Mr. Speaker, Bill C-33 sets out to amend the Canadian Environmental Protection Act in an important way.
The bill, for Canadians who are watching or who will read the transcripts of this debate, is really about expanding the scope that the Minister of the Environment has to regulate fuels in Canada. In fact, the brief summary of the bill says that the entire bill is merely to provide for what they say is the efficient regulation of fuels and the new measures that it puts forward are administrative in nature and give the government more control on regulations.
For example, the government enhances its ability to regulate fuel produced in Canada that is to be exported. Regulations can be made regarding the blending of fuels, how we mix them and in what percentages, an obvious nod as we have heard to the expanding biofuel industry. It also expands the basis upon which a government can distinguish between different kinds of fuels. It is fundamentally a housekeeping bill. There is really nothing in the bill that will immediately affect any commercial interest or immediately require any fuel producer or vendor to do anything. It is a very preliminary step that will allow the government to regulate all kinds of fuel within the same regulatory regime.
From that perspective, it is an improvement over the current wording of the Canadian Environmental Protection Act. The official opposition supports the bill in principle and we look forward to discussing the merits and the parameters of any new regulations that will come from the bill when it gets to committee.
That being said, I would like to continue with my remarks in three separate ways. First, I would like to talk about the government's setting of a 5% ethanol standard in Canada. I would like to talk about the incoherence of that new target that is forthcoming with the changes the government is bringing about to the excise tax exemption. Finally, I would like to talk about how this fits, or does not fit, into a climate change plan which frankly has been completely discredited by all third party observers in Canada.
This morning we saw news reports that four major Canadian provinces, British Columbia, Manitoba, Ontario and Quebec, have decided to no longer wait for the federal government in terms of coming up with a coherent climate change plan. They are going to go it alone. They are looking at designing their own cap and trade system. They are looking at the potential of fungible trading, trading that can happen between Canada and Canadian provinces and American states, for example.
This is happening at a time when the government is bringing in a minor technical adjustment bill to allow for the regulation of new fuels, which is only a very small part of what should be a coherent national climate change response.
Let us talk about Bill C-33 and what it actually will do if the government is going to follow through, as the environment minister and the agriculture minister have both said, with a 5% national ethanol mandate by 2010.
First, the official opposition has been calling for a 10% ethanol position since last January when the Leader of the Opposition challenged the government in a speech to Saskatchewan farmers in Regina to increase to 10% what had already been put forward in our election documentation of 2006 calling for a 5% ethanol content.
It is important for Canadians to know that all car manuals, in every car sold in Canada today, tells car owners that today they can in fact use a 10% ethanol content in their engines as they run their cars.
We know that if we had a 10% mandate in Canada as opposed to the weaker 5% put forward by the government, it would double the amount required to some four billion litres a year, a figure already surpassed in terms of those plants that are presently operating, under construction and being financed. When the Minister of Agriculture and his parliamentary secretary speak about supporting our farming community, one has to ask the question, why is the government pursuing such an unambitious target of 5%?
In fact, in late June the former minister of agriculture labelled the official opposition leader's call for 10% as “overly aggressive”, which the Canadian Report on Ruel Ethanol says is in itself an excessive term given that Ontario, the country's largest gasoline market, is already moving from an existing annual average E5 requirement to 10% starting in 2010. Why is the federal government lagging behind the province that consumes the largest amount of gasoline in the country? There is no explanation so far.
It is interesting to note as well that the Renewable Fuels Association that was quoted just moments ago by the parliamentary secretary is in fact driving for a 10% ethanol content. It says that since today all car manuals allow for 10% ethanol, this means that the government's legislation will allow for two years of the use of sub-environmental quality gasoline, that is, 5% ethanol, but two years later such blends have to be increased to at least match the level allowed for in 100% of all car manuals.
Thus, even the Renewable Fuels Association and its president Gord Quaiattini, who was just quoted by the parliamentary secretary, are opposed to the government's standard. Some consultation. Some leadership. All of this, of course, is in the context of the climate change plan.
Let us talk for a few minutes about the science behind ethanol and greenhouse gas reductions. Three or four colleagues have raised questions about the merits of one form of ethanol derived from one plant substance over another form of ethanol derived from yet another plant substance. Let us talk a bit about that.
I was quite astounded, in fact, to hear the Minister of Agriculture tell the House that this is his bill but he is unable to speak about the environmental considerations that ought to be paramount with respect to what he is trying to accomplish here.
We know that the environmental impact of ethanol depends very much on the raw materials and the production process used to make it. Studies of corn based ethanol, which is the most common form in North America, vary in how much greenhouse gases can actually be reduced. Some studies say there can be a net positive effect, while other studies say there can be a net negative effect. It depends on how it is measured.
Berkeley University found that corn ethanol reduces greenhouse gas emissions by about 13%, whereas another form of ethanol called cellulosic ethanol would produce about 85% fewer greenhouse gases than gasoline. That is 13% for corn and 85% for cellulosic ethanol. In terms of greenhouse gas emissions per mile driven, gas with 10% ethanol lowers emissions by 2% and E85 lowers emissions by 23% for corn based ethanol and 64% for cellulosic.
There are major concerns, realistic concerns, that heretofore we have not seen even mentioned by the government and we hope to see these debated in committee.
As we heard from the minister recently, the new demand for corn to produce ethanol is inflating corn prices, raising the price of both corn based products and other commodities that use corn as feed, such as beef, pork, and milk, for example. It raises the price of substitute crops, particularly as farmers switch to corn and produce less of the other crops. Some argue it could harm our exports of corn based or corn fed products. The proponents, those who favour corn based ethanol, say there is still a crop surplus carried over each year and that yields are growing.
Here is something else. We know that even small increases in grain costs harm poor people the most and could exacerbate world hunger. The often cited example is the price of tortillas in Mexico, which doubled in 2006, a year of record United States corn prices. Mexico gets 80% of its imported corn from the United States.
Here is another factor. Corn is energy and water intensive and is a highly polluting crop to grow. We have to be honest about this. It requires large amounts of fertilizer, pesticides and fuel to grow, harvest and dry, not to mention transport. It contributes to soil erosion and water pollution. It is a major cause of nitrogen runoff, which can create oxygen-starved dead zones in our water bodies, an extremely important issue for Canada.
Some people are concerned that the increased use of E85 as a motor fuel may lead to increased smog and health effects, but there I do not think the research is conclusive.
Sometimes when farmers rush to convert to or increase the production of corn or sugar cane or other crops for ethanol, there is a fear that the conversion of forests or wilderness to farmland will not only harm biodiversity but may negatively affect the net greenhouse gas reductions of ethanol use.
Even with major increases in ethanol production, ethanol is an expensive drop in the bucket in terms of reducing overall emissions. It is an expensive per tonne process to reduce our greenhouse gases. That is why cellulosic ethanol, which is often called second generation technology ethanol and uses waste material and switchgrass, et cetera, offers the real hope for significant reductions in GHG emissions.
Corn based ethanol has a net positive effect, I believe, but is not holding out the same promise. I think the government ought to be putting forward a policy where everything possible that can be done to direct the industry toward the next generation of ethanol development should happen if we really want the environmental benefits without as many drawbacks.
Yet there is another angle that deserves to be raised, and that is the incoherence between the government's purported 5% ethanol content regulation and what it is actually doing when it comes to taxation policy for these very fuels.
On April 1, just two months from now, the government will repeal the excise tax exemption for biodiesel and ethanol fuels. We know the effect of the repeal on low level blends is small, and maybe even minimal, but we know the additional taxes are substantial for higher blends. The price of what they call B50, for example, will increase by 2¢ a litre. The price of E85 will increase dramatically, by 8.5¢ a litre, hardly making the fuel competitive.
The tax increases come at a time when this early stage industry needs traction to establish a foothold in Canada's refueling market. There are 31 vehicle models today on the road in the Canadian market, 31 different kinds of vehicles that can use E85, but there are only two full-fledged E85 retail stations in the country compared to 1,200 in the United States.
Higher level blends are better for the environment than lower level blends. So what does the government do? It removes the tax subsidy, thereby driving up the cost of the substitute so that it is not competitive in the market at the retail stations and in fact pricing it over the $120 oil, as we have seen through analysis.
On this side of the House, we are really having a hard time reconciling how these two actually connect. In fact, we do not think they do at all. We think that the Minister of Finance took a decision on this particular excise tax exemption without talking to his colleague, the Minister of the Environment, who obviously did not talk to his colleague, the Minister of Agriculture, all of this in a government that purports to have a special cabinet committee where energy, environment and the economy come together. We are trying to figure out how they do come together.
My colleague, the member for Newton—North Delta, who is the official opposition critic for competitiveness and the new economy, has been raising this issue now for some months. It is falling on deaf ears with the government. He is trying to reconcile, for example, how a major company in his own riding or close to it, Cascadia Biofuels, has cancelled its plans to become the first retailer of E85 ethanol in B.C. because it is now going to be unaffordable to sell. What kind of market incentive are we creating?
In my own riding of Ottawa South, the largest single manufacturer of enzymes to produce cellulosic ethanol, Iogen Corporation, located just 30 or 40 blocks from here, is now getting very worried about the production processes and the ultimate costing of ethanol in Canada, more particularly in my home province of Ontario, where the provincial government in its wisdom set a 10% standard there as opposed to a meeker and less ambitious 5%.
For Canadians, all of this has to be seen in the context of climate change policy. Let us take a look, as the parliamentary secretary suggested, at the climate change policy of the government. Let us see where it is actually at today.
First of all, the Intergovernmental Panel on Climate Change told the government, all parliamentarians and all Canadians that we need to contain temperature increases to between 2° and 2.4° if possible. We will only be able to do that, it says, if we stabilize emissions within 15 years and cut them in half by 2050. We have to stabilize in 15 years and cut emissions in half by 2050 or we play Russian roulette with the atmosphere. That is the choice. The IPCC has told us.
It reminds me of the old advertisement on television for FRAM oil filters. The first shot was of a mechanic standing at the window who was saying “you can pay me now for your oil filter”, while the next shot was the car being wheeled in, obviously broken down, with the mechanic saying “or you can pay me later”. This is what we are talking about when we talk about a functioning atmosphere: pay now or pay later.
The Stern review, conducted by the former chief economist at the World Bank on the economics of climate change, said that the costs of ignoring climate change would be 5% to 20% of GDP, more than the cost of two world wars and the Great Depression combined. In contrast, the cost of tackling the problem now can be limited to 1% of global GDP, if we act now.
The IPCC report also says there are already many effective low-cost options available to developed countries like Canada to reduce greenhouse gases: financial incentives, and we have just talked about one, the excise fuel tax; deploying existing technologies; tradeable permits and carbon credits, something missing from the government's climate change plan; renewable power investments, cut since the government came to power; and voluntary programs.
Here is another study. Just four months ago, McKinsey & Company, the largest and most respected management consulting firm in the world, showed that a great deal could be achieved in the fight against climate change without placing an undue burden on the economy if governments were to provide incentives for the development and deployment of green technologies. The study concludes that the annual worldwide costs for making the needed emissions reductions to avoid worse climate change is only 0.6% of that year's projected GDP in 2030.
I could go on. The litany of failure on the government's climate change plan has now been well detailed by the C.D. Howe Institute, Deutsche Bank, the Pembina Institute and the Tyndall Centre for Climate Change Research and the National Round Table on the Environment and the Economy, the Conservative government's own board, have told the government its plan is baseless and will not achieve their targets in any way. In fact, not a single third party observer has put forward a shred of evidence to substantiate that its plan will work.
Once again, we see the government's incoherence. The Environment Minister , the Finance Minister and the Agriculture Minister do not speak to each other because they could not even get a basic policy straight as a subset of the climate change plan, a plan which has now been widely discredited throughout Canadian society.
Those are my remarks. I welcome any questions and comments from my colleagues.
