OTTAWA — Environmental activists say they believe the federal Liberal government is on the verge of delivering on the promise of the Kyoto Protocol, the international agreement to reduce greenhouse gas emissions.

"I think we're going to see one of the greenest, if not the greenest, budgets we've ever seen in this country," Barry Turner, director of government relations for Ducks Unlimited, said Tuesday morning.

"We are at a moment where we may actually see, by the end of this month, the kind of credible, environmentally appropriate plan that gets us to Kyoto targets and does it in a way that enhances not just economic activity in Canada in the short term but does it in a way that creates the kind of momentum we need in Canada," said Elizabeth May, executive director of the Sierra Club of Canada.

Federal Finance Minister Ralph Goodale will table the federal budget on Feb. 23.

On Tuesday, Goodale testified before the House of Commons Environment Committee. And while Goodale refused to reveal what will be in the budget when it comes to new environmental initiatives, he hinted that he would change tax laws to encourage individuals and businesses to cut down on greenhouse gas emissions and would also commit the Canadian government to spending millions of dollars on projects in other countries that will help Canada earn "credits" that can be applied towards its Kyoto targets.

Canada agreed to the Kyoto Protocol in 1997. The protocol was ratified by Parliament in 2002. It becomes international law on February 16. The Liberal government will outline in its budget on Feb. 23 how it will meet those targets and what its Kyoto plan will cost.

As part of its commitment to the Kyoto Protocol, Canada agreed that, by 2010, it would reduce greenhouse gas emissions generated by Canadian sources by 6 per cent compared to Canada's 1990 greenhouse gas emission level. Greenhouse gases are widely blamed for global warming and other climate change problems.

Despite spending more than $3.7-billion since 2002 on Kyoto-based initiatives, greenhouse gas emissions from Canada continue to increase every year. The latest government figures indicate that Canada's greenhouse gas emissions are more than 30 per cent higher than the benchmark 1990 level.

Kyoto signatories like Canada can meet their reduction commitments in three basic ways:

• Reduce greenhouse gas emissions with such initiatives as forcing automakers to make cleaner cars or convincing Canadians use public transit more often.
• Increase or develop carbon dioxide "sinks", such as forests, that absorb and neutralize greenhouse emissions.
• Purchase emission "credits" that can be applied to a country's reduction targets.

Buying credits is a politically charged topic. A country like Russia, for example, agreed to easy-to-achieve reduction targets. Canada's targets are widely regarded as very ambitious and by some as impossibly tough.

Because the Russian economy has been performing poorly, Russia is already well under its targets and, as a result, has "credits" to sell. Russia is eager to sell these credits to earn foreign currency. Critics and Goodale agree that it would not be in Canada's interest to transfer Canadian tax dollars to buy "Russian hot air."

But Canada may earn credits by committing Canadian tax dollars to projects in other countries that reduce overall global emissions. So, for example, Canadian tax dollars could be used to help build a hydroelectric power station in India that would replace a coal-powered station. Hydro is cleaner than coal, and so Canada would be given some Kyoto credits.

"There are some international projects that may well be valuable to the global community and can bring benefits from a Canadian point-of-view as well," Goodale told the Commons' Environment Committee. "But where do we want our emphasis? We want our emphasis on projects in Canada that change things on the ground domestically within Canada."

Still, it is all but certain that Canada will have to spend a considerable sum buying credits in order to meet its targets.

"It is no longer possible to achieve Kyoto targets by 2012 without some international credits. We don't oppose that. At this point, we think it's very very important that the public dialogue become much better informed," said the Sierra Club's May.

But while activists are hopeful of political success on Feb. 23, they worry that new green initiatives will be stonewalled by the federal bureaucracy.

"It's more encouraging on the political side than I've ever seen it and it's just as discouraging as it ever was on the bureaucratic side," said May. "Part of our problem in achieving ecological fiscal reform -- maybe 90 per cent of our problem -- is the bureaucracy at Finance Canada."