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

[The Chair, Conservative, Laurie Hawn]

May we have short answers, please.

[Gordon Lambert]

First of all, I think that question was a good illustration of what I was highlighting in my presentation, the difference between a negative orientation versus a positive one.

We think new technologies like CO₂ capture are where the real reductions are going to occur long term. And let's have the dialogue about what's necessary to attract the capital needed to make that happen, as opposed to punitive targets that would erode investor confidence and undermine our ability to finance the environmental improvements we're talking about today.

[Michael Cleland]

I have two comments on that. First of all, there are going to be a lot of impediments to the development of a carbon market in Canada. Canada is way too small to be a carbon market itself, so until we can develop links to the rest of the world, it won't work. A number of other impediments are going to be there.

But let's also be sure we don't have the tail wagging the dog. The objective is not to have a carbon market. The objective is to reduce the greenhouse gas intensity and ultimately the greenhouse gases in the economy.

The carbon market can be facilitative. The issue is, let's get the signals in place that make people's investment decisions move in the right direction. Over time, a carbon market will likely emerge.

[Matthew Bramley]

I would add that there is value in being able to link with other carbon markets. The world's largest carbon market is currently in the European Union, and the European Commission has made it clear there wouldn't be any possibility of Canada being able to link to the European market if we have intensity targets.

But I think the biggest problem with intensity targets is that they have a track record of abuse by governments. We've seen the intensity targets for greenhouse gases set by the Bush administration and by the Government of Alberta, which have been presented as representing major steps forward, as major emission reductions, whereas in reality they allow emissions to continue to increase.

We need targets that can be easily understood by everyone; that are related to the environmental goal, which is emissions, not emissions intensity; and that maximize accountability.

If the government wants Canada's emissions to continue to increase, it can still set absolute targets, but at least everyone would be clear as to exactly what was intended.

[The Chair, Conservative, Laurie Hawn]

Thank you.

We'll move on to Mr. Cullen for seven minutes, please.

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

Thank you, Mr. Chair.

Thank you to the witnesses.

I would encourage the witnesses to take a look at the testimony we received last night from three of the panellists who presented on the IPCC reports. I think it's actually the latest condemnation of the economic model we've driven forward in the last 100 years. They're very conservative estimates by these 2,300 climatologists, but the results of the studies are that action is needed and it's needed urgently.

Yet when I heard some of the testimony today, it felt as if we have the luxury of time. We can develop carbon sequestration over time. There are estimates of $60 per tonne by some within the industry and $30 per tonne by some outside the industry.

Mr. Bramley, you spoke to this recently.

I recently had an argument with the Premier of Alberta because he said Alberta had been the most aggressive when it came to seizing and controlling emissions of CO₂, and he claimed a 19% energy efficiency improvement over 1990 levels. Alberta's CO₂ emissions went up nearly 40% while those improvements were being made.

How intellectually honest is it to suggest you're being aggressive in reducing emissions when emissions have gone up almost 40%?

[Matthew Bramley]

Well, we always have to be very careful with the word “reduction” because a reduction is always a reduction below something. The kinds of reductions often talked about are reductions that are only in a very relative sense below some future projection of rapidly increasing emissions. I would say they very often do not represent reductions in common-sense understanding.

The Alberta target is an interesting one to pursue for a moment. It is a target to reduce the emissions intensity of the Alberta economy by 50% over 30 years, from 1990 to 2020. We calculated that if the Alberta economy continued to grow in the present decade and in the next decade at the same rate that it grew in the 1990s, Alberta would meet the target of reducing intensity by 50%, while actual emissions would grow somewhere between 65% and 85%. I think it's a pretty clear illustration that we're not getting to the kinds of destinations the scientists say we need to get to with that approach.

When the Alberta target was announced, the government created the impression in the media coverage following the announcement that somehow this was simply a delay of Kyoto targets and it was in fact going to be much better than Kyoto, only delayed by 10 years. The reality is obviously very different.

It's an example of the abuse of intensity targets. For honesty's sake and for transparency's sake, I think we need to have targets expressed in terms of actual emissions that everyone can understand.

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

I have a question for Mr. Lambert.

I think you referred to Kyoto compliance at one point when answering an earlier question. Does your company believe Canada should honour its Kyoto obligations?

[Gordon Lambert]

Quite frankly, we try to focus on what we have control over, which is our pursuit of technology, renewable energy, and biofuels, helping to create the energy future that we think is going to be required.

Yes, we pay attention to the Kyoto Protocol and the mechanisms. But given the lack of general progress on policy development within Canada, we haven't found it very productive to look to governments for guidance.

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

You've probably been wise up to this point.

The question I have is with respect to when you talked about a social, environmental, and economic pyramid that you almost rely on.

I spoke to the mayor and the council of the regional district of Wood Buffalo up in Fort McMurray, and they've asked for a moratorium on future expansion. What's currently on the books right now for new investment money going into the oil sands?

[Gordon Lambert]

I don't have that figure in front of me.

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

Is it tens of millions, hundreds, or billions?

[Gordon Lambert]

Yes, it's certainly in the tens of billions of dollars.

I think it's important, though, to reflect on this. What's driving that growth? It's the demand for transportation fuel for planes, trains, and automobiles. There are currently no substitutes for hydro-based transportation fuels. Until we start tackling the demand side of this equation as well, the requirement for oil is going to continue in the world.

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

Do you believe in the principle of the polluter pays, in the sense that we've now identified CO₂ emissions as a form of pollution that causes harm?

I'm from northwestern British Columbia. We've seen the pine beetle, and it's now in your neck of the woods. We've seen the economic and social ramifications of this pollution. Do you believe that cost should be captured by business?

[Gordon Lambert]

The polluter-pays principle is a very good discussion to have. I think it's important to define how to draw that circle. If we draw that circle solely on the production side of the equation and ignore the demand side of the equation in terms of who the polluters are, we're never going to get the level of engagement in our society that's going to be necessary for the transformational change we're talking about. In other words, I'm suggesting that for each of us, when we drive our automobiles, if we don't become conscious of the fact that we're contributing to greenhouse gas emissions, both from our tailpipe and from upstream, then we're going to have a serious problem on our hands.

I'll finish with a reminder. If you look at greenhouse gas emissions from a barrel of oil, 20% are related to its production, 80% are related to its end use.

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

Mr. Bramley, I'm confused. You've put out some numbers of what the investment costs would be, like 58¢ to $1.16 a barrel. I'm sure industry will dispute that, but even if it were twice or as much as five times what your estimate is, why wouldn't industry make those investments? If oil is at $50, $60, to upwards of $80 a barrel over the last couple of years, why not invest in that if it's such a marginal cost of the total?

[The Chair, Conservative, Laurie Hawn]

A short answer, please.

[Matthew Bramley]

The quick answer is that the industry does not face the regulated emission reduction requirement and the consequent price on emissions that would drive it to make those changes.

In addition, there's really no mystery about those dollar numbers I quoted. A typical oil sands production is emitting 100 kilograms of carbon dioxide per barrel. You can simply multiply that by a 46% reduction, and then multiply it by either something in the range of $15 a tonne for international credits or upwards of $30 a tonne for carbon capture and storage, and you come very easily to the numbers I've stated. I don't think there's anything particularly mysterious about those numbers.

[The Chair, Conservative, Laurie Hawn]

Thank you very much.

We'll move on to Mr. Warawa for seven minutes, please.

[Mark Warawa, Conservative, Langley, BC]

Thank you, Mr. Chair.

Thank you to the witnesses for being here today.

I appreciate the testimony that has already been provided. What we've done with Bill C-30 is broken it up into topics, and the topic today is the focus on large industry, oil and gas. That's what I want to focus my questioning on.

I find it interesting that we're focusing on the 50% of large industry—oil and gas—and there have been comments made on the other 50%, which is us as consumers. As consumers in Canada, in the world, we are fueling this hunger, this thirst for this energy. That's what's fueling the expansion. China has a huge hunger for all this energy.

We're a good country to put an investment in. We have a peaceful country. It's a good place to invest. I think that's why we see the investment coming to Canada, why the United States is looking at Canada, why the world is looking at Canada. I believe we are number two in the world, second to Saudi Arabia, in terms of natural resources for that good, clean energy.

But they are connected. And I think, Mr. Lambert, you alluded to that. You said we all need to do our part. So as a consumer I am trying to reduce the amount of energy I use. Each of us, I'm sure, has that responsibility to try to reduce.

But we're focusing today on how large industry, oil and gas, can actually reduce. I think what Mr. Bramley is saying is make large industry reduce the amount now. Don't let it gradually go in that direction; make them do it now. I don't want to put words in his mouth. He can clarify that in a moment.

There is an urgency. We've heard that. Climate change is happening, so we have to change. We've seen the charts. We've seen the graphs where emissions have gone up, climate change is happening, and we need to meet this target down here.

Capture, sequestration, I think, is where we're hoping your industry will go. You've made comments about that, that you want an incentive. You want a carrot and a stick. In the past we've used voluntary; we've used MOUs; we've said all sectors of industry will be part of reducing greenhouse gas emissions. But you've put a warning out there that we have to be careful that it's not just a stick, that it is a carrot.

You've also said that it will take time to build the infrastructure. You've studied. I've gone up to Fort McMurray. I saw the oil sands. I've read the material from Pembina. They've been very involved with this.

Our plan is to present regulations. We have notice of intent to regulate. The short term will be intensity-based and the mid term and long term will be real caps. That's the plan. Those short-term targets will be announced shortly. Are you concerned that that is too big a stick? I hope not.

Mr. Bramley, maybe you can comment too. Are we on the right track with Bill C-30, or do you feel it's too regulatory?

[Gordon Lambert]

No, I'd say offhand that it's on the right track in terms of imposing regulated performance obligations on companies that would get us bending the curve toward a stabilization kind of goal in the mid-time period.

But I'd say in parallel with that regulated efficiency target would be an urgency to advance on the technology opportunities, so engaging at provincial and federal government levels with industry to really get aggressive on making CO₂ capture and geological sequestration happen in some sort of public-private partnership. That approach characterized the development of Canada's oil sands in the early days. Certainly, it was prior to climate change being on the radar screen, but that was a joint public-private collective effort to get the technology in place to develop the oil sands. Let's do the same thing now on CO₂ capture and geological sequestration.

[Matthew Bramley]

First of all, I have a problem with the emissions trajectory that was laid out in the notice of intent that accompanied the Clean Air Act announcement, because it has a target for 2050, which represents substantial emissions reductions—not, I would add, ones that are sufficient from the perspective of science, but nonetheless substantial emissions reductions by 2050. At the same time, the notice of intent foresees emissions from heavy industry remaining at or above current levels until as late as 2025. I simply don't see how that 2050 target could be credibly reached if we're delaying...or if we've got a back load in the action so far into the second portion of that period.

Second, I would come back to the very straightforward calculations I presented today. The oil sands producers can immediately take responsibility for a Kyoto-level target of emissions—

[Mark Warawa, Conservative, Langley, BC]

Mr. Bramley, could you answer my question?

If we have capture and sequestration, in what timeframe do you realistically see that as being in place? That's the question.

[Matthew Bramley]

There are already 18 megatonnes of carbon dioxide being captured and sequestered at a single site in Texas right now. There are over 3,000 miles of mainline carbon dioxide pipeline systems already in existence in the U.S. This is not a technology that is 15 years down the road; it's a technology that exists and is already being deployed on a large scale. If this is what the industry wants to use to cut its emissions, that is only going to happen if the industry faces a price on emissions that is upwards of $30 a tonne. That is what the target of the regulatory system will have to be.

[Mark Warawa, Conservative, Langley, BC]

In what kind of timeframe do you see that infrastructure in place and functioning?