Canadian government embraces Kyoto Protocol, backs exchange plan

Montreal (Platts)--25Apr2007

Canada's Conservative government late Tuesday unexpectedly reversed its
position and helped pass a House of Commons motion calling for greenhouse gas
caps to meet Kyoto obligations as a prerequisite for establishing a carbon
exchange in Montreal.

The motion, introduced by opposition Bloc Quebecois MP Bernard Bigras,
called on the government "to set absolute greenhouse gas reduction targets as
soon as possible so as to meet the objectives of the Kyoto Protocol, a
prerequisite for the establishment...of a carbon exchange in Montreal."

The motion stated that cutting total emissions, rather than slowing their
growth through GHG "intensity" targets, was essential. It passed in a 283-9
vote.

Federal Environment Minister John Baird said Monday that Canada's
mandatory target under the Kyoto Protocol would be excluded from any
forthcoming government climate-change legislation to regulate large industrial
polluters. Baird was widely expected to announce intensity-based mandatory
emissions targets for industry in Toronto on Thursday.

Liberal Environment spokesman David McGuinty earlier told the House that
Baird presented misleading reports to a Senate committee "to try and frighten
Canadians as to why Kyoto could not be achieved."

McGuinty said the reports were "a dishonest economic analysis to meet
Kyoto that no-one is proposing anywhere else in the world," and cited Deutsche
Bank predictions that "a fully operational global carbon market would surpass
the value of every stock exchange."

After the motion passed, McGuinty told reporters he was unsure if the
government realized what it had done, describing the Conservatives' support
for the motion as the "biggest flip-flop ever."

In justifying the move, Baird said: "I think the motion speaks to
absolute reduction and I have said for some time I support the need for real
reductions. When you say greenhouse gases are going up, we want [the sources
of the pollution] to get them to go down. Really. Absolutely. I mean, I think
that's what Canadians want."