Environment Committee on May 2nd, 2024

[Jerry V. DeMarco]

That's why we made so many recommendations in our report. I believe that we made seven recommendations on this. However, Innovation, Science and Economic Development Canada didn't accept all the recommendations. There's still a lot of work to be done.

[The Chair, Liberal, Francis Scarpaleggia]

We have to stop at this point.

Unfortunately, your speaking time is up.

Go ahead, Mr. Longfield.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Chair, and thank you to Mr. DeMarco for coming back.

I have some questions for Stephanie Tanton on some details on the net-zero accelerator investments. I've spent a lot of time in Canada's steel industry, and I've spent a lot of time in the Saguenay, a beautiful part of Canada where the aluminum is produced. We're looking at green steel, green aluminum.

I'm looking at some of the projects that have been announced, like $420 million at Algoma in Sault Ste. Marie, and $500 million for green steel in Hamilton at ArcelorMittal, closer to my riding. ArcelorMittal Dofasco is looking at halting the use of coke by 2028. They're in the process of demolishing their coke plant.

Sweden is looking at locating in Quebec a $6-billion Boden-like site for green steel. It looks like steel has a solid focus in terms of industrial emissions.

I look at aluminum and Rio Tinto's $1.1-billion expansion of the AP60 smelter in Quebec with 96 new AP60 pots that were announced in June 2023. That's also in the Saguenay. They'll be up online by 2028. Alcoa has invested $60 million.

As we're building our inventory of steel and aluminum conversions, some of these numbers aren't going to be shown for a while. Are they included in your reduction forecasts for greenhouse gas emissions? Are they included in the audit scope, or are these outside the scope?

[Jean-Philippe Lapointe, Director General, Business Development and Strategy Branch, Department of Industry]

I'll take this one.

One thing I'd like to clarify is that we only account for direct GHG reductions that are going to materialize by 2030. For that to happen, you need a fairly mature technology. You need a large emitter or an adopter in order to have an accurate number. Those are the ones that we report.

Other projects under the NZA have a longer-term impact. These ones clearly don't have a specific number. You can guess, but you can't get to something accurate, so it's apples and oranges, really.

[Lloyd Longfield, Liberal, Guelph, ON]

These projects for the most part are on a 2028 time horizon, so they would be captured within 2030. However, because of the new technology, we won't know until 2028. Is that what you're saying?

[Jean-Philippe Lapointe]

I'm saying that the ones that you mentioned in steel would be accounted for because these technologies were deemed to have an impact by 2030.

[Lloyd Longfield, Liberal, Guelph, ON]

Okay, very good.

In terms of scope one, scope two, scope three emissions, the automotive industry is going to be using a lot of aluminum from Quebec. They might be capturing that under a different scope. Is that captured in our numbers?

[Jean-Philippe Lapointe]

When we do our calculations, we do look at scopes one, two and three. This is a life-cycle approach. We actually call it a partial life-cycle approach because we may decide, if it's not material, to leave some out.

However, companies in their contribution agreement will focus on scope one. These are facility-level reductions that they control. This is why sometimes you may see a slight discrepancy between what's in a signed deal with a company and what's in our estimates, which are more comprehensive.

[Lloyd Longfield, Liberal, Guelph, ON]

In terms of scope one, then, another large industry that I've been fortunate to do a significant amount of work in is mining—the emissions from mining and how Canada's mining sector is working on reductions. Some of those are also forecast well into the horizon.

Could you comment on the maturity of those numbers in terms of the audit that we have in front of us?

[Jean-Philippe Lapointe]

To my knowledge, the only mining project is one that doesn't have specific 2030 numbers. As you said, it's longer term. For instance, it's the use of more electricity and electric vehicles for mining and extraction, and those would typically have a longer-term impact.

[Lloyd Longfield, Liberal, Guelph, ON]

But it's still significant. These aren't small reductions; these are step increases. When they happen, they're going to happen in a big way.

[Jean-Philippe Lapointe]

Exactly, so to us, when it comes to value for money, a lot of these projects are actually going to have a long-term impact that will make a dent in our 2050 goals.

[Lloyd Longfield, Liberal, Guelph, ON]

The value for money is that Canada has to inject itself into the supply chain because it's a longer payback, so the federal government needs to be involved.

[Jean-Philippe Lapointe]

I would say so.

[Lloyd Longfield, Liberal, Guelph, ON]

Very good. Thank you.

[The Chair, Liberal, Francis Scarpaleggia]

We will go to the third round.

We will start with Mr. Leslie, for five minutes.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Thank you, Mr. Chair.

I would like to continue, Commissioner, as I was cut off there. With the news coming out today from the government in terms of the 708 megatonnes of emissions reporting, I went to look at the previous 25 years history because they say it's the lowest outside COVID years.

Thanks to the Wayback Machine, we can see that the numbers, at some time during question period, changed significantly. It seems as though that is due to a shift in the methodology of a number of measurements of land use and things like that.

You have mentioned, in previous reports, that we were double-counting trees. In these reports, we're double-counting our emissions. We seem to be artificially inflating our reporting of reductions. ECCC has changed the way it has reported on previous years. It seems to have elevated those numbers and, I worry, tried to demonize the past to make decisions taken look good in the future.

Is it a normal practice when the government says, “the lowest in 25 years” to see such a shift in numbers into the past? How is that reported back into previous NIR years?

[Jerry V. DeMarco]

We have seen that with the national inventory report. We have seen that with the calculation for land-use change in forestry. Then, just this month, we saw it with the plastic waste stream, where we don't just get a new data point for the next year; we see the previous data points shifting with improvements to the data and the analysis of it, so it does happen.

These numbers come out in a given year, and sometimes they go back and correct previous years. I'm not going to ascribe any motivation beyond trying to improve the numbers over the years, and it does make it difficult because there's a moving target. We don't just add a point each year in terms of the new calendar. We see the previous years being updated as well.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

I will ascribe the motivation then because I firmly believe that it is trying to make it seem as though their programs are working, but your reports are highlighting that there's no strategy, no verification of results. There are clearly flaws in the way the government is going about this. Given that, directly and indirectly, Canadians are paying the price for a number of these features, given that our economic growth is stagnant at 0.2%, and given that our American counterparts with the same interest rates are rising very quickly in their economic growth, Canadians are, I think, rightfully skeptical of these numbers, which is why I asked previously about the totality of the NIR reporting numbers.

I'll give you an example of the ag report. You mentioned the N2O emissions. That is an impossible thing to measure at the field level, and unfortunately, the N2O emissions stemming from crop production can't be right because the number is based on a coefficient measurement of rainfall, climactic zones and soil types, and the estimation that all fertilizer purchased in that province is applied within that year with no carryover. You therefore have a whole bunch of assumptions that—ask any farmer—you know are wrong.

Generally speaking, I'd like to hear your comments on N2O emissions because they are a major contributor, and one of the most controversial pieces of this government's plan to reduce emissions of that type by 30%.

Again, how can Canadians have confidence in any of the modelling when we're changing numbers in the past to fit?

Oh, we have the lowest emissions in 25 years. Suddenly the website's different, and that now proves that, despite the fact that, yesterday, the website would not have proved that. I think Canadians are rightfully asking questions about whether these policies are actually reducing emissions, whether the modelling is accurate and whether they're getting value for money.

[Jerry V. DeMarco]

There's a lot there. I guess it will be no surprise that we haven't audited the data that came out at noon today, even though it is late in the afternoon. We're not that quick.

We're diligent auditors, and we'll be looking at this in future reports. I can't say that we will be able to do an audit of the entire national inventory report. We would probably need to have to replicate the entire cadre of staff within the departments to be able to do that sort of thing.

We sometimes forget about the big picture when we're talking about slight changes from year to year. The fact of the matter is Canada has not reduced its emissions from the baseline of 1990. All the other G7 countries have. Whether there's some margin of error or not, we are the worst of those countries. We are still trying to get to an objective in 2026 in terms of emissions that just brings us back to where we started in 1990. This isn't a case that we've got good emissions reductions and it's just a question of how much—is it off by a few per cent or not—our emissions are still higher today than in 1990. We have to remember that.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Thank you.

[The Chair, Liberal, Francis Scarpaleggia]

Mr. van Koeverden.

[Adam van Koeverden, Liberal, Milton, ON]

Thank you, Mr. Chair.

My questions will be, in addition to the commissioner, for Nicole Côté and Dany Drouin.

I'll start with a quick question for Mr. DeMarco.

I know today's NIR is not precisely the reason you're here, but there seems to be a lot of conversation about it. I find the news quite encouraging, as somebody who cares about reducing our emissions. Some of the headlines today indicated that, and some suggested, as we all expected, that emissions are up a little bit from 2021.

However, taking a pragmatic approach to this, we all expected emissions to come up a little bit postpandemic. There really is an elephant in the room when you're reading that report because all of those emissions increases since 1997.... The minister said in the House today that emissions have never been lower in this country as long as Connor McDavid has been alive or since Google.com was registered as a domain name. So 1997 is a long time ago. Indeed, emissions have gone up a lot since then, but they've almost entirely been in Alberta, from the oil sands, almost entirely from the production of oil and gas. It's time that we look at that and actually reflect on the fact that our emissions are going up because of the way that we produce oil and gas in this country.

We need direction on that, but I would appreciate your reflection on other emissions-producing sectors that need to change their old habits, and whether you're encouraged or discouraged by today's news that it's been 25 years since they've been this low.

[Jerry V. DeMarco]

I'll be encouraged when we at least get back to 1990. The earliest we could possibly do that, according to their own projections, is 2026. It's a sad state of affairs that our next target is simply to get back to the starting line. Everyone calls this fight against climate change in Canada a marathon, but we've been going the wrong way from the starting line for many years. We're now getting closer to the starting line, which, I guess, is positive from some people's point of view, but we should be ahead of the starting line, not behind it still. We're still behind it.

As you heard from me in previous appearances before this committee, I completely agree that, with half of Canada's emissions being from two sectors, oil and gas and transportation, unless we get a handle on those two sectors, the reductions we get in all the other ones will just not add up to what we need. We do need to get a handle on oil and gas, especially as the largest-emitting sector in Canada.

[Adam van Koeverden, Liberal, Milton, ON]

Can we achieve our climate targets while being one of the largest oil and gas producers in the world with oil sands producing oil and gas the way they do? Give a quick answer, please.