Why a Carbon Tax is good for the Yukon’s economy

I’ve been really confused by the Yukon Party’s opposition to the carbon tax.  It seems they don’t understand the Yukon’s economy.  It needs to be said that in fact a carbon tax will be GOOD for the Yukon’s economy.  This is for two reasons:

1. The productive part of the Yukon’s economy actually has a very low carbon intensity.  We have a highly educated workforce and most of our economy is not resource intensive.  Mining, oil & gas are only about 13% of Yukon’s GDP (see Yukon Bureau of Statistics’ Gross Domestic Product (GDP) by Industry 2014).  Because mining produces a product (metal), that actually overstates the value of the resource industry when it comes to jobs and salaries paid.  Therefore the bulk of our economy is low-carbon intensity.  With a carbon tax, the Yukon’s economy is more competitive relative to carbon-intense economies.  In other words, the Yukon will perform better relative to other provinces when carbon taxes come into play.  This is a basic of economics:  do what you are good at and the Yukon is good at having a low-carbon intensity economy.

The Yukon also has excellent opportunity to further de-carbonize our economy by increasingly switching to renewable energy (primarily hydropower, but also biomass and to a lesser extent wind and solar).  Other jurisdictions do no have the natural resources to produce renewable energy that the Yukon does.  As such, the Yukon can readily further reduce its exposure to carbon taxes and become even more competitive.  

2.       Use of fossil fuels represents a significant economic leakage for the Yukon.  In 2013 the Yukon consumed about 226 million litres of gas, diesel (inc. heating fuel and jet fuel) and propane (see Yukon Greenhouse Gas Emissions: the Transportation Sector, 2015).  If we assume this is about $1/L, that is $226,000,000 that left the Yukon with just about no economic benefit to the Yukon (we essentially burned that money).  Any reduction in fuel usage will result in more money staying in the Yukon’s economy and can be put to more production use.  For example, the money could be used by Yukoners for arts, entertainment, culture, health care, education or just about anything will be more useful that burning the money.  This will also help build the local economy since more resources will be used and consumed locally.  Even a 10% reduction in fuel usage will be $22 million dollars that would be repatriated to the Yukon’s economy.  That is almost exactly at 1% increase in our GDP which would have wiped out the GPD decline the Yukon experienced in 2013 and 2014.  

Another thing that makes me mad is the rhetoric does not reflect the realities of math.  The carbon tax will have almost no measurable impact on the price of goods (and zero impact of the cost of services) because the amount of fuel used to transport goods to the Yukon is very very small relative to the value of the goods.  Where you will see the difference is at the gas pump and on heating fuel.  But it is not much of a difference:  the $10/tonne tax will be about $0.02 /L at the pump.  Yup, that is it: less than the price difference between gas stations and less than the difference between regular and premium.  If you drive the speed limit and drive conservatively, you will increase your fuel economy by 10% which more than offsets the fuel price increase of 1.7%.  Any driver can fully mitigate the any fuel price increase. 

First month of Solar Hot Water monitoring data

With the end of September we now have our first full month of energy monitoring data for the solar domestic hot water (SDHW) at 704B Wood Street (see http://forestpearson.blogspot.ca/2016/09/solar-domestic-hot-water-monitoring.html for background).

Since September is an equinox month (average day/night) we can kind of assume it is representative of annual average sunlight.  So it is fortuitous that the first month of monitoring has been September as it gives us some indication of what annual performance might be. 

And the result?  Significantly less saving than predicted by the energy model.  The interesting thing is it does not seem to be due to system performance (which is performing better modeled), but due to a more insidious factor:  Conservation!  Basically the residents of the home are not using enough hot water to realize the potential of the system.  This is because there are a number of hot water saving measures designed into the house (including a very large drain water heat recovery system), that there are only 2 to 3 occupants in the house and lastly the residents are very energy conscience and therefore don't use a lot of hot water.

The first rule of energy conservation wins yet again:  reduce the consumption first before looking at efficiency, and only then (last) is renewable energy generation (which is what the SDHW system is.) 

Below is a graph of September's energy performance of the system. I'll explain the three bars and the preliminary findings below:

1. The first bar on the left is the predicted hot water performance from the HOT2000 building energy model.  The model suggested that water heating in September would take 487 kWh of which 34% would be supplied by the solar system.  I don't know the details of what and how the model works, but I do know a few of the assumptions that help explain the difference.  HOT2000 standard reference defaults to assuming there are 4 people in the house (2 adults and 2 children).  It assumes they use 225 L of hot water a day at 55degrees C.  In the actual home there are 2 to 3 adults, they only use 125 L/day and the tank temperature is maximum 45degrees C.  So on water usage alone this house uses 44% less hot water than the model.
2. The middle bar is the actual total energy usage of the hot water system.  In September a total of 277 kWh of energy was put into the hot water system, of which 41% was supplied by the solar system.  Therefore we see 43% less total energy input, which matches well with the reduced hot water usage recorded (versus the model).  But we did see in September 2016 that the solar contribution at 41% was substantively higher than that modelled.  
3. The last bar (on the far right) is very interesting:  this is the amount of energy that actually supplied hot water to the tap.  The difference between this and the middle bar is energy lost as heat leaking off the storage tanks.  What we see here is only 131 kWh was used (of which 47% was solar supplied) to make hot water.  The remaining  146 kWh was presumably heat loss off the two big storage tanks.  Normally this would be considered "bad", but in the case of this super-insulated home, this might not be so bad.  This is because the house is electrically heated and with the high level of insulation, much of the "waste" heat off the tanks will be retained by the house.  This then displaces electricity that would be used to heat the house.  Of course, in the summer there really isn't any heating needed, plus the tanks are in the basement, a location that doesn't need to be as heated.  But none the less, the heat loss off the storage tanks isn't a total loss. 

Preliminary Findings

After one month of monitoring, it appears that the savings from the solar domestic hot water system are substantively lower than predicted.  This is not due to system performance, but due to low demand for hot water. 

Because this home is primarily in "first block" power (< 1,000 kWh/month), the electrical rates are quite low and therefore the savings (displaced electricity) are low.  At this time, first block power is approximately $0.109 / kWh.  At this rate, the solar system only saved about $12.49 in the month of September.   If that is representative of "average" savings, the total annual savings from the system are only about $150/yr.  That means it will be a very long pay-back for this system at these low electrical rates.

What I conclude from this is the solar hot water system seems to work well with good performance, however its value in a small, high-efficiency home, is low.  It is a technology that would be better suited to large homes with higher hot water demands or commercial/institutional buildings with large hot water demands. 

But, let's see how the rest of the year goes.