Bill C-377 (Historical)

Climate Change Accountability Act

An Act to ensure Canada assumes its responsibilities in preventing dangerous climate change

The purpose of this enactment is to ensure that
Canada meets its global climate change obligations
under the United Nations Framework Convention
on Climate Change by committing to a long-term
target to reduce Canadian greenhouse gas emissions
to a level that is 80% below the 1990 level by
the year 2050, and by establishing interim targets for the
period 2015 to 2045. It creates an obligation on
the Commissioner of the Environment and Sustainable
Development to review proposed measures to meet the
targets and submit a report to Parliament.
It also sets out the duties of the National Round Table on the Environment and the Economy.

[David Sawyer, Economist, EnviroEconomics]

Mr. Chairman, members, and guests, thank you for the opportunity to speak on the economic implications of Bill C-377.

My name is Dave Sawyer. I'm an Ottawa-based economist working on issues of climate policy.

I am here neither to support nor to contend Bill C-377, but rather to discuss the economic implications of the bill.

What are the economic implications of the bill? Well, not surprisingly, it depends. More specifically, it depends on how it's designed and implemented, but since the bill is not specific on this point, and since you have asked me to come here and comment on the possible implications, I basically need to identify a policy package from which to provide some judgments or some information for you. I'll do that now.

The key elements of a policy package that I use and that I think are required to assess any sort of deep GHG reductions like this—i.e., good principles to basically design effective policy for GHG mitigation—include the main points that follow.

First, not surprisingly, to attain substantial reductions in 2020 while minimizing costs, we need economy-wide carbon pricing. This means, as others have said, cap and trade, a carbon tax, or some combination of the two. Recognizing, however, that cap and trade is the dominant policy for large final emitters and that cap and trade is difficult to implement for smaller emitters like you and me—our houses and our cars—the preferred and maybe most expedient approach is to have a revenue-neutral carbon tax for the remaining emissions. While I recognize a carbon tax does not resonate politically, the alternatives have higher costs, and frankly, Canadians may dislike income taxes even more than they dislike carbon taxes.

Second, an effective policy package would provide subsidies to low-emitting technologies such as carbon capture storage and renewables—renewable electricity or renewable transportation fuel. Targeted regulations for buildings, transportation, and other difficult-to-get-at emissions would also be required.

Third, there would be significant financial flows with carbon pricing, and we must decide how these are distributed, or at least I must think about these in my assessment for providing information to you. Some revenue from cap and trade is transferred among industry through trading markets, but some could also accrue to the public through auctioning, because there is value in allocating permits free—significant value, in fact, as the European system is demonstrating. A carbon tax shift could then have income taxes on households reduced or targeted to address adverse competitiveness impacts in disproportionately impacted industries, so there are income effects that carbon revenue can be used to mitigate.

For now, let us look at domestic action only, but later on I will revisit this.

I will also focus on 2020, because if we don't hit the 2020 targets laid out in Bill C-377—or Turning the Corner, for that matter—we'll not likely be able to achieve longer-term targets by mid-century, at least not without significant economic dislocations. Again, the round table talked about this quite a bit, but technology lock-in is the issue where you have high-emitting technology rolling forward if you don't address it early on.

So with this policy package in place—I gave you a vision of a policy package—I now need to specify what the economy and the emissions will look like in 2020. With an economy growing at about 2% annually between now and then, Canada's GDP will grow from current levels of about $1.3 trillion to $1.7 trillion to $1.8 trillion. Again, a somewhat uncertain number, but the economy is growing at some sort of rate around 2% or 2.5%. This growth will then increase emissions by roughly 15% from current levels, from about 750 megatonnes currently to something around 850 to 900 megatonnes. These are publicly available estimates from Natural Resources Canada. This means that to hit the Bill C-377 targets of minus 25% below 1990, forecasted emissions will have to drop by about 50% in 2020—drop by 50% in 2020.

This compares to a 34% decrease under Turning the Corner. So we basically can bracket the types of reductions that we as a nation are contemplating in 2020: 34% to 50% below business as usual.

So now to get on to the interesting bits. To assess the economic implications of this stylized policy package, I employed two models that are routinely used to assess mitigation targets. CIMS is an integrated energy and emissions model of the Canadian economy, and it's widely used by governments, industry, and NGOs alike. Complementing CIMS is a model called C-GEEM, which is a macroeconomic model suited to questions of macroeconomic impact in public finance.

What do the models have to say about the costs of these different targets? Essentially, applying an economy-wide carbon price, having subsidies for renewables, having targeted regulations and some smart tax shifting, the models imply carbon prices in the order of about $100 per tonne in 2020 for the Turning the Corner targets and about $200 a tonne for Bill C-377. They are somewhat uncertain numbers, but they give you an idea, a rough range.

Now the question is, what do these numbers mean? The economic impact of these carbon prices on GDP, on growth, could then range between about 0.6% of 2020 GDP for Turning the Corner and 1.2% for Bill C-377. We're looking at basically reductions in future GDP less than the forecast growth rate. So we're not talking about wrecking the economy, although there are some underlying assumptions here about early action, getting moving, and stringent policy. You must also recognize that there is a significant level of uncertainty in these numbers, as there is in all modelling, but this gives you a flavour for what you're looking at.

These conclusions assume efficient policies, and indeed the models can show that a lower target with poorly designed policy could be more expensive than a higher target with efficient carbon pricing. We could go on and on about these numbers, but simply, maybe the more important point is that policy design matters much more than the targets themselves.

So the policy package I have outlined will raise prices, with increases of about 25% in electricity, 15% in petroleum products, and about 10% in natural gas. Again, this is the order of magnitude and the numbers for you to get your head around, what this means, what's the “so what”.

The impact on oil production is not so clear, given the variable of carbon capture and storage. If carbon capture and storage is widely available, the cost impacts on that sector will be much lower. If it's not available, then there are larger, larger hits. Again, poor policy design would change these price impacts entirely.

This national picture masks some sectoral and regional variations. While I can't comment on the regional variation, I can say something about the sectoral impacts. While national GDP impacts seem relatively small, sector output for the energy-intensive sectors will fall, especially in sectors like petroleum refining and coal. The extent of this drop is dependent on what is happening in the rest of the world. If Canada acts more or less in concert with the OECD, the trade impacts will likely not be as large, with drops in exports but also in imports, because prices will be rising for foreign goods.

Still, competitiveness impacts will be real and significant for some segments of the economy, so the smooth macroeconomic picture nationally is not borne out at the sector level. This is not to say, however, that we don't or shouldn't seek reductions from these sectors—you have asked for some specific targets, so you need reductions from all sectors—but rather that we should design complementary policies to address disproportionate income effects; that is, we separate a carbon signal from an income effect.

As for the notion that manufacturing will move to China, I would submit that other factors are also influencing this business decision and probably need some closer scrutiny.

I'd now like to visit the importance of obtaining low-cost reductions internationally. At domestic reductions above 20% below 2020 BAUs—the two targets I mentioned are greater than that—domestic mitigation costs rise exponentially. This means that at the targets contemplated, costs are rising much faster than reductions, so to minimize economic impacts, a strategy to access low-cost international abatement opportunities is probably a good thing, assuming they're real and verifiable.

I'd like to conclude with a short discussion of the cost of inaction, shifting basically from discussion about costs to discussion of what we get, discussion of the benefits. In thinking about designing effective climate policy, at least from an economist's narrow efficiency lens, the economist would prefer cost-effective reductions at a level where the costs and benefits are balanced, but information on the scope and scale of the possible benefits of action is too uncertain to lead to recommending targets that balance costs and benefits, so we're not in a great place.

As a result, our national climate debate continues to be informed by only a conceptual understanding of the benefits of abatement or adaptation, while we have a very acute understanding of the costs. Because of this asymmetry in information, it is likely that we will continue to be locked into a cycle of questioning the appropriateness of action on targets, regardless of their stringency. Indeed, without a balanced view of what we get for what we spend, we will continue to argue about targets, discuss policy options, reveal the associated costs, and ultimately question affordability. I call this “Globe and Mail economics”. This focus on costs and affordability is one-sided and will ultimately lead to poor national outcomes.

Oh, yes—in conclusion, a little more focus on action and a little less on targets would be nice.

Thank you.

[Dr. Shahrzad Rahbar, Vice-President, Strategy and Operations, Canadian Gas Association]

Good afternoon, ladies and gentlemen.

Thank you for the opportunity to appear before the committee as you deliberate Bill C-377.

The Canadian Gas Association represents natural gas distributors across Canada who deliver gas to around six million customers—individual homes as well as businesses and institutions.

I will touch upon three points in my remarks. I'll give you a brief overview of how we situate in the economy, give you specific comments on Bill C-377, and then wrap up by speaking to the opportunity to move forward and make real, meaningful, and quantifiable reductions in greenhouse gases.

Quickly, around natural gas and the economy, although in most public policy discourse you hear nothing about natural gas, we are a significant part of the economy: 26% of the energy end use—the numbers are in front of you—and something bigger when you look at individual homes for heating and businesses.

It's interesting. When looking at natural gas, as with any other fossil fuel, you look at where our emissions come from. The entire upstream delivery, transmission, and distribution account for a quarter of the emissions for our sector; 75% of the emissions occur at the end-use point, the six million homes and businesses whom we deal with. Our particular part of the emissions is actually fairly insignificant, less than 1%.

So where do we stand as an industry? We do believe in and are committed to being part of the solution to get Canada toward a carbon-lean future, as we would like to call it. We worked on our piece and our own emissions reductions. Our numbers are publicly available. We have reduced our own emissions, and we've been part and parcel of the conversations initially with Natural Resources, and subsequently with Environment Canada, to develop a regulatory framework for large industrial emitters. We think you need that framework. However, we also believe that without turning our attention to the other 50% of the economy, we cannot meet our obligations and our aspirations of actually getting to a carbon-lean future.

So what have we been doing with our customers? In addition to our own operations, we have been working with customers on conserving energy and on a variety of demand-side issues. We have seen progress, with the intensity of use and average use per customer declining in the past decade or so.

In my estimation, we have reached the point where we need to do something more than we have been doing. For the past two, almost three decades since the seventies, we have been focusing on discrete component improvements, meaning higher efficiency standards for discrete appliances and turning our attention to buildings. In our minds, the only way to actually meet the challenge of substantially reduced carbon in the long term is to have an integrated strategy for managing the energy demand in our communities.

I have specific comments on Bill C-377, and then I'll come back to the communities agenda and what I think is lacking in our current perspective and perhaps warrants some attention from you, ladies and gentlemen.

On Bill C-377, we agree with the need for federal leadership. The intent is laudable. We think we need federal signals that we are serious about reducing the carbon footprint of the economy. We'd like to see this issue transcend partisan discourse around whether this is real or not—we'd rather focus our energies collectively on getting ourselves there.

I don't quite think the bill makes the intent. I have a couple of reasons and some general comments.

Legislation is not the place, in our estimation, for this level of detail. The more detail you have of the nature that we see in Bill C-377, the less stable a platform you have for long-term action. Also, we look at the bill and wonder whether it's trying to afford the framework and the authorities where they already exist, and if they already exist, why do we need to set the legislation again?

Although it's not explicitly stated, the bill has definitely the flavour of again focusing on the large industrials alone. I said already that we believe the large industrials need a framework, but we also need a more economy-wide signal and a focus on the other 50%.

With respect to specific issues with the bill, the short-term targets are problematic. The various analyses done by the provinces recently in the National Round Table report would suggest the 2020 target of minus 25% is not actually doable, given where we stand today. Having us revisit the conversation on baselines we've been having for the past 10 years and trying to determine what happened 17 years ago, I think, is a bit of a distraction from focusing on what can be done on moving forward.

Not to repeat myself—but I will repeat myself—we do believe the large final emitters need to have a regulatory framework, but we also do believe that you need to focus on the other 50%. How you turn your attention to the other 50% matters. For the past 15 years, we've focused the discourse in this country entirely on the large final emitters. I'm not encouraged by the level of sophistication I see on the other 50%. We tend to flip-flop between thinking that good thoughts will get us there, or we absolutely need to be draconian and regulate lifestyle. I don't believe either of those are feasible options or ones that we should pursue. There's ample experience and enough evidence to suggest that a systems-integrated approach to our communities is what we need.

We need to look at our energy system as an integral part of the environmental question, not as a problem. The upstream energy sector exists to meet the demand for energy at our communities and businesses. So without focusing on the demand side, we're not going to get very far because that demand, as evidenced by the track record of the past 20 years, will continue to grow. So look at energy and environment as an integral whole; look at the community space.

Municipal governments have done very interesting experiments across Canada. The City of London did a model of an integrated plan versus business as usual. In their estimation, they can achieve up to 55% energy reductions within the community. Not only that, they bring in on-site renewables at a price-competitive range. They take advantage of the existing energy infrastructure, both gas and electric. They bring their on-site renewables. They look at waste in water and harness the energy from that. There are innovative, interesting solutions that need to happen. So why aren't they happening?

We don't have a price signal for carbon throughout the economy, and we need to have a consistent price signal throughout the economy, close enough to the point of consumption so that people who make decisions can see the impact of their choices and their decisions.

We are very encouraged by the recent focus of the National Round Table's report on the other 50% of the economy and would very much support paying a lot more attention to that space. It's an interesting space. It's diffuse. It has a large number of players, and it will require three levels of government working closely with one another, but it's doable. We're seeing examples appearing all across Canada, and we would like to see price signals that would allow us to replicate the demonstrations and actually move along with it.

In conclusion, I repeat that we support the need for an articulated vision and target to reduce the environmental footprint of economic growth, or both of them will deteriorate. Serious action, in our estimation, requires more than, but includes, the regulatory framework for large industries. It needs a price signal for carbon throughout the economy. Policy initiatives should reflect the need for an integrated approach to all our systems: water, waste, energy, land use. Bill C-377, although laudable, falls short of achieving that.

Thank you.

[Thomas d'Aquino, President and Chief Executive Officer, Canadian Council of Chief Executives]

Mr. Chairman, ladies and gentlemen,

good afternoon. It is my great pleasure to be here today representing

Canadian Council of Chief Executives.

Chair, I will present a brief introductory statement, stick to seven minutes, and then my colleague, John Dillon, and I will be pleased to answer any questions you might have.

As representatives of the Canadian Council of Chief Executives, we're very pleased to address the issue of environmental policy, an issue to which my organization and my fellow CEOs have accorded the highest priority.

I have reviewed Bill C-377, introduced by the leader of the New Democratic Party of Canada, Mr. Jack Layton, and while the sentiments expressed in the bill are noble, I fear that Mr. Layton's approach would divert us from the real task at hand.

The bill would set up a process to legislate a series of greenhouse gas targets from 2015 to 2050, but unfortunately, it provides no clue as to how these targets are to be achieved. It would be comforting to think that a simple act of government could get us to where we need to be, but if the past several years have shown anything, it is that setting ambitious targets is meaningless without the will to act by all segments of society and a solid consensus among all players on what needs to be done.

Now, let there be no doubt that turning around our growing greenhouse gas emissions is going to take time and enormous effort, and there is no silver bullet, nor is there any substitute for practical policies, sound analysis, and meaningful engagement about what changes we actually are prepared to make as businesses, governments, communities, and individual Canadians. We should be realistic about what is required, but also ambitious and creative about the kinds of policies that can make a real difference.

The latest initiative of my council to address the climate change issue was the creation last year of our task force on environmental leadership, which I co-chair along with Richard Evans, the chief executive officer of Rio Tinto Alcan, and Rick George, the chief executive of Suncor Energy. The task force, comprised of 33 chief executives from across Canada and drawn from a wide range of leading industries, forged an unprecedented consensus among Canada's business leaders.

In October of last year, we published what we call a policy declaration, in which we laid out five critical elements for an effective, sustainable, long-term plan, one that we believe will not only be successful in reducing Canadian greenhouse gas emissions but can also make a significant contribution to a global plan. It is called “Clean Growth: Building a Canadian Environmental Superpower”, and I have made copies available for all members of this committee in both official languages.

I was pleased to see that a number of our principles were echoed by the National Round Table on the Environment and Economy in its report last month setting out its recommendations for a climate change plan for Canada.

First and foremost, what the country needs is a more cohesive Canada-wide plan on climate change and air pollution, one that can make the most of the tremendous opportunity that we believe we as Canadians have to foster sustainable economic growth and superior environmental performance.

I want to commend the leadership shown by the Government of Canada in setting challenging greenhouse gas targets for Canadian industry, while at the same time recognizing the need to foster economic growth and technology enhancement.

In addition, a number of provinces have come forward with innovative ideas on how to address this complex issue, but what we lack, however, is sufficient convergence and cohesion around a Canada-wide approach involving all parties in Parliament and all levels of government—federal, provincial, territorial, and municipal. We need one set of targets and timetables for industry and, in our view, greater clarity about responsibility and accountability, in order to make the most effective use of public and private funds.

Such a plan must apply to everyone, and here I underscore the word “everyone”: large and small businesses, consumers, farmers, building owners, and public institutions, all of whom will have to do their part if Canada is to meet its ambitious targets regarding reductions in greenhouse gases.

Another key element of our proposal is to recognize the absolutely fundamental role of technology. There is simply no way to make meaningful reductions in greenhouse gas emissions without massive investments in new technologies. Business leaders in the council see this as a tremendous opportunity, since Canada has the natural resources and the technical, financial, and skills capability to be a leader in next-generation technologies such as clean coal, carbon capture and storage, nuclear, hydro, wind, biofuels, and other alternative energies.

A third element of our paper recognizes the importance of targets as a spur to environmental progress. We support the ultimate goal of achieving a substantial, absolute reduction in emissions of greenhouse gases, both in Canada and globally. At the same time, it is important that any target applied to Canadian industry recognize competitive realities and be set within an overall policy framework that allows profitable firms to increase their investment in new technologies.

A fourth necessity is to ensure that globally we have an effective and long-term plan that commits all major emitting countries to do more to constrain the growth of emissions around the world.

I believe that Canada can be a model to the world in demonstrating how to align public policy to strengthen economic and environmental performance. That brings me to one of the most critical elements of our paper, our policy declaration, and here I note our agreement with the recent report of the national round table.

I believe it's time to establish policy mechanisms around the appropriate pricing of carbon. I would tell the ladies and gentlemen of this committee that my organization said publicly that we supported the idea of putting a price on carbon as early as 1990. Appropriately set price signals encourage both business and consumers to change behaviour, and this can be done through emissions trading or environmental taxation, or some combination of the two.

Business accepts that there is a price to pay for our greenhouse gas emissions, and we have said so for a long time. But we have to be smart about how we design a price mechanism so that it accomplishes our environmental objectives and builds competitive advantage in Canada. Both emissions trading and environmental taxation have their advantages and disadvantages.

Cap and trade schemes have the advantage of a defined limit on emissions, but experience, especially in Europe, suggests there can be significant price volatility and difficult questions about fair allocation and emission rights.

Environmental taxation provides a clearer price signal and can be easier to design and administer. Relying solely on taxation, however, does not guarantee any particular quantity of emissions reductions. Any such tax must not discriminate against any particular sector or region and should be implemented only as part, in our view, of broader tax reform that is revenue-neutral and that aims to enhance our country's economic as well as environmental performance.

Increased revenues from environmental taxation could be offset by reductions in corporate and personal income tax, so that Canada can continue to attract the capital, innovation, and people to foster the technology shift that is critical to tackling climate change.

Governments also will need to think about their spending priorities. A strategy for climate change will require significant new public spending in areas such as public transit, clean energy infrastructure, and development of new technologies. This will require governments to change fundamentally how they spend, not just how they tax. Climate change must not become simply an excuse for governments to tax more and spend more.

Mr. Chairman, putting a price on carbon will mean real and potentially very costly obligations for everyone. There are ways to design our policies so that they do not place unfair burdens on vulnerable regions, sectors, or individuals, but we should not pretend that the cost is insignificant or that the policies need to focus on only driving reductions in Canadian industry.

I'll conclude with this. The reality is that we've been talking about this issue for 20 years, and it's long past time to get on with the job. Business has done a great deal already and is willing to make fundamental changes and the significant new investments that will produce a strong economy and a cleaner environment. We need to have a true Canada-wide consensus on the key policy elements and get everyone, including individual Canadians, pulling in the same direction.

Ladies and gentlemen, members of this committee, the ambition of Canada's business leaders in this regard is truly vast. We have stated, and I will repeat again today, that Canada has the natural resources and the technical, financial, and skills capability to justly aspire to environmental superpower status. I believe that you as parliamentarians have a critical role to play in moving Canada decidedly in this direction.

Thank you for your time and interest. Mr. Dillon and I very much look forward to answering any questions you might have.

Thank you very much indeed.

[The Chair, Conservative, Bob Mills]

I would like to begin by reminding members that today is our panel of economists. All of you have been itching to ask questions about the economics of Bill C-377, so this is your chance to go after the economics.

I would ask you to try to stay on subject. That's what the witnesses are here for.

I'd like to welcome our witnesses. Most of you have been here at one time or another, and we certainly are pleased to have you here again. Thank you for coming.

We'll begin with a brief presentation. Try to hold it to seven minutes or thereabouts, and then the members will have more time for questions.

We'll go in the order that's here, with Mr. d'Aquino kicking it off, please.

[Mark Warawa, Conservative, Langley, BC]

Bill C-377 sets some very aggressive targets. These targets are coming from the IPCC report. Pembina and the David Suzuki Foundation have then provided a case for deep reductions.

There was mention of the government's bill, Turning the Corner, and that was costed. There was some debate on whether or not that will be achievable and what the costs of that plan will be to the GDP, to Canadians, and maybe some questions on whether or not those targets will be reached.

I think there was comment that the targets aren't tough enough from an environmental perspective, and from industry they're too tough, which we're also hearing from some provinces. So we're sort of in the middle.

In terms of costing, what will it cost the Canadian economy? That seems to be a bit of a benchmark to compare perspectives and plans. The government has a clear plan, an absolute reduction by 2020, and deep reductions of 60% to 70% by 2050. That was costed.

Has Bill C-377 been costed? As I said, Mr. Layton said no, Mr. Bramley said no, and Dr. Stone said no, but each has said it should be costed so that we're not just setting arbitrary numbers but getting a full picture of what this means in Canada.

So that was my preface: what will Canada look like? What is urban development going to look like? What kinds of cars will we be driving? Where's the energy coming from? What are the costs? There is that balance, but what are the costs for Bill C-377?

[Mark Warawa, Conservative, Langley, BC]

Thank you, Chair.

Thank you to the witnesses today. I'm going to be focusing my questions on Bill C-377 and solutions. Your perspective is an environmental perspective, and I'm going to be looking for your wisdom in providing good direction on where you see Canada if we do accept these targets.

Now, you've suggested that we set these targets, that we entrench them into law, and then we achieve those targets. What would you see Canada looking like in 2050 and in 2020? How would this transition affect each and every Canadian? So there's how we achieve that but also what it will look like.

I'd like to begin by asking you, as I have with the other witnesses, about the importance of having this bill costed. I asked Mr. Layton if it was costed, because in sustainable development, part of that equation is that it has to protect the environment but you cannot destroy the economy. Each witness has addressed that briefly. On Wednesday we are going to have economists who will be presenting.

So Mr. Layton said yes, it had not been costed, and he'd like the government to cost it. I asked Mr. Bramley if it had been costed. He said no, and he also expected it to be costed. I asked Dr. Stone a week ago if it should be costed, and he said yes, he thought so.

Ms. Langer, you said you did your calculations, as provided in the deck you handed out. Has any costing been done by any of you three on Bill C-377?

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair, and thank you to our witnesses.

Thankfully, I've read many of these documents already, so missing your presentations, although I'm sure they were excellent.... I apologize for a late flight in.

The place I'd like to start is with the impacts on the economic side of not doing things that are prescribed in Bill C-377. There was much news made in the past year or so with the Stern report and others, seeking to understand what the implications of inaction mean, because oftentimes governments, like our own currently, that are resistant to bringing in some of the measures that are contained here will talk about the cost to the economy and focus on that and do the doom-and-gloom scenario.

What understanding have you seen that the Conservative federal government has in terms of the implications of not acting? Have any of you seen a study, a panel, an understanding within the federal government as to the impacts of climate change on our economy?

[The Chair, Conservative, Bob Mills]

Mr. Stoffer, that's why I'm trying to leave it as far as we can go. I would like it to ultimately end up with an analysis by our witnesses of Bill C-377, because we will be doing clause-by-clause on it; we'll be saying yes or no to it. I would constantly like to remind members to try to stay with that focus, because that's where we can move ahead.

We have limited time with these witnesses. It was the same last time. We have economists coming, so let's not ask economic questions on this. Let's try to evaluate Bill C-377 and show whether it's an improvement on what we had--without dwelling too much on the past--and go on with the future. I think everybody would agree with that.

Mr. McGuinty, let's continue. I will add an extra couple of minutes to your time.

[Mark Warawa, Conservative, Langley, BC]

My apologies to the witnesses for interrupting, but as you pointed out and as was brought to your attention, Mr. Chair, we're talking about Bill C-377. Mr. McGuinty is taking the witnesses off topic. We're supposed to be asking questions about Bill C-377. Is Bill C-377 a good bill? How can it be improved? It's not helpful to keep taking the witnesses off topic. I'd encourage the questioning to be about Bill C-377, because that's why we're here.

[The Chair, Conservative, Bob Mills]

I would remind you that we are dealing with Bill C-377. I'm trying to give everybody as much leeway as possible, but please try to stick to Bill C-377, in fairness to our witnesses who appeared here to talk about Bill C-377.

[Julia Langer, Director, Global Threats, Conservation, World Wildlife Fund Canada]

Thank you, Mr. Chair and committee members. Thank you for the invitation.

My name is Julia Langer. I'm director of the climate change program at World Wildlife Fund Canada.

World Wildlife Fund's mission is to build a future in which humans can live in harmony with nature. We work at conserving the world's biological diversity, ensuring that renewable resources are used sustainably, and promoting the reduction of pollution and wasteful consumption. But our 40 years of work in Canada to protect and manage and restore biodiversity could well be for naught if we don't avert the über-threat posed by global warming and climate chaos. It is with this perspective in mind that WWF is speaking in favour of Bill C-377.

We feel that Bill C-377 reflects the science, and the science calls for immediate action to achieve deep reductions. The reduction targets outlined by the Intergovernmental Panel on Climate Change are not arbitrary; they reflect the work of thousands of scientists over many, many years. They tell us we must reduce global warming pollution by at least 25% by 2020 and 80% by mid-century against the internationally referenced baseline of 1990. I am repeating and endorsing what Mr. Marshall has said. That is our reference point. There is no other way to look at this picture. I would also note that it means “at least”, because these are the bottom end of targets that are considered appropriate for industrialized countries like Canada.

Calling global warming a “hypothesis”, as the Prime Minister did less than four years ago, is now considered irrational. Governments of all political stripes around the world, including ours, are starting to reflect climate change science in policy. But accepting the science is only the first step. It is absolutely necessary and appropriate at this stage of the game to entrench targets and implementation requirements in law, because the current government's approach is a public relations ploy. It has to be brought into a management system.

I say it's a ploy because it's out of line with the science by virtue of having moved the baseline. It is ineffective because emissions will continue to explode--with more pronouncements than actions so far--and it's provoking some federal-provincial battles, which are not helpful toward getting on with the solution.

By way of looking at some of the targets we need, I want to focus on the tar sands as a prime example of how the government's proposed greenhouse gas rules for large final emitters would give a free pass to pollute and perpetuate the biggest source of emission contributions in Canada.

An important point to focus on when we're setting targets is what it is going to affect. Consider that emissions from the major emitters constitute 47% of the national total. The proposed targets call for greenhouse gas emissions to be reduced 23% against a unit of production basis by 2020, with a 6% exemption for fixed process emissions. This might sound like reduction, but it's not.

I'm not going to do a PowerPoint presentation, but maybe you can follow those charts. That graph is NEB's projections of tar sands growth, which has unmitigated emissions on a very steep climb. That's the blue line. Industry has already said it would continue to reduce emissions per barrel, and in fact it has set some targets for that. That dampens growth, but it doesn't reduce it overall. That's the green line. The proposed large final emitter rules, which is the red line, more or less matches these existing commitments and technically feasible mitigation options. This is a free pass. Further, more aggressive improvements have been targeted by some companies. That's the purple line.

The gap there, this excess reduction, can be turned into credits and sold within the LFE emission trading system. When you multiply that by $15 a tonne, that will generate millions in profit for an already profitable industry. The real bottom line is that emissions will double or triple by 2020. This elephant in the room cannot be ignored, and it has to be factored into our target setting.

It would be impossible to act in keeping with the science and with the proposed purpose of Bill C-377, or to deliver expected reductions as set out in the bill, without addressing the exploding emissions from tar sands operations. Uncontrolled, they will undermine action by other jurisdictions and other sectors and Canada's international reputation. How is Alberta's 14% reduction from 2005 levels by 2050 consistent or justified?

Parliament needs to set extremely clear rules that will work in the real world of the Canadian federation. So-called equivalency agreements, without a firm national cap, which needs to be set in this bill, will further undermine the objective.

With many, many provinces starting to make commitments and moving ahead, we need to ensure that the efforts of leading provinces are not cancelled out. Requiring the minister to demonstrate measures taken to meet the targets, including cooperation or agreements with some national governments, may not be clear or an ample enough mandate to allocate and distribute expected reductions among regions or sectors.

To help with this dilemma--I'm not suggesting this is an easy one to tackle--lessons can be taken from Europe for achieving fairness in a national climate action plan. As a federation, the EU's approach is to set the clear, binding targets, to divide up the responsibility on a transparent basis--they call it burden sharing, and it's not easy but it has to be done--and they create regulatory, market-based, and fiscal tools for implementation. And they require accountability--for instance, the ability to approve or reject plans, with repercussions for non-compliance.

There is a lot of moaning about the difficulties Canada faces. No one can really pretend that we have an easy road to hoe. But as numerous analysts have highlighted, there are significant costs of inaction. Canada is falling further and further behind on energy productivity and will suffer under high fossil fuel costs. With oil pushing $100 and more and government's refusal to go ahead on sustainable energy, our economy, our businesses, and consumers will be left exposed, not to mention the risks associated with extreme weather and warming itself.

Europe, on the other hand, is leaping ahead with a low carbon economy as a centre point. Last week the EU adopted a new package of climate and energy measures, including a 20% target. They said they would go to 30% if other countries came on board. What a bonus it would be if we set a target commensurate with the 25% or 30%. I think that would motivate Europe to go even further.

Renewable electricity and biofuels commitment is in their bill, as well as a new emissions trading system and very, very aggressive efficiency requirements, as Ken has put forward.

People like to complain about China and India, but they are very noteworthy because they are growing in an energy-constrained world that is forcing them to be super efficient, a claim that Canada cannot make, as we have the highest per capita energy consumption and the second-highest energy consumption per GDP.

In closing, WWF urges Parliament to get on with meeting the climate change challenge. It is essential to have a national law that entrenches the science, that positions Canada as a good-faith international player, and that reflects public expectations for avoiding dangerous climate change. The government has accepted the science and is a party to UN climate agreements, yet targets and proposed measures are inadequate. Emissions will continue to burgeon without appropriate binding targets and requirement for implementation.

As we enter Kyoto's first period and look to the next phase of multilateral collaboration, clear direction and expectations are essential. Bill C-377 fits the bill, and that's why we're supporting it. We urge all the parties to endorse the greenhouse gas reduction targets and timelines, and the government's obligations, as set out in the bill, in the spirit of creating a low-carbon society. We can't afford any other excuses and delay. Let's just get on with it.

Thank you.

[Kenneth Ogilvie, Executive Director, Pollution Probe]

I'll try not to repeat and will focus a little more on the solutions, but not in any great depth.

Dale pretty well said what I would want to say about the fact that the threat of global climate change is real and the cost of inaction is great. We have good references for all of these. I did make a submission and I've provided references, so I don't really want to get into detail on that.

The reason we need to think about supporting a bill such as Bill C-377 is that Canada has failed to take aggressive policy measures to control greenhouse gases in line with some of the leaders around the world. We all know the European Union is setting aggressive targets. We know that some states like California are moving, as are some provinces in Canada. We need to be with the leaders on this, in my opinion.

Also, industry has been calling for stable policy direction. Different numbers occur in different people's minds, but we're talking about the Canadian Council of Chief Executives, or, internationally, something called the three-C group, Combat Climate Change. It has four Canadian multinational companies represented on it. They're saying that we need to set targets.

The three-C group, in particular, endorsed the 80% by 2050 target. They're less resolute about exactly what can be accomplished by 2020 or 2030, but they believe we have to go with the science, set the long-term targets, and then set some short-term goals to get there. So industry is calling for stable policy direction.

And the public is concerned. We've seen various polls and so on about where the public is at.

I think the argument for a bill that requires us to move forward is pretty clear, because in the absence of it, we're not going to move forward. We're going to just keep fighting over what we can't do as opposed to what we can. I think the rationale is strong.

The question then, of course, is this. How do we get there and what do we do? We do have lots of studies showing the different ways in which we might get there. I know it's been a question more of equity and more of fairness as to how one gets there, as opposed to the fact that there are technologies and ways to get there.

I'd like to segment things very simply into infrastructure, technology, and prices, which I think are the three huge drivers of progress. If we don't invest in infrastructure, and the right infrastructure, it lasts a long time. We have to do that. If we don't push technologies to be consistent with climate change goals and with that infrastructure, then we're going to be locking in the wrong technologies. Of course, we all know that prices, especially in a market economy, are what move both individuals and companies.

On infrastructure, it's very clear that we have to think very, very large-scale about roads, rail, air, public transit, water and sewage, electricity, pipelines. These are infrastructure. A lot of that is paid for by public money, one way or the other, so politicians have a great deal of influence through planning processes, budget processes, and so on to shape the way that goes. We need a vision of where that has to be in 2050, and that vision has to tie into some notion of the hard numbers we have to achieve.

On the technology side, again, governments have a great deal of influence, both through the infrastructure that's put in place and the technology that has to match to it, but also in terms of regulations and other incentives. Industry is very largely a technology developer and has to feed into something that provides a return on investment and so on. We need the technology. It has to be very much a society-wide effort, with industry fully involved to develop the technologies we need, and we need prices that help make all of that fit together.

All three of these things interrelate, so as the national round table put it, without an economy-wide price signal, we're going to have trouble convincing consumers to be part of the solution. Without signals through either emissions trading or taxes and other mechanisms, we're going to have a hard time making the business case for business.

I think it's all a package and can't be seen as one or the other. I don't think we get there just simply by putting a price on the system. I don't think we get there simply by incenting technologies and hoping they'll get applied. I don't think we get there just by building one form of infrastructure and letting the rest of the system fall in place.

All of that requires a great deal of vision--ideally, a great deal of cooperation. That would be the best way to get forward, particularly in a country like Canada with its various economies and different circumstances. We need to look toward the leaders in the world as to how far and how fast they're going, and how far and how fast they're committed to go.

We do need a national vision.

I was reading in the Globe and Mail about the carbon capture storage report that's just come out. It's asking for $2 billion for initial work on carbon capture and storage. The second part of the bill wasn't even disclosed, but it could be quite a bit more. So why don't we have something of that scale and more on energy efficiency in renewables? We need that scale and much more on urban form and infrastructure, and recapitalizing the electricity grid to tap into the two technologies that will get us to the 80% reductions.

Why aren't we retooling our auto sector so that it's more vibrant and building the right kinds of efficient vehicles, rather than a sector that's trying to hold onto building the wrong kinds of vehicles that will eventually go the way of the dinosaur, taking our economy with it if we're not careful?

In closing, I think we need a bill that makes it very clear to industry, the public, and everybody that we have a long-term target and we are going to require plans to get there. We need a vision of what we're going to do with these big policy levers of infrastructure, technology, and prices in a whole pile of areas. We need investment across the board in a kind of recapitalization of the Canadian economy and social structures so that we have the kind of future that I think is totally there for us. There are tremendous hurdles along the way, but I think it's there if we set out to do it. I encourage you to consider that in your deliberations.

Thank you.

[The Chair, Conservative, Bob Mills]

I would like to call the meeting to order and welcome our guests. Thank you very much for appearing.

I would like to remind members that this is an environmental panel and that we're looking at the scope of the bill, greenhouse gas reductions and targets, and that should be the main emphasis of our questioning and of our presentations to deal with the environmental aspects of Bill C-377.

I would like to welcome you. We'll go in the order that you appear on our agenda. I would ask you to take approximately 10 minutes and then we will have the maximum time for our MPs to ask questions.

I would like to report to the members as well that we have had acceptance from Mr. Johnson and Mr. Morton to appear on February 27 for our other look at Bali. Ms. Simon is in Finland and Ms. Dowdeswell is in Vienna, so they would not be available on that date. My suggestion is that we go ahead. We have two people, and I think we're going to constantly have date problems. With your permission, we will send a letter confirming that with them, and we'll ask them to appear on February 27.

We'll start with Mr. Marshall for 10 minutes.

[The Chair, Conservative, Bob Mills]

After Bill C-377 is complete.

Those in favour of the motion?

(Motion agreed to [See Minutes of Proceedings])

[Paul Dewar, NDP, Ottawa Centre, ON]

This is just a question. I'm clarifying that this will be after Bill C-377 is sent to--