Kyoto is scheduled to expire at the end of 2012. Talks on a follow-up agreement to Kyoto have dragged on, in part because of a fundamental split between developed and developing nations. Canada has taken the position that any future agreement needs to include caps on emissions by countries like China and India. For their part, China and India (and other countries) have replied that they are still “developing” nations and that hard caps on GHG emissions could stifle their economic growth, and add that since the developed nations are responsible for much of the existing levels of GHGs in the atmosphere, it isn't fair to hold the developing countries to the same standard (it is something of a dubious argument, but it is one they are sticking to).
Canada has yet to officially confirm that they are indeed dropping out of the Protocols, though that hasn't stopped critiques from the environmental lobby from rolling in against the Conservatives. Canada has seen a jump in their GHG emissions since 2009, largely because of development of the Oil Sands reserves in northern Alberta, a project the Canadian government credits for much of the country's current economic health. But the Oil Sands are also a prime target of environmental lobbying both in the United States and Canada since not only do the Oil Sands contribute to GHG emissions and disrupt the environment in northern Alberta, but they also represent a new and vast source of crude oil at a time that environmentalists are pushing for a “green” energy economy. The most recent fight over the Oil Sands has been the Keystone XL pipeline that would link the Oil Sands with refineries along the Gulf Coast of the United States.
Speaking of the Oil Sands, Canada has possibly gained an ally in an ongoing fight with the European Union over the Oil Sands. The EU has been openly discussing barring the import of any petroleum products from the Oil Sands on the grounds that it is a “dirty” source of oil and that the GHG emissions from Oil Sands extraction and production is unacceptably high. The Canadian government has been aggressively pushing back, arguing both that the Oil Sands do not emit as many GHGs as critics claim and that it is unfair to single out the Oil Sands from other so-called sources of heavy crude oil, like imports from Venezuela, among other nations, since all heavy crude requires extensive processing to turn it into gasoline and other petroleum products. According to a report, the United Kingdom though is “secretly” siding with Canada. Liberal Democrat minister Norman Baker was quoted as basically agreeing with the Canadians, saying: “We believe that means tackling all highly polluting crudes equally, not simply oil sands from one particular country. These certainly represent a problem, but so do other crudes, and it makes no environmental sense to ignore these.” Canada currently doesn't send any Oil Sands products to Europe, but it does not want to lose Europe as a potential market and the government fears that an EU ruling could set a precedent that would make Oil Sands products more difficult to sell on the open market. And while I can't imagine China for one caring much about the GHG footprint of the Oil Sands, they could demand steep discounts for Oil Sands products if they know Canada doesn't have many other viable markets.