One of the “Canadian” stories at the recent Copenhagen Climate Change Summit was the constant attempt by the Governments of Quebec and Ontario and the Mayor of Toronto to distance themselves from the position of the Federal Government. This note analyzes the positions of Canada, Quebec and Ontario in terms of numbers, not words.

The Government of Canada intends to set and pursue greenhouse gas reduction targets in future decades that match the American effort, believing comparable efforts with the United States will best ensure free trade and fair competition in the integrated North American economy. The stated targets of both countries are similar (17% less than 2005 levels in the US compared to Canada’s 20% less than the 2006 volumes), so alignment does not imply a significant change in plans. Both countries have pledged to set their official 2020 target by the end of January, 2010.

The Quebec and Ontario provincial governments have criticized the federal approach as inadequate, both in terms of the stringency of the target and the selection of a recent, rather than historic (1990) base year. Quebec has now set a target to reduce provincial greenhouse gas emissions by 2020 to a level 20% below 1990 volumes, stating that improving on the Canadian target of “20% less than 2006 levels” is necessary to avoid trade reprisals from Europe as the EU enforces “aggressive” emission cuts. Ontario has previously announced its own 2020 target of “15% less than 1990.” Both provinces have also raised concerns over reports the Federal Government may provide “special treatment” for firms in “trade-exposed, carbon intensive” sectors in order to maintain their cross-border competitiveness.

Quebec’s annual emissions totalled 82.6 mega-tonnes (Mt) in both 1990 and 2006, with reduced emissions from forest product and metal production offset by higher emissions from vehicles and the heating and cooling of commercial buildings. Ontario’s emissions rose from 175 Mt in 1990 to 190 Mt in 2006, with lower upstream emissions more-than-offset by higher emissions from downstream sources. As a result, Quebec’s “stringent” target for 2020 emissions of 66.2 Mt is actually identical to the “inadequate” Canadian target; while Ontario’s is only 3 mega-tonnes (or 2%) more ambitious than the Federal 2020 target, a minor variance that will disappear should Canada align its base year with the US at 2005, (when Ontario’s emissions totalled 198 Mt). In contrast, BC’s 2020 target of ”33% less than 2007 levels” is the most stringent of the three provincial standards going forward, even though it translates into only “10% less than 1990 levels.”

The stated distaste of Quebec and Ontario for the federal target and use of a base year other than 1990 did not prevent them from joining with BC (and Manitoba) and a number of western American states in the Western Climate Initiative to achieve a 2020 target of “15% less than 2005 levels”. The fact most firms in trade-exposed industries (steel, chemicals, forest products, cement, petroleum refining etc.) are located in Ontario and Quebec adds further confusion.

As for the “aggressive” European target, use of a 1990 base year allows the EU to count (once again) the substantial emission reductions generated during the collapse of the communist economies in the early 1990s - prior to the 1997 signing of the Kyoto Protocol. (In fact, some Eastern European countries were allowed in the Kyoto Protocol to select base years in the late 1980s in order to optimize their credits). These “unearned” reductions mean the EU’s commitment to reduce 2020 emissions to “20% less than 1990 levels” actually constitutes only a 13% reduction from current (2006) levels, making it about 1/3 less aggressive than the allegedly weak Canadian target. In short, there is no need to worry about a looming trade war with Europe due to Canada’s proposed climate change policies.

Quebec and Ontario politicians appear to believe the use of a 1990 base year would allow certain provincial industries to optimize their credits for past reductions. And Canada should give early adopters credit for pre-2006 reductions that are in addition to “business as usual” reductions. However, there is no compelling reason to retroactively accord credit for reductions generated in the early 1990’s prior to Kyoto, or for reductions generated by plant shutdowns, or those involving the greenhouse gases that were not even officially recognized as such until 1997. In short, it is easy to overstate the benefits.

It is less easy to overstate the costs. Applying Quebec’s 2020 target of 20% less than 1990 levels on a national basis would impose onerous costs directly on Saskatchewan and Alberta and indirectly on all Canadians. About 55% of the increase in Alberta’s annual GHG emissions since 1990 occurred prior to 1997. The target would translate into a 45% reduction from current levels in one decade in the two provinces – an absolute amount equivalent to the complete shutdown of not just all oil sands operations, but all power generation in the two provinces. The certain result would be a policy-induced economic slowdown in Canada in general and the West in particular that would constrain Canada’s ability to meet the health care and income security challenges of an aging population, and ironically, to finance the massive investment in clean technologies and infrastructure that is essential if we are to move to a sustainable, low-carbon economy.