Browsing the blog archives for December, 2008.

Is The Bank of Montreal About To Fail?

Financial Crisis

Danger Signals

On December 15, the Bank of Montreal successfully issued a round of new common and preferred shares to raise $1 Billion in shareholder equity.  This pushed the BMO’s Tier 1 ratio to 10.4%.

However, to sell this equity the BMO had to price the common shares at a 9.5% yield!  Danger Signal #1 is a yield that is significantly above the rate that investment grade securities are priced.  For example, Enbridge is priced to yield 3.8%, Transcanada Pipelines at 4.4%, Manulife at 5.5%.

Danger Signal #2 is that other peer banks have yields that are priced considerably lower.  For example, the Royal Bank is priced to yield 5.8%, TD is at 6%, Scotiabank at 6.5%, CIBC at 7.3%.  They average 6.4% , or 1/3 lower than the BMO.

Danger Signal #3 is that the total BMO market capitalization ($14.9 B) is now less than shareholder equity ($17.9 B).  In other words, the BMO is worth less than the amount that shareholders invested in it and regardless of the high Tier 1 ratio, the Bank is worth considerably less than its Tier 1 equity.

When this happened to Wachovia in July 2008, the bank failed in Sept.  When Wachovia failed, its total shareholder equity was $73 B – almost 5x that of BMO.   Wachovia failed quickly – within 90 days.  On Oct 28, the BMO’s market capitalization was $33 B.  Today the BMO is worth half that amount.

BMO’s Bad Assets

According to the BMO’s 2008 Financial Report, the BMO is carrying about $8.7 B in bad assets – fully half of its market capitalization:

  • Bad loans total $3.7 B.  Of significant concern is that $2 B of this amount is so-called “formation of new impaired loans” – i.e. was suddenly added in 2008 alone.  Half of these new impaired loans are attributable to losses in the manufacturing sector and in US real estate.
  • Collateralized debt and loan obligations total $4.5 B.  Most of this is hedged with other banks which is great in theory as long as there is no counter-party risk.  However, in October inter-bank lending actually dried up due to fear of counter-party risk!
  • Subprime mortgages and asset backed securities total another $0.5 B.

The BMO also has $99 B in off-balance sheet credit loaned to its clients.  If only 10% of these default, then the total bad loans of the bank will double.  Remember Enron?

The final straw that broke Wachovia’s back was when bad debts equalled more than the paid in equity of the bank.  When that happens, the bank is insolvent.  The BMO is halfway there!  If its market capitalization falls by another half in another month, or if 10% of its off-balance-sheet lending defaults, or if some combination of these two events occur, the First Canadian Bank will be history.

Other CDN Banks

A quick health test of the other Candian banks shows that they are in much better shape than the BMO:

  • Royal Bank has a
    • market cap of $45.5 B which is almost 2x shareholder equity at $24.4 B.
    • yield of 5.5% which is below the peer group average for Canadian banks
  • Scotiabank has a
    • market cap of $29 B which is 1.5x shareholder equity at $18.8 B
    • yield of 6.5% which is roughly equal to the peer group average
  • CIBC has a
    • market cap of $18.5 B which is 1.3x shareholder equity at 13.8 B
    • yield of 7.3% which is above the peer group average (suggesting risk)
  • TD has a
    • market cap of $33.4 B which is slightly more than shareholder equity at $31.6 B
    • yield of 6% which is below the peer group average.


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Bailout Madness

Financial Crisis

According to the New York Times, the US government has committed $3.1 trillion as an insurer, $3.0 trillion as an investor, and $1.7 trillion as a lender.

However, the Times omits roughly $5 trillion in guarantees made by Fannie Mae and Freddie Mac that are now officially on the government balance sheet.  The total of commiitted bailout funds (without any auto industry funding) is now at $12.8 Trillion.

US GDP is about $14 trillion per year; the budget deficit in recent years has been running in the half-trillion range.  So that means that the total government spending is roughly 13.3 / 14 T = 95% of the entire US GDP!

The US government is betting that actual spending will be less – provided that that banks can repay some of these loan guarantees and preferred securities.  But with dominos now falling across the US auto and other manufacturing sectors, and with the housing and construction sector in the toilet, it is not hard to imagine a second phase to the banking crisis that serioiusly impairs these repayments.

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Calculate Carbon Footprint of Your Bank Account

Climate Change

Bank Funded GHG

Is government intervention necessary to kick-start funding of alternative energy projects in Canada? 

According to , the top 5 Canadian banks provided $55 B in direct funding for coal, gas, and oil production in 2007.  To put this in perspective, Canada’s entire military budget that year was only $17 B. 

If indirect funding is counted, the total credit extended for greenhouse gas (GHG) emitting fossil fuel production totals $155 B as illustrated below:

Bank Funded GHG 

This funding resulted in 625 M tonnes of CO2 emissions per year from fossil fuels – most of which is domestic GHG emission.   For example, in 2006 Canada’s entire GHG production was 583 M tonnes from all sources.

Meanwhile these same banks provided a total of only $6.8 B in direct funding for renewable, alternative energy production.  In other words, Canadian banks directly funded over 8x more GHG-intensive energy production than green energy production.

Your GHG Account

So what does this have to do with your bank account?

From previous posts on this site, you know that banks leverage their deposits by a ratio of approximately 10:1.  So for every dollar that you leave in a bank account, the bank lends out $10. 

By dividing the total funding of GHG-producing loans by the total amount deposited, it is easy to calculate the proportion of deposits that fund GHG emissions.  Multiply that by your bank balance, and voila, you have calculated the carbon footprint of your bank account.

To simplify this, you can readily calculate the carbon footprint of your bank balance by using the onlne calculator at

You can also determine how you can trim your personal funding of GHG emissions just by switching banks! 

For example, moving $5000 from the Bank of Montreal (535 Kg of CO2) to the TD Bank (485 Kg) will save 50 Kg in CO2 emissions – roughly equal to parking a small car and not driving it for 9 days.

Fund Green Jobs Instead
A study by the David Suzuki Foundation found that a $16 B investment in renewable energy—wind, solar, low impact hydro, biomass and geothermal—could in Ontario alone create:

  • 5,000 jobs in the wind energy sector by 2010
  • 77,000 jobs in wind energy by 2020
  • 18,750 jobs in geothermal energy within 2 years
  • 51,000 jobs in geothermal energy systems by 2020
  • 25,000 jobs in solar energy systems by 2025

This funding, which is less than 1/2 of what our banks are lending to generate fossil fuels, would install more than 12,000 megawatts of renewable energy capacity by 2020—enough electricity to entirely phase out all of Ontario’s coal plants.

These are not idle claims, the UNEP reports that Denmark created 17,000 permanent jobs within 5 years of launching a major investment program in wind energy production.  In Germany, over 45,000 people are employed in the wind energy industry.

Wind also presents a unique opportunity for a new cash crop in rural Ontario.  Farmers can lease their land to a wind developer. Or farmers can install, own and operate the turbines themselves. According to the Ontario Sustainable Energy Association, if 1/2 of Ontario’s farmers install only one 1 MW wind turbine, they could pump $4 billion through the rural Ontario economy by harvesting the wind!

Who says we have to choose between economic prospertity and a green future? 

And why are we focusing on bailing out the auto-industry when we could be replacing lost plants with green jobs?


Forget GM, Save Dokie

Canadian Politics, Climate Change

Credit Threat

The global financial crisis has forced Canada’s largest wind energy project in northeast B.C. to seek court protection, in order to hold off creditors who are looking to recover $131 million in debt.   Despite the fact that the Dokie wind energy project has a high credit rating (S&P: AA+, Moody’s: Aaa, DBRS: AA(high)), the project ran into trouble when its developer, EarthFirst Canada Inc. announced recently that it needed creditor protection.

The company’s press release stated that “EarthFirst’s efforts to pursue strategic alternatives has been severely hindered by the unprecedented crisis in the global financial markets which has impacted on EarthFirst’s ability to raise financing or to complete a sale of the company”.

EarthFirst Canada is important because its alternative energy projects represent 25% of Canada’s pipeline of new wind energy projects through 2015.  If EarthFirst is allowed to fail, Canada’s ability to generate new jobs by meeting Kyoto targets will be seriously at risk.

In fact, the collateral damage caused by the global financial crisis has put all major capital projects at risk. Since every single new alternative energy project is a major capital project that requires significant lending, many of these important projects, like Dokie, are now at risk.

Rather than suspending Parliament, our country would be better served by immediate government action to provide federal loan guarantees for these alternative energy projects!

About Dokie

Dokie Ridge is located on the Rocky Mountain foothills of the Peace River region  near the mountain spine that runs the length of North America. It’s location is one of the top-ranked wind resources in Canada.  The Dokie Project is located approximately 150 kilometres southwest of Fort St. John and is adjacent to the existing 500 kV and 230 kV transmission lines which originate at the Bennett Dam.

Where is Dokie Ridge?

The Dokie Wind Energy project is already under construction on Dokie Ridge after winning a 20-year power purchase agreement with BC Hydro in 2006. The project has obtained an Environmental Assessment Certificate, completed its engineering design, as well as First Nations and community review. The Dokie Project is structured in 2 phases: Dokie I will produce 144 MW followed by Dokie Expansion which will generate a further 156 MW for a total of 300 MW of green power.

By comparison, the next largest project in Canada is the 100 MW Anse-a-Valleau project in Quebec.  All the wind energy projects in Alberta currently total only 524 MW, Ontario’s total only 491 MW. 

The Dokie Project significantly adds to Canada’s wind energy output as it would be 30% of the total of Alberta and Ontario combined!

Global Comparisons

Europe was the first to embrace wind energy and now dominates the wind energy industry globally, with over 48,545 MWs or 65% of total global installed windpower capacity in 2006 according to Global Wind Energy Council.  Within Europe, Germany and Spain have been the largest producers.

Germany had 20,622 MW of installed windpower capacity at the end of 2006, which accounted for approximately 6% of that country’s total power consumption.

Spain had 11,615MW installed windpower capacity at the end of 2006, which accounted for approximately 9% of its total power consumption.

North America accounted for 13,062 MWs in 2006 which represents less than 1% of total power consumption.  The USA expanded its wind energy production by 45% in 2007 and currently produces 16,818 MW of power from wind.

GWEC reports that Canada has 1,846 MW of wind energy production in 2007.  As shown below Canadian provincial electrical utilities are currently seeking to commission 10,000 MW installed windpower capacity by 2015. 

Planned Wind Energy In Canada

EarthFirst Canada represents 2,500 MW or 25% of this total and Dokie is it’s leading project.  Dokie alone would add 16% to Canada’s current wind energy generation capacity.

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NonTraditional Governments In Canada

Canadian Politics


Coalition History In Canada:

1867 – John A MacDonald (National) Conservative-Liberal

1867 – John S MacDonald (Ontario) Conservative-Liberal

1878 – John A MacDonald (National) Conservative-Liberal

1891 – John Abbott (National) Conservative-Liberal

1917 – Robert Borden (National) Conservative-Liberal

1920 – Arthur Meighen (National) Conservative-Liberal

1926 – Arthur Meighen (National) Conservative

1931 – John Bracken (Manitoba) Progressive Conservative

1940 – John Bracken (Manitoba) Conservative Cooperative Commonwealth Federation (CCF)

1941 – John Hart (BC) Liberal & Conservative Coalition

1949 – Ingemar Johnson (BC) Liberal & Conservative Coalition

1985 – David Peterson (Ontario) Liberal NDP Coalition

1989 – Roy Romanow (Saskatchewan) Liberal – NDP

Note that 10 out of 13 involved leaders from the Conservative party.

Non-Elected Federal

There have been 12 designated Prime Ministers in Canada, half of which were Conservative:

      1873 – Alexander Mackenzie – Liberal

      1891 – John Abbott – Conservative-Liberal

      1892 – John Thompson – Conservative

      1894 – Mackenzie Bowell – Conservative

      1896 – Charles Tupper – Conservative

      1920 – Arthur Meighen – National Liberal & Conservative Party

      1926 – Arthur Meighen – Conservative

      1948 – Louis St. Laurent – Liberal

      1968 – Pierre Trudeau – Liberal

      1984 – John Turner – Liberal

      1993 – Kim Campbell – Conservative

      2003 – Paul Martin – Liberal

John Abbott and MacKenzie Bowell were non-elected Senators while Charles Tupper and John Turner were never elected as an MP.

Non-Elected Ontario

There have been 15 designated Premiers of Ontario:

1867 John S MacDonald – Liberal-Conservative

1872 Oliver Mowatt – Liberal

1896 Arthur Hardy – Liberal

1899 George W Ross – Liberal

1914 William Hearst – Conservative

1930 George Henry  – Conservative

1942 Gordon Conant  –  Liberal

1943 Harry Nixon  – Liberal

1948 Thomas Kennedy  – Conservative

1949 Leslie Frost  –  Conservative

1961 John Robarts  – Conservative

1971 Bill Davis  – Conservative

1985 Frank Miller  –  Conservative

1985 David Petersen  – Liberal

2002 Ernie Eves  – Conservative

Non-Elected Quebec

There have been 22 designated premiers of Quebec:

1873 Gédéon Ouimet – Conservative

1874 Charles Boucher de Boucherville – Conservative

1878 Henri-Gustave Joly de Lotbinière – Liberal

1879 Sir Joseph-Adolphe Chapleau – Conservative

1882 Joseph-Alfred Mousseau – Conservative

1884 John Jones Ross – Conservative

1887 Louis-Olivier Taillon – Conservative

1887 Honoré Mercier – Parti National

1891 Charles Boucher de Boucherville – Conservative

1892 Louis-Olivier Taillon – Conservative

1896 Edmund James Flynn – Conservative

1900 Simon-Napoléon Parent – Liberal

1905 Lomer Gouin – Liberal

1920 Louis-Alexandre Taschereau – Liberal

1936 Adélard Godbout – Liberal

1959 Paul Sauvé – Union Nationale

1960 Antonio Barrette – Union Nationale

1968 Jean-Jacques Bertrand – Union Nationale

1985 Pierre-Marc Johnson – Parti Québécois

1994 Daniel Johnson – Liberal

1996 Lucien Bouchard – Parti Québécois

2003 Bernard Landry- Parti Québécois

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Are Coalition Governments Undemocratic?

Canadian Politics

Harper’s Record
On Sept 9, 2004 while he was Leader of the Opposition, Harper wrote to the Governor General and requested that, should the minority Liberal government fall, before calling an election that the GG grant him and the Bloq the opportunity to form a Coalition Government!

September 9, 2004
Her Excellency the Right Honourable Adrienne Clarkson,
C.C., C.M.M., C.O.M., C.D.
Governor General
Rideau Hall
1 Sussex Drive
Ottawa, Ontario K1A 0A1
As leaders of the opposition parties, we are well aware that, given the 
Liberal minority government, you could be asked by the Prime Minister 
to dissolve the 38th Parliament at any time should the House of Commons 
fail to support some part of the government’s program.
We respectfully point out that the opposition parties, who together 
constitute a majority in the House, have been in close consultation. We 
believe that, should a request for dissolution arise this should give 
you cause, as constitutional practice has determined, to consult the 
opposition leaders and consider all of your options before exercising 
your constitutional authority.
Your attention to this matter is appreciated.
Hon. Stephen Harper, P.C., M.P.
Leader of the Opposition
Leader of the Conservative Party of Canada
Gilles Duceppe, M.P.
Leader of the Bloc Quebecois
Jack Layton, M.P.
Leader of the New Democratic Party

So why was a coalition government good enough for Harper then but suddently is an undemocratic thing to do now? … could it be that it is because he is a self-serving liar who would divide this country and cause a political crisis just so he can cling to power??

Harper’s Mandate
Nearly 2/3 of Canadians actually voted against Harper’s government in the last election.

In fact, 170,000 FEWER Conservatives voted for him.

Yet due to the lack of proportional representation in the House of Commons he managed to obtain 20 more seats – yet still has a minority of the seats.

So why should he be allowed to prorogue Parliament and govern like a King without opposition?

Harper’s Lies

Stephen Harper’s lies about the Coalition are getting more and more divisive.

He lied when he said “Here we have these three parties signing a document, and they wouldn’t even have a the Canadian flag behind them! They had to be photographed without it, because a member of the coalition doesn’t even believe in the country.”

 Canadian Flag Clearly Evident

He lied when he said that it includes the Separatists in the Coalition.  In fact, the Coalition is between the NDP and the Liberals with the support of the BQ and the Green Party.

He lied when he said that it is something that he would never work with the BQ.  In fact, he relied on the BQ to bail him out in 40 non-confidence votes during the last 2 years.

He lied when he used a different speech in English than in French on Dec 4 referring to “separatists” in the highly provocative English speech while cowardly using the term “souverainiste” in the French speech 5 minutes later.  Harper knows full well the difference in the two terms when used in French in Quebec. 

Separatist has a distinctly negative connotation that focuses on the division of Canada, while sovereigntist has a postitive connotation that focuses on promoting independence without necessarily damaging Canada.  As in Sovereignty-Association.

He lied when he claimed that his economic statement contained new initiatives to support the economy.  In fact all he did was summarize intiatives already announced in prior budgets.  There was nothing new other than an attack on pay equity for women.

Finally he lied when he said that our oldest democratic traditions dating back 141 years were based on electing a government.  In fact our parliamentary tradition was started by a coalition government in the 1860s and is based on electing members to the House of Commons who are responsible for forming a government based on a majority of members.  Our country has subsequently had several coalition governments both federally and provincially.

The real question is how can Harper claim that proroguing Parliament is a democratic act?


GHG Reduction Leadership or BullShip?

Climate Change


For those of us who can recall JFK, Obama certainly echos that spirit of change and hope.

If you ever wondered what JFK might have said about climate change, check out Greenpeace’s creative video rendition John F. Kennedy’s famous speech on climate change. Sadly it never happened.

By comparision, in these videos, Obama sounds considerably less visonary by comparison but certainly can be more specific.


Meanwhile this video shows our Canadian leaders spend more time attacking each other on this issue than actually attacking the real issues!  

Meanwhile, even though we can clearly do more, our [former] government is busy taking a so-called balanced approach that avoids concrete targets and gives the illusion of progress on the issue.

Research by both the Pembina Institute and the C. D. Howe Institute confirm that the Harper government’s policies won’t result in any GHG reductions by even 2020.   That’s because the current federal climate-change plan focuses on emission-intensity reductions—rather than on cutting overall emissions.  

According to Canada’s lead scientist to the UN’s blue ribbon panel on climate change, Andrew Weaver, “From the information provided in the federal plan, we learn that by 2020 the oil sands sector will be required to reduce its emissions intensity by 23%.  But oil sands production is also expected to quadruple by 2020.”   The net effect, according to Weaver, would be a tripling of GHG emissions from the oil sands by 2020. [Keeping Our Cool: Canada in a Warming World published by Viking Canada]

So why is the Canadian government so ineffective on climate change?


Harper’s behaviour is entirely based on a belief that progress on GHG reductions is at odds with economic growth.  In reaching this point of view, it has been reported that Harper met once with leading environmentalist David Suzuki, zero times with accredited Canadian scientific experts on climate change, and over 40 times with representatives from the Alberta oil industry.

However, the point of view that GHG reduction equals GDP reduction is not a uniquely Alberta perspective. This is based on data that clearly shows that increasing GHG emissions have historically accompanied GDP growth.  It is also based on data that shows that the countries who have grown their economies the most also tend to be the countries with the highest per-capita GHG emissions.

Heck, that is how we got into this mess in the first place. So if increased GHG emissions is the price of increased GDP, then it seems logical that reduced GHG emissions must cause reduced GDP growth.

But what may be true in one direction is not always true when going in the opposite direction.  E.G. Just because my feet get wet when it rains doesn’t mean that drying my feet will cause it to stop raining.

Decoupling GHG from GDP
When applied to the question of GHG-GDP, several countries (India, China, Sweden, Denmark, etc.) have in fact proved this reverse logic to be false.  This is known as “decoupling” GDP growth from GHG emissions and many countries have shown that they can take aggressive action on GHG reductions without impairing GDP growth.

For example, according to the Danish Environmental Protection Agency, illustrated below, GDP growth has been achieved while simultaneously making progress against Kyoto commitments:

Denmark Decouples GDP 

A recent study in New Zealand also found that relative de-coupling (based on GHG / GDP intensity) can readily be achieved as a first step to absolute de-coupling.   “Relative decoupling is useful to highlight the trends in CO2 emissions relative to GDP.  Relative decoupling may mean a drop in emissions relative to GDP but that drop may still be insufficient to minimise climate change impacts.”

So in other words, the fact that you can reduce your GHG intensity as GDP grows is proof that GHG can be de-coupled from GDP.  The report presents evidence that the USA, the EU, and Japan have already achieved relative decoupling.

The report also states that a country cannot rely solely on GHG intensity metrics to lead you to overall declines in emissions.  The report concludes that absolute de-coupling is possible and must be the goal of national policies:  “Decoupling has shown that it is essential to reduce absolute CO2 emissions, i.e. to achieve absolute decoupling.”

So it is time to do away with the fear that our economy will suffer from Kyoto.  Our leaders also need to dispose of false intensity-based targets and adopt absolute GHG reduction targets.

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Update on Canada’s Track Record on GHG

Climate Change

In a previous post, I highlighted Canada’s poor record on climate change based on 2002 per-capita data that puts us 4th worst in the world. 

In the meantime awareness on climate change has grown, so how are we doing now?  Not good – based on the most recent data on total change since the 1990 benchmark year.


In 1992 most countries (including Canada and the USA) joined an international treaty — the United Nations Framework Convention on Climate Change (UNFCCC) — to begin to consider what can be done to reduce global warming and to cope with whatever temperature increases are inevitable.

In 1997, a number of nations (including Canada) approved an addition to the treaty: the Kyoto Protocol, which has more powerful (and legally binding) measures. 

This protocol was ratified by Canada in 2002 by accession, meaning that Canada accepted the legality of the binding resolution without issuing explicit consent to it. 


Canada’s tepid response on ratifying Kyoto was no doubt based on our appalling and shameful compliance to the objectives of Kyoto.  According to Canada’s 4th National Report on Climate Change:

“On September 28, 2006, the [Canadian] Commissioner of the Environment and Sustainable Development released her 2006 Report on Climate Change. The Report described that even though the [Liberal] federal government had announced billions of dollars in funding since 1992 toward meeting commitments to address GHG emissions, as of 2004 Canada’s GHG emissions were 26.6% above 1990 levels.

The Commissioner urged Canada’s New Government to come up with a credible, realistic and clear plan that should address the long-neglected need to help Canadians cope with the consequences of climate change and to commit to specific actions with timeframes for completing them.”

In other words, the Canadian Commissioner was quite sickened over our lack of progress and kicked our government’s butt to get serious or give up. 


Ok, so we changed governments, how are we doing now?  According to the most recent data available from the UNFCC, Canada is now the 3rd worst nation in the world having gone from a 27% miss to a 54% miss in our Kyoto targets!  

 Changes in GHG Emissions 1990 - 2006

 LULUCF = Land use, Land-Use Change and Forestry Total emissions and removals from activities relating to land use, land-use change and forestry (from the following categories: forest land, cropland, grassland, wetlands, settlements and other land).

Why We Suck
In the 4th National Report on Climate Change, our new Conservative government responded with:

“The cornerstone of Canada’s new approach is legislation tabled in Parliament on October 19, 2006. Canada’s Clean Air Act takes a comprehensive approach to the problem of worsening air quality and GHG emissions. … The Act represents a significant shift from a voluntary to a regulatory approach.”

So far so good, but (here comes the water):

“Over the next three years, new regulations on all major sectors will be implemented. … Compliance options being examined include:

  • an industry-led emissions trading system; [industry-led – what happened to regulation??]
  • a technology investment fund that would support the development of transformative technologies for emissions reductions to which companies, and potentially governments, could contribute; [potentially contribute?  so its up to industry to invest, wonder how much?]
  • opt-in mechanisms that would enable entities not covered by regulation to voluntarily assume emissions targets; [opt-in?? what happened to regulation??]
  • incentives that could see companies receive credit for investments in technology; [more investment, but where’s the regulation??]
  • mechanisms to recognize credit for early action; [pats on the back!!]
  • domestic offsets in which verified emissions reductions outside the regulated system are recognized as eligible for compliance in the regulated system. [more pats on the back!!]”

Thats it. Thats all the compliance that we have in place to enforce our “regulations”. Basically our shiney new “regulatory compliance program” is entirely based on industry-led initiatives and investment fueled by “atta-boys” from our cheer-leading government.

Wow – no wonder the rest of the world thinks we’re idiots.

Intense Pollution
But it gets even more ludicrous when we look at our regulatory targets in more depth:

“Targets are an important dimension of Canada’s new approach. … Short-term intensity based GHG reduction targets will be set in consultation with provinces and territories and all affected industry sectors.”

Intensity-based targets are a made-in-USA concept (courtesty of G.W. Bush) where your GHG target is based on efficient you are at polluting.  Suppose you crank out X tons of GHG to generate Y dollars of revenue.  Your intensity is X/Y. 

If you cap your emissions but raise your revenue, then your intensity is less. So even though you are still polluting the same amount, you get an atta-boy from the government because you are more efficient at it!

But we are ALREADY the 3rd worst country in the world relative to our 1990 baseline target.  We can meet all our government’s intensity targets and still fail because we are not making absolute progress in REDUCING GHG emissions that we are already 54% behind on.

Is it time for a completely new political approach?

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