US embassy cable - 05QUEBEC183

UNCLAS SECTION 01 OF 02 QUEBEC 000183 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SENV, ENRG, PGOV, CA, Kyoto 
SUBJECT: QUEBEC STEAMING OVER CANADA'S KYOTO STRATEGY 
 
1. (SBU) Summary:  On Nov. 9, Quebec CG Friedman and TDY 
Montreal officer Anne Coleman met with GOQ Environment Ministry 
Director for Air Policy Robert Noel de Tilly, who confirmed 
media reports of deep GOQ frustration with Ottawa's approach to 
Kyoto.  Quebec's main complaint is that Canada's federal climate 
change policy, which calls for reductions in three sectors (oil, 
coal/natural gas, and manufacturing), does not take into account 
past voluntary efforts undertaken by Quebec manufacturing 
companies to reduce their GHG emissions, or Quebec's 
emissions-friendly hydroelectric power source.  Quebec recently 
submitted to Ottawa thirty-two GHG reduction projects for 
funding, all of which were rejected by Ottawa.  End Summary. 
 
2. (SBU) GOQ Environment Ministry official Robert Noel de Tilly 
confirmed to CG media reports of a rift between Quebec and 
federal officials over Canada's climate change policy.  Quebec 
objects to the way Ottawa has set its base targets for GHG 
emission reductions.  In 1999, he explained, Ottawa began 
encouraging provinces and companies to get ahead of the curve 
and undertake GHG reduction measures.  At the time, the GOC 
indicated that any future climate change policy would take into 
account the progress being made by the provinces on a voluntary 
basis.  But in 2002, Ottawa shifted its strategy and, according 
to Tilly, established 2010 as the base year against which to 
evaluate greenhouse gas reductions.  Ottawa has set emission 
reductions of 15 percent measured against the 2010 level for 
three sectors: oil, coal/natural gas and manufacturing.  As 
Quebec has no oil or coal/natural gas industry, its bone of 
contention with Ottawa is in the manufacturing sector. 
 
3.  (SBU) Tilly argued that Canada's approach benefits provinces 
or companies that have made no efforts at GHG reduction as they 
will be able to claim major reductions in 2010.  Quebec 
manufacturing companies, by contrast, have been reducing 
emissions and becoming more efficient all along.  By 2010, it 
will be impossible for them to reduce by another 15 percent. 
Quebec must find a way to reduce its manufacturing GHG emissions 
by 15%, or buy permits from companies who are able to outstrip 
these benchmarks.  Tilly is convinced that some Quebec 
manufacturers will go under, especially in the pulp and paper 
sector. 
 
Alberta and Ontario over Quebec? 
--------------------------------------------- -- 
 
4.  (SBU) Tilly stated that the federal government's decision to 
move the "base year" of emissions calculations to 2010 was taken 
in order to benefit the booming Alberta oil industry and Ontario 
coal producers.  Under the GOC approach, Quebec's absence of oil 
or coal/natural gas energy production is in no way rewarded. 
Oil and coal companies, who according to Tilly have not taken 
voluntary steps to reduce emissions, will be able to fairly 
easily and cheaply reduce their GHG emissions by 30-40%, in 
2010, thereby leaving them with many "emissions permits" to sell 
on the market.  Manufacturing companies in Quebec will be 
penalized, in contrast, as they would be hard-pressed to make 
further reductions and will be forced to purchase emissions 
permits.  Asked by CG why Ottawa would be favoring Alberta and 
Ontario, Tilly replied, "It's pure politics." 
 
Quebec Project Requests: 0 for 32 
--------------------------------------------- - 
 
5. (SBU) According to Tilley, press reports of Ottawa's signing 
agreements with all provinces other than Quebec on the 
allocation of Kyoto implementation funds are exaggerated.  The 
federal government, he said, simply requested provinces to 
submit projects proposals and Ottawa would select those it found 
the most attractive.  Quebec submitted thirty-two projects, all 
of which were dismissed by Ottawa for not being ambitious enough 
to meet the Kyoto reduction strategy.  Tilly explained that 
here, too, Quebec is being penalized.  The first changes a 
company makes to reduce emissions usually result in the most 
dramatic GHG emissions savings, at least cost.  But Quebec's 
manufacturing companies have already introduced these 
inexpensive and effective technologies.  (Tilly buttressed his 
argument by noting that Canada-wide manufacturing sector GHG are 
expected to increase 2 percent in the 1990-2010 time frame, but 
in Quebec the estimate is for a decrease in emissions of 9.5%.) 
Further reduction proposals from Quebec are necessarily more 
expensive, with limited returns.  (Comment: While Tilly credited 
Quebec companies' voluntary measures for the decrease in GGE, we 
wonder how much of this reduction is a result of manufacturing 
operations closing or moving overseas. End comment) 
 
6. (SBU) CG Friedman noted that the U.S., like Quebec, adopted a 
voluntary initiatives strategy to reduce GHG and, like Quebec, 
we were showing better results than some countries who are 
signatories to Kyoto such as Canada.  Tilly said he viewed the 
U.S. as being very active in its approach to climate change and 
noted the high quality of climate change research being 
undertaken in the U.S.  He added, however, that while Quebec is 
opposed to Canada's Kyoto implementation plan, it continues to 
support the Protocol itself. 
 
Comment 
------------- 
 
7. (SBU) Tilly said that the GOC program is supposed to be 
implemented in 2008, but he is doubtful that Canada will meet 
this self-imposed deadline.  He pointed out that the deadline is 
only two years away and that Canada's program is vague.  We 
agree that the GOC's climate change plan appears short on 
details.  The fairness debate among provinces, which has really 
just begun in earnest, is likely to further slow Canadian 
implementation.  End comment 
 
8. (U) Drafted by TDY Montreal officer Anne Coleman. 
FRIEDMAN