Creating a winning industrial strategy in Canada doesn't require a lot of imagination. When things get tough, all you have to do is threaten to blow a few employees out the door. That's usually enough to guarantee a financial freebie from the government -- as Air Canada got after Sept. 11 -- or remove a new regulation that may crimp profits.
At various times in recent decades, mining and pulp and paper companies threatened to kill jobs if regulations were to prevent them from choking the air and the water with poison. This year, the tried and trusted strategy is back in force. The Canadian Chamber of Commerce and the Canadian Manufacturers and Exporters, backed by the petroleum industry and premiers Ralph Klein and Mike Harris, want to ensure that Canada follows the American lead and rejects the Kyoto protocol on climate change. They will succeed. When jobs are at stake, politicians' backbones turn to rubber.
The figures used by the anti-Kyoto crowd are as compelling as those found on Enron's financial statements. The Chamber of Commerce claimed that meeting the Kyoto requirements would lop $30-billion a year from GDP by 2010. Not to be outdone, the Canadian Manufacturers and Exporters trotted out a figure of $40-billion, plus the loss of 450,000 manufacturing jobs. The Alberta government tossed in a cost range of $25-billion to $40-billion and as many as 70,000 jobs. Why stop there? Do we hear $100-billion and a million jobs? A lobby group could invent any figure and the media would dutifully report it as if it had some basis in reality.
Putting aside the environmental benefits of lower greenhouse gas emissions, Kyoto's economic costs are unknown. Reducing greenhouse gas emissions could very well trim economic growth. But there's also a good chance that Kyoto may not be nearly as expensive as the shockmeisters warn; it could even result in a net financial gain for industrial companies.
The acid rain debate of the 1970s and the 1980s is a case in point. For years, Inco, Falconbridge, Ontario Hydro and the other monster sources of sulphur dioxide used every technique in the book to fight emission restrictions. When combined with water, sulphur dioxide creates sulphuric acid -- acid rain -- which was killing thousands of lakes in Eastern Canada and the United States. As far as Inco and the others were concerned, dead lakes were a cost of doing business. What was not okay was forcing them to invest in new technology to reduce emissions. The companies would become uncompetitive. Smelter jobs would be lost. Romantic Sudbury, Ont., the Paris of the north, would survive only as a training site for future moon astronauts. The Soviet Union's smelting companies would take over the world.
In the mid-1980s, as more and more lakes looked like they were covered in astroturf, and as acid rain became an international issue, Jim Bradley, Ontario's environment minister at the time, finally got his way. Emissions would be reduced. Suddenly, sulphur dioxide went from a PR issue to an engineering issue. Inco wasn't as thick-skulled as it liked to let on. It found an ingenious way to burn high-sulphur nickel ore in an oxygen-rich environment as a fuel, as if it were low-grade coal. The process had two benefits: a) it created enough energy for primary smelting, thus vastly reducing the need for natural gas and b) it captured much of the sulphur before it went up the smokestack. As a result, Inco created a lovely win-win situation. It saved money because its nickel production has become more efficient, and the environment became cleaner.
Not all industrial users, of course, were as lucky as Inco. Cleaning up copper smelters has not been as easy. But other big polluters are finding that technology can help save costs while reducing pollution. Smelting aluminum creates a nasty greenhouse gas called polyfluorocarbon. The aluminum industry has made great progress in reducing the output of this gas; more efficient production has been the economic byproduct. Noranda is working on plans to create a win-win situation by cutting the emissions of sulphur hexafluoride, another ugly gas, from its magnesium operations.
If you listen to the Kyoto naysayers, though, there is no possible way that meeting the accord can produce anything but an economic loss for Canada. Rolling back emissions to 1990 levels would put hundreds of thousands of workers on the dole, and if you're unemployed, you don't really care whether the planet is getting warmer or not. The possibility that rolling back emissions might create production efficiencies has not even been examined. Has anyone asked the engineers what they think?
ereguly@globeandmail.ca
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