Stephane Dion and the Liberal Party have come out with a white paper outlining their approach to forcing Canadians to pay for their Kyoto promise:

Liberal Leader Stephane Dion has released a plan to crack down on industry and impose tough new caps on greenhouse gas emissions by January 2008, but Conservatives have dismissed the idea as a tax scheme.

"This plan asks industry to take responsibility for its fair share of carbon emissions, and this plan encourages businesses to invest in tangibly reducing their own emissions," said Dion.

"It took a Liberal government to balance Canada's financial budget. Now it's time to balance our carbon budget."

Under Dion's proposal, companies that fail to cut their emissions would pay $20 for every ton of carbon emissions over their target. The fines, which would rise to $30 by 2011, would go into a special account to finance green projects.

John Ivison at the National Post makes some excellent points:

The money would be held in trust for companies by an independent operating agency and could be earned back if the business invested in green projects within two years. If not, the money would transfer into a Green Investment Fund for other projects chosen by the agency.

Canadians who scoff at pleas of poverty from the oil and gas industry may be less smug when they learn the electricity industry is already contemplating passing on the estimated $1-billion in annual extra costs to consumers.

"Sure we would," said Hans Konow, president of the Canadian Electricity Association. "This is added cost that would be passed through."

Mr. Konow said Canadians will have to pay for whatever solution government comes up with, but had particular concerns over the aggressive and short-term nature of the Liberal plan. "Our capital stock turns over in 40-year chunks, so this would just be a financial exercise to cope with whatever requirements."

Mr. Dion said he is not worried the new arm's-length operating agency would administer a swollen Green Investment Fund, while no tangible reductions were being achieved. "If they pay $20, and soon it will be $30, and do nothing, this money will be available to the agency that will be able to reduce emissions by its own projects ... But I'm very confident that the CEOs in this country, industry, engineers altogether will find a way to decrease emissions dramatically."

This displays a curious naivete about the fiduciary duties of company executives, who are bound by law to act in the best interest of their corporation, rather than engage in some national environmental crusade. But then, this is a plan not much concerned with wealth creators or wealth creation, despite all Mr. Dion's cheerful talk about it leading to an "investment boom in job-rich green technology."

It's hard to see emissions reductions coming from this plan. The only statements that can be made with near certainty are that, firstly, we would see a bloated bureaucracy emerge to pick technology "winners," with all the business acumen that officialdom usually brings to such exercises.

All good points, as well as the fact that upwards to 25% of the value of the fund would disappear into administration costs required to run a bloated bureaucracy.

But here's another point to make -- there is absolutely no chance that this program will ever succeed at reducing greenhouse gases.

How do I know this? Simple. Ronald Reagan said it best: "There is nothing so permanent as a temporary government program."

This new government agency will work to ensure its own survival, and to do that, it has to maintain its importance. There is no way that by 2012 this agency can be disbanded. Industries will be shown not to have successfully reduced emissions, or if they have, that the carbon tax is critical to maintaining compliance.

The board of the agency (no doubt stuffed with pro-Liberal members who will simultaneously be senior members of the Sierra Club and the David Suzuki Foundation) will argue that the green projects being financed require long-term stable cash flow, and so regardless of the level of compliance, Canada's environmental health can only be guaranteed if the agency remains, and the money continue to flows from the penalized sectors.

Which means the money continues to flow from you and me -- both directly in higher energy costs, and the general rise in the cost of everything as everyone passes on higher energy costs to consumers.

But consider the alternative. Shut down this agency and Canada's landscape will be seared by the rays of the sun blasting through an ozone hole hovering over the marsh-like GHG-ruined atmosphere as we wade though shoulder-deep water left from the melted ice caps.

Maybe dinosaurs will roam the land too. Heck, why not? The important thing is that it certainly won't happen as long as Stephane Dion's agency is fully funded.