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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 Wednesday.        
 
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 predicted. 

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 $4,000. 

"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 finance minister. 

"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 incurred."

Other letters from economists who reviewed the study were also released. 
 
Carl Sonnen
, president of Infometrica Ltd., said the findings of significant negative effects are "a reasonable outcome in our view." 

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 Canadians."

"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 benefits."

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. 

: Related Links

> Will the Tories boldly go to the polls against Kyoto-

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