Kyoto Plan Still Does Not Measure Up, Say Canada’s Chief Executives

April 14, 2005

The Plan unveiled yesterday afternoon by the federal government for meeting Canada’s commitments under the Kyoto Protocol on global climate change will impose huge costs on taxpayers and will fail to meet its goals, say Canada’s business leaders.

“Eight years after the Kyoto Protocol was signed and more than two years after its ratification, there has yet to be a clear national discussion about its real impact on Canadians,” said Thomas d’Aquino, Chief Executive and President of the Canadian Council of Chief Executives (CCCE).

The CCCE has argued from the outset that the Canadian government accepted a far too ambitious commitment in its embracing of the Kyoto Protocol.  “Meeting the Kyoto target would mean cutting emissions of greenhouse gases by more than 30 percent within the next three to seven years.  Whether this is done through emission cuts in Canada or combined with the purchase of foreign credits, there are serious consequences for the economy, for jobs and for consumers,” Mr. d’Aquino said.

A non-partisan organization composed of the chief executive officers of 150 leading Canadian enterprises, the CCCE consistently has urged the government and opposition parties to ensure that Canada’s climate change strategy contributes to the country’s economic competitiveness as well as to the reduction of greenhouse gases.  Such a strategy requires in particular investment in cleaner and more energy efficient technologies which are unlikely to be developed and widely deployed within the Kyoto Protocol time frame.

In 2002, the CCCE advocated that Canada should not ratify the Kyoto Protocol until it had a realistic plan for meeting its target.  “We are still waiting for such a plan, and all that seems to change is the projected cost to taxpayers,” Mr. d’Aquino said. “During the ratification debate, the cost was said to be in the billions.  Now it is in the tens of billions.  How much will it really cost taxpayers in the end?  Yesterday’s announcement compounds the uncertainty.”

Warning that Canadian taxpayers will not tolerate a massive misuse of public funds or the jeopardizing of Canada’s hard-won positive fiscal position, Mr. d’Aquino called for sober second thought on the fiscal implications of the government’s proposals.

Pointing as well to the vigorous efforts of Canadian industry to demonstrate environmental leadership in concrete ways, the CCCE head said that Canadian companies have long understood the critical nexus between good environmental stewardship and strong competitive performance.  Canadian industry remains worried, however, that the single-minded focus on meeting the Kyoto Protocol deadline will skew investment decisions and penalize companies that take the lead in developing and adopting new technologies.

“At the end of the day, firms that use best-in-class technology may still be required to pay for additional credits, a penalty that will not apply to their competitors in the United States and in major developing countries,” said Mr. d’Aquino.

The CCCE also expressed concern with the continuing lack of detail on how the Kyoto Protocol target actually would be met.  Of the 270 megatonnes of greenhouse gas emissions which the government now says must be cut, between half and two-thirds will supposedly be met by the creation of two funds, the Climate Fund and the Partnership Fund.

The projected impact of these two funds is based on highly optimistic assumptions, and even the new overall price tag of $10 billion to $12 billion will not be enough to deliver the reduction in emissions needed to meet Kyoto Protocol obligations.

To its credit, the government has recognized the longer-term nature of the climate change challenge and has laid out some of the policies and corresponding resources that will be necessary.

Canada has many opportunities to be a growing supplier of a broad mix of energy sources, to develop the new technologies and lower-carbon energy sources that can contribute to better economic and environmental performance, and to make these available to help stem the growth of greenhouse gas emissions in developing countries.

“Canada’s business leaders are strongly committed to policies that can strengthen Canada’s position as an economic and environmental leader.  We will continue to urge the federal and provincial governments to work together in the development of a more innovative, made-in-Canada approach to climate change, while also making the investments required to support Canadian economic growth and progressive improvements in environmental performance,” Mr. d’Aquino said.

Finally, Mr. d’Aquino stressed the importance of building on Canada’s strong record in overall environmental performance.  “The 2005 Environmental Sustainability Index, under the auspices of the universities of Yale and Columbia, rates Canada as the sixth best performer among 146 countries.  Clearly Canadians are not ignoring their environmental responsibilities.  We can do better, of course, and Canadian industry is more than ready to do its share.”

The CCCE’s member chief executives head companies that collectively administer close to $2.5 trillion in assets, have annual revenues of more than $600 billion and account for a significant majority of Canada’s private sector investment, exports, training and research and development.

In addition to Mr. d’Aquino, the members of the CCCE’s Executive Committee are: Chairman Richard L. George, President and Chief Executive Officer of Suncor Energy Inc.; Honorary Chairman A. Charles Baillie; and Vice-Chairmen Dominic D’Alessandro, Paul Desmarais, Jr., Jacques Lamarre, Gwyn Morgan and Gordon Nixon, the chief executives respectively of Manulife Financial, Power Corporation of Canada, SNC-LAVALIN Group Inc., EnCana Corporation and Royal Bank of Canada.