Meeting 2012 Kyoto target could cost every Canadian $3,500 per year for next several years



    TORONTO, April 20 /CNW/ - Reducing Canada's greenhouse gas emissions to
meet Kyoto Protocol targets by 2012 could cost each Canadian upwards of $3,500
a year for the next several years, according to research done by The Fraser
Institute, an independent research organization with offices across Canada.
    The alternative is to purchase foreign emission credits, a move that
would transfer $30 billion from Canada to other countries.
    "In order to meet the Kyoto targets, Canada will have to make drastic
cuts in its emission levels. No matter how we go about it, meeting a target
that begins less than a year away is going to incur significant costs," said
Nicholas Schneider, a policy analyst with The Fraser Institute and author of
Welcome Back, Kyoto, published in the April issue of Fraser Forum, The Fraser
Institute's monthly magazine of critical thought.
    "One of the questions governments need to consider is, are Canadians
willing to pay those costs?"
    Schneider notes that research in the U.S. found people are willing to
spend $13 to $21 per month to reduce climate change.
    "If you convert that to Canadian dollars in 2007, that works out to a
range of $200 to $300 per year - far below the $3,500 per person per year that
may be required."
    Schneider's research looks at Canada's current emission levels, the Kyoto
targets, and compares the results achieved by other countries to the targets
for Canada. What he finds is that the easy options available to other
countries are not available to Canada.
    "You can control emissions by lowering a country's population or its GDP.
But it's unlikely government would choose these policies since Canada has a
policy of increasing population largely through immigration, and Canadians
would be averse to falling real incomes," Schneider said.
    He predicts policies to reduce greenhouse gas emissions will likely focus
on reducing emissions intensity, which can be reduced over time by switching
from high-emitting energy sources like coal, to lower-emitting sources like
nuclear and renewables, or by increasing the efficiency of existing energy
sources. This trend is already occurring in Canada; between 1990 and 2006, GDP
per capita and population both increased while emissions per unit of GDP
decreased.
    But based on current emissions estimates from both the United Nations and
Natural Resources Canada, achieving the required reduction in greenhouse gas
emissions under the Kyoto Protocol will require emissions intensity to fall
roughly 70 per cent below current levels by 2012 in order to offset growth in
population and income. This amounts to an average annual percentage reduction
in emissions intensity of almost 15 per cent per year, sustained for five
years.
    Schneider points out that most of the countries that have come close to
sustaining an annual reduction rate of 15 per cent consist of several Eastern
European countries that experienced economic contraction. The only
industrialized country that achieved that target was Luxembourg, mainly by
shifting its electrical generation from coal-fired plants to natural gas.
    "Canada's electricity production is already more than 70 per cent from
low-emissions hydroelectric, nuclear, and natural gas sources, with about 20
per cent from coal. This effectively eliminates any options we have for easy,
large-scale emission reductions in a short period of time through fuel
switching," Schneider said.
    Historically, the best any industrialized country has done at reducing
emissions is one to five per cent per year. Schneider's research shows that if
Canada can match the highest rate of emissions intensity improvement seen
within the majority of industrialized countries - five per cent per year -
then we would still be left to accept annual GDP reductions of roughly
10 per cent for the next five to six years in order to meet Kyoto.
    Shutting down 10 percent of Canada's $1.1 trillion economy would result
in a cost of over $100 billion per year, or roughly $3,500, on average, for
every Canadian in terms of forgone economic production or income.
    "Any attempt to meet Kyoto through a crash-course plan over the next five
years will result in unacceptably high costs, and little benefit in terms of
developing a flexible, long-term policy," Schneider said.
    "Over the longer term, a more gradual approach to emissions reductions
should allow for the development of new technologies and practices to reduce
emissions in more cost-effective ways."
    Welcome Back, Kyoto was published in the April issue of Fraser Forum, The
Fraser Institute's monthly magazine of critical thought. The article is also
available at www.fraserinstitute.ca.

    The Fraser Institute is an independent research and educational
organization based in Canada. Its mission is to measure, study, and
communicate the impact of competitive markets and government intervention on
the welfare of individuals. To protect the Institute's independence, it does
not accept grants from governments or contracts for research. Visit
www.fraserinstitute.ca





For further information:

For further information: Nicholas Schneider, Policy Analyst, The Fraser
Institute Centre for Risk, Regulation & the Environment, Tel: (416) 363-6575
ext: 222, Email: nicks@fraserinstitute.ca; Dean Pelkey, Associate Director of
Communications, The Fraser Institute, Tel: (604) 714-4582, Email
deanp@fraserinstitute.ca

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