Kyoto Protocol's Effects for Canadian Business

Topics: Kyoto Protocol, Greenhouse gas, Carbon dioxide Pages: 3 (1257 words) Published: July 21, 2008
The Kyoto Protocol, which took effect on February 16, 2005, aims to reduce the amount of greenhouse gas emissions around the world. The debate whether the issue of climate change is valid or whether it is an exaggerated theory is still ongoing. Given that the Kyoto Protocol raises economic concerns and that it lacks overall effectiveness, Canada and businesses in general should not be in favour of it. This is in part because of the treaty’s conditions and partially because of the actions of other nations regarding the treaty. In order to demonstrate the lack of effectiveness, the economic impacts must first be discussed.

Canada should not support the Kyoto Protocol because it has negative effects on the Canadian economy. Given that the United States has chosen not to ratify the Protocol, it is not bound by the same emission reductions. This gives rise to situations in which Canadian industry cannot be competitive since it has to operate within the restrictions of the Kyoto Protocol. This will increase the likelihood that Canadian corporations will move their operations to countries where environmental regulations are more relaxed. These corporations have obligations to maximize the wealth of their shareholders and to continue to be competitive in the global market. The tighter regulations in Canada will also decrease the foreign direct investment into our country because multinationals will not want to operate in this type of business environment. This follows the principles of the market economy, in which government intervention should be kept to a minimum or eliminated altogether . Of course, this is not to say that precautions should be taken to reduce the amount of greenhouse gas emissions of industry, but this should not be done at the expense of economic stability. The Protocol’s target for Canada is a six percent reduction of greenhouse gas emissions from the level of emissions in 1990. As of the year 2004, carbon dioxide emissions had risen by 27...
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