Environment Committee on Oct. 27th, 2025

[The Chair, Liberal, Angelo Iacono]

I call the meeting to order.

Welcome to meeting number 10 of the Standing Committee on Environment and Sustainable Development. This meeting is taking place in a hybrid format and is in public.

We have witness testimony for the full two hours. For those attending in person, please follow the health and safety guidelines for using the earpieces, which are written on the cards found on the table.

The committee is resuming its study on the effectiveness, potential improvements and capability of Canada's 2030 emissions reduction plan.

This morning, we are meeting with the following witnesses. From Clean Prosperity, we have Etienne Rainville, vice-president for central Canada. From the Pembina Institute, we have Janetta McKenzie, director of oil and gas, joining us by video conference. From Keystone Agricultural Producers, we have Colin Hornby, general manager, also joining us by video conference.

Colleagues and witnesses, when you see this yellow card going up, you have one more minute to speak. When you see this side of the card, you must stop speaking because your time is up. Thank you.

I will start with some opening remarks.

Mr. Clerk, please highlight the comments we received from the minister's office with respect to her visit.

[The Clerk of the Committee, Leif-Erik Aune]

Environment Canada has written to the committee to advise that Minister Dabrusin has not yet confirmed her availability, but officials from the department are available to appear before the committee on Monday, November 3, if it's the will of the committee, to discuss the work of the department. That's the update.

[The Chair, Liberal, Angelo Iacono]

Thank you.

We will start with the witnesses' opening remarks.

Mr. Étienne Rainville, you have the floor for five minutes.

[Etienne Rainville, Vice President, Central Canada, Clean Prosperity]

Thank you, Mr. Chair and members of the committee, for the invitation to present today.

My name is Etienne Rainville. I am the vice-president for central Canada at Clean Prosperity, which is a not-for-profit, non-partisan Canadian climate policy organization that advocates for market-driven solutions to build a low-carbon economy and reduce emissions.

The 2030 emissions reduction plan, or ERP, presented by the former federal government included dozens of measures aimed at reducing emissions, but for the purposes of this presentation, I’ll focus on the merits of only one: industrial carbon pricing.

Industrial carbon pricing is the single most significant policy detailed in the ERP. Industrial emissions account for 42% of Canadian emissions, and this single policy is projected to achieve as much as 50% of Canada's reductions by 2030. Further, it achieves that while being among the lowest economic costs to Canada, being sensitive to trade-exposed sectors, creating minimal pass-through costs to consumers and being widely supported by industry.

The history of industrial pricing in Canada started in 2007 with Alberta’s creation of the specified gas emitters regulation. Other provinces, such as British Columbia, Quebec and Ontario, later followed suit and introduced their own systems. Industrial pricing went nationwide in 2018 with the passage of the federal Greenhouse Gas Pollution Pricing Act.

While industrial pricing systems vary by jurisdiction in Canada, most provinces operate output-based pricing systems. These systems work by establishing a performance benchmark for each facility and setting a stringency rate that prices a specific fraction of a given facility's emissions. That benchmark tightens every year, slowly escalating both the price and the fraction of emissions covered.

Facilities that exceed the benchmark face a compliance cost, and those that outperform it are able to generate credits to sell to those that have exceeded it. In this way, a market is created. The market is broadly technology- and industry-agnostic, and it works to identify and pursue the lowest-cost decarbonization opportunities within a given jurisdiction. This allows the economy to target the lowest hanging fruit, prioritizing investments that can reduce emissions for, say, $50 per tonne, instead of $500 per tonne. Non-pricing regulations, by contrast, are often more indiscriminate, less flexible and more economically burdensome, and they often fail to distinguish between high-cost and low-cost emissions reductions.

While I expect that most members of the committee are familiar with how the consumer carbon tax or fuel surcharge is operated, there are two key differences I would highlight about industrial pricing that explain how it keeps costs low.

First, the consumer carbon tax worked by charging a price on every tonne of emissions. Industrial pricing systems work differently by charging a price on only a fraction of emissions today. It's roughly 20% in most jurisdictions.

Second, the consumer carbon tax charged the full carbon price on each tonne. Output-based emissions pricing systems provide the option to pay by credits instead, with credits often trading at a discount to the headline price, subject to supply and demand in a given market.

What’s the catch? The primary challenge with industrial pricing in Canada is long-term certainty. Initial emissions reductions can often be made through efficiency projects, but when those options are exhausted, facilities may consider deploying new technology, like carbon capture, electrification or fuel-switching options. All of these are capital-intensive projects, and their economic case rests in part or wholly on generating revenue via credits in their output-based pricing systems. A lack of long-term certainty in the durability and the rules of the system means they aren’t as investable as they should be. Without investment, you aren’t deploying technology, and without technology, you aren’t getting emissions reductions or the low-carbon growth you’re looking for.

This is having real-world impacts. In our recent report, “Market Force”, we calculate that over 50 billion dollars' worth of projects across Canada need a stable carbon market to advance. This uncertainty also helps explain why the emissions reduction plan’s modelling is falling short of real results. In our 2024 report, “Missing Megatonnes”, we found that uncertainty around carbon pricing could prevent Canada from achieving as much as 33 megatonnes of industrial emissions reductions per year by 2030, and the situation has only worsened since then.

Thank you for your time. I look forward to your questions.

[The Chair, Liberal, Angelo Iacono]

Thank you, Mr. Rainville.

I'll pass the floor now to Janetta McKenzie for five minutes.

[Janetta McKenzie, Director, Oil and Gas, Pembina Institute]

Thank you, Mr. Chair and committee members.

My name is Janetta McKenzie. I'm the director of the oil and gas program at the Pembina Institute. I hold a Ph.D. from the University of Waterloo, where I researched oil and gas regulatory development. I've also worked on regulatory compliance in the pipeline industry here in Alberta.

In investigating the efficacy of Canada's emissions reduction plan, today I'd like to highlight two sectors whose emissions have changed dramatically over the last 20 years. I believe they tell a story of how strong, durable climate policies can work without damaging industrial competitiveness.

First, Canada's electricity sector has achieved a massive reduction in greenhouse gases while growing its output. The sector has reduced 68 million tonnes, or 60%, of its carbon emissions over the last 20 years while increasing generation by 10%. On the other hand, the oil sands, the handful of companies in Alberta where bitumen is produced, have seen an increase of 55 million tonnes in emissions since 2005. That's an increase of over 150%.

The difference is simple: policy. The electricity sector responded to clear, long-term climate policies. Ontario began its phase-out of coal-fired power in 2003. Building on that success, in 2012 Prime Minister Stephen Harper mandated a nationwide coal phase-out by 2061. Federal and provincial governments of different stripes built on that commitment, resulting in regulations that sought to eliminate coal emissions by 2030 nationally, all while giving provinces flexibility to meet that goal and industry the runway to invest in other forms of power generation.

In Alberta, despite protestations that it couldn't be done, in 2024 the last coal-fired power plant went off-line ahead of schedule, despite coal powering 60% of the grid just a decade before. Meanwhile, Alberta was initially flooded with billions of dollars of private investment in wind and solar projects, from which local governments collect millions of dollars annually in municipal tax revenue.

In other words, coordinated coal regulations are a prime example of durable, predictable climate policy that companies can use to make long-term investment decisions. It's also a good reminder that climate policies don't only reduce emissions; they also show the world that Canada is open for business for low-carbon investment. Globally, clean energy investment now outnumbers that in fossil fuels at a rate of two to one, reinforcing Prime Minister Carney's statement that climate action is not simply a moral duty but an economic imperative.

Now let me turn to oil sands. In contrast to electricity generators, oil sands companies have not yet been subject to policy, either federal or provincial, that has effectively checked their overall pollution. Despite rhetoric about climate policies damaging the sector, oil sands production and emissions are at an all-time high. The oil and gas industry overall is responsible for almost one-third of Canada's emissions, though only one-twentieth of our GDP.

For the oil sands and for all sectors, we need strong policies guided by clear targets and predictable timelines that investors can have confidence in. Conversely, as we have seen south of the border, whiplashing policies are damaging to industries, suppliers and workers.

Industrial carbon pricing is Canada's best tool for driving innovation in high-emitting sectors like the oil sands. It has enjoyed the support of heavy industry, including oil and gas executives, for well over a decade because of how it slowly and predictably gets stronger, allowing them to plan out more and more investment in decarbonization over time.

Unfortunately, the Province of Alberta has recently taken backward steps that weaken its industrial price, despite the fact that complying with the current system costs oil sands firms just a few dollars on the barrel. If what we want is a cleaner, future-proofed oil sands, or anything approaching decarbonized barrels of oil, then strong industrial carbon pricing systems efficiently channel millions of dollars of private capital towards that goal.

Finally, the fact that we are not yet on track to meet our 2030 climate targets does not mean that the emissions reduction plan has failed. Such measures as industrial pricing, clean electricity regulations and electric vehicle sales standards are long-term measures whose benefits will only be fully realized if they're given the time to do so. Much like preparing for a marathon, where every training run you do improves your fitness, every tonne that we don't emit and every low-carbon investment that is made improves our climate competitiveness. However, as the contrasting examples of the electricity and oil sands sectors show, we won't get there without long-lasting regulations and policies that investors can work with and depend on.

Thank you again for having me today. I'd be happy to take your questions.

[The Chair, Liberal, Angelo Iacono]

Thank you, Ms. McKenzie.

Mr. Hornby, the floor is yours for five minutes.

Thank you.

[Colin Hornby, General Manager, Keystone Agricultural Producers]

Thank you, Mr. Chair.

Good morning, committee members. I appreciate the invitation to share some thoughts today on behalf of Manitoba farmers.

My name is Colin Hornby. I'm the general manager for Keystone Agricultural Producers, Manitoba's general farm organization, representing the interests of all Manitoba farmers. Our membership includes over 6,000 direct-paying individual farms and 20 commodity group members, representing the entire sector.

Farmers care deeply about the environment. They live on the land. In the many conversations we've had throughout the years, one common theme persists. They want to leave the land the same or better than when they put that first seed in the ground.

They depend on it every day for their livelihoods, their families and their futures. Nobody has a greater interest in protecting our soil, our water and our air than the people who work the land themselves. However, what I hear again and again from farmers across the province is that there's a growing sense of frustration and, frankly, a loss of trust in government environmental initiatives and programs.

When targets and initiatives are undertaken, I can appreciate their being aspirational and impactful; however, these must be grounded in the realities of how modern farming operations function.

Let's take fertilizer emissions as an example. In 2022, ECCC released its “A Healthy Environment and a Healthy Economy” plan, setting a target of reducing fertilizer emissions by 30% below 2020 levels by 2030. This was described as a voluntary target, but farmers quickly realized the challenges with its feasibility. They understood that cutting emissions by 30% without cutting fertilizer use was simply not realistic, especially with today's crop yields and soil conditions.

Farm groups, including us and the CFA, made it clear that this target could hurt production, lower farm income and weaken Canada's ability to compete on the world stage. Why did Ottawa not understand this?

Canadian farmers are not opposed to efficiency or innovation. In fact, they've been world leaders in both. They've adopted precision agriculture, zero till, cover crops, rotational grazing and 4R nutrient management strategies that reduce waste and emissions.

Agriculture has untapped potential. Compared to many other industries, agriculture can, in fact, remove emissions through carbon sequestration. Researchers have shown these effects. Farmers have created these effects. What farmers want are policies that work with them, not against them. They want policies grounded in science, not ideological assumptions about how agriculture works.

There's also the carbon tax. While we greatly appreciate the fact this drastically unreasonable policy was eventually reversed, when it was implemented farmers paid more to dry their grain, heat their barns and transport their goods. These are not optional activities. They're the core of modern farming. Every extra dollar spent on fuel is a dollar taken away from investing in better equipment, new technology, employees or next year's seed and inputs.

I've personally seen the countless utility bills from our members over the years, showing additional thousands of dollars spent per month to conduct these core business operations where there are no alternatives. KAP and other farm groups across the country were clear in our opposition, yet our voices fell on deaf ears. The carbon tax put farmers at a competitive disadvantage. This was one instance where the entire sector was unified and lobbied together against a single policy with one shared voice.

Canadian farmers sell into global markets where they compete against producers in countries without these added costs. When input prices are already climbing for fertilizer, fuel and feed, the extra layer of taxation makes it even harder to stay competitive.

That's why, as I mentioned, there was such strong industry and multi-party support in Parliament for Bill C-234 in the previous Parliament. It proposed to exempt on-farm natural gas and propane used for essential processes like heating livestock barns and drying grain. Farmers were simply asking for fairness. We saw the efforts to stop that bill from being fully implemented, and it was disheartening for farm families across Canada.

When government says it wants to partner with farmers, it needs to show that it's actually listening. Instead, what many producers see and feel is a pattern of Ottawa setting targets and timelines without meaningful consultation and without understanding how those decisions play out in the field. The result is a widening trust gap.

This deepens the urban-rural and east-west divides that persist, especially in the Prairies. Farmers want to do their part, but they're tired of feeling like they're being treated as if they're the problem. They are part of the climate solution, and that's the truth. Farmers are stewards of some of the most productive and sustainable farmland in the world. They're already adopting practices without programs telling them to do so. What they need from Ottawa is predictability, competitiveness and a genuine partnership based on respect for the expertise they bring to the table.

My message today is simple. Let's rebuild trust and listen to the people who feed our country and drive the economy. Economic growth must anchor any policies brought forward, including those in the environmental file. You can't be green when you're farming in the red.

Let's craft policies that strengthen, not weaken, Canadian agriculture. Let's implement policies that help farmers stay competitive while continuing to care for the land they love—with them at the table, not on it.

Thank you for listening.

[The Chair, Liberal, Angelo Iacono]

Thank you very much, Mr. Hornby, for your opening remarks.

We'll start with the Conservative Party.

Mr. Leslie, you have the floor for six minutes.

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

Thank you, Mr. Chair.

Thank you Mr. Hornby. I'm glad we were able to get an agricultural perspective added to this study.

I appreciated one of your lines, which was that farmers need to be part of the solution and, in fact, are part of the solution for the emissions reductions that we have seen in this country. I'd like to start with a specific policy, though.

You work on behalf of thousands of farmers in Manitoba. Have any of them ever indicated to you that they support the Liberal's electric vehicle mandate?

[Colin Hornby]

Thank you for the question.

That's not a topic that I've heard brought up from our membership, no.

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

You are a general farm organization, meaning that you're not commodity-specific, and you advocate for rural issues, broadly.

Do you think it is wise to force farm families living in rural Manitoba to purchase electric vehicles, where there are barely any charging stations and it's regularly below -30°C in the wintertime?

[Colin Hornby]

What I would say is that, in general, any time I speak to a farmer, when you talk about anything forcing, requiring or making prescriptive a certain purchase, activity or behaviour, generally, they would oppose it.

What we want is for farmers to be able to choose what best suits their operation. It could be that, perhaps, somebody does choose to purchase an electric vehicle; that could be their choice. However, not everybody has the means, nor is it practical, necessarily, depending on whether you're in, say, Ethelbert, Manitoba. It may not be realistic for you if the infrastructure doesn't exist. I think, today, that's not necessarily feasible for many producers.

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

Thank you.

During your opening remarks, you outlined some of the frustrations that many of us from the farming community have in terms of the Liberal government, which is the fact that we seem to be completely ignored. Farmers are an afterthought.

You mentioned some of the laws that have been made without, really, any consultation. How frustrating is it for the farmers you represent that Ottawa just passes laws and regulations that drive up their costs of doing business without even consulting them?

[Colin Hornby]

Some of the sentiment that I've heard from our members is about more than just agricultural policy. We've seen this throughout the country. As I mentioned, there's a rural-urban divide. There's a feeling that there are those who, perhaps through no fault of their own as they represent individuals in areas that are more urban, don't necessarily have an understanding of the realities of rural lifestyles and agricultural operations. It is frustrating, for sure, that many seem to feel that way, and I don't personally believe there is ill intent. However, I think it's just a reality that needs to be talked about more and more.

When we meet with members from urban areas, something we try to frame for them is how agriculture impacts them. Agriculture actually creates one in eight or one in seven jobs in Canada, regardless of where you are. If you look in Manitoba, down in St. Boniface, there's what we call “bacon corner”, where Maple Leaf has 3,000 jobs at a pork processing plant. We're the bacon capital of the world, essentially. That's an urban area, so agriculture creates jobs and impacts members everywhere in Canada.

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

I hope you continue to share that message loud and proud because we are a critical industry within this country.

You mentioned the fertilizer use cap that was proposed back in 2020. The farming community, rightfully, was completely outraged with, again, the lack of consultation on this idea that did not take into account, or listen to, the fact that we have adopted 4R nutrient stewardship technologies and no- or minimal-till operations that have significantly reduced our emissions.

I wonder if you could talk a bit about some of those practices and the fact that we, as the farming community in Canada, have increased our output significantly while not increasing emissions. Where do you think that could be going for Canadian farmers?

[Colin Hornby]

There's a lot that's been done over the years. I'm not an agrologist or an agronomist, so speaking to the specific numbers or processes isn't, perhaps, something I could do.

I do know that, for example, for 4R nutrient stewardship in Manitoba, the model we've adopted is a memorandum of understanding among industry, government and producer groups like ourselves, so it's KAP, Fertilizer Canada and the Government of Manitoba. This has gone back 20 years.

It's a shared commitment, with farmers, government and industry producers of fertilizers at the table. We say, “Here's a system with 4R nutrient stewardship that encompasses many different strategies and components. How do we work together to advance these principles and to increase the number of acres we are using for our practices?” We have seen a consistent increase in that over the years from this partnership.

That's one example where we could say that this is a success. It's not prescriptive. It's being collaborative. It's having government, industry and producers all together at the table saying that this is something we all agree on and this is something we can push forward together on, in our different respective ways.

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

Thank you.

In my view—I assume you share this—the world actually needs more Canadian agriculture. We should be darn proud of the strides we have made in our industry to stabilize emissions while increasing our production significantly. The intensity has been increased.

At a time when we see countries around the world devastating their forests and destroying landscapes to try to produce crops anywhere near the same quality and quantity that we do, how frustrating is it to see the federal Liberal government imposing penalties—

[The Chair, Liberal, Angelo Iacono]

Thank you.

I'm sorry, Mr. Leslie.

Mr. St‑Pierre, you have the floor for six minutes.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thank you for attending here today.

My question is for you, Ms. McKenzie.

The Pembina Institute put together a report in 2024 called “All Together Now: A provincial scorecard on shared responsibility to reduce greenhouse gas emissions in Canada”. Firstly, can you provide a copy of that report to this committee?

The report found a wide variation in performance across Canada's governments. Some provincial climate plans were more advanced than others. Can you share the performances of provinces, for example Alberta, and the impact that certain provinces will have on Canada's nationally determined contributions?

[Janetta McKenzie]

Yes, of course. We will send a copy of that report after this meeting.

In 2024, the Pembina Institute worked with Simon Fraser University to identify 23 indicators that represent best practices in climate and energy policy. We used those indicators to assess how Canada's federal and provincial governments were performing on climate and clean economy preparedness. We awarded provinces green, yellow and red ratings based on these indicators and based on their current policies and plans.

Some of our main findings were that two provinces are really leading. British Columbia and Quebec, as well as the federal government, are really showing leadership with emissions reduction targets backed up by public monitoring processes, with sector-specific measures like zero-emissions vehicle incentives or methane reduction targets and strategies to protect populations from the worst effects of climate change.

Two provinces are falling further behind. Even since last year, they have fallen even further behind. Alberta and Saskatchewan still don't have targets to reduce emissions by 2030. The climate plans they have released lack sufficient detail to be considered credible. They are also still actively opposing some federal climate measures like the phase-out of coal in Saskatchewan or measures to tackle oil and gas emissions in Alberta, mostly on economic grounds, while refusing to recognize that the economic impact of runaway climate change is quite significant or while failing to seek out billions of dollars of low carbon-aligned investment.

I'd like to highlight Alberta specifically. It's a good example because while it has a climate plan that was released in 2023, there's very little in the way of actual policy levers that would facilitate achievement of that plan. That is why Alberta was awarded mostly red ratings.

It's quite notable as well that one of the province's only green ratings—which is whether the province has a carbon price on industrial emitters that meets the federal benchmark—is now likely to be red given recent changes to TIER, especially the freezing of the headline price at $95 per tonne, which Alberta says it will retain for the foreseeable future. This threatens to undermine investment in key low-carbon technologies including carbon capture.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Great. Thank you.

Earlier this year, the Pembina Institute also produced a report called “Down But Not Out”, which showed that the moratorium on renewables in Alberta caused the cancellation of 53 renewable energy projects. Firstly, can you provide a copy of that report to this committee?

What impact has such provincial action, such as the moratorium, had on Canada's 2030 targets?

[Janetta McKenzie]

In short, it makes meeting those 2030 targets quite a bit harder. Up until two and a half years ago, Alberta was the destination of choice for renewable energy investment in Canada. For years, it led the country on new additions of wind and solar, generating billions of dollars in investment and adding new low-cost generation options to the province's electricity grid.

In August of 2023, the Government of Alberta announced a sudden and surprise moratorium on approvals for all renewable projects. As you noted, the immediate effect of that was quite sharp, with 53 projects pulling out essentially overnight.

In February of 2024, the moratorium was formally lifted; however, there have since been a number of new policies and contemplated changes directly affecting the renewable energy sector that have undermined confidence in this once very booming industry.

In August, 2025, two years after the moratorium was announced, a Pembina Institute analysis found that, although the Alberta Electric System Operator project development queue is “now back at pre-moratorium levels, there is a concerning increase in cancellations—suggesting that while investors may be joining the project queue, many are then leaving before their project is approved, or deciding not to put shovels in the ground even after they have the approvals in hand.”

Indeed, we found that almost 11 gigawatts of wind, solar and energy projects have been cancelled since the start of the moratorium. For reference, that's more than Alberta's average total power demand. What's happening to Alberta's renewables market is decidedly quite contrary to global investment trends in renewables, suggesting that these policy choices by the Government of Alberta are having a real direct effect on investor confidence.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thank you, Ms. McKenzie.

I have 45 seconds with Mr. Rainville.

You mentioned the “Missing Megatonnes” report. Can you provide a copy of that to this committee? Also, Clean Prosperity has had an exceptional leadership role in CCFDs, carbon contracts for differences. Can you quickly explain how CCFDs could get us to our 2030 or 2050 targets?

[Etienne Rainville]

I'm absolutely happy to provide the report.

CCFDs are a mechanism that are hard to elaborate on in one minute. They're a mechanism from the financial sector drawn from the derivatives markets that are used in Canada now by the Canada growth fund in order to provide certainty around industrial pricing and the revenues associated with it.