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Out of accord: industry leaders have mixed views on Kyoto, claiming it will eliminate a level playing field for resource-based industries.

The earth's climate is changing and scientists say that rising temperatures are causing a multitude of environmental problems in Canada, from melting per mafrost and sea ice in the north, to drought and more unstable weather in the south. Those scientists are also predicting even harsher impacts from climate change for the years to come. To make matters worse, many human activities, like the heating and cooling of homes and the driving of vehicles, have increased the amount of greenhouse gases (GHGs) in the atmosphere. Most of these gases, such as carbon dioxide, methane, and nitrous oxide, act like a blanket that keeps the sun's heat in. That is why back in 1997 Canada helped negotiate the Kyoto Protocol, under which Canada agreed to reduce its GHG emissions to six per cent below 1990 levels by 2012.

The manager of public works in Greater Sudbury, Paul Graham, is supportive of the accord and believes people should be looking towards alternative energy sources in order to reduce GHGs.

"I believe Canada and its citizens have an obligation, certainly a moral responsibility, to do their part to reduce GHGs and to help protect the environment," he says. "We are an energy-intensive country. I do believe there are real viable alternatives that can be put in place over time to help a make a substantial impact. I also believe that in the fullness of time, (the ratification of the Kyoto Protocol) will be a good business decision."

Graham has been doing his part to find energy alternatives and innovations for the City of Greater Sudbury, and is quick to make note of the Wahnapitae Water Treatment Plant.

The plant currently has two renewable energy sources. The first is a solar wall that takes in fresh air through the face of the wall. While the air is in contact with the metal panel, it is heated, thereby allowing the plant to reduce the amount of energy that is required to heat the cold air outside by preheating the air before it goes into the building.

The second system is a geothermal system that provides all the air-conditioning for the plant in the summer, and a significant part of the heat load for space heating in the facility. It works essentially as ground energy. In the winter, loops in the ground warm the fluid that comes back into the plant. Heat is extracted from the plant and then distributed throughout the plant. In the summer, the trend is reversed.

Graham says the plant is now working on a third initiative to develop 50 megawatts of windpower. He indicates that they are looking at the ridge behind the plant as a potential place to put a wind turbine that would be directly connected to the plant. No decisions, have been made yet, but Graham believes an innovation of this sort is what people should start to look towards for examples of how you can find alternative sources of energy that will not cause GHGs.

"One of the foundations of anybody's plan to reduce GHGs and move, towards the Kyoto Protocol will be reducing energy consumption and starting to produce energy using renewable energy sources," he says.

Although the majority of businesses and business people in Northern Ontario agree that GHGs have to be reduced, many are concerned about the Kyoto Protocol Canada entered into to achieve a reduction. Many critics are quick to point out that several developed countries, like Mexico, India, China, Brazil and 130 other countries, do not have to commit to reducing greenhouse gases before 2012. Other critics are also concerned about the protocol as far as how it is going to be implemented and how it is going to affect various industries.

Jim Thompson, first vice-chair of the Greater Sudbury' Chamber of Commerce board of directors, is one of the people concerned about the impact of the accord.

"1 think the major concern is that there is no specific plan in place in terms of who is going to fund the accord, who is going to fund the changes, or how the changes are going to impact on businesses, "he says. "How is it going to impact on Canada? There are some targets that need to be reached, but are there going to be incentives for businesses to support the innovation and new technology that is going the be required to achieve these goals?"

All of these questions need to be answered, he says, before Kyoto is' ratified by the federal government. Currently, the government is expected to ratify the' deal by Christmas, but Thompson's chamber has already starting sending out letters to local MPs urging them to, continue a dialogue with Canadians before voting to ratify the agreement.

Personally, 'Thompson feels the Kyoto Protocol would affect him more as a Canadian than as a business person, but he remains concerned for industries that are expected to be affected, like the mining industry.

"With Prime Minister Jean Chretien pushing to ratify Kyoto before the end of this year, Canada will be the only NAFTA partner to do so," he says, "This is going to put Canadian companies at a tremendous disadvantage. This includes companies like Inco and mining equipment manufacturers who compete internationally with companies in countries that are not part of the accord."

As for mining giant Inco, their manager of public affairs, Gory McPhee, says the company is already quite pleased with their own efforts to reduce GHG emissions. According to McPhee, they are already ahead of where they would have to be under the current Kyoto Protocol. He points out they have reduced their amount of absolute carbon dioxide emissions by eight per cent from their 1990 levels. McPhee also indicates that the company remains committed to the reduction of GHGs, but he says it still remains to be seen if Kyoto is the right way to go.

"While we remain fully committed to reducing GHGs and working with all levels of government, there are aspects of Kyoto that are still unclear to us as to how it is going to be implemented," he says. "We do not know how the government is going to implement the protocol or what the impact will be on the mining sector. For instance, are we going to be credited for the reductions we've already made?"

Ultimately, he says, Inco does not want to be put in a position where they might be at a competitive disadvantage with other competitors who operate in jurisdictions that do not have to follow the protocol.

"We are an international mining company," he says. "A lot is being made of the fact that the U.S. has not signed on to Kyoto, but equally important to us is that Australia and Russia have not signed on. Those are our biggest competitors in the mining industry, so we want to be sure to deal with GHGs in a way that allows us to remain competitive."

"We just hope any reduction in GHG emissions, whether it's through Kyoto or another accord, is done in a sustainable way so that companies and industries can remain competitive, while at the same time working to improve their performance," he concludes.

Falconbridge Ltd. shares the same concerns as Inco.

"Certainly we have concerns, as all industry does, and it's a concern about competitiveness," says Laurie Gregg, director of energy management at Falconbridge.

"To start reducing emissions significantly in the next five years is extremely difficult in heavy industries like mining and steel."

"Mining is an energy-intensive industry, so we use a lot of energy and a lot of natural gas," he adds. "The predictions are the prices of both of these things are going to go up by anywhere between 15 to 30 per cent. Consequently, our costs are going to go up by that amount."

Gregg also points out that according to a study conducted for Falconbridge by an independent group in England, their competitive ability to produce nickel will be reduced by 22 per cent if Kyoto is ratified. That would cause the company to be 22 per cent less competitive in-the global market.

"The problem with Kyoto is it demands almost impossible changes in a very short timeframe," he says "To implement things, as per the accord, it will have a small effect. It will only lessen the slope of increase. It will not mobilize the emissions in the atmosphere. Essentially, it is not the whole solution to the problem. The solution lies in how we use energy. This is really an energy consumption issue."

According to Gregg, 85 per cent of the world's emissions relate directly to the energy we use. That is why he believes that the GHG problem can only be solved within the time frame of centuries. Over that time, he feels people need to find clean energy sources that do not emit GHGs.

Still, the mining industry is not the only industry that has something to say about the issue. People in the forest industry are also speaking out.

The president of Tembec, a leading integrated Canadian forest products company involved in the production of wood products and market pulp and papers, is one of those people.

"'There is a very strong potential that the GHG effect is for real and I do not think you can put 55 million tonnes a day of carbon dioxide into the atmosphere and not have some effect," Frank Dottori says. "That is why we support the protocol."

"As business people, we're paid to make money, but we're also paid to be socially responsible," he adds. "I think this is an opportunity for Canadians to show some leadership. It is also an opportunity for Canadian businesses to show leadership."

Tembec has already set out an objective to eliminate fossil fuels, which Dottori believes is the largest contributor to GHGs. So far, he says Tembec has reduced its GHGs by 40 per cent in the last decade by eliminating the burning of oil and reducing the burning of coal, gas, and other fossil fuels.

Personally though, Dottori feels the onus should be on the individual who pollutes. He also feels there should be incentives for those who reduce their use of fossil fuels, and a tax for those who pollute by burning natural gas.

"I think the people who burn it and put it in the air should pay the tax," he says. "If you do that, it does not affect Alberta. They can still produce the oil; it's the person that burns the oil that pays the tax."

The worst case scenario of supporting the issue, he says, maybe the loss of a couple billion dollars a year. On the other hand, he says if the people who do not believe there is a GHG problem turn out to be wrong, "we are going to cause hundreds of billions of dollars in damages and probably set the stage for the elimination of the world as we know it.."

Ultimately, he feels the protocol is doable and can only help the GHG situation. He also believes Canadians should look into developing new technologies to reduce GHGs, like wind power and nuclear energy. Although nuclear energy is widely believed to be unsafe and extremely dangerous, Dottori says it does not pollute, it is a clean energy, and it is safe.
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Author:Ubriaco, Gianni
Publication:Northern Ontario Business
Date:Dec 1, 2002
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