Lack of focus on Kyoto makes long-term commitments tough
Tony Seskus <a href=www.nationalpost.com>Financial Post Tuesday, April 29, 2003
Canada faces mounting Kyoto costs and commitments unless Ottawa gets its "act together" before the next set of negotiations on the climate change accord, a policy think tank warned yesterday.
"The next round of commitments is going to be tougher," said Gilles Rheaume, vice-president of policy for the Conference Board of Canada. "If we're not prepared with a clear strategy, we could end up with a lot of problems."
The debate on Canada's decision in December to ratify the accord has faded since Ottawa made a number of concessions aiming to limit its impact during the implementation phase, which runs till 2012. But Mr. Rheaume said the federal government's short-term focus is leaving the country vulnerable to much tougher long-term commitments, which will be negotiated in 2005. He said Ottawa needs to start preparing a strategy for those negotiations now.
Many observers say Ottawa had a chance to develop a detailed strategy in the years that led up to the signing of the Accord last year.
Many felt that Ottawa signed Kyoto without a clear notion of how it would implement the complex deal and without a clear idea of how much it would cost.
"Let's not pull another Kyoto," Mr. Rheaume said at board conference in Calgary yesterday.
"If we're not prepared [for the negotiations], it's going to be tough because I can see by 2007-2008, we're going to have another agreement with stricter targets for a longer time period."
He said uncertainty around Canada's long-term Kyoto plans puts the future of major capital projects at risk.
"They have long lead times, they have long lives and if you don't know what will be Canada's longer-term strategy with respect to climate change, why would you want to put in a major investment that's going to last 25, 30, 50 years?" he said.
In fact, Petro-Canada is expected to address that issue today at its annual general meeting in Calgary when the company should provide some clarity on a $5.2-billion oilsands strategy, which has been clouded by Kyoto.
The company said in December it would be looking for longer-term certainty on Kyoto by the spring before deciding whether to spend $200-million for detailed engineering and other work on its Meadow Creek oilsands project and a refinery conversion.
Meanwhile, the Canadian Association of Petroleum Producers is still seeking further Kyoto certainty. Of note, it wants Ottawa to pledge not to increase Canada's climate change "burden" until other oil-rich countries, like Nigeria, Mexico and Venezuela, sign the deal, said Pierre Alvarez, CAPP's president.
Canada's current Kyoto commitment calls for the country to cut greenhouse gas emissions 6% below 1990 levels by 2012.
Prior to ratifying the agreement, critics warned the deal could cost industry billions of dollars, hundreds of thousands of jobs and forever put Canada at a disadvantage to the United States, which won't sign Kyoto.
Ottawa tried to mitigate those concerns with promises to spread the burden across the country and sectors.
In the case of the oil and gas industry -- one of Kyoto's fiercest opponents -- the federal government decided to cap related costs during the implementation stage.
Ottawa has, however, offered few assurances beyond 2012.
Many energy companies believe those costs are unlikely to rise significantly after that time, but Mr. Rheaume said there are no guarantees about what Canada's commitments will look like in the long term.
He said that's why Canada needs a strategy to ensure it negotiates an agreement it can handle.
Canada should even consider negotiating as a block with either North America or the Americas, just as European countries successfully did.