Ceilidh

Michael Zey
futurist3000@aol.com

Abstract (Document Summary)
Canada's predicament points to a headache faced by many countries bound by Kyoto. The European Commission, the European Union's executive body, says Ireland, Italy, Portugal and Spain need to ratchet up their pace of emissions cuts if they are going to fulfill their pledges. European nations have faced industry pressure against cracking down too much on fossil-fuel-powered economic output. Even the United Kingdom, which is on track to meet its Kyoto goals, yesterday reaffirmed it plans to loosen limits it is imposing on companies, in response to industry lobbying.

What is unfair, say many leaders of Canadian industry, is that the two nations that appear most eager to buy oil produced from the tar sands don't have to comply with Kyoto, even though they are the world's two biggest CO2 emitters. The top-ranked U.S. rejected the treaty on grounds that complying would crimp its economy and put it at a competitive disadvantage. China, the No. 2 emitter, isn't subject to Kyoto's limits because the treaty doesn't apply to developing countries.

Canada also exports a large volume of natural gas to the U.S., allowing its neighbor to reduce carbon emissions by burning gas instead of coal to generate electricity. But Canada doesn't get credit for this under Kyoto's rules. Indeed, it will be penalized for increasing carbon emissions when it develops large Arctic natural-gas deposits in the next few years.

Full Text (1250   words)
Copyright (c) 2005, Dow Jones & Company Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
WITH THE KYOTO Protocol set to take effect tomorrow, a disturbing realization is hitting many of the world's biggest global-warming suspects: Trying to meet their obligations to limit global-warming emissions under the treaty is proving a political and economic nightmare.

What is confronting many of the industrialized participants is the fact that turning their abstract environmental promise into tangible economic policy is extremely unpopular with politically powerful interests. Joining the Kyoto club was the easy part; now governments have to figure out how to divvy up responsibility for the cuts among companies and consumers that produce the emissions. Particularly since economies -- and emissions -- in many of these countries have grown significantly since the pact was negotiated in 1997, the process is producing a nasty political backlash.

Few nations among the roughly 130 participants are having as tough a time figuring out how to clean up their acts as Canada, a country whose European-style environmental pledge is crashing into the reality of its American-size energy appetite. Canada has pledged under Kyoto to cut its global-warming emissions to 6% below the 1990 level by 2012. But its emissions actually are rising, at an average rate of 1.5% a year.

If Canada's economy and global-warming emissions continue growing at the current rate, its Kyoto pledge will require it to cut emissions to 35% below what they would have been in 2012 with no action, says Pierre Alvarez, president of the Canadian Association of Petroleum Producers.

The culprit behind the squeeze: stronger-than-expected economic growth in a nation whose residents consume energy nearly as voraciously as their neighbors to the south -- and whose oil industry, already one of the world's largest, is ramping up production in a way that is particularly harmful to the atmosphere.

Canadian Environment Minister Stephan Dion said that, of all the countries bound by Kyoto, Canada has the toughest emissions target, but that he is confident his nation can meet it in a way that strengthens the economy. Mr. Dion said industrial emitters will be required to meet "demanding but fair and achievable" emissions targets.

But Finance Minister Ralph Goodale, testifying before a parliamentary environment committee last week, said Canada needs a "more robust plan" if it is to meet its targets. Calling the current blueprint "a work in progress," he said the government needs to reorganize a significant amount of already-booked expenditures to get "more bang for the buck."

Canada's predicament points to a headache faced by many countries bound by Kyoto. The European Commission, the European Union's executive body, says Ireland, Italy, Portugal and Spain need to ratchet up their pace of emissions cuts if they are going to fulfill their pledges. European nations have faced industry pressure against cracking down too much on fossil-fuel-powered economic output. Even the United Kingdom, which is on track to meet its Kyoto goals, yesterday reaffirmed it plans to loosen limits it is imposing on companies, in response to industry lobbying.

Canada is in a particular pickle. Not only does the average Canadian consume more energy than does the average European, but Canada, unlike most European nations, is a huge oil exporter. A growing portion of those exports comes from Alberta's "oil sands," vast deposits of sticky, black grit that constitute the world's biggest known source of crude oil outside Saudi Arabia. Extracting and transporting this molasses-like crude requires loads of electricity and steam. That requires burning lots of fossil fuel -- and that produces massive quantities of carbon dioxide, the chief suspected global-warming gas.

What is unfair, say many leaders of Canadian industry, is that the two nations that appear most eager to buy oil produced from the tar sands don't have to comply with Kyoto, even though they are the world's two biggest CO2 emitters. The top-ranked U.S. rejected the treaty on grounds that complying would crimp its economy and put it at a competitive disadvantage. China, the No. 2 emitter, isn't subject to Kyoto's limits because the treaty doesn't apply to developing countries.

Canada also exports a large volume of natural gas to the U.S., allowing its neighbor to reduce carbon emissions by burning gas instead of coal to generate electricity. But Canada doesn't get credit for this under Kyoto's rules. Indeed, it will be penalized for increasing carbon emissions when it develops large Arctic natural-gas deposits in the next few years.

Last Thursday, Canadian Natural Resources Ltd., one of Canada's biggest oil producers, announced board approval for an oil-sands project valued at 10.8 billion Canadian dollars (US$8.75 billion), scheduled to come on stream in three phases from 2008 to 2012.

Another problem for Canada is cars and trucks. Canadian officials are considering a law to force a 25% reduction in global-warming emissions from new vehicles starting in the next decade -- a milder version of a California law that aims for a roughly 30% cut. In 2002, auto makers in Canada agreed to boost their vehicles' fuel economy in exchange for Ottawa's promise not to require the industry to cut factory emissions. Now the car makers are balking at their pledge.

In a sign of growing pressure on auto makers in California, the board of the California Public Employees' Retirement System, the biggest U.S. public pension fund, announced it will use its investments in auto companies to try to get them to drop their legal fight against the state's global-warming law. Calpers will support global-warming-related shareholder resolutions at General Motors Corp. and Ford Motor Co.

Ottawa, meanwhile, has spent C$3.7 billion pushing a plan that was supposed to yield 180 million tons of voluntary greenhouse-emissions cuts by now. The plan included a nationwide advertising campaign issuing a challenge to consumers: reduce by about 20% the roughly five tons of carbon dioxide an average Canadian household emits. By most informed estimates, however, the plan has yielded only about half the hoped-for emissions cuts.

Environmentalists claim Canada could achieve its goals if its politicians didn't cave in to industry lobbyists. "What we have completely failed to do is develop any kind of regulatory infrastructure to go with a strategy" to curb global-warming emissions, says Morag Carter, climate-change program director at the David Suzuki Foundation, an environmental group in Vancouver, British Columbia.

The government is scrambling for a way out. One tactic could involve expanded tax incentives and subsidies to companies and consumers, though the Finance Ministry is likely to resist too many tax breaks as it seeks to keep the federal budget in the black. Another likely strategy: using taxpayer money to invest in emissions-reductions projects elsewhere in the world. Under Kyoto rules, such spending yields emissions "credits" that reduce the level of cuts the investing country has to make at home.

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Under the Gun

Canada is struggling to meet its obligations to cut carbon-dioxide
emissions under the Kyoto Protocol. One problem is that its growing industry
extracting huge oil deposits from sand -- like the Athabasca dunes --
requires huge amounts of fossil-fuel energy.

Ten largest emitters of CO2, ranked by per-capita output in 2002:

PER CAPITA, SHARE OF
COUNTRY IN TONS WORLD TOTAL

U.S. 23.5% 19.66
Canada 16.93 2.2
Russia 10.43 6.2
Germany 10.15 3.5
Korea 9.48 1.9
Japan 9.47 5.0
U.K. 8.94 2.2
Italy 7.47 1.8
China 2.55 13.6
India 0.97 4.2

Estimated breakdown of Canada's carbon emissions, by sector*

Energy production ................... 37%
Transportation ...................... 25%
Manufacturing ....................... 17%
Housing and buildings ............... 11%
Agriculture and forestry ............ 7%
Waste disposal ...................... 3%

* Based on Canadian government figures

Source: International Energy Agency