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August 21, 2007

Kyoto Update – Nothing the Taxpayers Federation Hasn’t Said, Twice Before

* Federal government report on Kyoto costs mirror earlier CTF predictions.

St. Andrews, New Brunswick: The Canadian Taxpayers Federation (CTF) responded today to the federal government’s Climate Change Plan for the Purpose of the Kyoto Protocol Implementation Act 2007. The Environment Canada statement is required by law under the Kyoto Implementation Act, which was advanced by Opposition MPs and received Royal Assent on June 22, 2007.

According to today’s release, “To meet its obligations under the Kyoto Protocol, Canada would have to achieve an average 33% reduction in annual emissions for each of the next five years.” This is because implementing the international agreement requires Canada to reduce average carbon dioxide emissions to 6% below 1990 levels by 2008-12. Because the country’s output of greenhouse gases has increased by nearly 33% above its target, draconian cuts in energy output are needed in short order.

“It is an impossible target that if we attempt to hit will cause economic suffering to countless Canadian families,” said CTF federal director John Williamson. “The only way to meet Kyoto targets without spending billions of tax dollars to buy ‘hot air’ from Russia is with strong price incentives to slash energy demand at home. This will require raising the cost of energy by way of higher taxes, which will mean lower economic growth and reduced family incomes.”

Since November 2002, the CTF has repeatedly warned Ottawa about the high cost of implementing the Kyoto Protocol. The CTF’s 2002 study, entitled Counting the Costs: The Effects of the Federal Kyoto Strategy on Canadian Households, authored by noted academic Dr. Ross McKitrick, predicted a 5.5% drop in “real” household incomes – $2,700 for the average family – starting in 2010. That figure was updated by the CTF in February, 2005, to $3,000 per family as a result of Ottawa’s early inaction on the Kyoto file.

Today’s Climate Change Plan for the Purpose of the Kyoto Implementation Act 2007 concludes the “Canadian Gross Domestic Product (GDP) would decline by more than 6.5% relative to current projections in 2008 as a result of strict adherence to the Kyoto Protocol’s emission reduction target for Canada. This would imply a deep recession in 2008, with a one-year net loss of national economic activity in the range of $51-billion relative to 2007 levels.” The impact on Canada’s workforce will also be severe as “employment levels would fall by about 1.7% (or 276,000 jobs) between 2007 and 2009” and per capita income will also decline by “about $1,000 per Canadian in today’s dollars.” In addition, “natural gas prices could potentially more than double in the early years of the 2008-2012 period, while electricity prices could rise by about 50% on average after 2010” and gas prices will rise by “roughly 60%.”

Other key findings from Counting the Costs that share an uncanny similarity to conclusions reported by the federal government include:

* Preferences for energy consumption are stable – changing consumption patterns could require natural gas price hikes of 90% and gasoline price hikes as high as 50%;

* Assumptions of a smoothly-functioning international emissions credit market are flawed;

* A drop in real wages of 5.8% along with a 5.5% drop in real net incomes by 2010; and

* Ottawa has not conducted independent reviews of the science or cost estimates behind Kyoto.

“Give the high economic cost and job losses, the federal government has wisely decided not to fulfill the Kyoto Protocol. If the Liberal Party truly believed in the merits of this United Nations agreement, it would have inflicted the economic pain necessary to reduce greenhouse gases when it was in office,” Williamson concluded. “Implementing Kyoto isn’t nearly as easy or pain free as many environmentalists claim. That the once governing Liberals did not enact Kyoto should tell Canadians something about the high economic and political costs.”

John Williamson
Federal Director
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]

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