OTTAWA - Ratifying the Kyoto agreement will result in lost potential for the Canadian economy, says David Anderson, the Minister of the Environment.
Mr. Anderson, who is committed to seeing the agreement to reduce greenhouse gas emissions signed, said the lost economic growth would be a maximum of $500-million each year for a 10-year period, or about $5-billion cumulatively. But he said the loss is slight in relation to our annual trillion-dollar economy.
In an interview with the Financial Post, Mr. Anderson also said he has approached the United States about working with Canada to combat greenhouse gas emissions in North America -- even though the United States has said it will not sign Kyoto.
The country's energy and manufacturing sectors have both raised red flags about the accord. Because the United States has said it will not sign, they feel Canadian industry will be put at a competitive disadvantage.
Mr. Anderson said he believes Canada can ratify Kyoto and still work in partnership with the United States.
"What we would like to do, of course, is work with them on their North American program and it will be a North American program inevitably because of our exports and because of our integrated technology and industry," he said.
Ottawa thinks the United States will develop a home-grown alternative to Kyoto, which will mitigate the competitive disadvantages to Canada.
Mr. Anderson said he has no illusions that the Americans will sign Kyoto.
"The President [George W. Bush] has made his position very clear and it [the U.S.] is going to have a different program. It's going to be a U.S. program," Mr. Anderson said.
The U.S. program will likely be less onerous than Kyoto and more focused on the development and adoption of technological solutions to the burning of fossil fuels, Mr. Anderson said. The burning of carbon, primarily by cars, is believed to be the source of atmospheric emissions that block sunlight, giving Earth a greenhouse effect that raises global temperatures.
Canada is well-positioned to participate in the U.S. program because of government-funded research and technology in areas such as fuel cells and alternate fuels, Mr. Anderson said. He said such companies as Ballard Power Systems Inc. and Westport Innovations Inc. are prime examples of the potential benefits of a close working relationship with the United States on climate change issues.
An outstanding question, however, is if sales of efficient fuels like natural gas to the United States will give Canada credit toward meeting its Kyoto obligations since the United States will be outside the treaty. So far, the Europeans have told Canada it will not get recognition for the reductions in greenhouse gases caused by substituting cleaner fuel such as natural gas for coal now being burned in U.S. power plants.
Mr. Anderson said last week the government estimates it must reduce emissions by 200 megatonnes. To do that, Canada will have to buy emission credits from less-developed countries. The emissions credit system, which is part of the treaty, in effect allows countries to buy rights to produce greenhouse gases beyond the treaty limits. The Canadian Association of Petroleum Producers estimates Canada could spend up to $4.5-billion annually on credits.
Mr. Anderson said discussions are continuing on the subject with the other Kyoto countries but recognition for exporting to the United States "is not a make-or-break" issue for Canada in considering whether or not to ratify Kyoto.
"It could be later. We might decide to put it in that category. At this point, we are simply describing it as a very important issue for Canada. We have not said that if we don't get satisfaction on this we would not proceed," Mr. Anderson said.
He also reiterated that Ottawa will carry out consultations and present a work plan before Kyoto is ratified.
Canada would like to announce acceptance of the treaty in June when the G7 industrial leaders meet in Kananaskis, Alta., under the chairmanship of Jean Chrétien, the Prime Minister.
But Mr. Anderson said if the government is not ready by June, it would sign the deal later.
A logical place would be in Johannesburg, in September, at an international conference on climate change, he said.
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