Canadians Split over Cost of Kyoto Accord

Consider it a duel among doomsayers.

Canadians Split over Cost of Kyoto Accord

Consider it a duel among doomsayers. Business critics and some provincial premiers maintain that if Canada ratifies the Kyoto Protocol - the international agreement aimed at reducing greenhouse emissions widely linked to GLOBAL WARMING - it could cost the country up to $40 billion in economic growth and at least 450,000 jobs by 2010. Environmentalists counter that a failure to ratify will only reinforce recent climate trends leading, among other things, to deepening drought on the prairies, flooding along the Atlantic and Pacific coasts and a central Canadian double whammy of more winter ice storms and summer heat stroke. In the black-and-white world of Kyoto boosters and bashers, the choice is stark indeed: apocalypse now or apocalypse later.

As is often the case, the truth is probably out there, in the shades of grey that underscore the complex issue of global climate change and what can - or should - be done to arrest it. But two things, at least, seem certain. First, the 1997 Kyoto accord, until recently a sure conversation chiller on the cocktail circuit, is suddenly hot, hot, hot. Second, even among the Kyoto cognoscenti, there's a nagging suspicion that no one really knows what the heck they're talking about.

Don Drummond, chief economist for the TD Bank Financial Group, has pored over most of the federal background papers on the Kyoto Protocol, as well as a raft of recent studies issued by national business groups and the Alberta government which warn of dire economic consequences if Canada moves to dramatically reduce greenhouse gas emissions. His conclusion? "Everyone is throwing around estimates before anyone knows what the plan is." All the same, Drummond says he understands perfectly well why Kyoto's many critics have suddenly become so vocal. "On the one hand, Ottawa says it's going to do all this consultation," he notes. "On the other, they give these hints that they'd like to ratify Kyoto, perhaps as early as June. It's like you have a gun to your head. People are very frustrated."

Frustrated - and fractured. Kyoto is, in fact, one of those quintessentially Canadian public policy issues which divides the country along regional, ideological and sectoral lines. Alberta versus Quebec. The right versus the left. Big business versus the greens. Even Canada's two national newspapers, the pro-Kyoto Globe and Mail and the anti-accord National Post, are helping to further polarize the tone of debate.

So how did it come to this? On Dec. 11, 1997, negotiators from 159 countries met into the wee hours in Kyoto, Japan, to hammer out an agreement on curbing the world's gluttonous appetite for burning fossil fuels - a primary source of so-called greenhouse gases, which lodge in the atmosphere and, like a pane of glass, prevent the sun's heat from escaping into space. Most scientists agree these gases - carbon dioxide being the biggest culprit - are contributing to recent global warming trends, although some argue this is simply part of the Earth's periodic cycles of warming and cooling. Under the Kyoto accord, Canada promised to reduce domestic greenhouse gas emissions to six per cent below 1990 levels - the internationally agreed benchmark year - over the period 2008 to 2012. Because Canadian emissions grew dramatically during the 1990s, projected rates would actually have to be cut by more than 20 per cent to satisfy the Kyoto targets.

Back home, the Kyoto accord was a source of friction from the get-go. Canada had agreed to a target that was twice as high as Ottawa's opening offer of a three per cent cut, a figure that had already angered many premiers because it went beyond an earlier federal-provincial compromise calling for a straight reduction to 1990 levels. The issue festered until early this year when federal Environment Minister David Anderson said Canada hoped to ratify Kyoto in time for the Group of Eight nations summit in Kananaskis, Alta., in late June. That timing would put Canada in lockstep with the 15 European Union member states, which last week said they intended to ratify by June 1.

In quick succession, Kyoto critics produced a series of studies attempting to put a price tag on the accord. The first, issued by the Alberta government on Feb. 21, said Canada stood to lose between $23 billion and $40 billion in gross domestic product by 2010, while Alberta alone would take a hit of up to $5.5 billion. Six days later, the Canadian Manufacturers & Exporters association declared that adhering to Kyoto could result in the loss of 450,000 jobs in the manufacturing sector alone. The association also said consumers would take a big hit, paying 60 to 100 per cent more to heat their homes and gas up their cars.

Last week, the country's largest business association, the 170,000-member Canadian Chamber of Commerce, weighed in. Chamber president Nancy Hughes Anthony said her group's analysis pegged the potential cost of Kyoto at $30 billion in lost GDP. A key concern, she added, is that the United States, which accounts for 25 per cent of the world's greenhouse gases (compared with the 2.5 per cent produced by Canada) has opted out of Kyoto. Last month, U.S. President George Bush tabled a domestic game plan consisting mainly of voluntary measures and incentives. Hughes Anthony argues that if businesses here must invest in new technologies and other measures to meet Kyoto targets, Canadians will be at a distinct competitive disadvantage. "The one thing Canada does not need right now," she says, "is more economic uncertainty."

Anderson has responded to the chorus of critics with thinly veiled contempt. He says they are drawing many of their figures from a 16-month-old federal-provincial analysis of the potential costs of Kyoto. Much has changed in the interim, he adds, including a series of recently negotiated concessions that allow countries like Canada to mitigate costs through measures such as trading emission credits and planting trees. Anderson urges Kyoto foes to cease and desist until a new federal-provincial analysis is complete, likely in April. That hasn't stopped him, though, from floating his own worst-case scenario: a GDP hit of 0.5 per cent, or about $500 million a year over the next decade. But Anderson admits that he, too, is shooting in the dark. "I have my hunches and expectations," he told Maclean's last week, "but the same restriction applies to me as everyone else."

Environmentalists like Matthew Bramley, director of climate change for the Alberta-based Pembina Institute for Appropriate Development, say the Kyoto critics are focusing too much on projected costs and not enough on what Bramley calls "the very real dangers of climate change." Bramley also thinks much of the current wrangling is about jockeying for position in the next major battle front: deciding which sectors and regions should pay the most to meet the Kyoto targets. A whiff of that was evident recently when Bloc Québécois MPs said that Alberta, which produces more than twice the amount of greenhouse gases as Quebec, must bear the biggest burden. Alberta Environment Minister Lorne Taylor shot back that Quebec, which receives equalization payments from his province, was in danger of killing "the goose that laid the golden eggs."

One concession Kyoto critics have wrung from Ottawa is that Anderson is no longer talking of ratifying the accord by June. Instead, he now speaks, hopefully, of doing so by the end of the year after consulting all affected parties. And that, says economist Drummond, is all to the good. "I think we should just cool it off and let government come up with a plan," he says. In the pressure cooker that is the global warming debate, that may be asking a lot.

How to Trade Hot Air

One of the many curious, convoluted aspects of the Kyoto Protocol is the way participating countries are encouraged to meet their emission reduction targets without, well, reducing their emissions. Some examples:

Emissions trading: Dubbed by cynics as the "pay-to-pollute" provision, this allows countries or individual companies which are high emitters of greenhouse gases to accumulate credits by investing in emission-reducing projects internationally. These credits mean a country like Canada could continue to pollute within its own borders at rates exceeding the Kyoto limits.

Carbon sinks. No, it's not time to call the plumber. This refers to the ability of trees and soils to soak up carbon dioxide and reduce overall global warming. In a provision that Canada pushed for and won, countries can also accumulate pollution credits for planting trees and altering agricultural practices such as excessive tilling.

Clean-energy credits. Canadian negotiators are currently pressing for this, but may not succeed. Essentially, Canada is arguing that it should get credit for being a large producer and exporter of relatively clean natural gas and hydroelectricity. This, Ottawa says, can be used to displace energy sources such as coal, which produce higher levels of greenhouse gases.

'A Free Shot on Goal'

Federal Environment Minister David Anderson spoke last week with Maclean's Calgary Bureau Chief Brian Bergman about the increasingly acrimonious debate over ratifying the Kyoto Protocol. Excerpts:

Maclean's:Almost daily, business groups and provincial governments are issuing studies and statements saying that adhering to Kyoto could destroy our economy. Your response?

Anderson: It is literally impossible to estimate total cost without having a knowledge of what will be taken into account under Kyoto. That analysis should be complete by April. I am surprised to see so many people willing to put their credibility on the line with out-of-date figures.

Maclean's:Why, in your view, are the critics speaking up now?

Anderson: They realize there is a gap as we wait for information and it's very difficult to respond in detail. So they are getting a free shot on goal. When the time comes and we are back on the ice, they won't look any better than the American hockey team.

Maclean's:Are you in danger of losing the public relations war?

Anderson: I don't think so. Just as Canadians believe that taking part in UN peacekeeping operations is the right thing to do, they believe Canada should play its part in the international battle against climate change.

Maclean's: The U.S., which produces 10 times as much greenhouse gas as Canada, has opted out of Kyoto. Given that, can Canadian emissions reductions really make a difference?

Anderson: That could have been cited in the Second World War; you know, why bother getting involved? You should just do nothing. That's not the way we want to go about it.

Maclean's:Can you see a scenario in which Canada would not ratify Kyoto?

Anderson: I don't see that. The prime minister has said his goal is to ratify. This is a major global problem that needs a global response.

Maclean's March 18, 2002