Outlook '98 - Environment

Some of the commitments made at the Kyoto Conference on the Environment in December 1997 were reviewed. The implication of those promises for the oil industry were assessed, along with speculation as to the means that may be employed to realize the commitments made. The twin concepts of QELRO, (Quantified Emissions Limitation and Reduction Objective) and its relationship to CDM (Clean Development Mechanism), two concepts that grew out of the Kyoto Conference, were also explained. As far as Canada is concerned the commitment is to reduce carbon dioxide emissions to within six per cent of 1990 levels by 2008-2012. Tax reform, tradeable emission credits and joint implementation rules have been briefly examined as possible means the government might use to meet the commitments. Tying the 30 per cent depreciation allowance for manufacturing and processing equipment to some predetermined level of energy efficiency and to introduce tax breaks for investing in companies producing ''biofuels'' such as ethanol made from wood waste, is another option that has been advocated by some. It should be borne in mind that the objective of ecological tax reform is to ''rebalance'' by discouraging non-renewable resources and encouraging renewable ones. With this in mind it is easy to see that it would take only a small shift in emphasis to quickly affect cash flow