Identifier
Created
Classification
Origin
06MONTREAL826
2006-07-28 19:28:00
CONFIDENTIAL
Consulate Montreal
Cable title:  

QUEBEC GOVERNMENT STRATEGY PURSUES KYOTO TARGETS,

Tags:  SENV ECON ENRG CA 
pdf how-to read a cable
VZCZCXRO4485
PP RUEHGA RUEHHA RUEHQU RUEHVC
DE RUEHMT #0826/01 2091928
ZNY CCCCC ZZH
P 281928Z JUL 06
FM AMCONSUL MONTREAL
TO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE PRIORITY
INFO RUEHC/SECSTATE WASHDC PRIORITY 9974
C O N F I D E N T I A L SECTION 01 OF 04 MONTREAL 000826 

SIPDIS

DEPT FOR OES

SIPDIS

E.O. 12958: DECL: 07/28/2016
TAGS: SENV ECON ENRG CA
SUBJECT: QUEBEC GOVERNMENT STRATEGY PURSUES KYOTO TARGETS,
GREEN VOTERS

REF: A. A MONTREAL 0622


B. B QUEBEC 0034

C. C OTTAWA 1685

Classified By: Gary Sheaffer for reasons 1.4b, d

C O N F I D E N T I A L SECTION 01 OF 04 MONTREAL 000826

SIPDIS

DEPT FOR OES

SIPDIS

E.O. 12958: DECL: 07/28/2016
TAGS: SENV ECON ENRG CA
SUBJECT: QUEBEC GOVERNMENT STRATEGY PURSUES KYOTO TARGETS,
GREEN VOTERS

REF: A. A MONTREAL 0622


B. B QUEBEC 0034

C. C OTTAWA 1685

Classified By: Gary Sheaffer for reasons 1.4b, d


1. (C/NF) Summary. On June 15th, the Quebec Government
released its Climate Change Strategy, including plans to
improve public transportation systems, adopt California,s
fuel-efficiency standards for vehicles and impose a carbon
tax. This announcement follows some five months after
Montreal hosted the COP-11 Climate Change conference, which
saw then Prime Minister Paul Martin pledging Canadian
fulfillment of its Kyoto targets. Quebec,s reliance on
hydroelectricity gives the province the capacity to adopt
measures which target carbon-based emissions without taking a
major economic hit. These initiatives have been
well-received by the Quebec public thus far and reflect an
effort on the part of the Charest government to demonstrate
its seriousness about an issue Quebeckers feel strongly about
while distancing itself slightly from the Harper government's
unpopular position on Kyoto. It remains to be seen how
popular this Climate Change Strategy will remain if GHG
emitting companies pass the costs of a hydrocarbon tax on to
consumers in the form of higher prices. It is also unclear
whether the Federal government will fork over the $328
million Quebec is counting on a part of the "Green fund" to
finance its ambitious project. End summary.


-------------- --------------
A good GHG performer, but with room for improvement
-------------- --------------



2. (SBU) Quebec has the lowest greenhouse gas (GHG)
emissions per capita in Canada, primarily due to the
province,s reliance on hydroelectricity. Quebec obtains 94%
of its electric power from hydro, and electricity production
in Quebec contributes only 1.7% of the province,s GHG
emissions compared to 18.1% Canada-wide average. Between 1990
and 2003, Quebec,s manufacturing sector reduced its GHG
emissions by 6.8% and its industrial process emissions by
15.1%. According to Quebec,s Climate Change Strategy, these
reductions can be attributed to investments in the

manufacturing sector in innovative technologies that increase
energy efficiency. Nevertheless, overall GHG emissions in
Quebec have increased by 6% between 2000 and 2003 (the most
current statistics available). The Climate Change Strategy
attributes these GHG emissions increases to the
transportation and building sectors, and aims its climate
change efforts towards these sectors, through actions such as
placing speed limiters on heavy vehicles to keep them from
exceeding 105 km/hr.


-------------- --------------
Energy efficiency: Hydro, wind, and public transit
-------------- --------------



3. (SBU) In 2003, GHG emissions in Quebec reached 90.9 MT,
up from 85.3 MT in 1990, of which 72.9% are emissions from
hydrocarbons and coal (the burning of fossil fuels.) The
strategy estimates that Quebec will be able to bring its
emission below the 1990 level by 1.5 % (not reaching the 6%
reduction specified within Canada,s Kyoto commitments.) The
Quebec government notes that companies within countries like
the US which have not committed themselves to "emissions
reductions targets" have a competitive advantage over
companies within countries like Canada that have ratified the
Kyoto protocol. Yet, the Climate Change Strategy also states
that in today,s climate of rising costs of fossil fuels,
energy efficiency is "not only preferable, but also
essential, if our companies and economy are to be
competitive."



4. (C/NF) The Climate Change Strategy emphasizes that Quebec
will continue to rely on and develop hydroelectric energy
sources (drawing on the provincial government,s
recently-released energy strategy). The Climate Change
Strategy reaffirmed the Quebec government,s commitment to
the development of wind power alongside hydropower,
specifically to produce 4000 MW of wind-generated
electricity. The report states that a combination of new
hydroelectric developments, wind power, and energy efficiency
can save the province a combined total of 10.9 MT of GHG
emissions. A Hydro Quebec official privately noted in a
recent meeting with EconMinCouns and EconOff that Quebeckers

MONTREAL 00000826 002 OF 004


have unrealistic hopes about the contribution of wind power
to Quebec's overall energy portfolio. (see ref A). The
development of wind power nonetheless remains an important
part of Hydro Quebec's strategy for the future.



5. (SBU) The Quebec government also promises to finance
projects to increase energy efficiency, in a program designed
for individuals, corporations, and small and medium-sized
enterprises. The Quebec government states that it will bring
its building construction standards (currently over 20 years
old) up to new levels of energy efficiency. In its 2006-07
budget, the Quebec government laid out plans for investing C$
1.5 billion in the public transportation sector and the
creation of a program in which employers can deduct 100-200%
of the cost of public transit passes provided to their
employees. The program also includes a provision to refund
provincial sales tax to those who purchase hybrid vehicles,
additional registration charges for high-cylinder vehicles,
and a series of vehicle inspection requirements designed to
require road transporters to improve maintenance on their
vehicles.


--------------
Adopting stricter vehicle standards
--------------



6. (SBU) The Climate Change Strategy also plans to apply
California,s standards for GHG emissions limitations to
vehicles sold in Quebec. A representative from Paccar, the
largest truck manufacturer in Quebec, told Econoff that the
new, strict standards would not have any impact on its
manufacturing procedures, since the company is already "ahead
of the current legislation." It remains unclear how these
new standards would impact the availability and price of
vehicles in Quebec, since the cars purchased in Quebec are
currently manufactured in either Ontario or the U.S. and not
all manufactured cars currently meet California's strict
standards. The Quebec Government also aims to make gas
distributors include a minimum of 5% ethanol in their fuel
sales by 2012 and to encourage the local production of
ethanol from forest biomass. The Quebec Government also
plans to discourage solo commuting by encouraging carpooling
and car sharing, as well as constructing bike paths from
residential areas to the downtown cores and industrial parks.



--------------
Voluntary GHG reductions for industry
--------------



7. (SBU) The aluminum, pulp and paper, petroleum refining,
metals, cement, and chemicals industries contribute the most
GHG emissions in Quebec,s industrial sector. Although this
sector has reduced its emissions from 1990 and 2003 by 6.8%,
it is still responsible for 31% of the province,s GHG
emissions. Quebec,s current Climate Change Strategy relies
on voluntary actions by large companies and industrial
associations to reduce GHG emissions according to their
"financial capacity, available technology, and
competitiveness on Canadian and international levels." The
Quebec government states its intention to "adopt a regulation
requiring major emitters to declare their GHG emissions and
other contaminants." The provincial government,s Strategy
also tackles the emission of methane (biogas) from landfills;
methane is 21 times more powerful as a source of GHG than
CO2. Larger landfills in Quebec already manage the biogas
they generate according to legislation passed in 2005, but
the Strategy will allow smaller landfills, not subject to the
regulation, to install equipment capable of capturing biogas,
at government expense.


-------------- --------------
Funding the plan: Hydrocarbon royalties, and federal cash
-------------- --------------



8. (C/NF) The Quebec government's strategy would, in
theory, be financed via a "Green Fund" comprised of
"hydrocarbon royalties applied to GHG producing business in
the energy sector" and managed by Quebec,s Ministry of
Environment and Sustainable Development. Royalty levels,
according to the report, would be set at levels determined by
the Quebec Energy Board and will amount to roughly C$200
million/year over the next six years, based on a "polluter

MONTREAL 00000826 003 OF 004


pays" principle. One representative from a large petroleum
refining company with a significant share of the Quebec
market told Econoff that he was "very surprised" at the final
content of this financing measure. Noting that his company
had been in consultations with employees at the Quebec
Ministry of the Environment for more than two years on the
issue of climate change, he stated that his company had been
clear in its willingness to implement programs to change
consumer habits with regard to gas consumption. He also
stated that the Strategy does not clarify how the government
will allocate what percentage of the Green Fun would be
contributed by which company or energy-producing industry,
and if it will apply to jet fuel as well as automobile fuel.


9. (C/NF) He maintained that although the action of
individuals driving their cars releases the bulk of GHG
emission in Quebec, petroleum refining itself does not
contribute significantly to GHG emissions, and therefore the
Quebec government's attempt to call its financing plan a
"polluter pays" strategy was in fact a misnomer. The Quebec
government has voiced its hope that energy-producing
companies will simply absorb the costs of contributing the
"Green Fund". "How can (the government) think we would
swallow these costs?" the oil executive added, pointing out
that the Climate Change Strategy would require an estimated
$150 million annual contribution from the oil industry in
Quebec, an amount roughly equal to his company's net annual
profit. It is far more likely that companies required to
contribute to the "Green Fund" will transfer the cost of
their contribution to gas consumers, to the tune of 1 cent
per liter. Quebec, while acknowledging the steps it will
take to mitigate climate change, calls on the Federal
Government to adopt GHG reducing actions, and provide $328
million towards Quebec,s Green fund. It also wants the
Federal Government to acknowledge the contributions of GHG
reductions by Quebec,s largest industrial GHG emitters as
well as Quebec's reliance on hydroelectricity to Canada's
overall GHG reduction efforts by taking such actions into
account when designing any Climate Change Strategy at the
Federal level.


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



10. (C/NF) Quebec,s Ministry of Environment had previously
expressed disappointment with the then Liberal Federal
government,s Kyoto strategy that would not take into account
Quebec,s voluntary GHG emissions reduction efforts (see
reftel B). The climate change issue remains an extremely
popular one in Quebec, whose citizens have been shown to be
continually supportive of the Kyoto protocol, and where the
Charest government earlier this year found itself being
slammed for its decision to convert a portion of a provincial
park, Mont Orford, into a real estate development. The Parti
Quebecois, Quebec's separatist party, has been trying to use
the issue of commitment to environmental protection, and
specifically Kyoto targets, as one of the attractions of a
sovereign Quebec. For the Charest government, announcing
this comprehensive climate change strategy reflects an effort
to bring the environmental issue into the Liberal agenda and
win public support as Quebec approaches a potential
provincial election as early as Fall 2006. It also offers
Charest a painless way to highlight one issue where Quebec
and the Harper government, who have been marching in lockstep
on many fronts, have diverging views.



11. (C/NF) Initial public reaction to the strategy,
according to a survey of editorials in Quebec periodicals and
conversations with contacts, has been positive. But for the
informed Quebec environmental policy watchers, this climate
change strategy is a purely political maneuver, too late in
the game. One of Quebec,s most prolific and respected
francophone environmental journalists commented in confidence
to Consulate officers: "The government doesn't do anything
for three years except selling part of Mont Orford, and
suddenly we have a strategy. It's a good one, but it's a bit
late." The Climate Change Strategy itself offers an overview
of lofty aspirations on the part of government, but it
remains unclear how the implementation of the Strategy will
play out on a practical level, and if consumers will remain
as positive about it when it begins to hit them in the
wallet. It also remains unclear exactly how the Green Fund
will raise the necessary C $200 million annually, and whether
the Conservative Federal government, which has shown itself
to be far less Kyoto-enthused than the Martin administration,
will be willing to contribute the C$328 million of federal

MONTREAL 00000826 004 OF 004


funds which the Quebec government has factored into its
"Green Fund" coffer.
SHEAFFER