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Full Circle on Canada and Kyoto
08/12/2002

Talk continues across Canada about what sort of response the country should make regarding global warming.

Ironically, despite the expectations it is the right-wing National Post which seems to be talking some sense on this issue. Columnist Andrew Coyne has written an opinion piece that declares that the best approach to implementation would be a carbon tax, rather than anything of the sort currently proposed by Ottawa. Here's what he had to say on October 28, 2002:

The problem with the government's Climate Change Draft Plan is that it is a plan, or at least it is in part. And the part that is planned is without exception a waste of time and money -- not because it is a bad plan, though it is that, but because it is planned: because it substitutes the limited insights of the planners for the diverse wisdom of millions of consumers and businesses, who are perfectly capable of reducing carbon dioxide emissions on their own, given the right signals.

What are those signals? Prices: those omnipresent, inescapable sentinels of resource use; those calculators of scarcity, in whose DNA is written the costs of everything that went into the production of any good or service, to be passed on in turn to the next purchaser at the next stage of the production chain. Build the costs of CO2 emissions into prices, through carbon taxes or other means, and economic agents will figure out for themselves how best to reduce their consumption or production of CO2, without having to be led by the planner's all-too-visible hand.

This is elementary economics. It has even of late become the axiom of environmentalists, most of whom have abandoned traditional "command-and-control" methods of achieving environmental goals - - regulations and subsidies -- in favour of the subtler disciplines of the price system. Yet what does the federal plan offer us? Regulations by the bushel, and subsidies by the barrel.

His approach is closer to that proposed by the Green Party of Canada than it is the Liberals. Of course it is distantly opposed from the thinking of the National Post's party, the Canadian Alliance. They are so tied to the powers-that-be in Alberta and Bay Street that they have joined Ralph Klein in suggesting that there should be no real effort put into reducing Greenhouse Gasses at all.

Of course, it seems to be that those powers-that-be are winning the real battle, despite all their moaning about Chretien. Here's how Eric Reguly of the Globe and Mail put it on November 28, 2002:

It appears the Canadian edition of Kyoto will be so full of loopholes for, and concessions to, the biggest polluters that ratification will go down in history as little more than a grandiose, green-tinged PR exercise. Canada, unlike the United States, likes to avoid pariah status by signing international agreements. We're Boy Scouts and we will be Boy Scouts on Kyoto.

The fine print, though, is bound to disappoint the many Canadians who thought that Kyoto's environmental, health and economic benefits had the potential to exceed the costs, even if the reductions in emissions of carbon dioxide, the main greenhouse gas, didn't go a long way to slowing the global warming trend. The feds are now evidently willing to allow the natural resources industry, that is, the oil companies, to miss Kyoto's 2012 deadline for carbon dioxide reductions. What's more, it looks as though a fair whack of Canada's emissions reductions will be fudged through the purchase of pollution "credits" on the international market, with another lot of credits earned by exporting clean hydroelectricity and cleanish natural gas. For Canada's biggest polluters, the costs of meeting the abbreviated Kyoto plan probably will be relatively painless.

I'm sure I'll have more to say on this topic later -- about the myths that Kyoto would hurt Canada's economy, and about the specific problems preventing us from effective action.

For now, here's Eric Reguly's bottom line:

The push for renewable energy is already creating new jobs as new technologies are developed. If Kyoto is taken as anything more than a PR exercise, it will reduce Canada's dependence on fossil fuels (whose prices over the long term can only rise as the cheap reserves are depleted) and take a bite out of the hidden costs with it. Burning vast amounts of oil and coal creates other undesirable emissions besides carbon dioxide, such as nitrogen and sulphur oxides. Gasoline contains benzene, a carcinogen. Putting global warming aside, burning less carbon-based fuel is better for the environment and human health, and will ultimately save industry and consumers money as it is replaced by cleaner fuels and renewable energy. Rejecting Kyoto pretty much guarantees Canada's reliance on fossil fuels will increase. The problem is that approving the Made-in-Canada version of Kyoto, with all its expected concessions and phony deadlines, isn't much better.


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