The Kyoto Protocol : Canada's risky rush to judgement

This paper outlined the 4 proposed policy options to implement the Kyoto Protocol in Canada and presented reasons why the Canadian timetable to ratify the Kyoto Protocol is an unrealistic and unsound policy. The Canadian Prime Minister will ask Parliament to ratify the agreement before the end of 2002 but the authors claim that before any decision regarding ratification is made, the government should cost out all relevant options, under all reasonable contingencies. For policy purposes, this paper focuses on reductions of carbon dioxide. Canada's obligation is to reduce them 6 per cent below 1990 levels by 2010, but because of economic growth, emissions among participating countries may be 30 per cent above their aggregate target. In addition, the withdrawal of the United States means that about two-thirds of the world's emissions are not covered by Kyoto. The first policy option involves the selling of emission permits covering about 80 per cent of domestic emitters. It results in 16 MT of domestic emissions reductions being accomplished and 128 MT of foreign permits being purchased. This first option is considered to be the least costly of the four. The second option relies on command-and-control measures in which 104 MT worth of new targeted measures are forced through. Although the government has not provided cost estimates for option 2, it is likely to be much more costly than option 1. The third option slightly adjusts the mix of permits trading and command-and-control measures, and distributes the permits freely instead of selling them. Only the large emitters are involved in the trading system, covering 40 per cent of domestic emission sources. The cost of emissions reductions would be lower than under option 1. The fourth and final option combines tradable permits systems in which only large emitters are involved, but where permits are distributed according to sectoral emission reduction costs, expected future emission growth rates as well as economic, social and environmental goals. It is concluded that all 4 options include targeted measures that are not likely to be cost-effective in any way, in fact, they require a lot of domestic emissions reductions that are needlessly costly. The authors emphasized that more information is needed to understand the economic consequences and risks of accepting the Kyoto target as legally binding. refs., tabs., figs