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The Kyoto protocol, to which the Canadian government has agreed, sets standards for the reduction of greenhouse gas emissions. Given that Canada is the largest per capita producer of carbon emissions, how will this signing affect our living standards, and what is The Fraser Institute’s position on an emissions credit trading program to meet the standards set by Kyoto?
- Trafford Crump,
Faculty of Economics,
Bishop’s University

The signing will not significantly affect our living standards unless we actually try to achieve the targets set out in the Kyoto protocol. Many global warming commentators think that this is very unlikely because they do not expect the US Senate to ratify the agreement. If the US does not intend to meet its targets, it would be difficult for Canada to meet ours - it would simply increase our costs of production too much and put us at too much of a disadvantage with regards to the US, our biggest trading partner.

However, if Canada did try to achieve the target set out at Kyoto, there is no question that, given current technology, it would be an incredibly costly endeavour. CO₂ is produced when fossil fuels are burned, and our entire economy from transportation to manufacturing depends on the use of fossil fuels. Making this input to production more expensive (whether through a tax or some type of limit on production) will affect the prices of most goods and services. Forecasting the exact effect on the economy, of course, is impossible.

Emissions credit trading programs have been proposed as a cheaper way of meeting the Kyoto targets. While an emissions trading program would likely be more cost effective than standards (any environmental economics textbook can give you the theory behind this), there are still several basic questions that I believe need more consideration before adopting any proposed solution.

First, do greenhouse gas emissions need controlling? Many scientists disagree with the idea that human activity is having a significant impact on climate and that this impact will have serious enough effects to warrant trying to reduce greenhouse gas emissions. For example, Sallie Baliunas, a scientist at the Harvard Center for Astrophysics, thinks that natural causes such as variations in the brightness of the sun may explain much of the observed change in temperature. Other scientific criticisms of the apocalyptic global warming theory include the inadequacy of the computer models used to make the prediction and the evidence from satellite data, which do not support the warmer world hypothesis (for more information see two Fraser Institute publications: the November 1997 Fraser Forum and our book, Global Warming: The Science and the Politics - both available on-line at www.fraserinstitute.ca).

Second, even if one accepts the hypothesis that greenhouse gas emissions related to human activity are affecting climate, the next logical question is which costs more: taking action or doing nothing? This is not a question that has been seriously discussed in the public arena. But some biologists and economists are making the case that taking action to reduce climate change will cost more than adapting and living in a warmer world.

The final problem with trying to meet the targets set out at Kyoto is that they are unlikely to have a significant effect on emissions. Even if developed countries meet their own targets, the carbon dioxide emissions of developing countries, which are unlikely to sign a treaty, are projected to continue increasing. By the year 2100, developing countries could contribute about two-thirds of the world’s carbon dioxide emissions. Thus, the Kyoto protocol is not an effective solution for reducing CO₂ emissions; it needs more consideration before looking at whether emissions permits or taxes or new regulations are the best way to implement any solution.

- Laura Jones,
Director of Environmental Studies,
The Fraser Institute

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