Volume 40, Number 1: January/February 2006

The Gap Between Rhetoric and Action

Canada’s Climate Change Plan

Exactly one year ago, during the coldest months of 2005, Canada had its second major climate-change debate of the millennium. The first one, on whether Canada should ratify the Kyoto Protocol, occurred in the fall of 2002. Prime Minister Jean Chrétien was at an environmental conference in South Africa when he announced, seemingly out of the blue, that Canada would ratify the protocol before the end of the year.

Opponents of action on climate change, led by the Canadian Chamber of Commerce and the Canadian Manufacturers and Exporters, had four months to convince Chrétien to change his mind. Though they tried hard, using the worst kind of scare tactics – energy prices will soar … hundreds of thousands will lose their jobs … the Canadian economy will tank – the dissenters were unsuccessful, and Canada’s Parliament ratified the Kyoto Protocol in December, 2002.

The second Canadian debate was sparked not domestically but by the Russian parliament’s decision to ratify Kyoto in November, 2004. That decision pushed the level of emissions covered by the protocol above the threshold of 55 per cent, placing the international agreement on a 90-day schedule to becoming international law.

Keeping Promises to Industry

Seven years after agreeing to the Kyoto Protocol and two years after making it part of domestic law, Canada still had no comprehensive climate-change plan. And the federal government now had three short months to come up with one. Urgency was warranted, given that Canada’s emissions were 24 per cent above the 1990 level (the Kyoto base year) and that Canada had to reduce its emissions to six per cent below 1990. The Kyoto period of 2008-12 was barely three years away.

Thus began the debate, this time not about whether to join Kyoto but how Canada should comply with it. It was clear that this plan would build on the incomplete one released during the 2002 debates. But the 2002 plan, along with various letters of promise from Prime Minister Chrétien and Natural Resources Minister Herb Dhaliwal, constrained the federal government at least as much as it provided a platform from which to build.

The first constraint was a promise that industrial emitters, called large final emitters, or LFEs, would not have strict emission-reduction targets, but rather targets based on emissions intensity. This is a profoundly regressive concession. Emissions intensity is measured as emissions per unit of production, so if companies increased their production, they could meet their targets while increasing emissions, albeit more slowly.

The implication is that all industrial activity, no matter how dirty, is protected. Even if there are cleaner ways to produce power than burning coal, even if producing oil from tar sands has more than twice the emissions of conventional oil production, these activities can continue under Canada’s Kyoto plan. It is an approach borrowed from Alberta and the U.S., two of Kyoto’s most vocal opponents. Alberta admitted that its intensity-based targets would in fact increase the province’s emissions by 39 per cent. The federal government originally estimated that industrial emissions would increase by 14 per cent, even if industry met its target to reduce its emissions intensity by 15 per cent. By the end of 2003, due to the projected growth of high-emissions sectors, most notably the tar sands, documents obtained under Access to Information revealed that emissions from the industrial sector would rise by between 27 and 55 per cent from 1990 levels. That’s if they meet their targets!

The second promise to industrial emitters was that they would pay no more than $15 per tonne of carbon dioxide for any emission reductions they did have to undertake. George Anderson, the deputy minister of natural resources, told a parliamentary committee that this would cost an extra seven cents per barrel for conventional oil producers and 20 to 25 cents per barrel for oil production from tar sands. Such a marginal cost gives industrial polluters no incentive to innovate. Why make investments in energy efficiency or switch to less polluting energy sources when energy users and producers can simply pay a miniscule fee?

Scaling Back Targets

Despite these self-imposed constraints on the federal government, there were still opportunities to develop a tenable climate-change plan in 2005. Environmental groups urged federal officials and politicians to use tough regulations and financial disincentives – fees or taxes – to discourage polluting activities. Many possibilities exist: mandatory fuel-efficiency standards for cars, greater efficiency standards for large appliances, higher emission targets for industrial emitters and a tax on energy sources based on their contribution to air pollution.

The advice was backed up by solid research. Ralph Torrie, a widely respected energy expert, found that using regulatory measures, especially to bolster energy efficiency, could cut Canada’s greenhouse-gas emissions by half. Mark Jaccard, another well regarded energy modeler, found that Canada could use a combination of instruments, including regulations, to meet Canada’s Kyoto commitments. The Organization for Economic Co-operation and Development, in a 2004 assessment of Canada’s environmental record, found it wanting. It stated that Canada’s greenhouse-gas emissions continued to rise because it had relied too heavily upon voluntary initiatives and financial incentives. Regulations and pollution taxes are what it recommended instead. The same advice came from Canada’s commissioner of the environment and sustainable development.

The Kyoto Protocol’s birthday, February 16, came and went without a Canadian action plan on climate change. Finally, at the beginning of April, Canadians got their first peek at one element of the plan when the federal government announced its negotiated deal with automakers to reduce emissions from personal vehicles. Despite all the advice against voluntary initiatives, despite high support amongst Canadians for mandatory fuel-efficiency standards in vehicles, Canada’s deal with the automakers was a voluntary one, with no legislation. As one official at Natural Resources Canada put it, “We lost the fight with the automakers.”

When the full climate-change plan came out just a few days later, it was clear the federal government had lost more battles. Targets for industrial emitters had been scaled back so that now they made up only 13 per cent of the emission reductions in the plan, even though Canadian industry contributed almost 50 per cent of the country’s emissions. Most of the remainder of the plan was made up of two substantial incentive programs: the Climate Fund, to pay LFEs and other large emitters who reduce their emissions, and the Partnership Fund, to engage the provinces, which have jurisdiction over important sectors like electricity and natural resource management. Instead of polluter pays, it was pay the polluter, and the responsibility for paying fell to Canadian citizens. Never mind the one-tonne challenge – Canadians had been handed a six-tonne challenge.

At the back of the climate-change plan was an index of all the promises made to industry on climate change, including details from the 2002 plan that favoured Canadian industry. Apparently, the fact that these favours had been granted by a former minister and former prime minister was irrelevant. There they were, seemingly carved in stone. Interestingly, other pledges, like the emission-reduction target, had been changed. In other words, polluter responsibility could be weakened, but concessions to polluters were ironclad. Another promise made by the former government – to strike a stakeholder committee to address labour issues and analyze “just transition” in the labour force – has never been acted upon.

An Inadequate Plan

On the day the climate-change plan was released, eleven leading Canadian environmental organizations, including the David Suzuki Foundation, called it “inadequate to achieve Canada’s Kyoto emission reduction target.” Of the seven recommendations made on how to strengthen the plan, only one has been acted upon: that major implementation steps be made in 2005.

And there has been action in implementing the plan. The federal government has moved to regulate greenhouse gases under the Canadian Environmental Protection Act, allowing for the implementation of the large final emitters system. A draft of the offsets system that would give credits to polluters that reduce their emissions has been released. Some federal projects under the partnership fund have been announced

But at least one of these developments, the offsets system, casts further doubt on Canada’s ability to meet its Kyoto commitments. The credits given out under the system will be bought by the government’s Climate Fund and industrial emitters that are not meeting their targets, so it is critical that credits be given out only to projects that go beyond business-as-usual. However, that will not be the case. Government officials working on the system instead want to cast a wide net for emission-reduction projects, giving incentives for every project proponent to ask for government money, whether it was initiated because of climate change or not. The result will be emission reductions on paper that do not translate into actual emission reductions.

The “inadequate” label placed on the climate plan has, so far, only been reinforced. And yet, when Prime Minister Paul Martin was an opposition environmental critic, he wrote the Liberal Red Book, the party’s 1993 election platform. In it, he decried the Tory government’s environmental record, pointing out the “gap between rhetoric and action.” With Martin’s government now saying all the right things about climate change, while this country is further from its Kyoto target compared to every other country that has one, those words have come full circle.