The $5 Billion Boondoggle

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Appeared in the Financial Post, June 23, 2004
Though largely a dead issue for most of the election cycle, the Kyoto Protocol has finally reared its head. The various party positions on Kyoto have come out, and politicians are increasingly pointing to the accord as an important distinction between the parties. Environment Minister David Anderson continues to boost the protocol, claiming that climate change poses a far greater threat to humanity than does terrorism, and the Liberal government claims to have spent or allocated nearly $5 billion on climate change-related activities. You might think that for something so serious and costly, there would be a serious effort to make sure that Canadian taxpayers get something for their money. But according to the Toronto Star, a leaked report out of Ottawa suggests that the first $500 million spent on Kyoto was largely wasted. The Star quotes an anonymous source as saying “We seriously underestimated the difficulty of getting reductions and overestimated the payoff from new technologies. A bit of digging around suggests that the remaining $5 billion isn’t likely to be much better spent.

Given the lack of results-based accounting for all of the monies allocated for Kyoto, it’s hard to figure out what value Canadians have received for the money spent to help Canada meet its greenhouse gas reduction goals. This year’s budget plan does not shed much light on the matter, explaining “To reduce greenhouse gas emissions and address climate change, the Government has invested $3.7 billion since 1997, including $2 billion in the last budget. Of this amount, approximately $1.3 billion has been allocated to technology and emission reduction measures.” Another $695 million gets thrown at “energy efficiency and renewable energy initiatives.” The 2003 budget was equally uninformative, telling us that the $1.7 billion spent from 1997-2002 went to the Minister of the Environment, and the Minister of Natural Resources, along with a bunch of funds, foundations, and organizations such as the Canadian Foundation for Climate and Atmospheric Sciences, Sustainable Development Technology Canada, the Climate Change Action Fund, and the Federation of Canadian Municipalities. Some of these groups issue reports detailing what they’ve spent the money on, but what we actually got for any of that spending is a mystery.

A quick scan of the website for the Canadian Foundation for Climate and Atmospheric Science (CFCAS, for example, implies that much of their spending is going to climate science research across Canada – they list about 86 grants given out in four rounds, the last in 2003. Having been given $110 million since 2001, CFCAS has spent only about $24 million on science grants to date (according to their website), mostly grants of 3-year duration. Where is the remaining $86 million going?

And consider the Climate Change Action Fund expenditures for 2002-2003 as listed in their annual report. Out of a budget of nearly $52 million (they’ve been given $300 million since 1997), less than $4 million was spent on either climate science, or on studying the impacts of, and adaptation to climate change (about 8 percent). The other 92% was spent on a smorgasbord of PR efforts, analyses of governmental impacts, and intergovernmental meetings. Projects in the category “International Policy and Related,” in fact, got only $200,000 less than climate science research projects, while “Public Education and Outreach” got $6 million, 50 percent more than the spending on science.

Finally, consider the recent announcement by Minister Anderson that the government will spend $1 billion to fix up the Toronto transit system, which, they claim, will eliminate 8 megatonnes (million tonnes) of greenhouse gas emissions compared to “business as usual” - that’s $125 per tonne. But when the federal government estimated the economic impacts of implementing the Kyoto Protocol, they suggested that the most likely cost of eliminating greenhouse gases would be $10 per tonne for government-financed greenhouse gas reduction efforts. If the revised $125 per tonne estimate is applied to Canada’s total greenhouse gas reduction commitment of 240 million tones, Canada would incur roughly $30 billion in direct costs to pay for Kyoto. That would be economically punishing. The federal government’s own Climate Action Plan, estimated that simulated greenhouse gas reduction costs of $50 per tonne would lead to significant provincial GDP losses up to 1.5 percent, with Alberta particularly hard hit.

If the government really believes its apocalyptic preaching, and if it really wants to help people prepare for climate changes, whether of human origin, natural origin, or a combination of the two, it’ll stop slinging money into PR efforts and other governmental exercises in navel gazing, and either leave us our tax money so we can put it to use as we see fit, or at the very least, put our taxpayer dollars to intelligent use securing our decaying infrastructure, securing our water supplies, securing our coastlines, securing our energy grid, and helping to build the kind of economically resilient society that can withstand whatever changes Mother Nature cares to throw at us. And, to avoid the inevitable waste that comes with government programs that lack grounding in results-based accounting, somebody should be accounting for the money allocated to climate change, and reporting on it in detail, to the general public. The last thing Canadians need is another gun registry, or sponsorship scandal in the name of climate change.

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