There's no denying it: Ottawa blinked on Kyoto.

Whether it was Alberta Premier Ralph Klein's success in building consensus on the issue among the provinces, the fear of what he might say while talking to the Wall Street crowd next month or the earful received by Federal Finance Minister John Manley on his Western tour last week, yesterday's new plan to tackle climate change has to be viewed as a step in the right direction.

Perhaps Prime Minister Chrétien realized that if concessions were not forthcoming in terms of implementation, the Liberals would give up all hope of ever electing another member of parliament in Alberta.

Not that Ottawa is backing away from ratifying the controversial treaty. Instead, it appears to have listened to the concerns of the provinces and industry over the potential for economic carnage if Kyoto was implemented as originally proposed.

The Prime Minister might be able to rule his cabinet with an iron fist, but he would do irreparable damage to his party if he opted not to listen to the provinces that would be most affected by the treaty. Most frustrating, according to one Liberal insider who happens to also be involved in the oil patch, has been the federal government's inability to comprehend what the impact of Kyoto would be on Alberta's economy, not to mention the other four provinces whose economies benefit greatly from the production of oil and natural gas.

To undermine the health of a sector that has been a key driver of the Canadian economy, helping to shield the country from the slump south of the border, is sheer folly.

Alberta alone contributes something in the order of $9.2-billion annually to federal coffers.

While there are increasing concerns about the potential for delays or a scaling back of oil sands megaprojects because of Kyoto, the key issue remains: how much is this going to cost? Some of the very modest estimates that have been floated by Ottawa will not be enough to reassure executives who are charged with the responsibility of having to make multibillion-dollar investment decisions.

Based on Ottawa's latest proposal, it appears there may be more wiggle room in meeting the emissions guidelines than originally put forward.

That wiggle room could possibly come in the form of subsidies of carbon emissions credits, which could be used to make up part of industry's Kyoto commitments.

Under an "emissions intensity" definition, a company producing a greater number of widgets while keeping constant the amount of emissions produced per unit of production will receive credit. With that approach, says Ottawa, there is an incentive to keep an eye on emissions even though absolute caps won't be placed on companies or industries.

What must be gratifying to Mr. Klein is the specific reference to Alberta's approach that suggests sector agreements be backed up by regulation or financial consequences for non-participation.

Still, even with these changes there is no escaping the grumbling that will continue to be heard across the country, especially in Alberta. This would be a good starting point for discussion, but the trouble is Ottawa's program is supposed to be the final cut.

When it comes to emissions, Canada, much like its two-per-cent weighting in the global capital markets, doesn't amount to a hill of beans; without the United States ratifying the treaty, our efforts to reduce greenhouse gases will realistically be nothing more than a drop in the bucket. Put Canada's emissions next to the belching smokestacks of India and China -- two countries which, while signatories to the protocol, are not required to comply with it -- and it becomes abundantly clear where the work must be done with Kyoto.

And when it comes to the science of climate change, anyone who lived through the mighty cold Alberta winters in the 1970s will recall the discussions back then centred on the potential for another ice age; all the talk about global warming seems to indicate only one thing -- climates do fluctuate over time.

As the deadline for ratification draws near, along with the uncertainty as to how it will ultimately play out, it's looking more like Mr. Chrétien is looking to borrow a page from the book of Mackenzie King: ratification if necessary, but not necessarily ratification.

Kyoto compromise
Details of the federal government's plan to implement the Kyoto Accord show Ottawa has moved to alleviate some, but not all, of industry's concerns:
What Ottawa has conceded

Credit for past reductions in emissions

Guarantee of maximum 55 megatonne reduction

Raising emissions cap for growing firms in energy-intensive sectors

Ability to delay reducing emissions past Kyoto deadline
What business still wants

Government to pay for the additional expense of carbon credits if costs soar

Relaxation of other regulations to meet Kyoto goals

Royalty breaks in oil sands if competitiveness is threatened