BC and The Kyoto Protocol

Archived Topic Box from the 2002 Second Annual Benchmark Report

By Canadian standards B.C. has an excellent record on Greenhouse Gas emissions. According to the most recent data, BC was the third lowest emitter of greenhouse gasses (GHGs) in the country in 2000, producing 9.1% of national emissions despite the fact that the province is home to 13.2% of the Canadian population and accounts for about 12.0% of national GDP.

Global warming has registered international concern for well over a decade. In 1992, global apprehension led to negotiation and ratification of the United Nations' Framework on Climate Change. The Kyoto Protocol, signed in Japan in 1997, followed this preliminary meeting. This second agreement outlined specific targets for greenhouse gas emission reductions and provided for enforcement mechanisms. Final changes to the agreement were completed at Bonn and Marrakech in 2001, adding provisions for emissions trading and carbon "sinks" to the previous accord.

There is considerable debate over the economic implications of Canada ratifying the Kyoto Protocol. If ratified, the Protocol would force Canada to reduce its GHG emissions to 94 percent of 1990 levels (or 570 Mt CO2 per year) by the agreed upon commitment period of 2008-2012. Other countries are required to reduce their GHG emission levels by a greater or lesser amount based on individual circumstances. Canada, with a widely dispersed population and cold climate, is the world's second highest per capita emitter of carbon dioxide. Many international analyses show it to be one of the hardest hit signatories to the agreement, possibly becoming the largest purchaser of emission credits.

In 2001, Canada's largest trading partner, the United States, pulled out of the agreement. Claiming that the Protocol was "fatally flawed" and would have a profound economic impact, the U.S. stated that it will neither ratify nor be bound by the provisions of the agreement. Emissions reductions will likely increase business costs in Canada relative to the U.S., thereby increasing the costs of Canadian exports and putting Canadian goods at a competitive disadvantage in U.S. markets. In short, B.C. is in a precarious position and will likely suffer disproportionately from the Protocol's proposed emission reductions. Consider the following:

Population Growth - BC's population increased by 23% since 1990 with 40% growth between 1990 and 2010 predicted. The problem of reducing GHG emissions is exacerbated by population growth, putting B.C. at a disadvantage versus provinces that have experienced slower growth - or even population declines - since 1990.

Current Emissions - B.C. has low GHG emissions by Canadian standards - the majority of provincial electricity production comes from emission-free hydro, implying B.C. has little scope to reduce emissions through fuel switching or other methods available to jurisdictions that rely on fossil fuels. Current emissions are largely transportation based (40% vs. 28% national average), a sector where fuel switching and emission reductions are extremely costly, especially given B.C.'s physical landscape.

Developing Industries - BC has a large and growing upstream oil and gas industry that promises to expand significantly in coming years, thus providing essential economic support for many rural B.C. communities that have been adversely affected by the declining forestry sector and a needed source of basic income from export markets.

Most studies and models estimate that total Canadian GDP loss by 2010 will be between 2.5% (roughly $30 billion) and 0.2% of GDP. Canada has received international agreement on a system of tradable emission permits, limited credits for the carbon "sinks" provided by the nation's vast forests, and continues to seek credits for its exports of non-GHG producing energy sources such as natural gas and hydro electricity. Other issues are more difficult to measure and therefore have rarely been included in existing economic models. These include the costs of higher vehicle and fuel prices, and possible relocation of populations to urban centers. Any benefits gained through savings in health care, environmental quality and energy usage must also be considered.

Without clearly defined policies, regulatory targets, and programs it is impossible to adequately assess an agreement that will have far reaching environmental and economic implications for generations to come.