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Liberals Will Wriggle Out Of Kyoto

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Prime Minister Jean Chrétien intends to ratify the Kyoto climate change accord this autumn, but is still haggling over its terms -- which puts the cart before the horse. He wants Canada credited for selling clean-burning natural gas, and says it should therefore have to reduce carbon dioxide emissions by only 170 megatonnes rather than the 240 megatonnes originally agreed.

The PM knows CO2 is generated by economic activity, and cutting emissions will depress growth. His government used to lowball the damage estimate at half a per cent of GDP -- once, long ago, it even suggested Kyoto would actually turbo charge growth -- but such flights of fancy are over and Ottawa now says complying will cost about 2.6% of GDP. Ross McKitrick, associate professor of economics at Guelph University, who has written in this newspaper, puts the figure at 2.7%. So Ottawa and the "skeptics" are in the same ballpark.

It's possible for a country to make a financial killing out of Kyoto, but it has to have a moribund economy to do so. Moscow, for example, expects to net many billions of dollars. It arm-twisted sweetheart deals out of other signatories -- they need Russian ratification to reach a Kyoto quorum -- that treat everything including the Kremlin kitchen sink as a carbon sink. Under Kyoto, sinks offset emissions at a discounted rate, and since Russia has little economy to speak of, it can sell its unused credits to countries with economies robust enough to require offsets. Moscow had the cheek at the Jo'burg sustainable development summit, to demand yet more perks in the form of debt forgiveness but backed down.

It's not just backward countries that cynically manipulate Kyoto to their advantage without apparent reference to the supposed needs of Earth's atmosphere. Everyone tries. Economically robust nations have even more incentive to twist the rules in their favour because they're trying to avoid dislocation and stem losses rather than merely pocketing extra gains. British negotiators sought to avoid discomfort by trying to set Kyoto's renewable energy requirements at exactly the levels Britain already met. How public spirited is that?

If this all suggests to you that Kyoto is less to do with "saving the planet" than squeezing advantages out of everyone else, you'd be right. Even Kyoto's supporters acknowledge it will barely affect the climate. If every country in the world were included, Kyoto would reduce warming by only 0.14C degrees by 2100. But without China, South America, Africa, India and the United States, the actual figure will be 0.04C. Whatever the pain -- great or slight, but unnecessary either way -- there's no gain.

The reason Kyoto has reached the verge of becoming law is that so many governments, with the exception of the United States, lack the courage to stand up to the environmentalist tidal wave, and choose instead to go with the flow while trying to slough economic burdens off on to others. Signatories have spent the past five years looking not for ways to reduce emissions, but for loopholes. Hence Britain's renewable energy definition and Mr. Chrétien's gas.

Current behaviour is a good predictor of future behaviour. Political leaders who try to wriggle out of prospective obligations won't stop wriggling when the obligations are real. Whether Canada loses 450,000 jobs under Kyoto, as the Canadian Manufacturers and Exporters warn, or suffers a less damaging but nevertheless constant drag on growth, citizens will punish politicians.

Ray Fair, economics professor at Yale has demonstrated that incumbent U.S. governments are made to pay on polling day if economic growth is below 2.9% in too many of the previous 15 quarters. Each quarter with higher growth adds one percentage point to the incumbent's share of the vote. There's no reason why the same calculation would not apply to Canada even if the coefficient is lower because we're used to slower growth than Americans are.

When the federal government sees Kyoto cooling its re-election chances rather than Earth's atmosphere, it will head for the exits. The treaty has no annual emissions thresholds, merely targets to be achieved between 2008 and 2012, which means signatories can get away with doing nothing for the next six years. Be honest, would you bet against the federal Liberals, a species that exists only to stay in office, deciding to wait until after the next election before administering Kyoto-mandated blows to the economy? And then, of course, there's the election after that. And, well, you get the picture. Voters will not re-elect a government that keeps dabbing the economic brakes.

Deference to Kyoto among democratic politicians will be exposed as a fraud. Killing it now would be better than a lingering death. Not just for honesty's sake -- breaking promises is not cost free. As 2008 approaches, activists will sue Ottawa to force it back into the Kyoto fold. But that's a subject for another column.