Pier-André Bouchard St-Amant is a master student at Université du Québec à Montréal.
Le Devoir, saturday 10 and sunday 11 of june 2006 edition.
By listening to the federal government atittude towards Kyoto protocol, I cannot stop thinking about how blurry his speech is and how insipid are his arguments.
An obvious example is his (flawed) demonstration of Kyoto protocol's inefficiency. Some volontary measures in it are inefficient so the whole thing is inefficient. For instance, The "popular" One Ton Challenge which asks every citizen to reduce its greenhouse gas emissions by one ton. In itself, there is no doubt that this voluntary measure is not working at all. It is like politely asking smokers to voluntarly stop smoking in public areas...
But Kyoto is not just a sum of voluntary measures and what would bring results if implemented is the carbon market. By publicly putting upfront the voluntary measures, one can raise some legitimate doubts about the government motives. Are they seeking to hide more coercitive measures for polluting industries ?
An efficient market
The carbon market is essentially forcing industries to reduce their greenhouse gases below a fixed threshold. By what means ? The cheapest one ! In short, a polluting company can choose between lowering its own emissions or buying reductions (carbon credits) from another company who have some in excess. Thus, firms can trade carbon credits on the market at the lowest possible price. It does not matter if the reductions comes from a very polluting factory : by buying credits from another company, the global level of greenhouse gases has been lowered at a cheaper price. In other words, this mecanism is coercitive in its objectives, not its means.
Evidence shows that a carbon market is efficient. One has been implemented in United States to lower the emissions of products causing acid rains. More precisely, this market aimed for 12 millions of tons in reduction of those "acid credits" with respect to projected emissions. Results : a 12,3 tons reduction of emissions. Despite four years of delay to achieve this goal, the results are still there.
On the european side, results can also be seen. In 2005, 395 millions of tons of carbon credit were bought (or sold) on the market for a total value of 13,2 millions of dollars. Thus, there is 395 millions of tons less in the atmosphere. In one year, Europe made more reductions than the Canada's objective !
Canada is ready
Asking if Canada is ready is asking if the market is ready. First, Montréal Stock Exchange signified its interest in organising the market. Therefore, there is a credible actor ready to do so. There are also firms like CO2 solutions, who specialises in potential reductions to achieve goals in an effective way. Furthermore, we can see "aggregators", agents going from farm to farm in order to buy rural carbon wells to sell them to potential buyers.
"Green" technologies can also act as substitutes in some everyday products. For instance, carbon credits could bring enough revenues to cover expenses in capital for a biodiesel plant in two years, biodiesel revenues excluded ! Needless to say, this new source of revenues influences the decision of potential investors.
On the side of polluters, asking for there readiness is similar to asking a condemned to death if he is ready for the electric chair : he is ready, but always has some last minute wishes...
When you think about it, the main thing missing in order to launch a carbon market is a legislative "signal" telling who are the polluters and what are their reduction goals. The lobby previously done on the federal government seems to work since this list, if it exists, is never going to be published.
Actually, demand for oil makes Albertan production very attractive on the world market. If it is good for the western part of Canada, it is a major source of inflation, wich is pushing interest rates higher. For the same reasons, the dollar goes up. This overheat of the western economy does not help that much those in eastern provinces. There may be possible layoffs or wages reduction (or both) as a consequence since higher dollar and interest rates mean a slow down of their own economies.
Implementing the Kyoto protocol would certainly force the oil producers, whom are responsible for the 70% increase in the greenhouse gases, to reduce their emissions and to buy some carbon credits. Thus, there would be a raise in carbon credits and the eastern provinces like Ontario and Québec are the best suited to meet demand.
For instance, there are 3000 MW of wind turbines being built in Québec, which does represent a good source of supply of carbon credits. In the request for proposal issued by Hydro-Québec, it was explicitely stated that any source of revenues generated by carbon credits would be given to the national electricity producer. Hence, the government would benefit from new sources of revenues from the oil in the west. This short example illustrates how Québec could benefit from the oil boost in the west, which is an indirect way to include oil in perequation between provinces.
So, why is the new government against it ? Because of its electoral basis and of electoral commitments. The ideology of some members of the parliament can also be a reason. It seems useful to remember that Bob Mills, former conservative speaker in matter of environment said that Kyoto was "a vast socialist conspiracy". To sum up, arguments of inefficiency do not point out the market. They rather seem to point out politicians.