Friday, April 20, 2007

An obvious solution

I'd think that after a year of Con government, I'd have seen enough of them not to be surprised by just how blatantly they seek to insult the intelligence of Canadians. But on a review of the Cons' anti-Kyoto temper tantrum, I can't avoid at least some astonishment at just how transparently the Cons' strategy remains based on a poor game of bait and switch. Even as John Baird's bluster about a forced recession has made headlines, the report itself contains an obvious means for Canada to meet its target for a very affordable price - if only the Cons weren't too caught up in their own rhetoric to apply it:
With unlimited access to international trading (regardless of "hot air" risk), the $25 per tonne international credit price assumed for the purposes of this analysis would effectively become the price ceiling for Canadian emitters, making it unnecessary to consider any domestic reductions at a cost above that price.

It is therefore reasonable to assume that this scenario would see international credits becoming the source of reductions for the vast majority of Canada's Kyoto target (the analysis presented above indicated that only a small portion of Canada's domestic emissions reductions could be achieved at a cost below $25 per tonne over the Kyoto period). This would dramatically lower the overall cost of reductions for Canadian emitters, and as a result would carry a much lower economic cost for Canada than presented above...

Assuming that 80% or so of Canada's Kyoto target would be met through international credits, somewhere in the range of $6 billion annually would be required for these purchases...
The Cons present two excuses for rejecting this option. Most prominently, there's their usual whine about "hot air" credits. Which of course remains in blissful ignorance of the fact that in agreeing to a deal, Kyoto's signatories obviously believed that such credits could form a legitimate means of emission management in the context of other action.

Interestingly, the report also relies heavily on a seemingly new claim that the "spirit" of Kyoto demands a focus on domestic reductions rather than international credits. Which means that the Cons are making a public show of using their invented claim about what Kyoto means to say as a justification for refusing to take action according to what the protocol actually says.

Mind you, there might be some real concern if Canada would be stuck purchasing credits in the long term. But it's clear from the report itself that there's no reason to think that to be true. Indeed, the report states in no uncertain terms that a relatively modest amount of longer-term planning is all that's needed for Canada to transition to more substantive domestic reductions:
(I)t is...assumed that there are no breakthroughs in current energy efficiency and other technologies pertaining to GHG emissions, or any dramatic reductions in the cost of access by Canadians to clean energy sources over the 2008 to 2012 period. Unforeseen developments on either of these fronts in the near future could also dramatically change the economic costs of meeting Canada's Kyoto target.

This last assumption is particularly important because, although it is quite reasonable for the purposes of this analysis, it also underscores the real source of the economic costs associated with Canada significantly reducing GHG emissions within the Kyoto period - a lack of time for business and consumers to smoothly transition to the changes required.
Of course, thanks presumably to Baird's direction, the report utterly ignores the obvious means of linking these two concepts, and fails to ask the question of why Canada couldn't meet its obligations in substantial part through purchases of credits to bridge the gap in which regulations can be implemented and necessary research funded. And with good reason from the standpoint of a party desperately looking for excuses for further inaction, as the answer would undercut the entire exercise in scaremongering: the most effective, least costly way of complying with Kyoto is plainly to bridge the gap with credits (including AAUs) while setting the groundwork for the real reductions which the Cons are still unwilling to consider.

What may be interesting to see going forward is whether the Cons' bad joke of an alternate solution to comply with Kyoto's requirements (in the form of a $195/ton carbon tax). If the opposition parties are thinking ahead, they should be emphasizing this assumption in particular: "John Baird thinks Canadians should pay eight times as much for carbon consumption as every other Kyoto country". And when the Cons attempt to respond by claiming there's no other alternative available, there's no lack of ready answers - which can only show all the more just how detached the Cons are from reality in their assumptions.

Ultimately, the only obstacle in the way of an entirely affordable, Kyoto-compliant transition for Canadian industry is the Cons' continued unwillingness to accept the terms that every Kyoto signatory agreed to a decade ago. And no matter how accomplished a blowhard Baird may be, it's hard to think anything but that the Cons are severely overestimating their ability to pull the wool over the eyes of voters who want to see action now.

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