Mr. Chair, Members of Parliament, and to Canadians who have access to this hearing, on behalf of the members of the CPPI, thank you for inviting us to offer our perspective on Bill C-33, the statutory framework that will permit the enabling of a national renewable fuel regulatory framework in Canada.
Right away, like the three speakers before me, I wish to express our association's support for Bill C-33. As you know, the CPPI is the national association of major Canadian companies involved in the refining, distribution and marketing of petroleum products for transportation, home energy and industrial uses. There are three key points that we wish to highlight with you as you consider Bill C-33.
Firstly, CPPI believes that the only sensible approach to renewable fuel mandates is one that is national in scope. Secondly, CPPI has worked hard with the Canadian Renewable Fuels Association to develop a national approach. Thirdly, CPPI is dedicated to leading-edge research on fuel quality specific to the realities unique to Canada, such as weather and geography.
Canada is a country with immense geography, a relatively small population and an economy fundamentally linked to, and in our case, competitive with the United States.
Movement of product free of economic barriers has been the cornerstone of Canada's success, and as all levels of government focus on how to remove internal trade barriers it is regretful that policies in provincial jurisdictions regarding renewable fuels have had the effect of creating new economic barriers across Canada.
As can be seen on the chart presented in the document, a patchwork of regulation is emerging across Canada. The second chart shows where the main refining centres are located. What is not shown here is that as we speak, there are recent proposals from Ontario and British Columbia to follow in the footsteps of California and introduce further another layer of complexity called the low-carbon fuel standard. The goals are unclear.
One of the benefits of Bill C-33 is that a national framework will emerge, and we congratulate the Parliament of Canada on recognizing the importance of showing federal leadership.
Secondly, regarding the essential feature of a national policy on renewable fuel, CPPI understands the many motivations that underlie public policy attention to renewable fuels. More important, let's remind ourselves that this framework cannot achieve this on its own. While countries like the United States pursue renewable fuel policy based on energy independence and security, this is not the case in Canada, nor is it likely to be the case in the near term. Canada has an abundance of natural resources that with some stewardship and innovation will provide both energy security and value-added jobs and economic growth for the benefit of all regions of Canada.
A national renewable fuel strategy is also not a panacea for the challenge posed by climate change. It may be one day, but for the moment I think we can agree that scientists, engineers, health practitioners, and modelling experts are still working on the real solution to climate change, and we are ready partners in that research.
So why have a renewable fuel mandate? At the very least, it is instructive that the House of Commons has referred this very important piece of legislation to the Standing Committee on Agriculture and Agrifood. As stated in our jointly agreed policy framework with the Canadian Renewable Fuels Association, we have repeatedly taken the position that it is up to government to make the political decision to develop a renewable fuels policy that is in the best interests of Canadians.
Mr. Chairman, Bill C-33is but one building block that will bring a sound renewable fuels framework to fruition. The agenda ahead, if we are truly to succeed, is laid out in our CPPI-CRFA framework, which is attached for your information.
Basically, the framework calls for five things: federal leadership; a competitive environment; technology advancement; policies that induce the ability of renewable fuels to drive down GHG emissions; and open borders.
I wish to inform parliamentarians that the federal government, in the budget, sent some very confusing messages about renewable fuels.
On the one hand, very generous programs will be in place as of April 2008 to provide production subsidies. One of the federal government's announcements concerned the ecoENERGY for Biofuels Initiative, which will invest up to $1.5 billion over nine years to boost Canada's production of biofuels.
Unfortunately, in the 2007 budget, the Excise Tax Act was amended to repeal the tax exemptions for renewable fuels.
In fact, the government brought in a higher tax rate for biofuels. Over the same period of time as the ecoEnergy program, the government has cut $1.5 billion that would otherwise have been used to keep the cost of bioblended fuels in line with regular gasoline and diesel fuel.
From where we stand, this translates into no net new investment in biofuel production.
As has been demonstrated in the U.S., a federal blenders' credit is the preferred method of supporting ethanol production. The equivalent of Canada's federal blenders' credit terminates on April 1 of this year, but in the absence of a comparable arrangement with our largest trading partner, we will fall short of expectations that renewable fuel in Canada will easily compete with the same product south of the border.
Mr. Chair, Mr. Gene Carrignan, chair of the national association, will now conclude our presentation.