Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Report on Business

Economy Lab

Delving into the forces that shape our living standards
Best Business Blog, EPPY awards, 2011 and 2012

Entry archive:

Economy Lab has moved

Only Globe Unlimited members will now have access to a wide range of insightful commentary
and analysis on the economy and markets previously offered on this page.


Globe Unlimited subscribers will be able to read these columns,
written by some of Canada’s most deeply respected economists,
such as Christopher Ragan, Sheryl King, Andrew Jackson, and Clement Gignac,
as part of our ROB INSIGHT section.


All of our readers will still be able to browse the Economy Lab archives and read our
broader coverage of economic data and news by accessing their 10 free articles a month.


Learn more about Globe Unlimited and how to subscribe.

Canada's Environment Minister Peter Kent addresses the media at the United Nations Climate Change Conference (COP17) in Durban on December 6, 2011. (ROGAN WARD/ROGAN WARD/REUTERS)
Canada's Environment Minister Peter Kent addresses the media at the United Nations Climate Change Conference (COP17) in Durban on December 6, 2011. (ROGAN WARD/ROGAN WARD/REUTERS)

Economy Lab

The nuts and bolts of Kyoto withdrawal Add to ...

Andrew Leach is an Associate Professor at the Alberta School of Business. He blogs on energy, environment, and oilsands issues at http://www.andrewleach.ca and is on Twitter @andrew_leach .



There’s a great deal of misconception with regard to Canada’s potential withdrawal from the Kyoto Protocol. Here are three key facts to keep in mind.

More related to this story

First, can Canada withdraw from the Kyoto Protocol, and why is December, 2011 an important date?

There is a provision for formal withdrawal from the Kyoto Protocol, in Article 27, which states that Canada has to give one year’s notice, in writing, to withdraw. As a result of this notice requirement, the window for withdrawal closes on Dec. 31 of this year. Canada’s Kyoto obligations cover the years 2008-2012, so withdrawal would only be meaningful if it were initiated before the end of December, 2011, so as to take effect before the end of our compliance period.

Second, does withdrawal from Kyoto imply that Canada is withdrawing from the United Nations process for negotiation of a global climate change agreement?

No. Article 27 of the Kyoto Protocol also states that, “any Party that withdraws from the (UN Framework Convention on Climate Change, or UNFCC) shall be considered as also having withdrawn from this Protocol,” but not vice versa. By withdrawing from Kyoto, Canada would not be withdrawing from the international process for negotiating a global climate change accord. Withdrawal would not affect requirements for annual emissions inventory reporting under the UNFCC.

Finally, what are the penalties for non-compliance with Kyoto, should Canada choose not to withdraw?

This document (credit to Craig McInnes at the Vancouver Sun for the link) outlines the process. Briefly, a country can only be found to be in non-compliance after a review of emissions inventory data takes place. This will happen after Canada submits its final inventory report in 2014 (covering emissions through the year 2012). In its latest filing under the Kyoto Protocol Implementation Act, the Federal Government estimates that Canada will exceed its Kyoto target of 558Mt/yr by an average of 161 Mt/yr, or 28.8 per cent. Assuming this proves accurate, Canada would be given 100 days after the 2014 review of our emissions inventories to buy international credits to make up the 805 Mt shortfall -- this potential for compliance through permit purchases is behind statements like this one assessing Canada’s Kyoto Debt at up to $19-billion.

Assuming that Canada would not move to purchase billions of dollars worth of international credits, Canada would potentially face penalties for non-compliance, but these are likely to be irrelevant. There are no financial penalties for non-compliance under the Kyoto Protocol. The penalty for non-compliance implies that Canada would be responsible to make up the shortfall of 805 Mt, plus 30 per cent, in a second commitment period after 2012. Our emissions allocations over the second commitment period, which have yet to be negotiated, would be decreased by 1050 Mt to make up for our non-compliance between 2008 and 2012. Since Canada has made it clear they will not be signing on to a second commitment period of Kyoto, this non-compliance penalty is largely moot.

Long story short -- by withdrawing from the Kyoto Protocol before the end of December, 2011, Canada would protect itself against an explicit finding of non-compliance and the penalties which go with that. That said, the risk that these penalties would have material implications for Canada is quite small. The question which remains is whether the effect on Canada’s international reputation would be greater as a result of withdrawal or non-compliance. We’ll find out what the government thinks between now and Dec. 31.

Economy Lab, winner of the 2011 Eppy Award for best business blog. Follow Economy Lab on twitter

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular