QUEBEC STEAMING OVER CANADA'S KYOTO STRATEGY

UNCLAS SECTION 01 OF 02 QUEBEC 000183

SIPDIS

E.O. 12958: N/A
TAGS: SENV ENRG PGOV CA
SUBJECT: QUEBEC STEAMING OVER CANADA'S KYOTO STRATEGY


1. (SBU) Summary: On Nov. 9, Quebec CG Friedman and TDY
Montreal officer Anne Coleman met with GOQ Environment Ministry
Director for Air Policy Robert Noel de Tilly, who confirmed
media reports of deep GOQ frustration with Ottawa's approach to
Kyoto. Quebec's main complaint is that Canada's federal climate
change policy, which calls for reductions in three sectors (oil,
coal/natural gas, and manufacturing),does not take into account
past voluntary efforts undertaken by Quebec manufacturing
companies to reduce their GHG emissions, or Quebec's
emissions-friendly hydroelectric power source. Quebec recently
submitted to Ottawa thirty-two GHG reduction projects for
funding, all of which were rejected by Ottawa. End Summary.


2. (SBU) GOQ Environment Ministry official Robert Noel de Tilly
confirmed to CG media reports of a rift between Quebec and
federal officials over Canada's climate change policy. Quebec
objects to the way Ottawa has set its base targets for GHG
emission reductions. In 1999, he explained, Ottawa began
encouraging provinces and companies to get ahead of the curve
and undertake GHG reduction measures. At the time, the GOC
indicated that any future climate change policy would take into
account the progress being made by the provinces on a voluntary
basis. But in 2002, Ottawa shifted its strategy and, according
to Tilly, established 2010 as the base year against which to
evaluate greenhouse gas reductions. Ottawa has set emission
reductions of 15 percent measured against the 2010 level for
three sectors: oil, coal/natural gas and manufacturing. As
Quebec has no oil or coal/natural gas industry, its bone of
contention with Ottawa is in the manufacturing sector.


3. (SBU) Tilly argued that Canada's approach benefits provinces
or companies that have made no efforts at GHG reduction as they
will be able to claim major reductions in 2010. Quebec
manufacturing companies, by contrast, have been reducing
emissions and becoming more efficient all along. By 2010, it
will be impossible for them to reduce by another 15 percent.
Quebec must find a way to reduce its manufacturing GHG emissions
by 15%, or buy permits from companies who are able to outstrip
these benchmarks. Tilly is convinced that some Quebec
manufacturers will go under, especially in the pulp and paper
sector.

Alberta and Ontario over Quebec?
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4. (SBU) Tilly stated that the federal government's decision to
move the "base year" of emissions calculations to 2010 was taken
in order to benefit the booming Alberta oil industry and Ontario
coal producers. Under the GOC approach, Quebec's absence of oil
or coal/natural gas energy production is in no way rewarded.
Oil and coal companies, who according to Tilly have not taken
voluntary steps to reduce emissions, will be able to fairly
easily and cheaply reduce their GHG emissions by 30-40%, in
2010, thereby leaving them with many "emissions permits" to sell
on the market. Manufacturing companies in Quebec will be
penalized, in contrast, as they would be hard-pressed to make
further reductions and will be forced to purchase emissions
permits. Asked by CG why Ottawa would be favoring Alberta and
Ontario, Tilly replied, "It's pure politics."

Quebec Project Requests: 0 for 32
-------------- -


5. (SBU) According to Tilley, press reports of Ottawa's signing
agreements with all provinces other than Quebec on the
allocation of Kyoto implementation funds are exaggerated. The
federal government, he said, simply requested provinces to
submit projects proposals and Ottawa would select those it found
the most attractive. Quebec submitted thirty-two projects, all
of which were dismissed by Ottawa for not being ambitious enough
to meet the Kyoto reduction strategy. Tilly explained that
here, too, Quebec is being penalized. The first changes a
company makes to reduce emissions usually result in the most
dramatic GHG emissions savings, at least cost. But Quebec's
manufacturing companies have already introduced these
inexpensive and effective technologies. (Tilly buttressed his
argument by noting that Canada-wide manufacturing sector GHG are
expected to increase 2 percent in the 1990-2010 time frame, but
in Quebec the estimate is for a decrease in emissions of 9.5%.)
Further reduction proposals from Quebec are necessarily more
expensive, with limited returns. (Comment: While Tilly credited
Quebec companies' voluntary measures for the decrease in GGE, we
wonder how much of this reduction is a result of manufacturing
operations closing or moving overseas. End comment)


6. (SBU) CG Friedman noted that the U.S., like Quebec, adopted a
voluntary initiatives strategy to reduce GHG and, like Quebec,
we were showing better results than some countries who are
signatories to Kyoto such as Canada. Tilly said he viewed the
U.S. as being very active in its approach to climate change and
noted the high quality of climate change research being
undertaken in the U.S. He added, however, that while Quebec is
opposed to Canada's Kyoto implementation plan, it continues to
support the Protocol itself.

Comment
--------------


7. (SBU) Tilly said that the GOC program is supposed to be
implemented in 2008, but he is doubtful that Canada will meet
this self-imposed deadline. He pointed out that the deadline is
only two years away and that Canada's program is vague. We
agree that the GOC's climate change plan appears short on
details. The fairness debate among provinces, which has really
just begun in earnest, is likely to further slow Canadian
implementation. End comment


8. (U) Drafted by TDY Montreal officer Anne Coleman.
FRIEDMAN