Why Kyoto Failed in Canada

Adrian Vannahme, Climate Change, Commentary, Energy, Environment, Globalization, Role of Government, Taxation, Uncategorized

In December, the United Nations Climate Change Conference will convene in Copenhagen. The purpose is to create a new international climate change treaty to replace the Kyoto Protocol, which expires in 2012. As Canada prepares to enter into negotiations for a new pact, it is critical to examine the factors which made Kyoto a failure in this country. By learning from the past, Canada can push for the creation of a more rational greenhouse gas emissions control regime which avoids the structural flaws which predestined the Kyoto treaty to failure.

In ratifying the Kyoto accord, Canada committed itself to reducing its total greenhouse gas emissions by six per cent from 1990 levels by 2008-2012. Canada has not even come close to this target; instead, it has actually seen its emissions rise by approximately 20 per cent during this time frame. Some people are upset about this track record, and have stated that Canada’s rising emissions should be a source of national shame.

Although some suggest that Canada failed to meet her targets due to a weak commitment to environmental protection or a lack of environmental virtue, the real reason for Canada’s rising emissions is much more prosaic. Simply put, the most important reason that Canada’s emissions have increased since signing Kyoto is that we experienced rapid population and economic growth over the past 20 years.

In fact, Canada’s real gross domestic product increased by about 60 per cent since 1990; that represents faster growth than achieved in most of our peer countries. Greenhouse gas emissions levels are tightly linked to population growth and economic development and, unsurprisingly, emissions increases are to be expected in a high-growth country such as Canada.

When one takes into account the fact that Canada has been a dynamic high-growth country over the past 20 years, it becomes clear—despite popular hand-wringing, that Canada actually made significant progress in controlling its greenhouse gas emissions.

Specifically, the most meaningful indicator of Canada’s record in this area is GHG emissions per unit of gross domestic product. This indicator compares the total amount of economic activity that takes place during a specific period with the total amount of GHG emitted during that period. This statistic is particularly valuable in a comparison of emissions between countries. That’s because it provides an indicator of emission trends that doesn’t incorrectly punish a country merely for experiencing economic and population growth.

When this indicator is examined, it becomes clear that Canada has actually made significant progress towards controlling its emissions: Canada has reduced the emission intensity of its economic activity by approximately 20 per cent since 1990. In 1990, a billion dollars of economic activity released 0.84 megatons of greenhouse gasses into the atmosphere. Today, that same billion dollars of productivity causes just 0.69 megatons of greenhouse gas emissions. This means that each dollar of economic production that occurs in Canada today produces significantly less greenhouse gasses than a dollar of production in 1990, even after an adjustment is made to control for inflation.

Rather than being an international rogue as some suggest, this indicator shows that Canada is participating in a trend across OECD countries where economic activity has become more efficient vis-à-vis greenhouse gas emissions. This improvement, however, is easily missed when crude indicators such as total emissions are examined.

The Kyoto Treaty was based on total emissions, an overly simplistic metric that makes no provisions for the fact that the rate of population and economic growth country are unpredictable, and that these factors greatly impact greenhouse gas emissions. Instead, Kyoto simply established national “caps” for emissions in each country. Those caps would not change if the country’s economy grew, remained stagnant or even if it shrank. As a result, high-growth countries such as Canada and Spain have not come close to meeting their emissions targets, whereas countries which have experienced economic contraction and population decline have easily met theirs.

Canada’s inability to meet its Kyoto commitment is not a source of national shame—it is the inevitable result of a flawed treaty which failed to recognize the relationship between population growth, economic growth and greenhouse gas emissions.

As the Copenhagen conference approaches, Canada should learn from the failure of Kyoto, and participate in a new climate change agreement only if the new pact does not punish growth. Predetermined emission caps make little sense in a dynamic country like Canada in which the rate of economic and population growth are unpredictable. The new climate change treaty should only be signed if emission targets are flexible, and responsive to changing demographic and economic conditions.