Natural Resources Canada
98/97

NOTES FOR A SPEECH
BY
THE HONOURABLE RALPH GOODALE
MINISTER OF NATURAL RESOURCES CANADA
AND MEMBER OF PARLIAMENT FOR WASCANA

ON THE
FIRST ANNIVERSARY OF THE KYOTO PROTOCOL

EMPIRE CLUB, ROYAL YORK HOTEL
DECEMBER 1, 1998

Check against delivery

Mr. Chairman, ladies and gentlemen, good afternoon. I thank you for the opportunity to speak to you today.

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, held in Kyoto, Japan.

The resulting Kyoto Protocol reaffirmed 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 industrialized 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 an 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 UN 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 also built momentum toward more definitive action.

That action would need to begin first among developed countries in the industrialized 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 the emission levels there 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 solutions must ultimately be global in scope.

Specifically in Kyoto, Canada undertook to bring its overall level of emissions down to 6 percent 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 minus six percent. The Europeans are at minus eight.

Most importantly, the United States, which receives 80 percent of Canada's exports, is at minus seven. So the American target is a bit deeper that 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 need to cut its emissions from business-as-usual over the next 10 to 15 years by about 30 percent. For Canada, the required reduction is about 25 percent.

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 minimize 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 economy are all growing — as we would want them to.

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 is 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 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 and the patent scepticism among American lawmakers, the U.S. Congress has enacted over one billion dollars' worth of climate change initiatives proposed by the President.

It 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 analyzed the possible costs associated with implementing Canada's Kyoto obligations. As you would expect, their results vary quite dramatically — depending upon their modelling methodology and their assumptions.

Some forecast that implementing Kyoto could generate a modest improvement in GDP after 2010. Others suggest that while our economy will still grow at a healthy rate over the coming decade, implementation could constrain that growth by up to 3 percent — not per year, but in total over the period.

And that brings me to the other side of the climate change coin — the opportunity side — and the specific mandate I have 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 the First Ministers that climate change is an important global issue, which Canada must address, and that all governments need to work together to develop a National Implementation Strategy.

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 longer-term options to be pursued.

The process is both transparent and highly inclusive. More than 450 participants are engaged in these Tables, representing all provinces, the municipalities, the private sector, the scientific community, all manner of non-governmental organizations and individual Canadians. Their work will be invaluable.

Let me give just one example from 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 will 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 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 key ways.

In the 1998 federal budget, 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 the National Implementation Strategy. It will help engage individual Canadians in the national effort — thinking globally and acting locally. And it will accelerate the development and deployment of more climate-friendly technologies.

The Government of Canada has also been working hard to get its own federal house in order. Nation-wide, we're a big operation — 64,000 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 on track to slash emissions from its own operations by more than 20 percent 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 won a series of vital world-wide flexibility tools — international emissions trading, joint implementation projects among industrialized countries and the Clean Development Mechanism 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 program to bring these measures to life, aiming toward the year 2000. International consensus among 160 nations is always tough to accomplish, but Canada is at the forefront of the effort, because we need these tools properly designed and implemented. Environment Minister Christine Stewart is leading our international initiatives, in conjunction with Foreign Affairs Minister Lloyd Axworthy.

We're also building bridges to developing countries to induce their meaningful participation. And we're leading the discussion on how to calculate and include forests and farmland as legitimate carbon sinks.

For the future, as the whole process moves forward — I don't want to pre-empt the work of our Issue Tables and the development of the National Implementation Strategy, but let me just mention a few key areas that are likely to get a lot of attention.

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, regulations where appropriate and targeted incentives to trigger action. We have established an Office of Energy Efficiency within my department to serve as a centre of expertise to promote faster progress.

Two — Greater diversification of Canadian energy sources. Unlike most countries, we are blessed with a powerful mix of sources. 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.

Three — A market-based approach to future energy investments that will help to bring emissions down.

Capital turnover is a key issue. It will 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. We'll look at it closely with the private sector.

And 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 investments. We will need — the world will need — innovative technological solutions. And we should make Canada the place to which the world will look for the best 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.
• The IOGEN biomass technology is attracting serious interest from Petro-Canada.
• Conserval Engineering has installed its unique Solarwall ventilation systems across North America and it's now exporting its technology around the world.
• Rose Technologies' building retrofits are growing rapidly and going global — cutting emissions and paying the bills through energy savings.
• Suncor is investing in wind power, carbon sinks and 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 trading systems.
• Weyerhaeuser Pulp and Paper and Husky Oil are investing in new co-generation projects.
• Pan Canadian is going to use new C02 sequestration technology to extend the productive life of an older oilfield in Saskatchewan, while capturing and removing the equivalent of the emissions from a hundred thousand automobiles.
• Alcan Aluminum of Canada is leading the aluminum industry response to climate change, world-wide. It's promoting recycling, lighter weight vehicles and covenants with national governments to meet 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 percent less carbon dioxide than vehicles that run on gasoline alone.
• NGV Vehicles of Lethbridge is preparing to export a Canadian natural gas CargoCycle 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, the Bentall Group in Vancouver and many others are increasing their energy sophistication — to reduce consumption, emissions and costs.

The list goes on, and it gets longer every day. We still have much farther to go. But the critical mass is building.

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 utilize 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 use of the most sophisticated energy products, services and technologies.

I believe that's a worthy Canadian ambition.