Kyoto BDO Dunwoody/Chamber Weekly CEO/Business Leader Poll by COMPAS in the Financial Post for Publication February 6th, 2005 COMPAS Inc. Public Opinion and Customer Research February 6, 2005
1.0 Introduction The Kyoto issue is the worst managed policy issue I have seen in 30 years of government, a comment from a CEO respondent this week, highlights some of this weekly business panel s sentiment with respect to the Treaty. Canada s business leaders are certain that Canada will not be able to meet its Kyoto emissions targets and are very concerned about the Government s proposal to buy $1.5B in credits to make up for the shortfall. CEOs and business leaders continue to worry about the Treaty s potential damage to the economy. They give the odds of countries like the United States and Australia ratifying Kyoto less than 3:1. These are the key findings of this week s web-survey of business leaders under the sponsorship of BDO Dunwoody and the Canadian Chamber of Commerce for publication in the Financial Post. 2.0 7 in 10 Business Leaders Say Canada Unlikely to Meet Emissions Reduction Targets The Kyoto Treaty legally comes into force in Canada on February 16 th, 2005 and commits Canada to cut its output of greenhouse gases by an average of 240 million tonnes a year from 2008 to 2012 (or return to about 1990 levels). Respondents in this business panel were the likelihood of Canada meeting these targets, using a 7 point scale where 7 means very likely and 1, the opposite. As sown in table 1, almost 7 in 10 (69%) assigned scores of 3 or less, indicating very confidence that targets would be met and respondents assigned a mean score of 2.6, well below the mid point of 4. As one CEO commented, Kyoto protocol targets are unrealistic and will create more problems than they solve. To meet Kyoto requirements, we would have to take one out of every two cars off the road. Canada's population has grown in actual terms. A real reduction more in the range of 25% from current 2
levels is needed to achieve the target of 6% below 1990 levels. Table 1: (Q1) As you may know, the Kyoto Treaty legally comes into force on February 16 th of this year and commits Canada to cut its output of greenhouse gases by an average of 240 million tonnes a year from 2008 to 2012 (or return to about 1990 levels). Using a 7 point scale where 7 means very likely and 1, the opposite, how likely will Canada be able to meet this target? Mean 7 6 5 4 3 2 1 DNK 2.6 2 6 11 9 12 23 34 3 2.0 Strong Opposition to Fulfilling Treaty by Buying Credits From Countries like Russia Three quarters of business leaders agree that Canada should not meet Kyoto requirements by buying credits from countries like Russia who have available credits as a result of industrial collapse as opposed to an investment in clean-air infrastructure, as shown in table. Respondents were unusually open with their comments on this subject and offered a number of thoughts to explain their concerns with the treaty, including: Kyoto is a sham - a major shell game. It is a deal designed to transfer wealth from "have" to "have not" countries merely pretending to be a real trade deal. However, its advocates have successfully positioned it as a "sacred cow" whereby those who question it as simply a bad deal for this country are unfairly criticized as being environmentally insensitive. It is just a bad deal economically e.g. it was predicted many years ago that we would ultimately have to buy credits from Russia. This has everything to do with transferring wealth to these countries and precious little about the environment. I believe that investing infrastructure in countries such as Russia 3
to assist them in meeting the Kyoto accord commitments is potentially damaging to Canada's competitive position in the world. We are already at a significant disadvantage to most countries with our manufacturing costs and this is costing Canada jobs and lost opportunity for our youth. We don't need to exacerbate this already serious and unbalanced situation. Kyoto is nothing more than a massive wealth transfer exercise to Third World nations, Russia and China with absolutely no impact on the environment, and definitely no impact on socalled global warming' - which is a real phenomenon, but nothing more than part of a long-term natural cycle which the Earth has and will experience many times over. It's time to junk the JUNK science! 63% of respondents also agreed that, The Government has more important priorities like healthcare and tax cuts where the $1.5Billion could better be applied. Respondents discussed their concerns about Government spending implications of the Treaty and offered a few comments, including: The Kyoto Accord will not do what it is supposed to while costing taxpayers $2700 per year per person. It is a waste of money! I am tired of the government throwing our money away just to leave a legacy. More than half of respondents (59%) agreed that the $1.5B should be used to reduce greenhouse gas emissions in Canada, as opposed to buying Kyoto credits. As one respondent in the financial sector said, If Kyoto is important enough to sign on to, we need to meet our commitment by making reductions and not by buying credits. While we have a number of very worthy costs, there is enough government waste that could be redirected to businesses that buy seriously into reductions. 4
Table 2: (Q2) Recent media reports suggest that current Government proposals for reduction in greenhouse gases would not meet Kyoto targets. Ottawa is considering meeting Kyoto requirements instead by spending $1.5Billion over the next four years to reduce emissions in other countries and thereby earn credits under Kyoto, or purchasing credits from other countries that have already met their targets under the accord, like Russia. Using a 7 point scale where 7 means definitely agree and 1, the opposite, to what extent do you agree with each of the following? [ROTATE] Canada should not meet Kyoto requirements by buying credits from countries like Russia who have available credits as a result of industrial collapse as opposed to an investment in clean-air infrastructure The Government has more important priorities like healthcare and tax cuts where the $1.5Billion could better be applied The Government should use the $1.5Billion to reduce greenhouse gas emissions in Canada Mean 7 6 5 4 3 2 1 DNK 5.6 50 15 9 4 5 5 7 4 5.2 40 9 14 11 11 7 5 3 4.8 27 15 17 13 8 6 10 4 5
Protecting the worldwide environment is important and $1.5Billion is reasonable to spend for this effort Canada should meet the Kyoto requirements by whichever means is the most practical 3.7 15 7 12 17 12 11 22 3 3.5 17 8 11 11 11 12 30 1 4.0 Odds Against Other Industrialized Nations Ratifying Kyoto As illustrated in table 3, COMPAS business panels gives low probability (30%) to the likelihood of other industrialized nations like the U.S. and Australia ratifying Kyoto. According to some respondents, this is an important factor in considering the efficacy of the treaty, Kyoto is an unworkable plan. Without the largest industrial country on board it has no hope of achieving anything. If the U.S. is not on board, how can Canada save the world when the U.S. has over 10 times the population generating over 10 times the emissions? There is no wall on the 49th Parallel keeping emissions out. Without the U.S. on side, I don't see the business rationale to disadvantage ourselves with respect to our largest trading partner. Once the U.S. is onboard, then the Kyoto agreement might make more sense. This whole process is a complete waste unless all of the big polluters of the world are involved. Even then, it would be impossible to monitor. 6
Table 3: (Q4) Using a 100 point probability scale, so far as you can tell how likely will the other industrialized countries, like the United States and Australia, ratify Kyoto? MEAN DNK 30 1 3.0 Concerns About Treaty s Impact on the Economy Continue While concerned about the environment, business leaders continue to be concerned about the Kyoto Treaty s potential impact on the economy. In their own words, business leaders explain their concerns; The Kyoto Protocol is not a good deal for Canada, especially without commitments from the U.S., China and India. Carbon dioxide does not cause smog and efforts to reduce it are often in opposition to efforts to reduce smog. Also, it will cost a lot more than $1.5 billion over 4 years to reach our Kyoto targets. I don't think it is achievable without serious economic pain. This is a long term problem, requiring long term solutions. Short term "political fixes" may make politicians feel better, but they won t solve the problem. Kyoto is based on unreliable and unreplicated scientific data. The science relied upon to support Kyoto is highly politicized and shows how little humanity has advanced in its ability to critically appraise data put before it. Our society suffers from 'numeracy' which in essence is an inability to interpret data in a critical fashion because we have no idea what it really means. Proponents of global warming are like the people of the Middle Ages who believed the Earth was flat and branded anyone who dared question that notion as heretics. Credible scientific data needs to be gathered before extraordinarily expensive initiatives like Kyoto are undertaken. 7
Those individuals who negotiated Canada's commitments to the Kyoto Accord were either stupid or disloyal. Put simply, the fact that our population and economy has grown far more than Europe's is an indication of the grossly unfair burden that is being placed on Canadians and Canadian industry relative to every other country. Add the fact that Canada is a net energy exporter while the EU is a net importer and you start to understand the dimensions of this problem. For all her faults, I would never accuse Sheila Copps of ever being disloyal (so you can draw your own conclusions!) It is time to come to some sort of plan that reduces greenhouse gases over the long term while maintaining a productive and growing economy. Table 4: (Q3) Advocates of Kyoto say that the treaty would combat global warming at a moderate economic cost while its opponents believe that the treaty is an unworkable solution that would seriously damage Canada s economy, especially because the U.S. will not sign it. Would you say that [ROTATE POLES] Feb. 2005 Sept. 2002 May 2002 Feb. 2002 1 The advocates are entirely right 3 2 5 9 The advocates are largely right 15 10 12 19 Both sides have their merits 34 42 33 28 The provinces led by Premier Klein are largely right 28 26 31 26 The provinces led by Premier Klein are entirely right 17 15 14 16 DNK/ Refused 3 5 6 2 1 In February 2002, response categories were: The Prime Minister is entirely right, The Prime Minister is largely right, Both sides have their merits, The provinces led by Premier Klein are largely right, and The provinces led by Premier Klein are entirely right 8
5.0 Methodology The National Post/COMPAS web-survey of CEOs and leaders of small, medium, and large corporations and among executives of the local and national Chambers of Commerce was conducted February 1-4, 2005. Respondents constitute an essentially hand-picked panel with a higher numerical representation of small and medium-sized firms. Because of the small population of CEOs and business leaders from which the sample was drawn, the study can be considered more accurate than comparably sized general public studies. In studies of the general public, surveys of 149 are deemed accurate to within approximately 8.0 percentage points 19 times out of 20. The principal and co-investigator on this study are Conrad Winn, Ph.D and Tamara Gottlieb. 9