Canada's Kyoto debate to hit full throttle this year

A national debate on whether Canada should ratify the Kyoto Protocol on climate change will likely reach a clutch point later this year.

Jim Stott
Special Correspondent-Calgary

CALGARY, Sept. 19 -- A national debate on whether Canada should ratify the Kyoto Protocol on climate change will likely reach a clutch point later this year.

Ottawa has agreed to requests from provincial and territorial leaders for a national conference on several issues, including Kyoto and climate control. A date is expected to be set for late this fall.

Alberta, as Canada's principal energy and carbon dioxide-producing province, is leading a campaign to urge Prime Minister Jean Chretien's federal Liberal government to take a thorough look at the economic consequences of Kyoto before ratification.

Early this month, at the World Summit on Sustainable Development in Johannesburg, Chretien said that ratification of the Kyoto agreement will be put to a vote in Parliament before the end of 2002. Meanwhile, he said, consultations will continue with the provinces and other stakeholders.

And a report August 29 in the National Post newspaper said the government is ready to bring a ratification plan for the accord to the federal cabinet Sept. 26.

The prime minister's office at that time said his position on the Kyoto Protocol has not changed in recent weeks, when he said that Canada "would probably ratify the accord."

Alberta's concerns
Alberta Premier Ralph Klein says the consequences of ratification can be compared with the federal National Energy Program (NEP) of the 1980s that cost Alberta billions of dollars in revenues, a drastic decline in investment, and a slump in the previously-buoyant petroleum industry.

Klein says the NEP culminated in a two-price system for oil that was to the disadvantage of Alberta as Canada's main producer of hydrocarbons.

"I'm saying the same thing relative to Kyoto, because the whole focus is on carbon fuels. Most of the fuels are produced in this province, so the impact, the negative economic impact, will be on Alberta, as opposed to other provinces," he said. Alberta has estimated Kyoto Protocol ratification could cost its economy up to $5.5 billion (Can.)/year and result in 70,000 lost jobs.

The Alberta premier says there must be a full and thorough costing of the economic implications before Ottawa makes any move to ratify Kyoto. There are also concerns that ratification of Kyoto would put Canada at a competitive disadvantage because the US, its main trading partner, will not ratify the accord.

Dueling studies
Klein noted the wide disparity in results of economic studies done so far on the economic impact of Kyoto. He said that proves much more detailed analysis is required before any decision.

A study by the David Suzuki Foundation, an environmental group, said implementing the Kyoto Protocol would result eventually in a $4 billion/year boost to the national economy. A study by the environmentally oriented Pembina Institute research group, said Kyoto would not harm Canada's competitive position but would promote innovation in business and government and create a competitive edge.

On the other side of the debate, energy industry groups and other business groups such as the Canadian Chamber of Commerce and the Canadian Manufacturers Association have estimated a negative Kyoto impact ranging from $4 billion to $28 billion. The chamber says it supports efforts to mitigate the effects of greenhouse gases but does not support ratification of Kyoto.

The chamber has urged Liberal members of Parliament to oppose ratification and says Kyoto is not a practical or effective tool to address climate change.

Differing approaches
Ottawa has presented four options on how to implement Kyoto and is now holding meetings across the country to discuss those options. It refused to include a made-in-Canada solution, suggested by Alberta, in the list of options. Kyoto calls for a cut in emissions of greenhouse gases to 6% below 1990 levels by 2012. The Alberta plan would focus on research spending with matching contributions from industry and Ottawa and a more gradual approach to emissions reduction. It calls for a 50% cut in emissions produced for each dollar of gross domestic product by 2020.

Chretien said in August that his government will announce an effective approach to achieve the objectives of the Kyoto accord, and probably to ratify it. Earlier, the prime minister had said that Canada hoped to ratify Kyoto, if other countries agreed to credits for Canadian exports of clean energy sources, such as natural gas and hydropower.

Alberta Energy Minister Murray Smith said Ottawa appears ready to ratify Kyoto without regard for the economic havoc this will cause. The Canadian Association of Petroleum Producers (CAPP) said companies are frustrated that the existing federal process of negotiations is being short-circuited.

Ottawa made a concession to Alberta in May when federal Environment Minister David Anderson said the government will provide federal assistance to provinces for technology to reduce greenhouse gas emissions. Alberta had asked Ottawa to match $800 million it plans to spend on research and development to reduce emissions.

The four options being proposed by Ottawa involve different combinations of tax credits, emissions trading, technology research, and investments in clean-energy initiatives.

Oil industry view
CAPP says none of the four federal options adequately addresses the issue of industry competitiveness.

It says the industry supports improvement in performance on greenhouse gas emissions but any policy must be based on what is achievable using best-practices technology. CAPP says an economic analysis of the federal proposals being developed needs to focus on realistic estimates of the cost of programs and the volume of domestic reductions it would achieve. It said the past focus on macroeconomic model analysis would not be appropriate.

CAPP Pres. Pierre Alvarez says it is vital that the public understands the competitive impact of the Kyoto treaty. Alvarez says industry wants Ottawa to implement an informed ratification process.

He says emissions reduction under Kyoto will raise industry costs and have an impact on investment. If the industry can't recover costs and attract capital, he says, the only way to reach reduction targets is to reduce production.

Outlook
The dialogue is continuing among Ottawa, industry, and the provinces, with all parties working towards a national emissions reduction program they can live with.

But Alberta has already served notice that it will not accept a Kyoto settlement that it considers punitive to its economy.

Alberta Environment Minister Lorne Taylor says the province could take the issue to the Supreme Court of Canada, if necessary. He said Alberta will not draft legislation to implement Kyoto if Ottawa ratifies the international accord. Taylor said Alberta would prefer a negotiated settlement but would not rule out a court referral.

Taylor said Alberta recognizes Ottawa's right to sign international agreements but said it is clear that Alberta owns and has jurisdiction over the resources involved.

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