuclear to gas. GHG emissions from gas move more-or-less in step with output and are expected to increase to 10-11 MT for the 2027-2030 period, from the current range of about 4 MT. As Figure 3 shows, that 7MT increase to 11MT in 2030 would result in the highest ever emissions in Ontario for gas. And this is with the most modern and efficient gas plants. Figure 3 shows that gas emissions intensity has dropped significantly as newer gas plants have come online, from generally over 0.500 tCO2/MWh earlier in the period, to an average of 0.408 from 2014 to 2019. In its APO IESO expects this to decrease slightly to 0.390 by 2030.
So why would OPG decide to shutter PNGS? Clearly not for climate reasons, in spite of their net-zero commitment by 2040; under the current provincial Conservative government OPG went on a buying spree in 2019, purchasing two large existing gas plants from Trans-Canada Energy (TCE) and the remaining 50% of two others, so that under its newly-formed subsidiary Atura Power, it became the single largest gas generation company in Ontario with 2.7 GW of installed capacity. Adding to that is the OPG-held Lennox dual-fuel generation station and its shares in other gas generating stations, so OPG has a total has installed gas installed capacity of 4.8 GW or nearly half of installed gas capacity in Ontario.
The Market Surveillance Panel (MSP) of the Ontario Energy Board (OEB), the electricity sector regulatory agency, prepares semi-annual monitoring reports on the IESO-administered markets. In Report #32 released in July 2020 it noted the potential market power concerns associated with having one generation company, OPG, having 48% of installed gas generation capacity and 48% total Ontario installed capacity after its acquisitions. This was after the original recommendations on market opening in 2002, via the Market Power Mitigation Agreement (MPMA), that OPG reduce its market share of installed capacity from 90% pre-reform to 35%. It has overshot that 35% to the current 48%.
Why would the provincial Conservatives, the party of small business and free enterprise, allow OPG to bulk up? One possible explanation is that OPG could be a more attractive entity for privatization. That was the original plan of the provincial Conservatives in the 2002 reforms, but they backed off that initiative due to public opposition. It is perhaps ironic that the 51% privatization of Hydro One was done by the Liberals, that had apposed such selling off in 2002.
Speaking of politics, keen observers recall the out-sized role that gas generation and specific gas plants have played in Ontario politics. The “gas plants scandal” during the 2011 provincial election wherein the governing Liberals relocated two gas plants originally slated for Oakville and Mississauga, contributed to the resignation of the Liberal Premier McGuinty in 2013 and the criminal conviction of his Chief of Staff David Livingstone for “mischief in relation to data” and “attempted misuse of computer system to commit mischief” and served 35 days in jail in the summer of 2018. Perhaps ironically, it was the TCE-owned Oakville gas plant (that the Auditor General estimated cost tax-payers $675 million to relocate), that was eventually built in eastern Ontario near Bath. That Napanee generation station was one of the two that was sold by TCE to OPG in 2019.
So if the OEB and MoE won’t provide market power due diligence over OPG and the MoE will not do so from a climate perspective, perhaps Canada’s or Ontario’s carbon taxes can come to the rescue and mitigate this climate reversal?
Unfortunately, not as currently planned…..
Figure 4 shows the minimal effect that the current and proposed carbon taxes, as currently-designed, are likely to have. I divide the time-line into pre-carbon tax (2005-2018) and post-carbon tax (2019-2030) periods. Data is from the same sources as in Figures 2 and 3. The first period coincides to the coal phase-out, which was done without a carbon tax, so I designate the coal and gas emissions as “untaxed”. This is a fundamentally important political-economy consideration – carbon taxes are neither necessary nor sufficient for decarbonization. But public ownership sure helps… All of the coal plants were owned by OPG; the coal phase-out was made more achievable in Ontario because the financial costs were absorbed by OPG under direction of its sole shareholder, the Province. A different set of challenges, including outright monetary compensation, apply when the State decides to shut down privately-owned coal plants in other provinces (e.g. Alberta, Nova Scotia, etc.).
For the second period, in which the carbon tax applies, the only GHG emitter remaining in Ontario is gas. The political economy of carbon taxes in general and how they relate to a federal country such as Canada could be the subject of a whole series of blogs, as could the relative role that carbon taxes could or should play in a decarbonization strategy.
Federal Backstops and “Made in Ontario” Alternatives
To focus the discussion, therefore, this post will not debate whether or not Canada or Ontario should have a carbon tax. In essence, and as a result of the recent Supreme Court of Canada decision that ruled the Federal “backstop” as constitutional, carbon taxes are the law of the land in Ontario. Given that, this post focuses on whether the carbon tax to be applied to the electricity sector in Ontario is likely to reduce GHG emissions in the short and long term.
So by way of background, Federal law stipulates that the Federal “back-stop” carbon taxes would apply in provinces that the Federal Government does not “certify” have a sufficiently stringent provincial carbon tax. The Federal scheme is based on an end-user fuel-specific levy and a separate large emitter programme, the Output Based Pricing System (OBPS). For example, the former applies to gasoline and diesel bought by consumers to power their cars and natural gas to power their heating furnaces, while the latter applies to specific cement producers and aluminum smelters facilities.
The OBPS is one type of what is generally-referred to as an emission trading system (ETS), sometimes called a “baseline or benchmark and credit” system. The other type of ETS is a “cap and trade” system. This is what had been proposed by the previous Liberal Government in Ontario, which was cancelled by the current provincial Conservatives, which triggered the back-stop application of the OBPS in Ontario for 2019, 2020 and 2021. As set out below, Ontario will return to a provincial programme, the Emission Performance Standard (EPS) in 2022. This yo-yo policy is in contrast with Quebec and BC which have had systems in place for over a decade that have been already “certified” by the Federal Government.
There are number of policy reasons that a jurisdiction would choose to impose an ETS. One of the reasons Governments implement ETS is that their design features make them very flexible to take into account local conditions and preferences. One aspect is degree of coverage, which I’ll cover further below. Another aspect relates to “carbon leakage”, which is the idea that in a globalized economy, over-taxation in jurisdiction A may reduce emissions in A, but could increase emissions in lower-taxation jurisdiction B. Hence, in “high emissions” and “trade exposed” sectors, ETS schemes typically have “benchmarks” or “performance” levels under which emissions are exempt. These levels are typically set at 80% to 95% of sector averages, so that only 20% or 5% of emissions would be taxed, respectively. The idea here is that the large emitters are still incentivized at the margin to reduce their emissions (the marginal carbon tax), but are not “over taxed” and thus made uncompetitive (by the lower average carbon tax, compared to if they had to pay on 100% of their emissions).
Electricity generation is generally not considered a “trade exposed” sector, yet it was included in the OBPS. This was a controversial decision by the Federal government. The technical reasons behind treating the electricity sector as a “trade exposed” has never been specifically explained by the Federal Government – my take is that it constitutes a form of “lowest common denominator” realpolitik compromise necessary to make the back-stop less unacceptable to Provinces with high-emission electricity sectors, such as Nova Scotia, New Brunswick, Alberta and Saskatchewan.
The problem is that Ontario is not a high-emission province. It is a low-emission province. So the OBPS Federal backstop designed for a “lowest common denominator” high-emitting province is a very bad fit in Ontario for three reasons:
Low Stringency
The OBPS established a fuel-specific benchmark of 370 g/kWh for gas generation in Ontario. In effect, this exempts about 91% of gas emissions in Ontario, as set out in Table 1 (which also includes the data included in Figure 4). Last year the Federal Government “certified” Ontario’s proposed ETS, the Emission Performance Standard (EPS), which is now scheduled to take over from the OBPS in Ontario beginning January 2022. The EPS is a carbon copy (pardon the pun) of the OBPS as it relates to the electricity sector, with a one-year lag in the size of the carbon tax.
Neither the OBPS or the EPS set out stringency goals past 2022. Table 1 assumes that the current 370 g/kWh holds to 2030. The Base Case presented in Figure 4 and Table 1 would be a climate failure because it would exempt perhaps 95% of gas emissions by 2030. While the marginal incentive to abate would remain, the average cost to pollute would only be 5%, and so make gas generation cheaper to operate and make it relatively more attractive compared to zero-emission generation against which it competes.
It would also be a financial failure. Figure 5 shows the estimated proceeds from the application of the carbon tax under the Base Case, collecting only about $90 million in 2030, while exempting $1,700 million. In fiscal economics we call this “tax expenditures” the dollar amount of forgone revenues from the application of exemptions or deductions, commonly referred to as “loopholes”.
Increasing Stringency “Alternative A”: Gradual reduction of the Exemption
What would happen if the MoE were to decide to gradually eliminate the current benchmark exemption? Could be in 2023 or in 2030 or some other time. Table 2 shows the static results of Alternative A which would lower the 370 g/kWh benchmark starting in 2022 to zero in 2030 , thus reducing exempted emissions to 0% by that same date. This Alternative A would essentially remove the electricity sector in Ontario from the EPS and have it treated like any other consumer or industry that has to pay carbon taxes on 100% of their emissions.
Figures 6 and 7 are the Alternative A equivalents of the Base Case Figures 4 and 5, showing the evolution of taxed and exempt emissions, and the taxation revenues and tax expenditures, respectively. Note, these are all “static” calculations, assuming (unrealistically) that that there is no abatement as a result of higher stringency – I will leave the calculation of dynamic responses to those with specific models. One example of such modelling, is here, for instance.
Narrow Programme Coverage – Base Case
For carbon taxes to play their theoretical role of revealing socially-optimal prices, coverage should be as broad as possible, including in the electricity sector. This is not the case for the OBPS, which only covers fossil fuel generation and has a fuel-specific benchmark. This means that non-fossil zero-emission generation, including nuclear, wind and solar, are uncovered and therefore are not eligible to receive credits for emissions under the relevant benchmarks. ETS schemes do not have to be designed in this manner – the recently-revised TIER scheme in Alberta covers all generation technologies, resulting in an even level playing field and has been proposed as a better alternative to the OBPS, and by extension, the EPS.
Table 3, which is the Base Case, is how the EPS is currently designed. For illustrative purposes, I have calculated a “typical” forward-looking year, based on the average 2022-2030 period. This includes a period average carbon tax of $100 which is only applicable to gas generation. Table 3 shows that the EPS only covers gas, which has a benchmark exemption of 0.370 CO2 kg/kWh, average emission intensity of 0.391 and output of 22 TWh. The resulting payment in carbon taxes is $45 million for that average/typical year. The formula is (0.391 – 0.370) * 22 * $100 = $45 million.
Sector-Wide Coverage – Alternative B
In contrast, Table 4, which is the Alternative B, is the scenario under which all generation technologies are covered by the EPS, as is the case in Alberta under the TIER. The EPS benchmark could stay the same at 370 g/kWh, but that would create a surplus of sector compliance units (credits). This is not necessarily a problem if other covered sectors in the economy are in deficit, so that as whole the covered sectors are in rough balance. But for this scenario I want to set the benchmark to roughly balance the net tax/credits, relative to the Base Case. I do this by applying the principle of setting the performance level at between 80-95% of average sector emissions intensity. Specifically I set the standard at 0.055 tCO2/MWh in Table 4 so as to have the same net tax/credits as the Base Case ($45 million). Other alternatives are, of course, possible.
Using the same formula, we can calculate what would be the results of Alternative B. One difference would be much higher payments by gas plants. On the other hand, low and zero emission generation would now receive credits. Overall, the net proceeds of the scheme would remain the same. The value of the credits would of course be determined based on trading, but for simplicity I set them in Table 4 to have the same value of as the corresponding carbon tax. As above, these are only static results.
In comparing these two scenarios it is clear from Table 3 that only covering fossil fuel generation sends the wrong climate investment signals with respect to electricity generation. The difference in carbon taxes paid per MWh between gas and hydro, for example is only $2.08/MWh. In contrast, Table 4 levels the playing field by ensuring that zero-emissions technologies are credited relative to gas generation. The difference in carbon prices paid between gas and nuclear, for example, increases by nearly 20 times, to $39.08/MWh, making zero-emission generation relatively much more attractive, which is one of the goals of carbon taxes! Would OPG have made the same decision not to refurbish PNGS and buy nearly 3GW of gas plants if it had faced these set of relative prices reflecting carbon costs?
Further layers of complexity could be added to Table 4 to take into account price, cost and subsidy levels. For example, the Alberta TIER scheme, some non-hydro renewables that are already subsidized are therefore not eligible for carbon credits.
Concluding Thoughts
The provincial Conservatives touted the EPS as a “made in Ontario” solution to climate change. As it relates to the electricity sector, the EPS, when in comes into force in January 2022, is a continuation of the Federal Liberal non-solution that is the OBPS. This is perhaps not surprising because Ontario was one of the three provinces that challenged the constitutionality of the Federal backstop, on which the Supreme Court has recently ruled. In parallel, the provincial Conservatives were working to replace the OBPS with the EPS (there are no plans to replace the federal fuel levy, which continues to apply in Ontario). Given this political context, the provincial Conservatives were never going to make the EPS more stringent than the OBPS, regardless of the conditions “on the ground” in Ontario.
That is a pity, and a wasted opportunity.
As proposed, for the electricity sector in Ontario, the EPS is fatally flawed. One, the electricity sector is neither emissions-intensive nor trade exposed, so it should not be included in the EPS in principle. Two, by only covering non-fossil generation technologies, the EPS tilts the playing field in favour of fossil generation and disincentivizes future investment in zero-emission generation. Three, the EPS will exempt about 91% of fossil generation in Ontario when it comes into effect in 2022, a figure that is likely to increase to perhaps 95% by 2030.
It is clear that the provincial Conservatives will not change course on the electricity file before the next Ontario provincial election scheduled for the summer of 2022. By then they would have spent another $6.5 billion of Government revenues to keep electricity prices low and out of the headlines. Also by that time the EPS would have been in place for half a year, with gas generators paying carbon taxes on 9% of their emissions. Such low emissions carbon tax coverage is likely to have a minimal impact on end-user electricity rates, which is perhaps why it is favoured by the current Conservative Government? The inequity, however, of residential consumers using the very same gas would of course continue to pay the fuel levy on the full 100% of their consumption to heat their homes, is presumably something that they would prefer not be shouted from the rooftops….
Will electricity play its out-sized role in the 2022 election that it did in the three previous Ontario elections? I think yes – the decision to shutter Pickering and thus increase GHG emissions from additional gas generation and not to seriously tax those emissions are all political decisions. Previous elections focussed on political corruption in the handling of the electricity file and on rising electricity prices that increased inequality that drove energy poverty. With heightened public awareness of climate change, the key role that the electricity sector could play in decarbonization in Ontario should make it an important election topic in 2022.
]]>The Fire and the Ashes – Between the Lines (btlbooks.com)
In The Fire and the Ashes, long-time union economist and policy analyst Andrew Jackson looks back on a fascinating career in the labour movement, the NDP, and left politics, combining keen historical analysis with a political manifesto for today.
As one of the few trade union economists in Canada, Jackson brings a unique insider perspective and decades of experience to bear on his critical reflections on the history and changing fortunes of the NDP, the failures of neoliberalism, and the waning and recent renewal of the democratic socialist tradition.
What plays out is a battle of ideas fought by Jackson and the wider left—one meant to rekindle both political veterans and a new generation of activists who believe that a true democracy cannot exist with great inequalities of wealth and political power, and that social ownership and public investment must be brought squarely into the mainstream.
]]>Calling all Canadian students anywhere in the world and all post-secondary students in Canada who are working on papers taking a critical approach to the functioning, efficiency, social, and environmental consequences of unconstrained markets. The winning essays will receive a cash prize of $1,000 for the graduate student category and $500 for the undergraduate student category.
You can download a poster in English or Français. Please help us spread the word and share with your networks and on social media.
Essay submissions should be made to PEFEssayContest2021@gmail.com and must be accompanied by a signed scanned file of the completed PEF Essay Contest Submission Form or fiche d’inscription pour le concours de textes du PEF. The deadline for submitting an essay for the contest is now May 11, 2021.
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CONTENT OF THE ESSAY
Entries may be on any subject related to political economy, economic theory or an economic policy issue, and should reflect a critical approach to the functioning, efficiency, social and environmental consequences of unconstrained markets.
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Concours de textes étudiants – édition 2021
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Textes gagnants
One news story about the Biden program, however, got me thinking about Canada’s climate debates. The story cited a statement of public support for Biden’s plan from the United Mine Workers of America – the largest union in the U.S. coal sector. The UMWA endorsed Biden’s proposal to accelerate the phase-out of coal use, so long as strong guarantees were provided for new job opportunities in renewable energy and reclamation activities, support for health insurance and pensions for affected workers, and other sensible transition measures.
This is, of course, a very positive and overdue position for the UMWA (and other U.S. unions) to adopt, and it attracted considerable media attention. Superficially it might seem contradictory for a coal miners’ union to endorse policies that will accelerate the disappearance of its major industry. But the devastation being wrought by the unplanned, unsupported closure of coal mines – which only accelerated after Donald Trump came to power promising to ‘bring back coal’ – is proof positive that doing nothing, or worse yet trying to resist the accelerating energy transition, is not a good way to protect your members. Anyone who cares about fossil fuel workers (and we all should) must acknowledge this entails supporting the energy transition and protecting workers and communities as it happens – not pretending it can somehow all be stopped.
What struck me about media coverage of the UMWA statement, however, is how it highlighted something we often take for granted in Canada. Canadian unions (including those representing coal miners and other energy workers) have been saying the same things here for many years. Indeed, for decades Canadian unions and union leaders have taken generally visionary, principled and ultimately effective positions in favour of a supported, fair, gradual transition away from fossil fuels. A union endorsing climate policies and the phase-out of coal would not generate headlines in Canada: it would definitely be a ‘dog bites man’ story, not the other way around. So as the U.S. union movement (and those in other countries) moves forward, and mobilizes its members, in favour of a supported, fair energy transition, perhaps we should take a moment to acknowledge and thank Canadian unions for their often unsung role. Canadian unions have advanced the debate here in many important ways: negotiating practical but important details of transition, and refusing the bait of fossil fuel lobbyists that jobs and sustainability are somehow incompatible.
There are many outstanding examples of leadership from Canadian unions on climate and transition issues. When strong and representative worker voices reject the false dichotomy between saving jobs and saving the environment, the fossil fuel industry and their allies in politics are prevented in their quest to divide the labour movement from the climate movement. While the debate over the economic effects of climate policy is still smouldering in some quarters (just pick up any issue of the National Post), on the whole I think the Canadian discourse has accepted there is no trade-off between climate policy and economic and employment performance. And the careful, constructive positioning of Canadian unions has been an important factor in that success.
There are many examples over recent years of Canadian unions and union leaders whose efforts to defend energy workers have helped us avoid the jobs vs. environment trap that has bedeviled labour movements in the U.S. and some other countries.
For example, it is significant that one of the first uses of the phrase ‘just transition’ was by a Canadian union activist, Brian Kohler: a member of the former CEP who coined the phrase in 1998 to refer to the needed combination of planned energy transition, alternative job-creation, and income supports and transition assistance.
The CEP (which helped found Unifor in 2013, along with the former CAW) remained very active in advocating emissions reduction initiatives in the energy industry, campaigning for more value-added energy refining and petrochemical activity in Canada, and opposing more exports of raw energy. They showed, for example, that more pipelines and raw bitumen exports could never provide a base for stable, decent, value-added jobs.
Unifor also represents members in several industries with a stake in ensuring that the transition to renewable energy is managed effectively and fairly. One high-profile example is the auto industry, which is now restructuring to produce electric vehicles. Unifor’s success in winning major EV investments in Canadian auto plants (often putting more pressure on company investment decisions than Canadian governments do, by making investment an issue in collective bargaining) has reinforced the public’s appreciation of the economic and employment opportunities associated with the energy transition.
The Canadian Labour Congress has also played a crucial role in advancing a positive vision of planned, fair transition – and then fighting effectively for those principles in federal policy-making. For example, the CLC played a vital role in the federal task force on phasing out coal-fired power, that has become an international example for how to achieve this critical environmental step without undue dislocation of workers and communities.
That federal coal transition plan was heavily influenced by the previous experience of the off-coal transition plan negotiated in Alberta, with crucial input and support from the Alberta Federation of Labour. Indeed, the AFL has been a consistent and innovative force for pragmatic regulation of greenhouse gas emissions from energy production, limits on new energy developments, and defending wages and working conditions for energy workers. This is especially important since Alberta has the largest reliance on fossil fuel industries of any province (direct fossil fuel jobs account for around 7% of employment in Alberta). This makes it harder for unions to reject the false choice presented by fossil fuel lobbyists between employment and the environment, but the Federation has done so consistently and effectively. Its 12-point plan, released in 2019, is an excellent example of the labour movement getting on the front foot on the climate and jobs debate. And the AFL’s President, Gil McGowan, has been an outstanding and visionary leader in the fight for decent, sustainable jobs. He pushes back effectively against the onslaught of right-wing, anti-labour attacks from the provincial UCP government and its big business backers – calling out the hypocrisy of Jason Kenney and his backers, who claim they are standing up for Alberta’s workers while stripping away their overtime benefits, workers’ compensation, and job security. Many individual unions in Alberta have also taken very positive approaches on climate issues, showing their members and the broader public that petroleum and mining companies are not actually interested in stable, secure jobs for workers.
Many other unions in Canada have used their voices, their bargaining clout, and their political influence to advance progressive climate and jobs policies in their workplaces and industries. This database, compiled by the York University-based ACW research project, catalogues many innovative contract provisions negotiated by Canadian unions to improve environmental practices at workplaces, educate union members and employers about climate policy, and implement concrete provisions and supports (like job security and notice, retraining, and adjustment assistance) as energy transitions occur. It confirms that Canadian unions are very much ahead of the curve on these issues: playing a vital role in both winning the broader political debate over climate change, but then demanding and winning concrete measures (not token statements) to ensure that the energy transition is fair and inclusive.
Of course, the approach of Canadian unions to climate issues has not been perfect or uniform: there have been tensions and debates, and at times some unions have supported further fossil fuel developments on the faint hope that the insecurity facing their members could be solved by approval of just one more mega-project. But in general the Canadian union movement has been a consistent and progressive force in climate debates. The idea of a Canadian union endorsing a pro-jobs climate plan (like Biden’s) wouldn’t be news at all here. And that has undoubtedly helped us move the policy needle forward in Canada.
I have worked with unions in several countries around climate, employment and transition planning issues. In my experience, Canada’s trade union movement sets a very high standard with its positive and pro-active approach to these issues. Our campaigns for both sustainability and workers’ rights are stronger, thanks to our union movement’s activism, vision, and courage.
]]>The English-language version is here: https://nickfalvo.ca/canada-ten-things-to-know-about-the-federal-role-in-housing-policy/
The French-language version is here: https://nickfalvo.ca/canada-dix-faits-saillants-sur-le-role-du-federal-en-matiere-de-politique-du-logement/
]]>Calling all Canadian students anywhere in the world and all post-secondary students in Canada who are working on papers taking a critical approach to the functioning, efficiency, social, and environmental consequences of unconstrained markets. The winning essays will receive a cash prize of $1,000 for the graduate student category and $500 for the undergraduate student category.
You can download a poster in English or Français. Please help us spread the word and share with your networks and on social media.
Essay submissions should be made to PEFEssayContest2021@gmail.com and must be accompanied by a signed scanned file of the completed PEF Essay Contest Submission Form or fiche d’inscription pour le concours de textes du PEF. The deadline for submitting an essay for the contest is May 3 now May 11, 2021 [deadline extended].
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2021 PEF ESSAY CONTEST RULES
ELIGIBILE ENTRANTS
LEVELS OF COMPETITION
There are two levels of competition:
*Note: Those who have previously completed an undergraduate degree or a graduate degree, and are returning to do a second undergraduate degree will only be considered for the graduate student competition. The same holds for students who spend part of the academic year in a graduate program.
CONTENT OF THE ESSAY
Entries may be on any subject related to political economy, economic theory or an economic policy issue, and should reflect a critical approach to the functioning, efficiency, social and environmental consequences of unconstrained markets.
ELIGIBLE SUBMISSIONS
Eligible entries will be:
Entrants consent to having the Progressive Economics Forum publish essays from winners and those receiving honourable mention. Each applicant will submit a valid email and postal address for correspondence.
ADJUDICATION
WINNING SUBMISSIONS
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Concours de textes étudiants – édition 2021
Qui peut participer?
Niveaux de compétition
Il y a deux niveaux de compétition:
*NB: Ceux qui ont déjà complété un programme prégradué ou un programme gradué et qui retournent faire un deuxième programme prégradué ne peuvent participer au concours qu’au niveau gradué. C’est la même chose pour tout étudiant ayant passé une partie de l’année dans un programme gradué.
Contenu du texte
Les textes peuvent porter sur tout sujet relié à l’économie politique, la théorie économique ou une problématique en lien avec des politiques économiques, qui reflète une approche critique sur le fonctionnement, l’efficience, et les conséquences sociales et environnementales des marchés libéralisés.
Pour être accepté, un texte doit:
Les participants acceptent que le Progressive Economics Forum publie les textes des gagnants et de tout autre participant recevant une mention d’honneur. Tout participant devra soumettre une adresse courriel qui fonctionne, ainsi qu’une adresse postale pour fins de correspondance.
Jugement
Textes gagnants
I’ve written an 900-word overview of the budget here.
]]>Here’s the link to the English-language version: https://nickfalvo.ca/a-primer-on-supportive-housing-and-housing-first/
Here’s the link to the French-language version: https://nickfalvo.ca/une-introduction-au-logement-supervise-et-le-logement-dabord/
]]>My ‘top 10’ overview of the study can be found here.
]]>A ‘top 10’ overview of the report can be found here.
]]>I have recently updated the data and had it published in a journal.
Here’s a short summary of the journal article’s main findings.
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