The Canadian government has released what is supposed to be a plan to meet its Kyoto Protocol commitments — and apparently baffled the energy industry in the process.
What emerged from months of reported fumbling and feuding within the government was a C$10 billion plan — twice the cost projected in a February budget — to reduce greenhouse gases over the 2008-2012 period.
Beyond that Project Green offered little hope that the actual targets will be met.
After a week of trying to make sense out of the much-anticipated plan, many industry leaders have described the strategy as vague and the goals as unattainable.
Richard Paton, president of the Canadian Chemical Producers Association, said there is not enough detail for his sector to build business plans around.
“We question the government’s approach,” said George Fink, environmental chairman of the Small Explorers and Producers Association of Canada.
Pierre Alvarez, president of the Canadian Association of Petroleum Producers, wants to see promises made by the Liberal government putting caps on industry greenhouse gas emissions enshrined in law before he will rest easy.
He said the industry must be able to explain the costs of Kyoto to investors, adding “the investor impact is just as important as the legislative impact.”
For the Canadian Energy Pipeline Association the uncertainty about how much they will have to spend on climate change abatement poses an added challenge now that the United States has introduced new accounting rules that force companies to specify future climate change-related spending estimates.
TransAlta, Canada’s second largest emitter of greenhouse gases, is still not clear what steps it will have to take to comply with Kyoto, a spokesman said.
Less onerous for oil patch
For the oil patch, however, Project Green is less onerous than previously stipulated, reflecting a government concession that it did not want to wreck its economic engines.
The burden on about 700 companies, including oil and gas producers, refiners and pipelines, who are responsible for half of Canada’s greenhouse gases, was eased.
They will now being required to cut their annual emissions by 45 million metric tons, 10 million metric tons less than a 2002 target.
Unchanged is the government’s pledge to cap the cost of compliance at C$15 per metric ton of carbon dioxide.
Environment Minister and Industry Minister David Emerson said the “balanced” measures will not put Canada at a competitive disadvantage — a pledge that many industry leaders have yet to share.
Small producers are especially unhappy because of the excessive costs they will face in monitoring greenhouse gases, in many cases involving wells that produce only a handful of barrels each day.
Fink said it is not clear whether every well will have to be measured. Until then there is no way to estimate Kyoto’s costs in terms of delays and lost opportunities, he said.
His association plans to continue its lobbying to have companies pumping less than 4,000 barrels per day of oil equivalent exempt from Kyoto.
By scaling back the greenhouse gases target for heavy industries, the government will require ordinary Canadians to meet 85 percent of the annual cuts of 270 million metric tons.
Major plan elements
Major elements of the plan, in addition to the program for large industrial emitters, include:
• A Climate Fund that could involve C$5 billion of government money to purchase domestic and some international emission reductions totaling 75 million-115 million metric tons a year. Federal officials estimate the cost of buying credits will not exceed C$10 per metric ton; some economists have set the bar at C$30 per metric ton.
• A Partnership Fund, costing C$50 million a year initially and growing to as much as $3 billion over a decade, will target annual reductions of 55 million-85 million metric tons, based on cooperation and cost-sharing with the provincial and territorial governments. Projects could include clean coal technology, carbon dioxide capture and an east-west electricity grid across Canada.
• Renewable Energy, costing C$1.8 billion over the next 15 years to lower greenhouse gases by 15 million metric tons a year, hopes to quadruple wind power production to 4,000 megawatts, enough to power 1 million homes, and offer incentives to exploit other renewable sources such as solar, small hydro and biomass.
• Engaged Citizens, a program that will challenge ordinary Canadians, who are responsible for 28 percent of greenhouse gases, to achieve 10 million metric tons in annual reductions through individual and community undertakings.
• A previously announced C$5 billion transfer of gasoline taxes over five years to help finance environmentally sustainable infrastructure in urban regions.
Opposition parties, environmental groups unhappy
Federal opposition parties flayed the Kyoto plan on a variety of grounds, with the Conservative environment spokesman Bob Mills unhappy with the absence of precise targets for specific industries.
He said the Liberal government started too late to develop its implementation plan and set deadlines it has no hope of meeting.
Mills wants to delay Canada’s compliance with the Kyoto Protocol by five to eight years beyond 2012, when the first phase ends.
Bloc Quebecois environment spokesman Bernard Bigras accused the Liberals of giving a break to the “biggest polluters” by lowering their annual target to 45 million metric tons and shifting the burden to citizens.
That view was shared by many environmental leaders, including John Bennett, a spokesman for the Sierra Club of Canada, who claimed the “richest and largest polluters have used their economic power to avoid doing their duty to future generations.”
Greenpeace, the David Suzuki Foundation and a coalition of nine other groups said the government failed by not setting firm deadlines for various sectors and not imposing penalties on offenders.
