Bill C-33 (Historical)

An Act to amend the Canadian Environmental Protection Act, 1999

This enactment amends the Canadian Environmental Protection Act, 1999 to provide for the efficient regulation of fuels.
It also provides for a periodic and comprehensive review of the environmental and economic aspects of biofuel production in Canada by a committee of Parliament.

[The Chair, Conservative, James Bezan]

Thank you. Your time has expired, Mr. Storseth.

I want to thank all the witnesses for coming in today and for your presentations and input on Bill C-33. I'm going to ask that you leave the table as quickly as possible, and we'll suspend.

I want to call all the witnesses for five o'clock to come to the table as quickly as they can as well.

Thank you. We are suspended.

[Benoit Legault]

I can tell you quite honestly that the Fédération des producteurs de cultures commerciales du Québec has a rather general understanding of Bill C-33, which is intended to amend the Canadian Environmental Protection Act.

Our interest is more directly tied to everything that affects biofuels policy and that could promote the development of biofuels policy. As far as the specifics of the bill and the proposed amendment are concerned, they suit us overall and we do not really have any amendments or changes to propose.

[Ian Thomson, President, Canadian Bioenergy Corporation]

Thank you very much, and good afternoon, Mr. Chairman and members of the committee. I am pleased to be before you today to speak on Bill C-33, An Act to amend the Canadian Environmental Protection Act, 1999.

Thank you for this opportunity to tell you why we believe that this bill and biofuels need your support.

I represent Canadian Bioenergy Corporation, a Vancouver-based company currently distributing biodiesel across Canada, with advanced planning for a large-scale biodiesel plant near Edmonton, Alberta. I'm also the president of the Alberta Biodiesel Association, which represents the full value chain of biodiesel interests in Alberta and whose members have the potential to produce a significant portion of Canada's biodiesel supply, based on currently available feedstocks and those non-food feedstocks we are researching and hope to utilize as soon as they are viable.

My statements reflect the experience of five years of working with the leaders of the biodiesel industry in Canada, starting at a time when this smart biofuel was entirely unknown and extending to the situation today where biodiesel is a household word and in use in large fleets across the country. It has accomplished this status because it works; because its benefits are immediate, scientifically sound, and verifiable; and because the farmers, the economy, and the environment benefit when it is used.

During my remarks I would like to make three things clear.

Number one, Bill C-33 is the most direct means by which the government can support the most positive development in Canadian agriculture in the last three decades. Bill C-33 will launch a new industry that will improve our environment, provide market stability in the traditionally challenged agricultural sector, and incent research and development for even more advanced biofuels.

Secondly, timing is critical. Financial markets are looking for certainty of policy in order to step in. They will take the risk, but they will not be reckless.

Third and last, biodiesel produced in Canada is an excellent fuel in terms of operability. It works in the full range of conditions in Canada and in terms of sustainability. It has a clear positive benefit for the environment, which I will describe further.

In the case of Canadian-made biodiesel, Bill C-33 will support a smart, advanced biofuel that reduces greenhouse gases in excess of 75% over those of diesel and improves dirty urban air, reducing respiratory illness in our large cities. It is renewable. Its use will extend available reserves of petroleum for future high-value purposes. It creates a new market. Its use will help smooth out the commodity-driven market swings that have held agricultural producers captive for decades. And it will add value to the agriculture sector. We will do more than just grow and export grains if we have a Canadian biodiesel industry.

Our society runs on diesel engines. Biodiesel is the only currently available and approved biofuel for the diesel engines that move us and the goods we consume. We live side by side with diesel exhaust every day: on transit and school buses, on downtown streets, on trains, in harbours, and increasingly in passenger cars. Biodiesel is an excellent climate change tool, but it is also an excellent local air quality tool.

Agricultural producers are huge supporters of biodiesel. I am told by the members of the canola growers advisory council that assists our company that canola growers know high prices will not last, and when prices do drop, producers will have a new market—biodiesel—to fall back on. This is significant in the context of the billions of dollars spent every year for Canadian agricultural support payments, federally and provincially. In the United States, the USDA has calculated savings in the billions of dollars diverted from historical price support programs as a direct result of federal government incentives for the biofuels industry.

Programs that support direct ownership in biofuels manufacture, such as the ecoagriculture biofuels capital initiative, also known as ecoABC, will ensure that Canadian farmers will be owners in the industry. Our company is very clear that producers must benefit from this industry, and we have structured our company so that they will.

Actions are required now to ensure market demand. Canada will be in good company as it takes steps to ensure renewable content in its fuel pools. OECD countries, particularly the European member states, have had clear biofuels policies for years and continue to expand them. Canada is late to the game but is fast catching up. But time is of the essence. This industry can stand on its own feet only when it has fully established the production capacity to be competitive internationally.

The private capital required to build the biofuels production plants needs clear, long-term commitment to the industry from federal and provincial governments. Without the assured market demand coming from the blend level provisions of the renewable fuel standard, biofuel production plants and supporting infrastructure will not be built in Canada. Delay in passing this legislation risks losing the tremendous biofuels opportunity, especially for the Canadian farmers who stand ready to participate in this new and important industry.

Two decisions must be made to ensure there is sufficient demand to establish this nascent industry. The first decision you can make immediately: pass Bill C-33 without delay. The absence of specific regulations to define how renewable content will be achieved should not delay the passage of this critical bill.

In a few months' time, we will need the second decision you and your colleagues can make, namely, to get biodiesel on the same timetable as that for ethanol—January 1, 2010. What do I mean by this? The original renewable fuel standard timetable developed in the late summer of 2006 pushed biodiesel implementation to as late as 2012. Our industry needs an implementation date of January 1, 2010. Delaying a biodiesel mandate until almost four years from now will, simply stated, kill or significantly delay new plant construction and would be a wholly unnecessary delay, defensible on neither technical nor policy grounds.

We expect in the next few months to successfully complete the most important requirement for a 2010 RFS date, namely a pilot test to confirm full operability of biodiesel in extreme cold weather. In many years and in many millions of kilometres of road tests in Canada, across Europe, and throughout the United States, biodiesel use, when produced and handled to strict quality specifications and guidelines, has established its efficacy and safety so that we can support with confidence the adoption of biodiesel in the Canadian fuel marketplace.

There are no reasons to delay the timetable another two years. British Columbia, where I live, will have a 5% renewable mandate in diesel fuel by 2010, and if B.C. can do a 5% mandated blend, the federal government can most certainly implement a 2% renewable mandate in diesel fuels by 2010. Loopholes, such as renewable credit carryovers, market out measures, or adoption delays, will only harm the establishment of the renewable fuels production industry in Canada. Credible sustained market access for renewable fuels must be observed by the regulatory regime adopted pursuant to Bill C-33.

Canadian biodiesel is a sustainable smart fuel. Biodiesel made from Canadian canola provides an immediate carbon reduction strategy. Canola biodiesel makes the superior cold weather biodiesel required by Canadian climatic conditions, and it is grown in surplus and in abundance in a full life cycle, sustainable manner on non-irrigated, established arable lands across the Canadian Prairies, and in lesser amounts in Ontario and Quebec.

I wish to address suggestions that biofuels can cause environmental degradation and that feedstock cultivation methods in biofuel production processes release more carbon than they displace, through their use as transportation fuel. Canada's largest anticipated biodiesel feedstock, canola, has proven it has significant benefits environmentally. It has greenhouse gas reductions in excess of 75%. It returns three units of energy for every single unit of fossil fuel used to produce it, and it will bring only minimal new land area under cultivation. High biodiversity ecosystems and established carbon sink lands will not be harmed from crop production.

Canadian biodiesel will also not cause food shortages or drive up food prices. Canada grows more than enough canola to fill the federal renewable fuel mandate set out by Bill C-33. In addition, the Canadian Renderers Association has indicated that Canadian-produced fats and rendered recycled greases are also available in substantial volumes for biodiesel production in Canada.

At a 70:30 ratio of canola to fats and oils in feedstocks supplies for biodiesel production in Canada, the federal government's recently announced requirement that 2% of the volume of diesel fuels used in Canada be renewable fuel will require approximately 900,000 tonnes of canola seed. This compares with the carryover of canola seed—that portion of the crop unsold at the end of the year—which is well under that for future years, and has been for the last three years.

With the U.S. and European legislative and regulatory measures, it be will be an important part of the regulatory process under Bill C-33 to ensure that biofuels adopted by the Canadian marketplace do not lead to unsustainable or harmful practices in biofuel production and use. The global biofuels industry is founded on the premise and promise of a better environmental fuel supply. Our biofuel regulations must ensure that biofuels credited toward to RFS requirements do not contribute to more greenhouse gases or air pollutants. We must protect biodiversity, sensitive wetlands, watersheds, and endangered species. The biodiesel produced in Canada will meet the most rigorous international sustainability standards for biofuels, and we must act to ensure that any imported biofuels are certified to meet Canada's environmental standard.

We encourage this committee to support this legislation.

Thank you for giving me this opportunity to appear this afternoon before the committee. I will be pleased to answer all of your questions.

[Benoit Legault, Director General, Fédération des producteurs de cultures commerciales du Québec]

Mr. Chairman, members of the committee, good afternoon. Thank you for inviting us to appear before you.

The Fédération des producteurs de cultures commerciales du Québec has a keen interest in Bill C-33, an act to amend the Canadian Environmental Protection Act. It is clear that this legislative amendment required for the biofuel policy will have a substantial impact on the competitiveness of the grain sector in Canada and Quebec.

The federation has avoided taking part in the debate up to now on the energy and environmental issues associated with the biofuel industry. However, it remains convinced that the debate must be an objective one based only on scientific evidence. We feel that the citizens of Canada, and perhaps more particularly those in Quebec, have been very poorly informed by the media on these issues up to now.

Our organization is here today to highlight an aspect which it considers important and which seems to have been set aside when the biofuel policy and the legislative measures necessary for it were assessed. That aspect is the negative impact on the grain sector resulting from the lack of a policy or measures aimed at ensuring the sector's success. More generally speaking, our organization believes that it will be vital to develop the processing of commodities into industrial products in order for grain producers in Canada and Quebec to survive.

To begin with, agriculture in Canada and Quebec operates within the North American market context. The grain sectors in Canada and Quebec, which produce 70 and 5 million tonnes respectively, are subject to the realities and the dynamics of a larger market in the United States, our close neighbour.

[The Chair, Conservative, James Bezan]

I call this meeting to order.

As we planned earlier, we're going to have two groups of witnesses this afternoon. In our first group, to present on Bill C-33, we have by video conference Dr. Esteban Chornet, who will be joining us at around four o'clock. The committee permitting, when Dr. Chornet is able to get away from his class--which I think is what he's tied up with--we'll let him bring his 10-minute opening remarks at that point in time.

Thank you very much.

From the Conseil québécois du biodiésel, we have Camil Lagacé--no, he's going to be at five o'clock.

From Ducks Unlimited Canada, we have Paul Thoroughgood; from the Fédération des producteurs de cultures commerciales du Québec, Benoit Legault and Stéphane Bisaillon; and from Canadian Bioenergy Corporation, Ian Thomson.

I want to welcome all of you to committee. We're going to keep things moving fairly rapidly. I'd ask that you bring your opening comments in less than 10 minutes. We're going to go with five-minute question rounds for the members.

With that, I'm going to ask Mr. Thoroughgood to lead off with his opening comments, please.

Canada Grain Act

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Mr. Speaker, it is important to have this debate. The Canadian Grain Commission is the result of an act of 1912, which established three grain commissioners to oversee the regulation of the movement of grain from the country elevator to the point where it was loaded for export or processed in Canada. It has functioned in the interest of farmers. One of the main reasons it exists is to retain quality, so the wheat we send overseas has a stamp of quality from Canada.

Today, approximately 700 dedicated employees arbitrate disagreements over grain and weight, inspect grain passing in and out of terminal elevators, license and regulate elevators and grain companies and, most important, administer the Canadian grading system. Canadian grains are trusted and respected throughout the world due to the honesty and thoroughness of the Canadian Grain Commission.

I point out that we have specialists, people who have studied and learned what they are doing, working on behalf of farmers in Canada. Unfortunately, the way the bill stands now approximately 200 people stand to lose their jobs in the name of deregulation and privatization. That is one thing of which we have to be aware.

Grades like number 1 or number 2 Canadian western red spring wheat correspond to established specifications based on measures such as a percentage in the shipment of damaged or broken kernels or other kinds of seeds and of foreign matter such as dirt, as well as moisture content and the weight of grain. The grades assigned by the Grain Commission are under the control of the western and eastern grain standards committees, which meet and make decisions about any changes or additions to the grades that may be necessary because of changing market and crop conditions. Each year they also establish standards samples for each grade.

I mention that to underline the fact that the Grain Commission has a useful function. Any time we want to change or modify the way it works, we have to tread very carefully.

Bill C-39, as it stands, has a potential threat to Canadian grain producers. We know the Grain Commission has served as an independent referee to settle disputes between Canadian grain producers and the powerful companies that buy and export. It is no secret that our system of doing things in Canada is under attack. When I posed the question to our chief negotiator at the WTO last week during committee, he admitted, for example, that there was pressure internationally for us to do away with our state trading institutions, namely the Wheat Board. That same pressure exists to modify or to eventually make the Grain Commission not as serving as it is today. We have to be careful.

The commission has also served as the body that determines the amounts farmers are paid based on the Grain Commission determination of the weight and quality of grain before it goes to market. These roles would dramatically diminish if Bill C-39 becomes law, leaving producers newly disadvantaged in their dealings with grain companies when it comes to determining grain quantity and quality.

The producer can hire a private company to grade and weigh the grain even though no such companies exist today. The bill would also expose grain producers to financial harm in the event of a grain buyer bankruptcy or refusal to pay.

The feeling among many people who are in the business is that this will also undermine Canada's international reputation as an exporter of top quality grain. For example, the proposed elimination of inward inspection will likely result in diminished quality of Canadian grain exports. Currently, inward inspection by the Canadian Grain Commission ensures grains of different quality can be segregated to protect higher grades from being diluted by lower quality grain.

It took me a while to wrap my head around this, but I understand that when the grain goes to the elevator, for example, in Vancouver, which I have visited a number of times before with my farmer uncle from Saskatchewan, that the grain is put in bins and that quality is retained. The quality is there because of outward inspection when the grain is loaded on to ships.

Therefore, the way I understand it, there is the possibility, if there is no inward and outward inspection, there could be a mixture decreasing the quality of the grain, tarnishing Canada's reputation as an exporter of quality grain.

There is something called kernel visual distinguishability, or KVD, which is performed by the Grain Commission with this inward inspection. The bill proposes to do away with this.

I refer to an article by Mr. Wade Sobkowich, who is the executive director of the Western Grain Elevators Association. In general, the feeling is that we have to be very careful before doing away with KVD. Technologies are in the process of being worked on and finalized that can replace this famous black box, which we were told about at committee. However, to date nothing really exists to replace KVD.

Right now only certain varieties are eligible for a particular class and KVD means that a trained person can differentiate between the classes through visual inspection. Any grain that contains an excess of varieties outside of the intended class is downgraded to the Canada feed grain. In other words, if I understand this correctly, by having KVD, we are able to retain, with qualified people who understand it, a quality in the grain we export.

KVD is a consideration used by the Canadian Food Inspection Agency when deciding what varieties should be registered.

The biggest problem, according to Mr. Sobkowich, with removing KVD is the obvious one. It exists to protect the farmer because it allows settlement at the time of delivery.

Just as an aside, one of the problems with the bill, which goes contrary to one of the recommendations we made in committee, is it does not put the farmer first and foremost. The farmer is lumped into all the other segments of the agriculture industry.

Therefore, KVD protects the grain handler because the certificate final is based on a visual grading system. It protects the marketer by giving assurances that the customer is receiving what he or she has ordered. It protects the end use customers by providing confidence that they are receiving grain that meets the processing requirements.

The Western Grain Elevators Association is not saying that we have to keep KVD forever, that this is ingrained in stone. What it is saying is let us be very careful. Let us tread lightly. Let us ensure we do not replace something until we have something better to act in the interest of farmers.

What has been happening with the government is it appears to be willing to act very quickly and often recklessly with regard to the Wheat Board and the Grain Commission. Yet it seems to drag its feet when it comes to immediate aid that is needed for pork and cattle producers, which we saw during the debate. Somehow the government can act quickly if it wants, but if it does not want to, then we have the spin that it cannot get aid to people right away. Therefore, we have to tread very carefully.

So why is Bill C-39 flawed? Instead of having a study done by a parliamentary committee, the government used a report prepared by a polling firm whose very existence depends on contracts from government and large corporations.

COMPAS, which conducted the study that led to Bill C-39, had a favourable—I repeat, favourable—bias for deregulation and privatization right from the start.

So I ask the following question: how can a firm conduct a study if it has a favourable bias for deregulation from the get go. When a study is done, it is expected to be based on an examination of both sides of the issue.

Moreover, due to lack of funding, the Canadian Grain Commission has not been able to fulfill its mandate, and these failures are being used as an excuse to deregulate or privatize services to farmers.

What we have here is a ploy that involves cutting funding. We have seen the same thing in the health system. Then the government claims that the system is not working, but the reason for that is the lack of funding. If one looks at the commission's recommendations, one will see that one of these recommendations is to allocate sufficient funding to the commission so it can do its job properly.

Again, I want to stress the fact that this bill benefits large corporations rather than farm families. If we pass it in its current form, farmers will no longer have their say.

I will continue reading from a press release by the National Farmers Union, which states:

Many of those recommendations [in the report] would accelerate the economic leverage of large grain companies and railways at the expense of farmers, according to the NFU. “The mandate of the [Canadian Grain Commission], since the Act was first implemented in 1912, has recognized that farmers have less power in the marketplace and need certain protections,” said Boehm. He noted the Compas report specifically recommends “narrowing the mandate to protect producers' rights from a broad over-arching principle, down to some very specific limits.”

Boehm refuted the claim by the authors of the Compas report that they had heard no positive feedback about the CGC during their consultation process. “Such a claim is categorically not accurate,” said Boehm. “Particularly given our direct experiences at the public meetings in Saskatoon and Regina. Grain producers at both those meetings unequivocally expressed support for the CGC, particularly the role of the Assistant Commissioners.”

I would like to take an aside here and tie this in with what we have been experiencing with the whole debate on the Canadian Wheat Board. We have been told time and time again by the government that we have to move ahead for marketing choice, that we have to dismantle single desk, and that farmers are wanting this choice at this time. Yet in my office I have over 700 individual letters from people, some handwritten, some typed, which say that we have to be careful. These people say they do not want to do away with the Canadian Wheat Board and the single desk.

Then there is the spin we get from the government, which is that all these letters came from the same fax. Certainly. They are from members of the National Farmers Union. The National Farmers Union provides a service to its members. A member sends a letter and the NFU faxes it to me and other MPs. These are not form letters. These are individual letters. There are many gut-wrenching letters asking what the government is doing and why it is moving so quickly to destroy the Canadian Wheat Board. I would say that this is the same sentiment that there is out there among many farmers in regard to the Canadian Grain Commission.

I will move on to an article from the Winnipeg Free Press, in which we see that the minister has decided not to work with the board of directors of the Canadian Wheat Board and is actually threatening to introduce legislation, I think he said within 10 days, if he does not get his way.

Since I became a member of the agriculture committee and have taken up this file, I have always thought how nice it would be if the current minister--or the previous minister--would sit down with those elected officials who are there on behalf of farmers. It would be nice if he would sit down with all farmers' organizations, especially an organization such as the National Farmers Union, which represents thousands and thousands of farmers.

The minister could sit down, hammer out a solution and try to work with the system as it is. As we can see, the Wheat Board is trying to introduce new programs. The majority of the board's directors want the federal government and the malt and barley industry “to give their new CashPlus barley marketing initiative a chance”. As well, states the Winnipeg Free Press article, “The program seeks to put more money into farmers' hands sooner than with the current pooling system”.

So it is not as if the Wheat Board directors are stuck in a time zone. They understand what is happening, but at the same time they want to ensure that the market power stays with the farmers and they are not at the mercy of the big multinationals.

It is disturbing when we hear a minister give ultimatums. I will quote him from the article in the Winnipeg Free Press:

“They can lead, follow or get the hell out of the way,” he said.

What is that? What kind of a statement is that from the Minister of Agriculture of our country?

Now we will move on. Yesterday I received a letter from the president of the National Farmers Union, who was extremely upset over the comments made by the Parliamentary Secretary to the Minister of Agriculture in debate the other night.

It is incredible. I will quote what he is saying:

One of your other defamatory allegations in the same emergency debate is that acting as the President of the National Farmers Union, I have “disappeared on this issue [the CWB] this year”. Again, although you know this to be opposite to the truth (I have attached my recent press releases on the CWB issue as you are pretending that you haven't seen them), you seem to think you can mislead your fellow members of the House of Commons, and this is a further disgrace to yourself and your party.

In the last paragraph, he poses a question to the parliamentary secretary:

Do you have the integrity required to stand in the House of Commons and apologize to your colleagues and then make a further apology to me for your unsubstantiated, defamatory, and incorrect remarks?

I will pose the question to the Parliamentary Secretary for the Canadian Wheat Board: does he have the integrity to do this?

I hope that when we come back to the House he in fact will stand up and apologize, because it is time to work in a spirit of cooperation. Farmers want to work in a spirit of cooperation with the government. The government is doing some good things. It is not a time for confrontation.

It is not a time for shenanigans, as we saw yesterday in committee when the Parliamentary Secretary to the Minister of Agriculture tried to stop debate on Bill C-33 and rush it through, back to the House, even though he knew witnesses were lined up to be heard on this important issue. The issue of biofuels is not something that we just move through. It has to be looked at and we must at least put on the record that there are concerns.

Thankfully we have a committee chairman with integrity who stood up and made the right decision. I would like to applaud him for that.

In the minutes I have remaining, I would like to quote from a letter dated January 18 from the organization called Save My Canadian Wheat Board:

[Bill] C-39 includes some of the amendments proposed in the review and is sure to cause further controversy. For one, it proposes to remove the phrase from the act that requires the [Canadian Grain Commission] to regulate the entire grain industry “in the interests of grain producers”. Instead of the focus of the act being the protection and promotion of the interests of grain producers, the interests of producers that would be protected by the act are spelled out specifically and narrowly.

That is just one example from friends of the group, Save My Canadian Wheat Board. Further on, the letter states:

Likely to be highly controversial, and certainly not recommended by the 2006 review, [Bill] C-39 removes the requirement that companies wishing to be licensed by the [Canadian Grain Commission] as primary elevators must post adequate security to cover potential losses farmers may incur if the company goes bankrupt. The security posted by companies in the past has not always been adequate, but it has certainly protected farmers from huge losses in some cases.

I would like to once again emphasize that we have to take the precautionary approach before we move quickly. Often the government has not done that in dealing with health and with the environment and now in dealing with the lives of farmers and our grain industry.

The precautionary approach means that we tread very carefully before we move in to throw something out and bring in something new when we are not quite certain what the future will bring. This is especially so in light of the fact that today in the world there is this thrust, this feeling, in regard to Canada that other countries and the WTO want us to do away with any protection we have for our farmers. That is a threat not only to the Canadian Wheat Board, but also to supply management. We can see it.

I would like to conclude by saying that the bill as it currently stands certainly does not receive my support or the support of my party. I hope we have a chance to look at it and turn it into a bill that reflects the interests of all farmers in Canada.

[The Chair, Conservative, James Bezan]

That Bill C-33 return to the House.

[The Chair, Conservative, James Bezan]

It definitely wasn't a level playing field. I'm sure the Alberta government would say that sometimes you need those incentives to start off a business, and that's essentially what Bill C-33 is about. It's about providing short-term incentives to start off an industry.

Dr. Klein, you're right down on feedlot alley, and Travis and I benefit from those feedlot guys getting all those dollars to start off their businesses, the packing plants intended to start there. They buy our calves and put us in a better fiscal position, because they can be more aggressive in the marketplace than the poorer feedlot operators in other parts of the country.

Do you believe government incentives to start off those types of businesses that are so close to your area are wrong?

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

You really didn't answer my question.

I'm going to go on to Mr. Toews. It's good to see you here again, Travis. What can we do to help out, to increase profitability? Even though we're talking about Bill C-33, there must be a connection to your industry, or you wouldn't be here.

What kinds of things can we look at here? With respect to SRMs, for example, is there any research that would generate some gold at the end of a rainbow, a huge profit? That's one example. Maybe you could comment on some other ways to make it profitable.

[Lloyd St. Amand, Liberal, Brant, ON]

Thank you, Mr. Chair.

Thank you, Ms. Buth and gentlemen, for being here.

I'll be splitting my time, Mr. Chair, with my distinguished colleague for Huron—Bruce.

I have a couple of points for you, Ms. Buth.

In wind energy and solar energy, we are behind the Europeans for sure. You make the same point with respect to the use of canola biodiesel, which I understand is being used extensively in Europe. Can you quantify how far behind Europe we are and how the gap will be narrowed if Bill C-33 is passed?

[Travis Toews, Director and Vice-Chair, Domestic Agricultural Policy, Canadian Cattlemen's Association]

Thank you, Mr. Chairman, for holding this hearing on Bill C-33 and for inviting us to advise the committee on the policy views of the Canadian Cattlemen's Association, an organization that represents over 90,000 cattle producers.

I am an elected director of the Canadian Cattlemen's Association. I serve as vice-chair of the foreign trade committee and I also chair the CCA biofuels task force. My family and I ranch west of Grand Prairie, Alberta, and operate a cow-calf backgrounding and yearling operation.

The biofuels industry in North America has recently experienced significant growth. Proponents of a biofuels industry speak of the increased prices farmers are receiving for their grains, a cleaner environment, revitalized rural areas, and a reduced reliance on fossil fuels. Opponents generally talk about higher prices for food and the uncertainties around measuring the environmental footprint of biofuels relative to petroleum-based fuels.

Today I want to advise you on the potential effect on one of Canada's largest current customers for Canadian grain: the cattle feeding sector.

For every calf fed to finish, approximately 1.25 tonnes is required. As a result, profitability in the Canadian cattle industry is significantly affected by the availability and price of feed grains. The rapid growth in the biofuels industry in North America in the last few years has been encouraged by policies of production subsidization and mandated demand. This phenomenon, coupled with increased demand from developing countries, has left global grain inventories very low, and grain prices at record levels.

While we expect that both Canadian and global grain production will rise as a response to higher prices, we are concerned that the extremely robust growth and demand encouraged by North American biofuels policies may outstrip supply in the short and intermediate terms. In the event a crop shortage is experienced in any of the major growing areas of North America in the upcoming year or two, the cattle industry and its infrastructure could be devastated. During a year of shortage, the cattle industry would be hard-pressed to compete for feedstuffs with a competitor that has the advantage of a demand mandate.

I'm not here today on behalf of CCA to suggest that we're opposed to biofuels or profitable returns for Canada's grain producers. I'm here to be a voice of caution regarding the potential unintended consequences of this bill and to speak in favour of a transition to a market-based approach to the biofuels business in Canada.

Last year I chaired the CCA biofuels task force. This committee consisted of cattle producers from across Canada. We met with researchers, plant breeders, and ethanol producers. In the end, we came out with four recommendations, which the CCA board subsequently adopted as CCA policy. I will share these with you.

First is that the CCA endorse a clearly defined and expeditious transition to a market-based approach to the production of renewable energy that re-establishes a competitive balance between sectors.

Second is that the CCA support the elimination of tariffs on imported biofuels.

Third is that the CCA emphasize that any further encouragement of the biofuels sector should focus on the production of biofuels from sources that do not impact the availability of livestock feed.

Fourth is that the CCA formally request that the government incorporate safeguard measures in the event of crop shortages. These may include the elimination of any remaining tariffs, a reduction in mandates, and/or a reduction in incentives.

While we recognize the government's desire to help kick-start the biofuels industry in Canada, we suggest that ultimately, the marketplace, free of government-mandated demand, is the best method for determining the usage equilibrium for feed grains. A biofuels industry built on real market fundamentals will grow at a manageable pace and will be far more sustainable in the long run. The resulting growth will also be at a pace at which demand for feedstuffs is less likely to dangerously outstrip supply.

In closing, we would hope that the members of this committee would take steps to ensure that the biofuels and livestock industries can compete and coexist on a level playing field and thereby ensure that we will not simply replace one value-added industry with another.

Thank you for the opportunity to speak to this important issue.

[JoAnne Buth, President, Canola Council of Canada]

Good morning, Mr. Chairman and members of the committee.

As already mentioned, I am JoAnne Buth, and I'm president of the Canola Council of Canada. The Canola Council is the trade association of the canola value chain, including growers, seed developers, processors, and exporters. Our organization strongly supports a vibrant canola-based biodiesel industry that involves a made-in-Canada solution to benefit canola growers and all Canadians.

This legislation that will make provisions for the regulation of the renewable fuel content in diesel, coupled with the new $1.5 billion federal ecoEnergy for biofuels program, is key for the development of the biodiesel industry in Canada.

I know the time here is short, so I'd like to start with three conclusions: canola biodiesel is good for the environment, good for farmers, and good for the economy; canola is grown in abundance in a sustainable manner across the prairies, with additional acres in Ontario; and canola biodiesel has superior cold-weather properties that are clearly needed for the Canadian climate.

I'd like to spend a few minutes now expanding on some of those key points.

First of all, on the environment, there's a lot of talk about climate change and the impact that the use of fossil fuels has on the environment, but I have not heard of many practical solutions, especially for a country that relies so heavily on fossil fuels for both transportation and heating. Bill C-33 offers a practical solution and a step in the right direction.

The use of biodiesel can reduce greenhouse gas emissions and alleviate health and pollution concerns, which have been raised because we're on this treadmill of ever-increasing production and use of non-renewable petroleum resources. According to a Canadian study done at the University of British Columbia, the reduction of greenhouse gas emissions from canola biodiesel is 85%, relative to fossil diesel. Reduced tillage practices that are commonly used in canola production also means less carbon released. In addition, using biodiesel can reduce carbon monoxide, unburned hydrocarbons, and smog-producing particulates.

I have a few comments on the impact to farmers and the economy. We currently export 75% of the canola produced in Canada. This renewable fuel standard will provide fundamental long-term support for the rural Canadian agricultural sectors by creating inelastic demand that's needed in our trade-dependent commodity. We are so very vulnerable to borders shutting because of tariffs and non-tariff trade barriers. Made-at-home canola biodiesel will stabilize demand and help increase the value-added industry that is already expanding in Canada in anticipation of increased use in North America.

The positive impact of a canola-based biodiesel industry will be seen quickly. Construction of biodiesel-producing plants can be completed in 18 to 24 months. Economic analysis shows that every dollar invested in biodiesel infrastructure returns two dollars of economic activity in construction and supporting industries. Predictable supplies of biodiesel production co-products will also provide additional economic activity. The meal from canola crushing is a high-protein livestock feed that can replace more expensive imported protein meal in dairy and hog rations. The bottom line is that every $100 million in additional demand for canola generates 730 jobs in value-added industries, $83 million in GDP, and $5.2 million in tax revenues.

Specifically on canola biodiesel supply and quality, we have no doubt that the Canadian canola growers can produce the seed needed for a 2% inclusion rate and for a 5% inclusion rate. The amount of canola needed for 2% would be 1.3 million tonnes if we took the entire biodiesel industry. In 2007 we produced just under nine million tonnes, meaning that biodiesel production would have used 14% of the crop.

The 2015 canola industry production target is 15 million tonnes, and that's for total production. We have already proven that we can grow more than enough canola to fill the mandate. The carry-over of canola seed was over 1.3 million tonnes for the last three years.

Canola biodiesel means quality. As you know, canola oil is the best heart-healthy oil for consumers because of its low saturated fat content. Low in saturated fat means clean arteries for people and clean fuel filters for diesel engines, resulting in superior cold weather performance.

Canola biodiesel is already proven and is used extensively in Europe. In Canada it's currently being demonstrated under cold weather conditions in Alberta, and at minus 51 degrees Celsius, trust me, it's a true test of Canadian cold weather. We are a clean way to power diesel automobiles, trucks, tractors, heavy equipment, and marine vessels. And diesel engines do not require any modification to use biodiesel.

To summarize, Bill C-33 is the first step towards creating a Canadian canola biodiesel industry. We urge you to act quickly to assure a long-term, viable Canadian renewable diesel industry. The time to move is now.

Canadian farmers stand ready to grow and deliver the high-quality, sustainable, and renewable feedstocks our industrial entrepreneurs will use to produce world-class renewable fuels here in Canada. We have a made-in-Canada crop that offers a made-in-Canada solution.

Thank you for creating the opportunity for Canadian farmers, processors, and the economy.

[The Chair, Conservative, James Bezan]

On the 26th.

Is everybody in agreement? Okay.

Let's carry on with our hearings on Bill C-33.

We welcome to the table JoAnne Buth, from the Canola Council of Canada, and from the University of Lethbridge Dr. Kurt Klein. I'm glad to see you here.

The Canadian Cattlemen's Association contacted my office. They're running a bit late. When they get here, I believe Brad Wilderman will be presenting on their behalf.

We'll open up to opening comments. I'd ask that you keep your opening comments to less than ten minutes.

Ms. Buth, you may go first.

[The Chair, Conservative, James Bezan]

Essentially, the motion we have on the record is that the committee hold a meeting February 25 from 6 p.m. to 9 p.m. in order to hear the other witnesses on Bill C-33. I think your suggestion is the same thing we have on the floor right now.

[The Chair, Conservative, James Bezan]

As it relates to Bill C-33, please.