First of all, thank you for inviting me to comment on the role that Canadian negotiators might play in the upcoming meeting in Bali.
I want to state my support for Prime Minister Harper's position, at least as I understand it, that the world does not need another international protocol that binds only a minority of the world's emitters to absolute greenhouse gas emission caps. I don't think the question is whether we need an international treaty on climate change--we do--the question is what shape the next generation of the Kyoto Protocol must take to address this global crisis.
I'd like to look to history to answer this question. All nations, developed and developing, have previously accepted, and so far complied with, binding national obligations to eliminate whole product lines and industries in a process designed to address a global environmental disaster. They did this to stop the erosion of the ozone layer under the international treaty construct known as the Montreal Protocol. The developed nations accepted the obligation to act first, as the developing nations have asked us to do in the greenhouse gas context. Developing nations agreed to binding targets without the promise of hot air credits, which is one of our stumbling blocks right now in the Kyoto context. As far as I know, all the parties have complied with their commitments under the Montreal Protocol, in spite of the fact that in the 1980s, when all the parties signed on, its driving objective was 70 years into the future. The Montreal Protocol belies the assertion that having a long-term target is an impossible objective to work with.
In the media and elsewhere, we periodically hear the Kyoto Protocol described as similar to, or modelled on, the Montreal Protocol. This characterization of the Kyoto Protocol is dangerously inaccurate. Structurally and procedurally, the two treaties could not be more different. If I were allowed to offer only one piece of guidance to Canada's negotiators, it would be to study the Montreal Protocol and figure out why it has been effective. I think the reasons for its effectiveness jump off the pages if you stare at them long enough. You should develop greenhouse gas equivalents of the essential elements of the Montreal Protocol and then pull every trick out of your negotiator handbook to encourage the parties to the Kyoto Protocol to entertain inclusion of these strategies in the Kyoto toolbox. The Montreal Protocol does not impose a quota-based supply management system on the parties.
The Kyoto negotiators have introduced elements of the U.S. acid rain program into the Kyoto construct, which elements do not appear in the Montreal Protocol. I think that's proving to be one of the great structural issues in the Kyoto Protocol. We may or may not talk more about that in your question period.
One primary reason that the Montreal Protocol has been so successful is because it directly creates demand for new sustainable products by regulating the sale—I underline sale—of the production of substances that on consumption create ozone-depleting gases. The drafters of the Montreal Protocol somehow understood that their primary objective had to put a global mechanism in place that would facilitate an orderly but highly accelerated capital stock turnover in the industries they were trying to affect. Meanwhile, in Kyoto, we keep going to meetings where people talk about trying to build the protocol around the existing capital stock turnover rate. The objective should be to implement actions that accelerate the stock turnover rate.
The key that the Kyoto negotiators need to shift to is easiest to illustrate with the ultra-low sulphur diesel regulation that was passed across North America last year. Last year, all over North America, we passed regulations that had a number of elements. The key elements were these. The first element says that after a certain date, which was last fall, you cannot sell high-sulphur diesel in North America. The second element says that after a certain date, which was four months prior to that date last year, you may not make high-sulphur diesel in North America.
With the Kyoto construct, in every domestic emission regulation that has been proposed in Canada to date, we have been saying to industry, “We're going to make you phase out the making of it, but we're not giving you the security of a prohibition on the sale of high greenhouse gas products.”
Every attempt we've made in the past that was successful at managing products out of our value chain started with regulating what can be sold, and only by first regulating what can be sold can we create the foundation that enables us to regulate what can be made.
If we, in our sulphur diesel regulation had said we're going to tell you that you can't make a high-sulphur diesel in Canada anymore, but we're not going to make any statement about what can be sold here, then all the refiners would have shut down their plants and supplied high-sulphur diesel into Canada from offshore. The fact is, when we gave them the protection of a made market for low-sulphur diesel, the average refiner spent $500 million per plant upgrading and retooling to make the more environmentally sustainable product.
I think it's essential that our negotiators go to Kyoto and, starting with the existing Kyoto construct, ask how we start to build the 10 essential product standards that make the market for the new products we want to see developed in our country and globally.
I'll stop there for now.