EU head urges Canada to act on climate change

Canada shouldn't wait for the rest of the world to act on climate change before making its own changes, the president of the European Union Commission said before a planned meeting with Prime Minister Stephen Harper in Brussels.

Global bank tax also on Barroso's mind heading into meeting with Harper

Prime Minister Stephen Harper speaks as International Trade Minister Peter Van Loan looks on during an EU-Canada joint meeting in Brussels Wednesday. ((Reuters/Francois Lenoir))

Canada shouldn't keep waiting for the rest of the world to act on climate change before making its own changes, the president of the European Union Commission said Wednesday in advance of a meeting with Prime Minister Stephen Harper in Brussels.

"We should not lose momentum regarding climate change negotiations," Jose Manuel Barroso told Canadian reporters during an hour-long briefing.

"With Canada, I'm not going to give lessons to one of our partners. What we want is for everybody to move.

"What we don’t want to see, frankly speaking, is that someone does not move because the others don’t move."

He said that if every country adopts Canada's position that it won't start taking drastic action to combat climate change until most other countries in the world agree to do the same, "no one will move in the end."

Barroso said the matter is pressing enough to require immediate political action, despite the economic toll that might result from measures to reduce carbon emissions, which a large body of research has linked to global warming.

"In Europe, we believe, according to science, that there is a real threat to our survival as a civilization. And for the future of our planet and the quality of life of our children … I think we have to move."

Barroso, who is essentially the head of Europe's shared government,  discussed trade and other economic issues with Harper at a two-hour meeting later in the day.

European Union Commission President Jose Manuel Barroso, shown in a file photo, met with Harper in Brussels Wednesday. ((Reuters/Yves Herman))

Talking to Canadian reporters, he stressed how much Europe and Canada have in common, calling them "natural partners with basically the same model and the same values." He said he was looking forward to talking with Harper, saying they had a "very good working relationship."

However, the two men differ not just on the need for immediate climate change action, but on whether a global bank tax should be imposed to start building an emergency fund to ward off the effects of financial meltdowns down the road.

Harper opposes such an international levy. Barroso supports the concept.

"One of the possibilities is to use these levies as a kind of insurance for a future crisis so it's not the taxpayers who have to pay for the banks who could go out of business," Barroso said.

Barroso said he hopes there will be progress on both of these issues in June, as Canada plays host to the G8 and G20 leaders at two meetings in Ontario.

But Canada is refusing to back down on the bank tax issue.

Harper said Canada's financial regulatory system kept banks from growing like their foreign competitors.

"Obviously we believe it would be unfair to then doubly hit them, not just with a tougher regulation system but with levies as well," he said following the meeting.

Harper said he expects the topic will be discussed at length at the G20 meeting in Toronto.

Earlier this week, Finance Minister Jim Flaherty said Canada favours a plan built around a concept known as "embedded contingent capital" — essentially one where banks sell bonds to pad their reserves, but the bonds would automatically be converted to equity during bad times, thus avoiding the need for a taxpayer bailout.

The system theoretically would encourage bondholders to keep a closer eye on management because they would be unwillingly converted into shareholders if anything goes wrong.

"[Our proposal] makes debt convert to equity so debtholders and shareholders take the hit when financial institutions fail and not taxpayers," Flaherty said. "We think we have a better idea."

With files from James Cudmore and The Canadian Pres