Thank you, Mr. Chairman. I will endeavour to respect your time limitations.
Thank you and the committee for the opportunity to appear here with some comments on Bill C-30.
Just very briefly, the Canadian Gas Association is the association that speaks on behalf of the downstream end of Canada's natural gas system, the delivery end. In essence, we deliver natural gas to almost six million Canadian customers, businesses and residents alike, from coast to coast in Canada.
Today I will indeed focus mainly on Bill C-30, but I wanted to start by saying a couple of things about how natural gas fits into the system, about our record on GHG management, and then about Bill C-30. Then I will give a couple of other perspectives on the other part of the debate, which really doesn't come up very much when we talk about industrial emissions.
Just on natural gas, the numbers are in the documents we've left you. I won't go through those, except to say that natural gas accounts for a little over one quarter of the energy used by Canadians, and it's growing. It's growing particularly in power generation—particularly in distributed generation applications—and it has potential for growth in transportation, albeit from a very small base.
The reason for that is pretty straightforward. Natural gas, for a variety of reasons, is a very preferred form of energy. It's flexible; it's clean; it's reliable; it's in abundant supply; and it can make important contributions to both our air quality objectives and our climate change objectives. Natural gas should be an important part of Canada's strategy for dealing with climate change.
In terms of my industry's record on greenhouse gases, we're a relatively small contributor in a direct sense—from the industry. But we are part of the process; we would be part of any regulatory process or system that is put in place. We have in fact made some progress in the reduction of our GHGs: from 2000, about 6%, and actually a little bit less than that from 1990.
Let me turn to Bill C-30. First of all, on target setting in general, CGA strongly supports the idea of a framework that has short-, medium-, and long-term objectives for targets. We think that sets the kind of long view that's essential, as well as the short view needed to get us moving. But should it go further? Should it include actual detailed targets in the legislation? I would argue that there are some important reasons for not doing that.
With respect to Kyoto per se, we've said before parliamentary committees, and I'll say again, that there is no physical way of achieving Kyoto, and we would argue that building Kyoto targets into Bill C-30 is indeed to set it up for failure when Canadians are asking us to focus on possibilities for success.
I would argue as well that in any event legislation is not the place for this type of detail. Legislation should set the framework, and the authorities to regulate and the detail should be incorporated in regulations. More detail at this stage means a less stable framework as we look forward.
Moving on to the natural gas distribution sector and the targets we might set, I won't go into the details except to say that we have done a lot of work with Environment Canada. We have the data in hand. We are in fact well on the way to understanding how we could comply with any reasonable regulatory framework, and we therefore urge you to get on with passing Bill C-30 and the government to get on with getting that framework in place.
I want to comment on the issue of intensity-based reductions. I know it's controversial. Our point is simply that an intensity-based system allows you to focus on what you can control, not what you can't control, and is simply a management system. An intensity-based system, depending on how big the numerator and the denominator are, can ultimately produce absolute reductions. We should try I think to get past that debate and focus on putting a practical management framework in place.
With respect to air contaminants—I know this hasn't been the main focus, but it is part of Bill C-30 and it's important—we think we need to be moving there as well. But we're not in a position, and I don't think most industries are in a position, to move as quickly, because we haven't done the homework. We've been doing a lot of homework on greenhouse gases; we need to do a lot more on air emissions.
In any event, air contaminants and local air pollution are more complex issues in some respects. Therefore, we would argue that it is entirely appropriate to include both air contaminants and GHGs in the same legislative framework, but they probably need to move on somewhat different tracks in a regulatory sense.
In the meantime, we are getting on with it. We have hired a third party to do an inventory of air contaminants from our industry, and we expect to be in a position to move on that front reasonably quickly.
There are two points on compliance options that I want to emphasize. I know they are being debated at this table. We would argue that there should be a menu of compliance options, and two in particular that we think are important.
First, within a domestic offset system, we should allow for offsets related to utility demand-side management programs—something that we and the electrical industry both do. Since 2000, gas utility efforts have reduced natural gas use by something over 700 million cubic feet. That's the equivalent of about 250,000 households' heat and hot water. We can do more on that with the right incentives. We think one of the incentives that would help us do more would be to allow demand-side management offsets as one of the suite of compliance options.
Another part of the compliance options that we would argue in favour of is a technology investment fund. This is something that can allow us to invest in the future. It can be structured in a way to give some upside cost protection to industry. I would only add that it's important that such a fund be able to invest in a variety of technologies, including, we would argue, downstream-related technologies.
I won't spend a lot of time talking about compliance assessment, monitoring, and reporting, except to say that as you think about Bill C-30, think about ways of making that more efficient, as well as effective and transparent. There are a number of measures, in our submission, that would allow you to do that.
Finally, on equivalency agreements, CGA supports that as a mechanism that allows you to avoid overlap and duplication if the provinces want to step up.
One last thing is that there is a specific issue in Bill C-30, as structured, that in effect would require reporting every time somebody turns on their furnace. The release of a greenhouse gas, including CO2, would need to be reported under the way it's worded at present. I don't think that's the intent. It's a minor thing, but it's probably something about which something should be done.
Mr. Chairman, wrapping up, let me just say that the other side of the equation, the non-industrial side, is that about half the energy we use in Canada is used in our communities. We have to come at that differently. It doesn't work in a regulatory framework. There are other things we can do and do more of. One of them is to significantly accelerate our energy efficiency and conservation efforts to take a more systematic approach, building on the good work that has been done over the past decade. We need to do more, though.
Building on that, we should include fuel switching as part of energy efficiency and conservation efforts. To put that in perspective, by using natural gas in a direct-burn application, as opposed to using electricity, you can get about a 50% increase in efficiency over the most efficient stand-alone electrical generation option. Notwithstanding the size of that prize and the opportunities it affords, a lot of energy efficiency programs across Canada, including in the federal government, don't treat fuel switching as a legitimate mechanism. We think it should be treated as such.
Finally, there's technology development. We strongly urge that we make sure we have the programs in place to support new technologies downstream as well as upstream. Downstream includes small-scale fuel cells, on-site renewables, combined heat and power, and making best use of the gas and electricity grids as they exist in our communities today. We can make a lot of progress in the next five years by doing a demonstration of those sorts of technologies.
Mr. Chairman, I'm over time, so I'm going to leave it at that and pass it back over to you.