VZCZCXRO6508
RR RUEHGA RUEHHA RUEHQU RUEHVC
DE RUEHOT #0627/01 0951955
ZNR UUUUU ZZH
R 051955Z APR 07
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC 5342
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC
RUEAEPA/EPA WASHDC
RHEHAAA/WHITE HOUSE WASHINGTON DC

UNCLAS SECTION 01 OF 02 OTTAWA 000627 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EB, OES AND WHA 
WHITE HOUSE FOR CEQ 
EPA FOR OFFICE OF THE ADMINISTRATOR AND INTERNATIONAL 
AFFAIRS 
DOE FOR POLICY AND INTERNATIONAL 
 
E.O. 12958: N/A 
TAGS: SENV ENRG PGOV CA
SUBJECT: RE-WRITTEN CLEAN AIR ACT WOULD CAP GHG EMISSIONS 
-- IF ENACTED 
 
REF: 06 OTTAWA 3423 
 
This message is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary: The Conservative's "Clean Air Act" emerged 
March 30 from its legislative committee re-draft a very 
different document from the draft bill that went to the 
committee in December 2006.  The new bill C-30 emphasizes 
hard targets for reducing greenhouse gas emissions and 
penalties for non-compliance.  Yet it is far from certain the 
bill will be adopted in this form.  The government has 
several options and controls next steps.  It can submit the 
revised bill to the House of Commons for a vote, or it can 
resubmit the original bill, or its own revision.  Or it can 
choose not to return the bill to the House at all and proceed 
with its regulatory approach under existing statute.  Each 
choice holds some risk, and whether the government would use 
the bill to trigger an election remains a matter of much 
speculation.  The government is not tipping its hand.  End 
summary. 
 
New Draft Sets Hard Targets for GHG Emissions... 
--------------------------------------------- --- 
¶2. (U) The revised bill C-30 differs from the original Tory 
bill (the "Clean Air Act," tabled in the House of Commons on 
October 19, 2006) in several important aspects and not 
surprisingly, given opposition parties' majority on the 
legislative committee, bears a strong resemblance to the 
Kyoto bill, C-288, the House passed on February 14, 2007. 
For one, it mandates hard GHG emissions targets beginning in 
¶2008.  The Act prescribes a "national carbon budget," to be 
determined by the Minister of the Environment, which for each 
year from 2008 to 2012, corresponds to a 6 percent reduction 
in Canada's domestic greenhouse gas emissions from their 1990 
level (i.e., Canada's Kyoto Protocol target).  Carbon budgets 
in out years would require a 20 percent cut from 1990 levels 
in 2020; a 35 percent cut by 2035, and a 60-80 percent cut by 
¶2050.  The original Clean Air Act called for initial 
intensity-based targets for GHG emissions before switching to 
hard targets in the 2020 to 2025 time frame. 
 
¶3. (U) Under the re-drafted legislation the Minister would 
also determine sectoral and individual carbon budgets for 
sectors and individual emitters deemed significant by the 
Minister.  Individual budgets would take into account: early 
action to reduce emissions; the range of abatement 
opportunities available to the emitter, and "fair treatment" 
of the emitter with respect to its prospects for economic 
growth in comparison to the average for the sector. 
 
... and Financial Penalties for Emitters 
---------------------------------------- 
¶4. (U) Under the proposed legislation, once the carbon 
budgets are determined, the Minister shall issue permits to 
the emitter for a set amount of GHG emissions equal to that 
entity's individual carbon budget.  If emissions exceed the 
permitted amount, the emitter will be liable for a financial 
penalty per ton of carbon dioxide equivalent of C$20 in 2008, 
C$25 in 2009 and 2010, C$30 for 2011 and 2012, and for 2013 
and after C$30 or more, as prescribed by the Minister. 
 
¶5. (U) To manage the financial accounting the re-drafted 
legislation calls for the creation of an independent agency 
to be known as the Green Investment Bank of Canada, which 
would be responsible for monitoring and regulating the GHG 
Qwould be responsible for monitoring and regulating the GHG 
emissions of large industrial emitters.  Emitters would make 
annual deposits to their "green investment account" based on 
their emissions level and the cost of carbon credits.  The 
emitter could withdraw funds from its account to retrofit 
facilities to reduce GHG emissions, but funds that remain in 
a green investment account for two years without being 
allocated to an approved project will be transferred into a 
"Green Investment Fund" and lost to the individual emitter. 
The Green Investment Bank would invest those funds to further 
reduce greenhouse gas emissions in Canada, targeting half for 
a revolving building retrofit fund program, and half for 
investment in greenhouse gas reduction projects with a 
minimum of 80 percent of the funds to be spent on projects in 
the province or territory where emitter is principally 
situated. 
 
 
OTTAWA 00000627  002 OF 002 
 
 
Next Steps 
---------- 
¶6. (SBU) There has been significant speculation that the 
revised Clean Air Act will be the trigger for an election, 
because either opposition parties would like to goad the 
government into fighting an election on climate change or 
because the government would deem it a "confidence measure" 
which would lead to an election if the opposition passes the 
bill over the government's opposition.  But in fact, the 
government has several options, and it controls next steps 
with the bill.  As far back as November 2006, Rob Taylor, 
then the Director of Parliamentary Affairs for the 
Conservative House Leader, told Embassy the Conservatives 
still hold some cards: if the legislation that comes back 
from committee is unacceptable, the government can choose not 
to submit it for third reading and consequently kill it 
(reftel).  Indeed, we have reconfirmed with House procedural 
experts that there are additional options available to the 
government.  The government can submit the revised bill to 
the House for a vote, it can re-submit the original bill, or 
it can offer its own re-written version (these two latter 
options would require the government to submit the bills at 
first reading stage).  Or, as suggested by Taylor, it can 
choose to not submit the bill back into the House of Commons 
at all and proceed with its regulatory approach under 
existing statute (as government officials have assured us 
they can and are prepared to do).  The final possibility, of 
course, is that an election is called before the bill, in 
whatever form, completes all legislative stages, in which 
case it would "die" on the order paper, and a new parliament 
would have to initiate the legislative process from the 
beginning. 
 
¶7. (SBU) Each choice holds some risks for the government, and 
the government's political calculus certainly involves many 
variables.  In sum, it is far from certain that the revised 
C-30 will either be used to precipitate an election or that 
its provisions for regulating greenhouse gas emissions will 
be enacted.  The government is as yet holding its cards 
closely on how it intends to proceed with C-30, and with the 
House still on recess until April 16, there is no compelling 
reason to rush an announcement.  We suspect the government,s 
decision on how to push forward its climate change strategy 
rests as much with its domestic political calculations as it 
does with its environmental platform. 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
WILKINS