NEW LIBERAL LEADER DION LIKELY TO PUSH

UNCLAS SECTION 01 OF 04 OTTAWA 003561 SIPDIS SENSITIVE SIPDIS DEPARTMENT FOR WHA, OES AND EB EPA FOR OFFICE OF THE ADMINISTRATOR AND INTERNATIONAL AFFAIRS DOE FOR POLICY AND INTERNATIONAL WHITE HOUSE FOR CEQ E.O. 12958: N/A TAGS: SENV ENRG PINR CA SUBJECT: NEW LIBERAL LEADER DION LIKELY TO PUSH ENVIRONMENTAL INITIATIVES REF: A. MONTREAL 1205 ¶B. OTTAWA 3423 AND PREVIOUS ¶C. MONTREAL 826 Sensitive but unclassified. Please protect accordingly. ¶1. (SBU) Summary. The victory of former Environment Minister Stephane Dion in the federal Liberal leadership battle seems certain to keep the environment and especially the Kyoto Protocol squarely in the center of domestic political discourse. As Environment Minister, Dion was closely identified with the Kyoto Protocol. He has consistently criticized the Conservative government's decision to abandon Canada's Kyoto commitments as unachievable and just as regularly insisted that his own climate change and energy program, outlined at length but missing many specifics, would allow Canada to meet those commitments if implemented by "early 2007." Even though Dion received generally good reviews as Environment Minister, his record is not without blemish, particularly since the Martin Liberal government made little progress in reducing greenhouse gas emissions. A Dion-led government seems certain to focus greater attention on the environment and to pursue its environmental objectives aggressively. End Summary. ¶2. (U) Stephane Dion's victory in the December 2 federal Liberal Party leadership race (ref a) heightened focus on Canada's already vocal environmental debate, specifically on whether a Liberal victory in the next federal election (expected in 2007) would see a re-commitment to the Kyoto Protocol commitments Canada assumed in 1997. In any event, Dion's rise seems certain to maintain the rhetoric on the environment at a high level, perhaps highlighting the Conservatives' relative lack of success in selling the Canadian public on their own environmental and climate change program. ¶3. (U) The environment was not Dion's sole focus during the leadership campaign ) he says economic prosperity and social justice shared equal billing ) but his tenure as federal Minister of the Environment from July 2004 to January 2006, and his regular campaign criticism of the Conservative's Clean Air Act, seem to link him more closely to the environment than these other elements of his platform. He is strongly identified with Canada's commitment to the Kyoto Protocol, and his campaign rhetoric on the environment was notable for its focus on the Harper government's admission in May that the Kyoto target was not achievable. He consistently charged the Harper government with betraying its "responsibility to live up to its international treaty obligations" (i.e., the Protocol),and the first paragraph of his Liberal leadership campaign's energy and climate change plan, for example, accuses the Conservatives of having "cut, postponed or simply abandoned every meaningful federal initiative to combat climate change and increase energy efficiency." The Environment ) Important in Domestic Politics, but not all Good News for the Liberals -------------- -------------- ¶4. (U) Polling data consistently provide evidence of the importance Canadians attach to the environment, and one poll taken early last month found that Canadians, for the first time since 1990, claimed to be more concerned about the state of the environment than (perennial front runner) their own health. That data also point out regional differences, with respondents in Alberta and Quebec, which has its own climate Qrespondents in Alberta and Quebec, which has its own climate change strategy (ref c),the most likely to cite the environment as their greatest concern; and some aspects of the environment, for instance climate change and energy conservation, regularly claim greater attention from the public. A mid-November survey of British Columbians, for example, found that 72 percent agreed they were "desperately concerned" that climate change required "dramatic action." Analysis noted this figure was substantially higher than the 63 percent of respondents across Canada polled two months earlier, probably due to "increased media coverage of this issue in the last few weeks." (Note: That increased media coverage was almost certainly the spate of publicity, much of it negative (ref b),surrounding the tabling of the Clean Air Act by the Conservatives in late October.) OTTAWA 00003561 002 OF 004 ¶5. (U) While most observers give Dion good marks on the environment and expect this issue may benefit from greater focus in the government agenda if the Liberals win the next election, Dion's credentials as Minister of the Environment and the most visible face of the Liberal's past environmental stewardship, are not entirely positive, and he has come in for some criticism for being too focused on the Kyoto protocol. The apolitical Commissioner for the Environment and Sustainable Development (the CESD is part of the office of the Auditor General of Canada) in a report released in September 2006 noted a stark contrast between Dion's vision of a green Canada and what the Liberals actually implemented during their reign in power. That report noted at the "government-wide level, our audits revealed inadequate leadership, planning, and performance," and "(t)he federal government has done too little and acted too slowly on Canada's commitments to address the challenge of climate change". In a line sure to be used by Dion's adversaries in the next election, CESD stated "(e)ven if the measures contained in the previous government's 2005 plan had been fully implemented, it is difficult to say whether the projected emission reductions would have been enough to meet our Kyoto obligations." (Note. More tellingly, Canada's greenhouse gas emissions in 2004 stood at 27 percent above their 1990 Kyoto base year level (and 35 percent above Canada's Kyoto target). Emissions increased at a fairly constant rate from the early 1990s through 2004, the last year for which official figures are available and years when the Liberal Party was in power (1993-2006). Dion certainly does not bear individual responsibility for the whole of the Liberal Party's record on emissions, but that record ) if examined critically ) seems unlikely to provide his next campaign with much comfort.) ¶6. (SBU) The CESD report on Climate Change also remarked on the federal government's inability to act on its own in this sphere and suggested that achieving success on a complex and pervasive problem such as climate change requires "bringing various players onside and in mobilizing concerted action." While CESD was referring also to private sector stakeholders, this concern is especially evident in provincial-federal relations; the two levels of government in Canada share responsibility for the environment and constantly wrangle over who has jurisdiction (and who will pay the bills). Thus there is no guarantee a Prime Minister could implement effectively a vigorous and robust green agenda in the face of provincial opposition. (Note. Typically national environmental standards would be set by consensus among the 14 federal, provincial and territorial environment ministers sitting as the Canadian Council of Ministers of the Environment (CCME). The CCME cannot impose its conclusions on provinces since it does not have the authority to implement or enforce legislation, and each jurisdiction decides whether or not to adopt CCME proposals.) The Conservative government was reminded of this in October when Ontario's Liberal Premier Dalton McGuinty, in response to the Clean Air Act's push for tougher standards for vehicles by 2010, angrily exclaimed, "(t)he one thing we will not abide is any effort on the part of the national government to Qis any effort on the part of the national government to unduly impose greenhouse-gas-emissions reductions on the province of Ontario at the expense of our auto sector." (The Clean Air Act proposes to require tougher fuel efficiency standards, not tougher emissions standards. Perhaps McGuinty misunderstood. In any event, the Conservatives seem to have learned their lesson on this score from their relative lack of success in rolling out the Clean Air Act, and are devoting considerable attention to consulting with provinces and industry stakeholders on the overall concepts of the Act.) So what might a Dion Environment Plan Look Like? -------------- --- ¶7. (U) Dion called his campaign platform on the environment (but covering energy and climate change more specifically) "Building a Sustainable Future for Canada." The plan, largely a repeat of the Project Green he pushed in 2005 while Environment Minister, lays out aggressive targets for emissions reductions throughout the Canadian economy, but provides little detail on proposed programs and no estimates of the costs needed to implement them. (His overall plan for environmental sustainability also includes shorter elements addressing health, clean air, and clean water.) OTTAWA 00003561 003 OF 004 ¶8. (U) Dion's energy and climate change plan promises programs to provide individuals with tax credits for home energy efficiency improvements and purchases of fuel efficient vehicles, as well as committing Canada to matching the most stringent vehicle emissions standards in the U.S. (specifically California). On the energy side, Dion would support research, development and deployment of green technologies (by Canadian companies),make more stringent efficiency standards for appliances, and mandate 10 percent ethanol content for gasoline and biodiesel by 2010. Dion would also adjust preferential cost recovery rules for oil sands to promote "zero net impact development." Industry would immediately face caps on emissions and trading, but the price for verified reductions would be capped initially at C$15 to ensure manageable compliance costs during the first Kyoto commitment period (to 2012). ¶9. (U) To promote renewable energy, the plan would provide incentives for wind and other renewable power production and establish, in consultation with the provinces, renewable portfolio standards. Owners of commercial buildings would receive accelerated depreciation allowances for energy efficiency investments, and communities would be eligible for a variety of funds to support mass transit, weatherization, and urban renewal. The government would not escape: Dion would set targets for the federal government and crown corporations to use at least 20 percent renewable energy immediately, moving to 30 percent by 2010 and 80 percent by ¶2020. (Note. This ambitious target only makes sense if the plan includes large scale hydro and nuclear in the renewables category, which often is not the case. In 2002 hydro and nuclear supplied 70 percent of Canada's electricity. Other renewables, including biomass, solar, and wind, accounted for a very small share of Canada's electricity that year. Generation from these sources is expanding rapidly, but from a very low base.) ¶10. (U) And certainly, Kyoto played prominently in Dion's plan, which claims that enactment of all of its measures by early 2007 would still put Canada on track to meet its Kyoto Protocol commitment to reduce greenhouse gas emissions by 6 percent from their 1990 level by 2012. Dion estimates his plan would cut greenhouse gas emissions by between 238 and 308 million tons by 2012, enough to meet those targets. In Dion's words, "the Kyoto Protocol is the only credible international tool to fight the coming climate crisis, and Canada must honor its commitments under the agreement, while leading the negotiations to extend it past 2012." ¶11. (SBU) Dion's ambitious plans (including the 2005 Green Plan) have taken their share of criticism. On one hand, Dion is criticized by some environmentalists for borrowing heavily (and in many instances word for word) from the work of David Suzuki, one of Canada's leading and most vocal environmental personalities. On the other, Dion has never made a secret of his plan's reliance, at least in the initial stages, on the purchase of credits internationally (either from transition economy "hot air" or from actual reductions from Joint Implementation or Clean Development Mechanism projects), prompting charges that Canada could spend as much as C$5 billion yet see no benefit domestically. Then too, Dion's Qbillion yet see no benefit domestically. Then too, Dion's plans have provided little detail on project specifics or costs to implement or sources of funds. Does it Differ from the Conservative's Clean Air Act? -------------- -------------- ¶12. (U) Certainly the Conservative Clean Air act also lacks detail on program specifics, at least partly because the government is still in the process of consulting with provinces and industry. (This extensive round of negotiations, in fact, draws criticism from both the political opposition and some environmentalists who claim it only delays effective action, since the Liberals had already done "enough" consulting.) And, the Clean Air Act does have longer time frames than Dion's plans. It envisions absolute reductions in greenhouse gas emissions of 45-65 percent (from 2003 levels),but not until 2050. On the other hand, the Tory legislation does contain specifics on a number of programs to regulate pollutants, to gain provincial support through enhanced use of "equivalency agreements" that focus on outcomes rather than specify technology, and to set mandatory fuel economy standards and efficiency standards for OTTAWA 00003561 004 OF 004 appliances. ¶13. (SBU) However, the Harper government's ability to implement its own clean air and climate change plans is complicated by the Clean Air Act's status in Parliament (ref b). Not only are there two other competing climate change bills before the House, but the Clean Air Act has been assigned to an ad hoc drafting committee for revision before it comes back to the House for a second reading. GOC contacts will not (and really cannot) speculate on the form of the bill that will be reported out by the drafting committee, but they do expect required short-term targets for emissions reductions will feature prominently. Interestingly, they believe the re-worked bill may not call for meeting Kyoto commitments. What sets the Tory plan apart though, is the degree to which it relies not on the passage of new legislation, but on the existing Canadian Environmental Protection Act of 1999. With respect to air pollutants ) but not greenhouse gases ) the Clean Air Act would enhance the GOC's ability to regulate, but the legal authority to do so derives from CEPA and thus does not depend on the new legislation. What if? -------------- ¶14. (SBU) There seems to be little doubt that a Dion-led government would focus greater attention on the environment, and likely on climate change specifically. Certainly this is what the public expects (another poll in taken in early November found that 70 percent of Canadians think the Clean Air Act is not tough enough),and Dion himself in his first press conference as Liberal leader, stressed the environment's importance to him on a personal level. He announced that he would pull together the best environmental plans from the party to develop "the best for energy and climate change that you can have in Canada." ¶15. (SBU) And how would he approach pursuing his environmental goals as prime minister? Dion himself acknowledges a "rather willful temperament" and was regarded as very aggressive when he was Environment Minister, both on issues and in promoting Environment Canada's bureaucratic interests. He had the reputation among some of pursuing his objectives without too much regard for balance and for discrediting the arguments of those who disagreed, and sources report that he was surprisingly not always well briefed on environmental issues and ignored facts that did not support his position. And, he was known to display remarkable insensitivity to U.S. views on most environmental issues. While it is far from certain that Dion will be Canada's next prime minister, the odds of him gaining the office at some point are in his favor, since every Liberal Party leader since 1896 has served as Canada's prime minister. The exact environmental and climate change programs a Dion-led government would pursue are also uncertain, of course, but expect their pursuit to be energetic and assertive. Visit Canada's Classified Web Site at http://www.state.sgov.gov/p/wha/ottawa WILKINS