Bill C-30 (39th Parliament, 1st Session) Committee on Feb. 20th, 2007

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

You do not see any opportunity for interprovincial trading?

[Matthew Bramley]

On the contrary, the provincial option is just one of a number of possibilities.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

It does not rule out—

[Matthew Bramley]

Not at all, we would still be able to do this elsewhere in the country or elsewhere in the world.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

In your presentation, Mr. Lambert, you talked about distributing the efforts equitably. Are the polluter-payer principle or the territorial distribution idea part of your philosophy? What do you think about the famous tax that the Quebec government has just placed on the oil companies, which is a few cents per litre of gas? This tax has been passed on to consumers by the oil companies.

[Gordon Lambert]

Well, I think the price signal does need to flow through to the end use of the product. If it's an attempt to try to shift behaviour or to change the behaviour of consumers, a price signal is likely going to be needed.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

How do you define “equitable distribution of effort”?

[Gordon Lambert]

That's the ultimate challenge, isn't it? As I mentioned earlier, equitable distribution of effort is in the eyes of the beholder. I think it needs to be an approach that's comprehensive to the production and uses of energy. The national round table's work on energy 2050, to me, is inclusive of a broad range of interests and opportunities.

[The Chair, Conservative, Laurie Hawn]

We have to move on to Mr. Manning for five minutes, please.

[Fabian Manning, Conservative, Avalon, NL]

Thank you, Mr. Chair, and I certainly welcome our guests and thank them for their testimony here today.

Recent polling has shown that Canadians' number one priority is a clean, healthy environment, but just after that, Canadians want a strong economy. I guess our job here as legislators and your job as business is trying to find that medium ground where we can have both.

The oil sands certainly have received a lot of attention lately, creating an immense amount of employment opportunities, but in some corners of the world, creating some concerns with the environment. We have had official opposition members threaten to close them down. But then on the other side of that, last January, we had the former government engage in secret meetings with the United States looking to expand the production by four to five times.

I'll pose the question to Mr. Lambert first. We're trying to find the common ground so that we can have a healthy environment, but also have the strong economy we need to have in order.... I find it difficult to understand how we're going to correct the concerns we have in the environment unless we have a strong economy behind that. So my question to you is this. What do you believe are the keys to creating that environmentally sustainable economy in Canada?

[Gordon Lambert]

Yes, and just to reinforce that, I think we do have a significant dilemma in front of us. On the one hand, we want abundant, cheap energy. We get blasted, too, for high gasoline prices anytime they go up. And we also want a clean environment.

To be honest, the only way to square that circle is with technology and innovation. In other words, it can't be the case that we just continue to produce and use energy the same way in the future as we have in the past. I think you do see those signs of innovation starting to come on to the market. I mean, ten years ago, hybrid vehicles were felt to be a dream, and now they really are penetrating the transportation market.

On the oil sands, I mentioned CO₂ capture, which we're actively working on. We're also part of a consortium looking at deep geothermal energy. This is dry rock geothermal energy that would actually be emissions-free energy, and not just for the development of the oil sands; imagine it for central heat and power for our communities. This is drilling at tremendous depths, in the order of 5,000 metres to 7,000 metres. Again, it's very exciting as an opportunity, and we want to aggressively pursue that.

We're looking for the kinds of policies and partnerships with governments that are going to help encourage the investment that's needed to get there. It's not going to be done through punitive regulation and hitting us over the head harder. That's not going to be the motivator. It has to be a collaborative effort, a joint effort, and one where we really roll up our sleeves to make this happen.

[Fabian Manning, Conservative, Avalon, NL]

I'll ask Mr. Cleland.

[Michael Cleland]

Can I just add to that? You talked about two things Canadians are looking for from their energy system. One is that they want it to be affordable, or maybe cheap, but at least affordable. They also want it to be environmentally sustainable. The other thing they want is that it be reliable. They want it to meet their needs all the time—in the middle of a cold winter, or whenever that happens to be.

The right condition for keeping those three things on the screen is policy that provides a steady push in the right direction. Sharp inflections, shocks, things that upset the investment environment, or things that, frankly, push technologies into the environment faster than we can learn how to apply them are bad policy.

We need to act. Mr. Cullen talked about acting urgently. Agreed. We need to get going and get that price signal flowing through to investors and consumers.

[The Chair, Conservative, Laurie Hawn]

Did you want Mr. Bramley to comment?

[Matthew Bramley]

I just think it really stretches credibility to suggest that an additional cost to the oil sands producers on the order of $1 a barrel would be in any way punitive or would somehow get us away from a balance between environment and economy. We heard from Gord Lambert that the production cost is $20 to $30 a barrel. I'm not sure what the price is currently, but I think it's been in the fifties and sixties recently. Clearly there are enormous profit margins in this industry, and it's very difficult to see why $1 a barrel would be a dramatic shock to anyone.

[The Chair, Conservative, Laurie Hawn]

Okay.

We'll move on to Mr. McGuinty for five minutes, please.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you, Mr. Chair, and thank you very much to the witnesses.

I'd like to go right to the question that I think is probably on the minds mostly of the oil and gas and energy sectors in this country: how much is it going to cost to comply?

I'd like to go back to two questions I put to our Minister of the Environment in this committee maybe 10 days ago. I asked the minister directly whether he had any idea of what the size of the international carbon market would be, and he could not answer or would not answer. Then I asked him directly whether we'd be participating in an international carbon market. His answer was that we're not looking at participating in an international market. I asked him to repeat that for the record, and he said we're not interested in participating in carbon markets overseas.

Today we learned that on December 21, the president of the Toronto Stock Exchange sent a letter to the minister and the Prime Minister advising both that the cost of compliance for Canadian companies would be excessively high if we were to have a mere domestic market. The document goes on to say that Canadian companies would be disadvantaged with a domestic market only, because the cost for each tonne of greenhouse gas would be excessively high, especially because of the small size of the Canadian market.

Similar remarks have been made by Clive Mather, the president and CEO of Shell Canada, who is asking Canada to remain a signatory and a full participant in Kyoto and to participate in the international carbon market it's creating.

Now can we hear from all three witnesses about the effect if Canadian oil and gas companies, energy companies, cannot participate in the burgeoning European market and the start-up markets in roughly 18 or 20 American states? And do you believe that it is intelligent for this country to shut down our eventual and potential participation in international carbon markets when we know that the cost of compliance for the energy sector in this country is going to be higher, whereas in countries that are signed on and are participating—including, potentially, the United States—their companies are going to benefit from lower costs in terms of compliance? Is that an intelligent thing for us to do at this stage, given what we know about the burgeoning international carbon markets?

[Gordon Lambert]

I'd like to reiterate a comment that I made earlier in my remarks, about needing all the tools in the tool basket. How aggressively we use each one of these tools is going to be something we have to be quite careful about, so we don't think any doors should be closed.

We do support,though—and I want to reinforce this, based on the technology theme that I've been stressing this morning—the possibility of establishing a technology fund as an additional compliance mechanism for Canadian companies, as part of our regulatory approach. The Canadian Association of Petroleum Producers has been advocating for a technology fund as a compliance mechanism. Companies could pay into that fund and have those funds used to support deployment and advancement of new technologies domestically.

[Michael Cleland]

Mr. McGuinty, I have just a couple of things on that. I won't comment on Mr. Baird's comments or what the import of them was.

I would say that, all things being equal in the first instance, we should first be looking at how we reduce our own domestic emissions. We have to change the structure of the underlying capital in the economy. All other things being equal, that should be where we want to go.

We also need a suite of other compliance options. Exactly consistent with Mr. Lambert's comment, we need as complete a basket of compliance options as possible.

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Cleland, I have to interrupt you, because my time is really short. I just want to know what the position of your sector is now with respect to a mere and single Canadian domestic emissions trading market, which is not ultimately fungible and connected to the international markets. Is this going to help your oil and gas and energy sector reduce the cost of compliance by reducing GHGs using an international trading system?

[Michael Cleland]

We would want to have access to as complete a set of options as possible, including a clean development mechanism and including other markets as they develop in parallel.

[David McGuinty, Liberal, Ottawa South, ON]

So it would be beneficial to Canadian industry to participate in a fully fledged international carbon market. Is that how I understand it?

[Michael Cleland]

It's beneficial to Canadian industry to have the most cost-effective ways available to reduce emissions, which might include that option.

[The Chair, Conservative, Laurie Hawn]

Our time is up. We're at five minutes.

We're going to Mr. Paradis—

[David McGuinty, Liberal, Ottawa South, ON]

Have we heard from Mr. Bramley at all, Mr. Chair?