Gwyn Morgan is the retired founding CEO of EnCana Corp.
After an orchestrated frenzy of warnings about pending environmental Armageddon, the United Nations summit on climate change starts today in Copenhagen.
Here at home, Quebec drew applause in the pre-Copenhagen beauty contest by announcing intentions to reduce greenhouse-gas emissions to 20 per cent below 1990 levels by 2020 (similar to the European Union target).
Environmental groups quickly pounced on Quebec's move as evidence that the federal government's plan to reduce emissions to 3 per cent below 1990 levels by 2020 is woefully inadequate.
The difference, of course, is that Premier Jean Charest leads a province literally flooded with zero-emissions hydro power, while Prime Minister Stephen Harper leads a country that includes nine other less-well-endowed provinces. And under a national cap-and-trade system that is likely to follow the Copenhagen meeting, the fossil-fuel-dependent unfortunates in Alberta, Saskatchewan and Atlantic Canada would be forced to pay cash for "carbon credits" earned by Quebec's new hydro projects.
So it's no surprise that Mr. Charest is one of the biggest proponents of cap-and-trade. If you think that such divisive manoeuvring for advantage is problematic in Canada, imagine the Machiavellian schemes that will colour the negotiating positions of countries going to Copenhagen
Along with electricity, transportation fuel is the other form of energy crucial to the Western way of life. And as is the case with wind and solar power, Western governments have implemented costly, ineffective and even harmful subsidies aimed at replacing gasoline and diesel fuel.
In North America, grain- and corn-based biofuels require almost as much hydrocarbon energy to grow and distill as is contained in the final product, while also encouraging farming practices that harm land and watersheds. Internationally, biodiesel subsidies have resulted in the destruction of irreplaceable ancient forests for palm oil plantations.
Meanwhile, high taxes are levied on hydrocarbon-based transportation fuels. In Canada, provincial and federal taxes add some 50 per cent to the average price at the pump. The addition of cap-and-trade costs would add substantially more. Many Canadians feel that their fuel taxes are already too high. Others will see this action as necessary to discourage consumption and reduce emissions.
Resolving those different views into anything resembling a national consensus will require clear and transparent communication of the full costs; along with who gains, who pays, and how much. But as we debate how much to add to already high fuel taxes, few Canadians are aware that the policy dilemma facing governments in much of the world is how much to subsidize fuel consumption.
The International Energy Agency estimates that developing (non-OECD) countries are spending $320-billion (U.S.) a year on fuel subsidies. The top 10 subsidizers in terms of total dollars are Iran, Russia, China, Saudi Arabia, India, Venezuela, Indonesia, Egypt, Ukraine and Argentina - a group representing more than half of the world population. Not surprisingly, they also represent the lion's share of the growth in hydrocarbon emissions.
At the recent Pittsburgh Group of 20 meeting, leaders called for an end to fuel subsidies "in the medium term" (whenever that is). But it won't be easy. For example, even after taking politically painful action to modestly decrease them, Indonesia's fuel subsidies still amounted to 25 per cent of 2008 government spending.
Governments of countries where many live in poverty, such as India and Egypt, fear violent responses if they try to make even small reductions in fuel subsidies. In oil-exporting countries, including Saudi Arabia, Russia, Iran and Venezuela, fuel prices as low as a few cents per litre are taken as a birthright. (I vividly recall the smoke-choked streets of Caracas clogged with old clunkers, each exhausting toxic gases a hundred times more polluting than any modern Canadian vehicle.)
Whether it be the poorer countries where people have become dependent on fuel subsidies as a social program, or the oil-producing countries where people view cheap fuel as a birthright, there is little chance that fuel subsidizers will agree to the actions necessary to reduce, or even constrain, emissions growth.
So the elephant in the room at Copenhagen is this: While the developed world attempts to reduce hydrocarbon consumption through taxation, most of the globe's population lives in countries that subsidize consumption.
And if that weren't problematic enough, the post-Kyoto diehards will be pushing for developed countries to adopt emissions targets so stringent that the only way to meet them will be to buy "clean development" credits, supposedly to help developing countries clean up their act. The result of such an arrangement would see businesses and citizens of developing countries paying huge fuel taxes, while sending money to countries that subsidize fuel prices.
Come to think of it, there will be many elephants in the room at Copenhagen. Let's hope Prime Minister Harper and Environment Minister Jim Prentice take along some experienced mahouts to keep from being trampled.