Economics experts question Tory environmental approach

Font: The government consulted six economists to validate its recent study that warned that major domestic reductions in greenhouse gas emissions, undertaken to meet Canada’s commitments under the Kyoto protocol, would cause a recession. Only one of the economists contacted by CanWest News Service declined to comment on the government’s latest environmental plan because he had not yet reviewed it.
With both plans including a proposed technology fund and intensity targets for industry, Jean-Thomas Bernard, an economics professor from Universite Laval in Quebec City, said the only major differences were that the Conservatives had delayed action and ruled out participation in international markets.

“This is not that different from the old Liberal plan,” said Bernard in a phone interview. “It’s exactly the same tools that are used.”
Bernard and others were skeptical about the government’s plan, which requires industry to reduce the intensity of their emissions instead of making absolute reductions.

Opposition parties and environmentalists have criticized the intensity approach, favoured by the Bush administration in the U.S., since companies with increasing emissions can still meet the targets if their pollution levels are rising more slowly than their overall rate of growth.

“Basically, the intensity cap and trade program for large final emitters looks like it has far too many loopholes (so-called flexibility provisions) to cause much in the way of GHG (greenhouse gas) reductions in Canada,” Mark Jaccard, a professor at B.C.’s Simon Fraser University’s school of resource and environmental management, said in an e-mail.

“It sounds tough to talk about six per cent emissions-intensity reductions per year, and then two per cent per year, but how much of that will actually be ‘real emissions reductions?’ My preliminary sense is ‘not a lot.’”
Jaccard said he was expecting to complete a more detailed analysis after running simulations over the next two weeks.

The economists also suggested the government was overestimating the short-term benefits of its policies, such as the $15-per-tonne carbon tax that companies could pay into a technology fund to offset their pollution levels.
“Fifteen dollars a tonne is not a joke. It’s more than some countries in the world are doing for sure, so it’s real,” said David Keith, from the University of Calgary.

“But I think it’s pretty unlikely it will put the brakes on that (on rising emissions) quickly. I think you need something twice that tonne-of-emissions price to put the brakes on that fast.”
Don Drummond, chief economist at the TD Bank Financial group, said he was puzzled by the government’s assertions that its plan could cost the economy up to $9 billion in its worst year.

“That is just an extremely simplistic calculation,” said Drummond. “I don’t think anybody could do (those calculations), because there are not enough details.”
Carl Sonnen, president of Informetrica Limited, was also cautious when asked if he could validate the government’s promise that it would reduce greenhouse gas emissions by 20 per cent by 2020.

However, he said the intensity targets are set high enough to push Canadian companies farther than their counterparts in jurisdictions like Europe, which is on target to exceed its Kyoto commitments.
Meantime, environmentalists called the government’s new radio ads a sign of desperation after a week of negative reviews. The campaign even spawned a joke website, ecofraud.

ca, which mocks the government’s ecoaction.gc.ca site.

“Government propaganda will not fool Canadians,” said John Bennett, spokesperson for ClimateforChange. “We know this government has abandoned Kyoto and our children.