Pembina Institute

Canada’s Kyoto math doesn’t add up

Yesterday afternoon, my colleagues and I were trying to make sense of the outcomes from the Durban, South Africa, climate change conference — was it an exercise in deceit or did it offer some glimmer of hope? — but before we could fully answer those questions, news broke that Canada was formally withdrawing from the Kyoto Protocol. Just hours off the plane from Durban, Environment Minister Kent made the announcement that Canada would no longer be a party to the world’s only climate change treaty.

It wasn’t particularly surprising to hear that Canada is withdrawing. Minister Kent’s painful efforts to neither confirm nor deny rumours of Canada’s intentions made it perfectly clear what those intentions were. Nor was it news that Canada will miss its Kyoto commitments to reduce emissions by a wide margin: a complete lack of effort on the part of Liberal and Conservative governments alike gave our country no chance of meeting them.

“Delaying action is a false economy: for every $1 of investment avoided before 2020, an additional $4.3 would need to be spent after 2020 to compensate for the increased emissions.”
— The International Energy Agency.

What was surprising was the Minister’s attempt to spin this withdrawal as a positive step for Canada’s economy. While taking action on climate change does come with costs, they are entirely manageable. The costs of inaction — in Canada, let alone on a global scale — are not.

Yesterday’s announcement fits into a long-standing pattern of federal inaction on climate change that can only be justified by ignoring the costs of inaction. Here’s a quick rundown on those costs that the government’s math is currently ignoring.

The Costs of Delay

For several years, the typically staid International Energy Agency has been warning about the high costs of delaying action on climate change. In 2010 they found that the lack of ambition inherent in the pledges countries made under the Copenhagen Accord and Cancun Agreements would increase the global cost of staying below the two degrees Celsius limit by $1 trillion over the period 2010 to 2030, compared with a scenario based on taking strong actions earlier. This year they calculated the costs of locking-in inefficient infrastructure in the power sector and found that, “Delaying action is a false economy: for every $1 of investment avoided before 2020, an additional $4.3 would need to be spent after 2020 to compensate for the increased emissions.”

In Canada, the National Roundtable on the Environment and the Economy has shown that it is likely to Canada’s advantage to take action on climate change before the United States. A C.D. Howe study came to similar conclusions.

The Costs of Having Climate Change Policies Imposed on Canada

We also know that many jurisdictions will not be satisfied with Canada failing to do its fair share. That frustration is evidenced by efforts in the European Union to clamp down on the emissions from the fuels they use or international aviation. Likewise, recent protests in the U.S. that successfully delayed the proposed Keystone XL pipeline were largely motivated by concerns about greenhouse gas emissions from Canada’s oilsands. While those efforts and frustrations aren’t directed solely at Canada, our exposure to them will only increase if we don’t do our fair share.

“For a vulnerable country like Tuvalu, its an act of sabotage on our future. Withdrawing from the Kyoto Protocol is a reckless and totally irresponsible act.”
— Tuvalu’s lead climate negotiator

If we fail to act and leave other countries with no choice but to implement their own made-for-Canada policies, we can’t expect those countries to consider our unique needs and challenges. The result is likely to be added costs for Canadian companies, reduced market access and project uncertainty. None of those are good for business, and it’s shocking that we’re prepared to accept those types of risks when made-in-Canada solutions could provide the same environmental benefit without undermining our economy. For example, we could put a national price on greenhouse gas pollution; something that industry itself is calling for.

The Costs of Climate Change

The world remains on a path to more than three degrees Celsius of global warming. If that scenario becomes reality, droughts and desertification, coastal flooding, storms and forest fires are just a sampling of the impacts that will intensify over the coming decades. All of those impacts will have costs for the global environment and economy. For Canada, the National Round Table for Environment and Economy recently estimated those types of costs could wipe out up to 25 per cent of the country’s wealth.

The costs can be kept to manageable levels, but only if we get on a path that avoids two degrees of warming. And we can only get on a path that avoids two degrees of warming if there is collective global action to reduce emissions. The fragile deal reached in Durban offers one of the few paths to such collective action, so given how important the extension of the Kyoto protocol was to reaching the Durban agreement (and especially to the world’s most vulnerable countries), steps to undermine it will not be received positively.

As Tuvalu’s lead climate negotiator told Reuters, “for a vulnerable country like Tuvalu, its an act of sabotage on our future. Withdrawing from the Kyoto Protocol is a reckless and totally irresponsible act.” Even UN climate chief Christiana Figueres has condemned Canada's position, telling the Guardian that, "I regret Canada's withdrawal and am surprised over its timing.... Canada has a moral obligation to itself and future generations to lead in the global effort."

While Canada is not going to make or break a global agreement, flatly rejecting Kyoto can only hurt the overall prospects for a deal and the chance to avoid the worst impacts of climate change.

When you take off the blinders and recognize that the costs of delay, the costs of having climate policies imposed on Canada and the costs of climate change impacts will all increase with continued inaction on climate change, the government’s position is all the more economically troubling. For a government that touts its economic management credentials, this blindspot is particularly striking.

Skip — Jan 02, 2012 - 03:56 PM MT

Canadian are fed up with you and your global warming lies.

We are not going to take this anymore.

hamish wilson — Dec 19, 2011 - 08:00 PM MT

The record heat in Toronto, and the distinct lack of snow should be a wakeup for folks that we're well underway to a warmed world and past a tipping point. Along with calling Mr. Kent a piece of coal, we should try to get folks mad about how traditional Chirstmas with snow has disappeared, and we can't go to the mall to get any.

There's a Wed. aft vigil at Mr. Kent's consttuency office at 7300 Yonge St. btw.

Roger Gagne — Dec 13, 2011 - 10:25 PM MT

Excellent summary, Matt. I'll definitely be revisiting this blog, and taking advantage of your links, in the future.

Another excellent report on the growing consensus in Corporate Canada that we need a price on carbon comes from Sustainable Prosperity, at http://www.sustainableprosperity.ca/article811

By the time I learned about their efforts, however, I'd already begun the same survey on my own. I've now written to 186 companies and have received replies from 44. Most of those are, to one degree or another, in acceptance of carbon pricing, though some prefer a carbon tax over cap and trade, or vice versa.

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