King Arthur Movie Tristan

I have reviewed three Canadian papers on Kyoto to try and get a gauge of what implementing Kyoto would mean. Previously I looked at Germany and Europe, and have taken some of that analysis into my figuring on the Canadian situation.

The first paper I looked at was The Suzuki foundation's Keeping Canada in Kyoto. Suzuki modestly predicts a 300M cost to Canada from Kyoto implementation, and even hopefully offers up one study that suggests a 2B benefit to Canadians. He further makes some claims, such as global warming has already cost Canada $5B in agricultural losses due to a 2001 drought in Western Canada, and potential loss due to forest fires, timber loss, even perma-frost melting destabilizing pipelines.

Suzuki, however, makes many claims and backs none of it up. On top of that, this Suzuki Foundation analysis rests upon a couple of false assumptions. First that Canada will be making real reductions, not just buying carbon:

The federal government has frequently and publicly declared that Canada will make the majority of its emission reductions through domestic action. This ensures that the reductions will be real and not just "hot air" purchased internationally.

However, how Canada can reduce 600 Megatonnes without purchasing carbon, and still be in business, is never explained. In fact, Canada is likely to buy huge amounts of carbon. Which leads us to Suzuki's second bad assumption, that carbon will trade around $10 per tonne. The European Studies I reviewed two weeks ago suggested that carbon was moving into the $40-$60/ton range. Even the economic report that people like Suzuki adore, the new testament of environmental economics, The Stern report, calls for $30-$50 ton, which means Suzuki's numbers on buying (had the report deemed it important enough to actually include numbers) are off by a factor of somewhere between 3 and 6. Further his claim that the majority of our reductions will be through domestic reduction means his numbers, whatever they may be, are skewed to the low side before we factor in price. Which means, it's hard to take the conclusions very seriously. Here they are, however:

With carbon dioxide valued at $10 per tonne, emissions reduction measures for specific sectors and an emission trading system for large fossil fuel users, the following economic impacts are forecast:

the Canadian economy grows by 30.4 per cent by 2012, from $1 trillion to $1.315 trillion

the Ontario economy grows by 35 per cent; $426.6 billion to $575.9 billion.

the Alberta economy grows by 35 per cent, from $118 billion to $150 billion

the oil and gas sectors grow by 24.6 per cent

machinery and equipment manufacturing grows by 65.7 per cent

transportation equipment grows by 28.3 per cent

electrical and electronic components grow by 47.8 per cent.

But what's never even close to explained is how Canada is going to be the first economy ever to dramatically reduce energy use, and dramatically expand the economy. And make no mistake, Canada has very few options for meeting it's Kyoto commitment without dramatically contracting it's energy use, both in electrical conservation and, far more specifically, petroleum products. Even using Suzuki's base assumptions of $10/tonne for CO2, and a $30 million cost to Kyoto, that would buy 1/3rd of the required reduction. The other 60 megatons will have to come from conservation, and that calculation doesn't allow for any cost during the conservation of 60 MT of CO2. More likely, Suzuki plans on a reduction of upwards of 90%, 80 MT of CO2. You can't make those kinds of reductions without hurting the economy. Or at least, it's never been done before.

And that's why this report is hard to take seriously. Without any true documentation it comes across as pie-in-the-sky economics.