Ottawa — As MPs vote on the federal budget this week, the Pembina Institute released figures showing that proposals to dramatically weaken Kyoto emission reduction targets for large industry mean that taxpayers will have to pay an extra $2.65 billion or more, not disclosed in the budget, in order to meet our international obligations. The $2.65 billion represents a hidden subsidy to industry.
"Meeting our Kyoto target means everyone has to do their fair share," said Dr. Matthew Bramley, Director, Climate Change at the Pembina Institute."If the government makes these additional concessions to industry, taxpayers will be forced to make up the shortfall."
Large final emitters (LFEs) are responsible for close to 50 per cent of Canada's greenhouse gas emissions. Despite the fact that this sector has many opportunities to reduce emissions profitably, the government's Climate Change Plan for Canada (November 2002) charged LFEs with securing just 55 megatonnes (Mt) of emission reductions, representing only 23 per cent of Canada's Kyoto target.
Widespread recent media reports, not denied by the government, state the LFE target will be weakened even further, even though Canada's Kyoto obligations have become more stringent as a result of revised emission projections. Estimates are that the LFE target will be reduced from 55 Mt to somewhere between 37 and 45 Mt. This weakening does not take into account the increased emissions projection (estimated at 29 Mt for LFEs) and the creation of a "Technology Investment Fund" that industry may contribute to in lieu of meeting targets. As the Fund is not expected to achieve significant reductions during the Kyoto period, liability for securing reductions will be further shifted from industry to taxpayers.
According to Pembina's conservative calculations, a reduction in the target from 55 Mt to 41 Mt would cost taxpayers approximately $700 million. Industry's increase in emissions beyond previous projections will cost the public an additional $1.45 billion. And although it is unclear to what extent government will allow industry to meet its targets through the Technology Investment Fund, a mid-range estimate is 10 Mt, which would result in a further $500 million in taxpayer liability.
The 2005 federal budget does not take into account these amounts, which total $2.65 billion, and could increase to $4 billion if the price of Kyoto emission credits rises modestly. Total new spending on Kyoto in the budget is roughly $2.8 billion over five years ($2 billion in the budget is re-announced spending).
The Pembina Institute, one of Canada's largest environmental NGOs, focuses on sustainable energy issues.
Note: the Pembina Institute's calculations are detailed in a backgrounder, The Cost to Taxpayers of Weakening Kyoto Targets for Industry, available here.
Contact: Dr. Matthew Bramley, 819-483-6288 ext. 26.
