PREAMBLE: The European Community (EU) takes Climate Change seriously, and is making progress towards its Kyoto targets. On April 26, 2007, Canada’s Conservative government released its first “climate-change plan”. Disappointingly, despite Canada leading the world in reducing ozone destroying chlorofluoro-carbons (Montreal Protocol 1987), signing the Kyoto Protocol (1997), and hosting its ratification (2005), this plan is incapable of meeting Canada’s Kyoto targets. Ranked 27th of 29 by the Organization for Economic Cooperation and Development on Greenhouse Gas (GHG) emissions, Canada remains among the most environmentally delinquent industrialized countries (ref: http://www.environmentalindicators.com/htdocs/indicators.htm). In this edition, adapting material from Global Vision (GV), a British NGO not linked to any political party, we examine Europe’s valid experience in reducing Greenhouse Gases (GHG), and close with an editorial advocating that Canada reconsider all options.
THE EU APPROACH TO KYOTO
Commitments: In 1997 the EU15 signed the UN Framework Convention on Climate Change (Kyoto Protocol), agreeing to cut Greenhouse Gas (GHG) emissions, by 8% by the 5-year period 2008-12 (annual average emissions over the period) compared with the base year 1990. Under the "burden sharing" scheme of 2002, different member states were allocated different emissions targets: Germany agreed to a 21% cut (possible because of the collapse of much of east Germany's industry) and the UK agreed to a 12.5% cut; Spain was permitted a 15% increase and Greece a 25% increase. In 2004, new member states took different approaches: six (including the Czech Republic) adopted an 8% cut, Hungary and Poland have a target of 6%, while Cyprus and Malta have no targets.
The EU Emissions Trading Scheme (ETS): EU environment ministers have set up an ETS market to trade pollution permits for CO2, the main GHG. The scheme caps the amount of CO2 that industries can produce and allows companies to trade emissions rights within the EU (a "Cap and Trade" scheme). Firms that exceed their emissions limits can buy "allowances" from firms whose emissions are under target levels. The ETS began operating in January 2005. The first trading period (“phase”) runs from 2005 to 2007, to be followed by subsequent 5-year phases. Under ETS, Member States compile a National Allocation Plan (NAP) for each phase. They decide a "cap" for total emissions allowances and then allocate the capped total (in the form of permits) to individual plants and other "installations" according to predetermined criteria. Permit recipients can use their allowances for their own CO2 emissions, sell surplus allowances to others if they have any or, if short, buy the necessary allowances from others through the EU-wide market.
Performance: 2004 data (table in GV link) indicate that, of the EU15, 4 (UK, France, Germany, Sweden) are on track to meet commitments under the accord; 11 are not: Ireland, Portugal by >20%; Spain by >30%. Seven of 8 new countries are within target - the exception is Slovenia. The EU15 overall, are well off target.
Critique: Emissions Trading Schemes can work successfully but the EU's ETS has attracted criticism. Because national governments were left to choose their own targets, problems arose concerning allocation of emissions permits for 2005-07. The UK set stringent targets, whilst most other Member States did not. As a result, UK firms paid nearly £½bn for extra permits from business rivals in other Member States in 2005, whilst (for example) German firms received nearly £300m. Some UK firms, especially electricity companies, reduced their emissions and hence output because they were short of permits, which led to higher UK electricity prices. Other problems: in 2005, member states issued free permits for 1,830m tonnes, whilst emissions were only 1,785m tonnes. When this was realized in April 2006, a secondary market for emissions permits crashed.
The Future: Planning for the period 2008-12 is now underway. The EU claims that it will be tougher and fairer than the first; the UK has submitted plans with a 3% reduction target for CO2 emissions; Germany's plans again are less stringent.
Source: Global Vision (GV) http://global-vision.net/facts/fact10_3.asp (Feb 2007).
EDITORIAL: The European experience is instructive in many ways, but three lessons for Canada are clear: 1) curbing GHGs requires transformational thinking, not business as usual; 2) realities, commitment and performance vary across jurisdictions; and 3) respect for the Kyoto Accord is globally responsible.
Canada has suffered from Prime Minister Harper’s state of denial regarding the environment generally and Kyoto in particular (eg., in a 2002 letter to his party, Harper ridiculed the accord as “a money-sucking socialist scheme”). His hostility to the treaty while in opposition damaged the potential for consensus then, and carries over to his role now. On January 2007, an opinion poll nonetheless revealed environment to be Canada’s No.1 public concern, which caused the Conservative leadership finally to take the matter seriously, albeit still struggling to come to grips with it. However, Canada’s Green Plan, released April 26, 15 months into the term of the government (no longer “new”), falls so far short of what Canada is capable of doing, that energy stocks abruptly gained in value following its announcement! By contrast, the EU achieved consensus in 2005 and is far ahead in all aspects of the process. While rejecting Kyoto, highlights of the Conservative plan include short (2010) and medium term (2015) emission reduction targets, national emission caps (2012), and a domestic ETS (failure to meet Kyoto targets disqualify Canada from the global ETS). But there are many loopholes: although a technology fund will be financed by industries failing to meet targets, new facilities are exempt from any targets for 3 years, while those that prove unable to reduce emissions with existing technology will be exempt from any requirements to make reductions. Climate change activist Al Gore, invited speaker to a Canadian exhibition on green technologies, described the plan as a “fraud… designed to mislead the Canadian people”.
The debate clearly must not stop there. All policy options deserve ongoing consideration, including a carbon tax: fossil fuels taxed in proportion to carbon content, to represent the environmental cost of doing business. Although little new bureaucracy is required, this option was rejected outright by the “new” Environment Minister John Baird with more bluster than brilliance.[1] Meanwhile, south of the border, a Carbon Tax Center (CTC) was launched in New York in January; its aim is: to educate policymakers, opinion leaders, and the public about the benefits of taxing fossil fuel emissions. CTC advocates a carbon tax system because of "predictability, immediacy, transparency, universality, and equity."[2] This deserves more study in Canada, and the novel idea of educating policy-makers is appealing. Critically important is the need for incentives for operational research into cleaner energy systems. Not least, having nuclear technology, Canada should expand this source of clean energy. Combining approaches will more likely succeed than blind adherence or resistance to any given approach.
References: 1. Carbon tax proposal stirs political debate in Canada. Mar 5, 2007 http://www.corporateknights.ca/info/news/page.asp?name=platts_carbon_tax
2. Carbon Tax Center. Mar 31, 2007 http://www.carbontax.org/
Tuesday 1 May 2007
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