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### Viewing cable 03OTTAWA687, CLIMATE CHANGE: CANADA'S KYOTO FOLLOW-THROUGH:

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
03OTTAWA687 | 2003-03-12 18:44 | 2011-04-28 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Ottawa

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

    121844Z Mar 03

` `

    UNCLAS SECTION 01 OF 02 OTTAWA 000687

    SIPDIS

    SENSITIVE

    STATE FOR OES (WATSON), OES/EGC (REIFSNEIDER, DEROSA),
    EB/ESC/ISC (MCMANUS, DUDLEY), WHA/CAN (MASON, RUNNING,
    NORMAN)

    USDOC FOR ITA/MAC -- OFFICE OF NAFTA

    DOE FOR INT'L AND POLICY (PUMPHREY AND PERSON), IE-141
    (DEUTSCH) AND BPA (ATKINS)

    EPA FOR OFFICE OF THE ADMINISTRATOR, INTERNATIONAL AFFAIRS
    AND BRIAN MCLEAN

    E.O. 12958: N/A
    TAGS: SENV ENRG CA
    SUBJECT:     CLIMATE CHANGE:  CANADA'S KYOTO FOLLOW-THROUGH:
          SPENDING DECISIONS MAY REQUIRE A NEW PROCESS

    REF:  02 OTTAWA 3560

    SENSITIVE BUT UNCLASSIFIED - NOT FOR DISTRIBUTION OUTSIDE
    USG CHANNELS

    ¶1.    (U) In its FY2003-04 budget, released on February 18,
    the GOC committed C$1.5 billion (about US$1 billion) over
    five years directly to achieving greenhouse gas emission
    reductions (plus modest additional funds for research and
    long-term technology development).  This represents about
    4.3 percent of the new spending promised in the budget
    (which totalled C$34.8 billion over five years, much of it
    for health care).

    ¶2.    (U) The budget documents offer no details at all on
    how emission reductions are to be achieved, except that this
    will be done "with provinces and other partners" and will
    draw upon "expert external advice."  The lack of detail
    quickly led to predictions that the C$1.5 billion would be
    tapped by various ministers to fund large "pet projects."
    Examples included a long-touted but expensive high-speed
    rail line between Quebec and Ontario, and a major power
    transmission line from Manitoba to Ontario, either of which
    could reasonably be claimed to reduce greenhouse gas
    emissions.

    ¶3. (SBU) Environment Minister David Anderson responded the
    day after the budget by calling for a "control group" of
    ministers to be charged with ensuring that the new spending
    flows to projects which are cost-effective in terms of
    reducing emissions.  Speaking to Econoffs on March 6, Don
    Strange of the National Climate Change Secretariat said that
    the GOC was considering options for ensuring such cost-
    effectiveness - possibly through a newly created function
    within the Privy Council Office, which is a policy co-
    ordinating secretariat to the federal Cabinet.

    ¶4. (SBU) Strange noted the difficult squeeze between the
    time required to find and implement a suitable decision-
    making process, and the very brief time "window" available
    in which to get climate change programs started.  Time is
    short, he said, for two reasons.  First, Prime Minister Jean
    Chretien's "selling" of Kyoto implementation to Parliament
    and the public during 2002 created high expectations for
    action among stakeholders throughout Canada.  This could
    soon turn to disillusionment and criticism unless real
    programs materialize by mid-2003.  Second, the race within
    the governing Liberal Party to succeed Chretien as Party
    leader will culminate in a leadership convention in November
    2003 and a change of leadership early in 2004.  This
    transition is liable to interfere with policy decisions and
    could derail any programs not implemented by fall 2003.

    ¶5. (SBU) PM Chretien's show of determination during
    2002 to formally "ratify" the Kyoto Accord, which was
    achieved with an act of Parliament in December, was
    intended to display independence from the USG on a
    high-profile, international environmental issue.
    Given Canada's comprehensive economic integration
    with the U.S., many of the GOC's critics emphasized
    the likely high economic price (and low efficacy) of
    any measure which could push business costs up
    relative to those in the U.S.

    ¶6. (SBU) COMMENT:  While few details are yet
    available, ironically the pattern of GOC Kyoto
    "implementation" thus far looks quite similar to USG
    climate change initiatives - such as announced
    spending on research/development toward emission
    reduction technologies; announced spending on climate
    monitoring/research; and probable further spending on
    new fuel and transportation technologies (notably
    hydrogen fuel cells) and wind power.  GOC policy
    leaders are sensitive to any cross-border
    differential in business conditions, and no doubt
    intend to keep up with (or ahead of) U.S. initiatives
    in each of these industries so as not to miss any
    opportunities.  GOC officials remain enthusiastic
    about U.S.-Canada cooperation on climate change,
    including carbon sequestration.  Environment Minister
    Anderson has also expressed interest in facilitating
    Canadian-based firms' participation in nascent
    international "carbon markets."

    ¶7. (SBU) COMMENT CONTINUED:  One key question still
    unanswered is how the GOC will fulfill a potentially costly
    promise which it made in December (just as its motion
    supporting ratification of Kyoto was being debated in
    Parliament).  The promise was to ensure that industry's cost
    of achieving mandated reductions in carbon emissions would
    be "capped" at C$15 per tonne.  So far, we have seen no
    indication from the GOC as to how much this promise might
    cost, nor whether it is to be funded from the C$1.5 billion.
    Likewise, as noted in para. 2, there are long-standing
    expectations that the GOC will assist with transportation
    infrastructure and with Manitoba's dream of a major new east-
    west power transmission line.  Even making a start in either
    of these areas could absorb all of the GOC's new climate
    change funding.  Climate change funding is certainly among
    the areas where high expectations are liable to be
    disappointed in coming months.

    CELLUCCI

`