The federal government plans a high-risk “Kyoto
surprise” that involves ratifying but not complying with the treaty while imposing a new national gasoline tax, predicts a key player in climate change discussions.
Ottawa will use some of the revenue from the increased
federal gas tax to reduce emissions blamed for global warming, says Aldyen Donnelly, president of the Greenhouse Emissions Management Consortium (GEMCo).
But the Liberals will use the bulk of the new money to give Canadians a personal income tax cut heading into the next federal election, she predicts.
“The bottom line is, all of us will pay $3 out of our left pocket in increased fuel costs, for every $2 we get back in income tax deductions,” said Donnelly, who stressed in an interview this was her personal view and not GEMCo’s.
The consortium of energy companies, which includes ATCO Electric, EPCOR Utilities Inc. and TransCanada Pipelines Ltd. in Alberta, is pursuing voluntary and market-driven approaches to reducing greenhouse gases.
Premier Ralph Klein has said if Ottawa ratifies the Kyoto Protocol without consulting the provinces and doing a detailed cost analysis, it “would be nothing less than a betrayal of a firm commitment made by the federal government.”
The treaty would commit Canada to cut greenhouse gas emissions to six per cent below the 1990 level. That amounts to an actual reduction of about 240 million tonnes of emissions, or a 26-per-cent cut by 2008-2012.
Pierre Alvarez, president of the Canadian Association of Petroleum Producers (CAPP), says the oil and gas industry is confused and concerned by Ottawa’s latest direction.
Natural Resources Minister Herb Dhaliwal had assured the industry that it would be consulted, the costs of a Canadian plan detailed, and the emissions to be allowed for each sector well understood, Alvarez noted. “And only then would a decision be made.
“At this point, there’s no question there is tremendous concern that the process may have been short-circuited,” Alvarez said.
Business Edge was unable to reach an official in Environment Minister David Anderson’s office for comment.
Donnelly pointed out that Ottawa still doesn’t have a compliance plan in place, yet the government appears poised to ratify a legally binding international treaty.
She said if Canada signs on but doesn’t follow the rules, the country risks being hit by trade sanctions from U.S. industries that are taking steps to reduce emissions, even though the Bush administration has rejected Kyoto.
By the time Canada has to start complying with Kyoto in 2008, American electrical utilities and automobile manufacturers will be operating under greenhouse gas restrictions as well as requirements to increase clean renewable energy sources, Donnelly said.
The European bloc and Japan, having ratified Kyoto and started to reduce emissions, will launch trade sanctions against Canadian wood products and beef exports, she envisions. “Our export products are going to be legitimately accused of enjoying an environmental subsidy, because we didn’t do anything about greenhouse gas emissions.”
Matthew Bramley, director of the climate change program for the Alberta-based Pembina Institute for Appropriate Development, says the compliance regime under Kyoto is weak, but he believes Donnelly’s scenario is unlikely.
Although Canada has the second-lowest gasoline taxes of OECD countries, a new federal gasoline tax would be “very difficult to sell politically.”
Canada also would become a pariah in the international community if it ratified the Kyoto accord yet did nothing or little to comply, said Bramley, who thinks the chances of ratification are now “above 90 per cent.”
