A sustainable economy is not only good for the birds and the water, but also for the health of business, says Canada's top federal energy official.

And Environment Minister Stéphane Dion told a business audience in Vancouver last week that the country has made significant environmental progress.

In what he called his first annual report of his current portfolio, Dion told the Board of Trade luncheon that a green conscience is the key to a healthy economy for Canada.

He added that Canada already has the strictest vehicle engine and fuel regulations in the world, and considers it a priority to reduce the levels of sulphur in rail, marine and mining equipment fuel.

Stephane Dion says a 'green conscience' is the key to a healthy Canadian economy.

When asked about the problem of acid rain, Dion noted that most of the improvements will come from using so-called clean coal rather than eliminating it as a power source.

"With a nation as big as China so reliant on coal, fighting coal becomes a losing battle," he said. "Instead, we need to ensure Canada has the best technology for clean coal so we can sell that technology overseas."

But he admitted that Canada's environmental record continues to have a mixed showing on the world stage. In a comparison of eight major indices of environmental performance, the country ranked 23rd and 25th out of 30 Organisation for Economic Cooperation and Development (OECD) countries.

"Canada does very well in the 'state of the environment' rankings," Dion said, but compared to other OECD nations, the country still does a poor job of conserving resources.

Dion said that the rankings held good news with respect to air and water quality results, and thanked the country's chemical industries for their co-operation in the reduction of the annual release of toxic substances, down by two-thirds since 1992. He added that emissions of mercury and other heavy metals, dioxins and furans have all been reduced between 65 and 75 per cent since 1990.

But Canada has been slower than other developed nations to accept alternative clean-energy technologies, says Mossadiq Umedaly, chairman of Xantrex Technology.

Xantrex, headquartered in Vancouver with facilities in the U.S. and Spain, develops, manufactures and markets renewable and distributed power electronic products. Along with the David Suzuki Foundation, Xantrex sponsored Dion's speech to the board.

"Canada lags behind industrialized countries in encouraging a sustainable economy," says Umedaly. "Europe and Japan each have four times the installed solar capacity of Canada and within North America, the U.S. has significantly more wind and solar capacity than Canada."

He added the federal government needs to show leadership in clean-power initiatives to echo the advances elsewhere in the world.

Umedaly also expresses concern for Xantrex and other Canadian clean-power companies that find the demand for their products to be almost entirely outside the country.

While not directly addressing the issue of supporting home-grown clean power, Dion noted that a primary focus of the federal government's Project Green is the link to economic competitiveness of Canadian business. Project Green was launched earlier this year to address Canada's commitment to the Kyoto accord, and includes measures to improve energy efficiency, ensure clean air and water, and reduce greenhouse gas emissions.

Kyoto commits member countries to cut greenhouse emissions by an average of about five per cent from 1990 levels by 2012. Some countries are on track, but many are not.

Canada promised a cut of six per cent, but its emissions have risen by 24 per cent since 1990, raising questions about whether it has the credibility to play a leadership role.

Brigitte Caron, spokeswoman for Dion, said Canada's Kyoto plan includes major investments expected to be announced by the end of the year.

Ottawa recently tabled draft regulations to enforce cuts on large industrial emitters and set up an emissions-trading system. It also has the option of purchasing emissions credits overseas.

Scientists say the international community must agree on far deeper cuts, beyond those required in the existing treaty, to slow down warming in coming decades.

Dion will chair the upcoming United Nations Conference on Climate Change to be held in Montreal in November. "Canada is only responsible for two per cent of international greenhouse gas emissions," he said, "so it is important for us to work with the rest of the world."

Web Watch: www.climatechange.gc.ca

- with files from The Canadian Press

(Karen Dyer can be reached at karen@businessedge.ca)