The Cost of Bill C-288 to Canadian Families and Business

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B. Global Context

The science underlying climate change tells us that human-caused emissions of GHGs, resulting primarily from the combustion of fossil fuels for energy, is a significant driver of global warming. Global energy-use trends are therefore at the centre of the issue of climate change, and are tied to global economic growth projections.

According to the World Energy Outlook 2006 (WEO2006) of the International Energy Agency (IEA), world energy demand will increase by 53% over 2004 levels by 2030, with 70% of the increase coming from developing countries. Similar energy and emissions growth projections are made in the International Energy Outlook 2006 (IEO2006) by the Energy Information Administration (EIA) in the US (Chart 1). According to the EIA, fossil fuels will remain the dominant source of world energy, accounting for 83% of the overall increase in energy demand between 2004 and 2030. Power generation accounts for 47% of this increase. According to both the IEA and EIA, the world's remaining economically exploitable energy resources are adequate to meet the projected increases in demand through to 2030.

Chart 1: World Energy Consumption, 2003-2030
Chart 1: World Energy Consumption, 2003-2030

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Source: Energy Information Administration , International Energy Outlook 2006

In the absence of new government action, global energy-related carbon dioxide (CO2) emissions will increase by 55% from 1990 to 2030, with developing countries (primarily China and India) being responsible for over three-quarters of the increase. Developing countries' share of global emissions overtakes that of OECD countries soon after 2010 (Chart 2). China will become the world's largest emitter prior to 2010.

Chart 2: World Carbon Dioxide Emissions by Region, 1990-2030
Chart 2: World Carbon Dioxide Emissions by Region, 1990-2030

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Source: Energy Information Administration, International Energy Outlook 2006

GHG Emissions of Kyoto Signatories

There are significant differences in various countries' progress toward reducing greenhouse gas emissions. Overall, the EU has kept its emissions stable at around 1990 levels. Within the EU, Germany and the UK are among the most advanced in terms of actually reducing their emissions since 1990. In the case of Germany, this resulted in part from the major economic changes following reunification, which saw closure and replacement of economically non-viable industrial facilities of the former East Germany, as well as proactive government policies such as introduction of a carbon tax. For the UK, success in reducing emissions arose from a combination of government policies introduced since the late 1990s, and benefited as well from a longer-term trend away from coal as a primary source of domestic industrial and household energy.

More generally, the fact that the EU has assumed a collective target, and the evolution of the organization since 1990, has worked to its advantage in terms of its ability to meet, and even expand upon, its Kyoto targets. Under Article 4 of the Kyoto Protocol, the 15 member states of the EU (before it expanded in 2004) are to collectively meet a GHG reduction target of -8% of 1990 levels by 2012. In effect, this allows those EU countries that surpass their GHG reductions (e.g. Germany and the UK) to compensate for member states that are not achieving their targets (e.g. Denmark, Ireland, Italy and Spain). In particular, reunification with the former East Germany allowed Germany (the largest European economy) to take on a deep reduction target.

In addition, some of the new "economies in transition" (EIT) countries that are within the now 27-member state EU still remain well below their Kyoto targets. While some of these EIT countries (e.g. Czech Republic, Hungary, Poland and Slovenia) are now experiencing rapid economic growth that has resulted in a GHG emissions increase of 4.1% over the period 2000-2004, overall the presence and economic situation of EIT countries within the EU will contribute greatly to its collective ability to meet both its Kyoto objectives and its recent commitment of reducing emissions by 20% of 1990 levels by 2020.

In other developed countries, including Canada, the United States, Australia and Japan, emissions have increased, in some cases significantly. However, the most dramatic emissions increases have come in the developing Asian economies of China and India, where economic growth and energy demand has begun to take off (Chart 3).

Chart 3: GHG Emissions by Region and Selected Countries, 1990 and 2004
Chart 3: GHG Emissions by Region and Selected Countries, 1990 and 2004

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Source: United Nations Framework Convention on Climate Change (UNFCCC)

Despite progress by some Annex I countries, the WEO2006 projects total emissions of Annex I OECD countries in 2010 to be 29% above the target set out in the Protocol.

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