Canada and the Kyoto Protocol

Head Table Guests

Angus Scott, Head Master Emeritus, Trinity College School, former Executive Vice-President, Canadian Wilderness Parks and Wilderness Society and Honorary Director, The Empire Club of Canada; The Rt. Rev. Ann Tottenham, Bishop of the Credit Valley Area, Diocese of Toronto; Catherine Mohamed, OAC Student, Rosedale Heights Secondary School; Michael Cleland, Assistant Deputy Minister of the Energy Section, Natural Resources, Government of Canada; Mary Byers, Author and Historian and Honorary Director, The Empire Club of Canada; R. Allen Kilpatrick, President and CEO, Atomic Energy of Canada Ltd.; Monte Hummel, President, World Wildlife Fund Canada; John Campion, Partner, Fasken Campbell Godfrey and a Past President, The Empire Club of Canada; Mary Granscoe, Executive Director, Canadian Parks and Wilderness Society; and Ann Curran, Partner, Lewis Companies and Third Vice-President, The Empire Club of Canada.

Introduction by George L. Cooke

It is a pleasure to welcome today, as guest speaker to The Empire Club of Canada, The Honourable Ralph Goodale.

Ralph Goodale became Minister of Natural Resources Canada and Minister responsible for The Canadian Wheat Board in June of 1997. He is also Federal Interlocutor for Metis and Non-Status Indians and carries regional political responsibilities for Saskatchewan and the North.

In addition to these responsibilities, he chairs the federal Cabinet Committee for the Economic Union, a position to which he was appointed in January 1996.

Raised on the family farm near Wilcox, Saskatchewan and educated at both the University of Regina and the University of Saskatchewan, Ralph Goodale has practical experience in business, agriculture, law and broadcasting, as well as federal and provincial politics.

He was first elected to the Parliament of Canada in 1974 at the age of 24, representing the federal constituency of Assiniboia. In the 1980s, he served as leader of the Saskatchewan Liberal Party and in 1986 was elected a member of the Saskatchewan Legislative Assembly.

Mr. Goodale returned to the House of Commons as MP for Regina-Wascana in October of 1993 and was appointed Minister of Agriculture and Agri-Food Canada. He was re-elected in June 1997. Ralph Goodale and his wife Pamela live in Regina.

From December 1 to 10, 1997, ministers and other high-level officials from 160 countries met in Kyoto, Japan, for the Third Conference of Parties to the United Nations Framework Convention on Climate Change. Under the new legally binding Kyoto Protocol, industrialised countries must reduce their collective emissions of greenhouse gases by 5.2 per cent below 1990 levels by the period 2008 to 2012. In response to this challenge, Canada has committed to reduce emissions to 6 per cent below 1990 levels by that period. In his address today, Minister Goodale will update us on the progress Canada has made in the past year on the issue of climate change.

Minister Goodale, welcome to The Empire Club of Canada.

Ralph Goodale

Ladies and gentlemen, distinguished guests, good afternoon.

I thank you very much for the opportunity to speak to you today and as the Chairman has mentioned I want to focus my remarks on the complex evolving global challenge of climate change--a challenge that is both environmental and economic. As Minister of Natural Resources Canada and Chair of the committee of the federal cabinet that deals with economic issues, I have a mandate from the Prime Minister to lead the domestic implementation of this country's international climate change commitments.

Those commitments took specific shape almost exactly one year ago in December of 1997 at the third United Nations conference on climate change in Kyoto, Japan. The resulting Kyoto protocol re-affirmed the conviction among some 160 nations that the six commonly identified greenhouse gases, including most especially carbon dioxide, are accumulating in the world's atmosphere at such a rate and to such an extent that they are putting the world's future climate at risk.

For Canada this could mean more severe and more frequent weather disruptions, more inland floods in some areas, more droughts in others, rising sea levels and flooded coastlines but actually less water overall in the Great Lakes, more wind and hail and ice storms and greater threats to public safety and economic security. The vast majority of global scientific opinion suggests that human conduct is certainly contributing to the problem, making it worse, and at Kyoto the industrialised world pledged to accelerate the process of bringing greenhouse gas emissions under more effective control. I say accelerate because this issue and the process to deal with it are not brand new. Kyoto was not some sudden singular event. The world has been wrestling with what to do about greenhouse gas emissions for more than a decade.

In 1988, a global conference in Geneva created the original intergovernmental panel on climate change. That was followed a few months later by a conference on the changing atmosphere here in Toronto. The topic was highlighted at the Rio Earth Summit in 1992 followed by other United Nations conferences in 1995 and 1996 in Berlin and Bonn.

While demonstrating how complex and constantly evolving the climate change issue really is, each of these world gatherings over the last decade has built momentum toward more definitive action. That action would need to begin first among developed countries in the industrialised world because we together are in fact the source of the vast majority of human-induced greenhouse gases so far. But that is steadily changing. Ever-growing energy demand and consumption in the developing world will cause emission levels to escalate sharply in the early years of the next century which simply reinforces the point that climate change is a truly global phenomenon. It creeps toward serious impacts gradually over time. Greenhouse gases and their consequences do not respect anyone's national boundaries and the solutions must ultimately be global in scope.

Specifically in Kyoto, Canada undertook to bring its overall level of emissions down to 6 per cent below the level that existed in Canada in 1990 and to reach that target by the period between 2008 and 2012. The Japanese are also committed to -6 per cent. The Europeans are at minus eight. Most importantly, the United States, which accounts for 80 per cent of Canada's exports, is at minus seven. So the American target is a bit deeper than ours and they have further to go because they start out with excess emissions above 1990 levels which are higher than ours. Based on current information and projections the United States will likely need to cut its emissions from business as usual over the next 10 to 15 years by about 30 per cent. For Canada the required reduction is about 25 per cent.

So going into this challenge Canada's positioning is both strategic and competitive. How we come out of it will depend on how smart we are in devising world-leading made-in-Canada solutions and how astute we are in managing our conduct in comparison to the rest of the world.

I do not minimise the magnitude of the task that lies ahead. Ours is an energy-intensive country due to our northern location and our vast geography. Our population, our exports and our overall economy are all growing as we want them to do. But all that desirable growth brings with it increased emissions. The challenge is to find the means to break the linkage between growth and prosperity on the one hand and greenhouse gases on the other. It's often said that danger and opportunity are the opposite sides of the same coin. On the danger side of this coin Canada's environment and natural resources and the health, safety and long-term economic security of Canadians are particularly vulnerable to climatic disruptions. That's the physical danger to us of overall global inaction. There's also danger in allowing the rest of the world to out-position us in the changing energy dynamics of the 21st century. We don't have the luxury of saying: "Stop the world, we want to get off."

For a host of reasons, of which climate change is just one, energy production and consumption patterns in years to come will likely be much different from those that we know today. New technology will be a key driver and we need to keep ahead of that wave. Indeed we run the risk of obsolescence if we allow ourselves to lag behind.

It's interesting that despite all the turbulence surrounding the Clinton administration in the United States and the scepticism among some American law-makers, the U.S. Congress has enacted over one billion dollars worth of climate change initiatives proposed by the President. They did so for competitive and strategic positioning reasons long before any prospect of U.S. ratification of the Kyoto protocol. As I have said many times, the legal niceties of ratification aside, the important thing is actual U.S. conduct.

A wide variety of private-sector think-tanks have analysed the possible costs associated with implementing Canada's Kyoto obligations. As you would expect, their results vary quite dramatically depending on their modelling methodology and the assumptions that go into those models. Some forecast that implementing Kyoto could generate a modest improvement in GDP at some point after the year 2010. Others suggest that while our economy will still grow at a very healthy rate over the coming decade, implementation could constrain that growth by as much as 3 per cent, not per year but in total over the period.

And that really brings me to the other side of the climate change coin--the opportunity side--and the specific mandate that I've been given for domestic implementation. We must be effective in reaching our Kyoto targets. But we must act in ways that are most compatible with sustained economic growth and increased Canadian competitiveness. And we must be inclusive and fair, ensuring that no region of the country is called upon to bear an unreasonable burden. In the 12 months since Kyoto these are the principles that have shaped our approach. Within 48 hours after Kyoto, the Prime Minister secured the agreement of all of the First Ministers of Canada that climate change is an important global issue that Canada must address and that all governments need to work together to develop a national implementation strategy. And we are doing just that. The work on that strategy is pushing forward, built around 15 issue tables that slice the climate change challenge both vertically by economic sector and horizontally by cross-cutting themes to generate sound analyses and consensus and to identify obstacles to be overcome, opportunities to be seized especially for quick starts, best practices to be shared and strategic long-term options to be pursued. The process is both transparent and highly inclusive. More than 450 participants are engaged in these issue tables representing all provinces, the municipalities, the private sector, the scientific community, all manner of non-governmental organisations and individual Canadians and their work will be invaluable. We are looking forward to seeing the results beginning in 1999.

And let me give just one example among the scores of items being examined by the issue tables. It's the topic of tangible credit for those in the private sector who proactively implement early action to bring their emissions down sooner rather than later. Some companies are naturally worried that if they act too soon the goal-posts may move later on and their early initiatives would not be taken into account. That worry is clearly a disincentive. That's why we want to identify a clear crediting system hopefully early in 1999 to send the message tangibly that there is no advantage in delay and no disadvantage in moving now. This is one key component in a broader strategy to stimulate deeper and stronger action throughout the Canadian private sector.

Beyond building partnerships and momentum with other governments and with business, the Government of Canada has demonstrated leadership on this file in several other important ways. In the 1998 federal budget for example we created a climate change action fund--$50 million per year in each of the next three years. That brings the total federal investment in the search for climate change solutions to about $200 million per year. The new money will add to our understanding of the basic science. It will support the thoughtful inclusive process that's developing that national implementation strategy. It will help engage individual Canadians in the national effort, thinking globally but acting locally and it will accelerate the development and the deployment of more climate-friendly technologies.

The Government of Canada has also been working hard to get its own federal house in order. Nationwide we are a large operating entity--64,000 federal buildings, 25,000 vehicles. We have to lead by example and we are. Through building retrofits, better boiler systems, stronger vehicle fleet management and strategic green power purchases, the Government of Canada is now on track to slash emissions from its own federal operations by more than 20 per cent below 1990 levels--not just Kyoto's minus six--and to reach that deeper target by 2005, not Kyoto's 2010.

Another critical aspect of federal leadership is at the international level. At Kyoto, we fought for and we won a series of vital worldwide flexibility tools--international emissions trading, joint implementation projects among industrialised countries and the clean development mechanism to be used in the developing world. These are not loopholes. They are common-sense tools to allow emission reductions to be achieved globally in the most cost-efficient manner. At the latest climate change conference last month in Buenos Aires, agreement was achieved on a work programme to bring these flexibility measures to life aiming toward the year 2000. _International consensus among 160 countries is always tough to accomplish but Canada is at the forefront of the effort because we need these flexibility mechanisms properly designed and implemented.

We're also building bridges to developing countries to induce their meaningful participation and we are leading the world discussion on how to calculate and include forests and farmland as legitimate carbon sinks. For the future as this whole process moves forward I don't want to pre-empt the work of our issue tables and the development of that national implementation strategy but let me just mention a few key areas that are likely to get a lot of attention in the process.

Number one: more energy conservation and efficiency throughout our whole economy-residential buildings, the commercial sector, industrial processes, transportation, public-sector operations, consumer behaviour--the whole gamut. Our tools will be more aggressive promotion and regulations where appropriate and targetted incentives trigger action. We've established an office of energy efficiency within my department to serve as a national centre of expertise and to promote faster progress.

Number two: greater diversification of Canadian energy sources. Unlike most countries we are blessed with a powerful mix of energy sources and we must use that advantage intelligently. Among other things we need to increase the commercial availability and the practical use of alternative fuels and renewable power-hydro, solar, wind, earth and bio energy, more co-generation. We also need to perfect our skills on the use and export of nuclear power. Canada's CANDU technology is the best in the world. It has an enviable reputation for efficiency and safety and it emits no greenhouse gases.

Number three: a market-based approach to future energy investments that will help to bring emissions down. Capital turnover is a key issue. It'll be easier for some and more difficult for others to make a timely transition to lower carbon business operations or more efficient industrial processes. A number of provinces and business leaders have suggested that Canada should seriously examine a domestic version of emissions trading adapted to our internal purposes consistent with international directions and compatible with likely approaches in the United States and we'll look at that very closely with the private sector.

Number four: new technology development and deployment. This really underpins everything else. It's the excitement side, the opportunity side of the climate change challenge. It can mean new business opportunities, new jobs, new economic sophistication, new trade potential and new strategic global positioning. We must foster increased public-sector and private-sector technology investment. We will need and the world will need innovative technological solutions and we should make Canada the place to which the world will look for the best energy ideas.

Momentum is building on many fronts. The Ballard fuel cell technology incubated for several years through government support from my department and others is now gaining major private-sector investors like Ford and Daimler-Benz. Conservall Engineering has installed its unique solar wall ventilation systems across North America and it's now exporting that technology around the world. Suncor is investing in wind power, carbon sinks, conservation education in schools and it's testing an emissions trading contract with Niagara Mohawk Power of New York. Ontario Hydro and the provinces of Ontario and British Columbia are also engaged in pilot projects to test-run emissions trading. Weyerhaeuser Pulp and Paper and Husky Oil are investing in new co-generation projects. Alcan Aluminum from Canada is leading the aluminum industry response to climate change worldwide. It's promoting recycling and lighter weight vehicles with national governments to meet specific targets. Toyota will introduce its new Prius automobile in Canada in the year 2000. Powered by a combination of gasoline and electricity it generates 50 per cent less carbon dioxide. NGV Vehicles of Lethbridge is preparing to export a Canadian natural gas cargo cycle to a billion-dollar market in Asia. Municipalities like Toronto with its atmospheric fund and my own city of Regina as an energy innovator are cutting emissions and saving money at the same time. The University of Ottawa, University Hospital in Edmonton and many others are increasing their energy sophistication to reduce consumption, reduce emissions and reduce costs.

The list goes on and it gets longer every day. We still have much further yet to go. But the critical mass is building and that's been particularly true over these past 12 months. With openness, transparency, and partnerships, with federal leadership by example and commitment, with increasing public understanding and engagement, with broader and faster action in the private sector, with greater energy conservation and efficiency, with more diversification among our energy sources and a powerful emphasis upon new technology, with a global drive to activate our international flexibility tools to properly utilise carbon sinks and to engage developing countries and with a keen eye on our competitive position with the United States, we have moved forward since Kyoto.

Our goal is simply this--to marry strong environmental performance with strong economic performance. Canadians want both and that's what we seek to deliver. As we enter the new millennium Canada should aspire to be nothing less than the smartest nation on earth in the production and the use of the more sophisticated energy products, services and technologies. And I believe that that's a worthy Canadian ambition.

Thank you very much.

The appreciation of the meeting was expressed by John Campion, Partner, Fasken Campbell Godfrey and a Past President, The Empire Club of Canada.