Meeting Kyoto would send Canada into
a recession: Baird
[PoliticsWatch updated 1:40 p.m. April 19, 2007]
OTTAWA — Canada
cannot meet its Kyoto protocol targets without suffering
"significant economic costs," according to an Environment
Canada study released by Environment Minister John Baird on
Baird released the study in response to a Liberal private
member's bill that the opposition parties recently passed in the
House of Commons compelling the government to develop a plan to meet
the 2012 Kyoto targets.
Under the Kyoto protocol, Canada must reduce its greenhouse gas
emissions to six per cent below 1990 levels. As of 2004, Canada was
27 per cent above its 1990 levels.
Baird told a Senate committee looking at the private member's bill
that the study should give them "sober second thought"
about meeting the targets.
The study found the changes to the Canadian economy would result in
GDP declining by 6.5 per cent.
"This would imply a deep recession in 2008," the study
The study also predicted:
> The unemployment rate would rise by 25 per cent with 275,000
Canadians losing their jobs by 2008.
> A 50 per cent increase in the cost of electricity after 2010.
> Gasoline prices rising by 60 per cent
> And the real disposable income of a family of four declining by
"This might not seem like much of a sacrifice by the opposition
parties that united to pass Bill C-288 in the House of Commons, but
for the government these numbers are simply unacceptable,"
Baird said later at a press conference.
The government backed up its study by having it reviewed by four
independent economists, including Don Drummond of TD Bank,
who was a senior official at finance when Paul Martin was
"I believe the economic cost would be at least as deep as the
recession in the early 1980s and indeed that is the result your
department's analysis shows," Drummond said in a letter to
Baird that was given to reporters.
"Output losses would begin to fade in the later years of the
analysis," he added. "However, as the paper clearly
states, this does not alter the robustness of the finding that for
the first several years great economic damage would be
Other letters from economists who reviewed the study were also
Carl Sonnen, president of Infometrica Ltd., said the findings of
significant negative effects are "a reasonable outcome in our
The opposition parties quickly suggested that the study was made on
a number of faulty assumptions, including suggesting Canada would
impose a carbon tax and not taking into account the spin off
economic benefits from energy savings.
Liberal MP David McGuinty accused Baird of "misleading
"Nobody is proposing a $195 carbon tax on every tonne of
carbon. Nobody is proposing a carbon tax," he said. "This
is the basis of his absurd cost numbers."
Baird challenged the Liberals to unveil their own economic impact
study on meeting the Kyoto targets, but at a later press conference
Liberal Senator Grant Mitchell instead dismissed the
endorsement of the study by the five independent economists.
"Economists are notorious for having a variety of different
opinions about the same set of data often," he said. "This
study of Mr. Baird's assumes the worst case when it comes to
negative benefits and the worst case when it comes to positive
When asked if the Liberals had made any economic estimates about the
positive or negative impacts of meeting the Kyoto targets, Mitchell
said, "We don't have to make estimates and economic models in
many respects because we have a great deal of experience" from
the past when dire economic predictions about environmental
regulation never came to fruition.
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