Good morning, Mr. Chairman, committee members, and members of this panel.
First of all, on behalf of the Canadian Steel Producers Association, I welcome the opportunity to appear today on behalf of the Canadian steel industry.
We recognize the need for concerted action to protect the environment, and we believe it is possible to achieve environmental and economic performance that will generate sustainable growth and prosperity in the Canadian economy and the industry. Our companies have demonstrated a strong commitment to achieving substantial environmental gains, while maintaining an economic balance.
In my remarks, I will first highlight the strong performance of our industry in addressing clean air issues over the past 15- plus years, surpassing the Kyoto targets on greenhouse gas emissions and achieving large reductions of other emissions.
Next, I would like to advocate our approach to sustainable success, which combines environmental and economic performance. I would stress the need to continue investing in break-through "clean" technologies.
Thirdly, I would like to highlight some of our industry's efforts to contribute to a sustainable steel sector that will continue to benefit Canada.
It is unfortunate that too much of the general public perceives the steel industry to be a large contributor to Canada's air pollutants and greenhouse gas emissions. In reality, as Environment Canada's publication indicate, we produce only 1.8% of Canadian greenhouse gas emissions and 1% of air pollutants.
We're a small contributor in relative terms, but we have worked to have a larger impact on our footprint. We were an early mover in reducing emissions, even before 1990. And since 1990, a period during which Canadian steel shipments grew by 13%, our industry has reduced greenhouse gas intensity by 24%, and we have reduced absolute greenhouse gas emissions by almost 15%. Indeed, we exceeded the Kyoto target of a 16% reduction very early in 1991.
Similarly, we have reduced harmful pollutants significantly. For example, between 1993 and 2003 we reduced benzene emissions by 75%. We have a CEPA code of practice target of 90% by 2015, which we expect to meet in 2008, a full seven years earlier than the target set.
These statistics clearly show that our industry has made strong efforts over an extended period to improve our environmental performance. We will continue to improve, but we believe it is important that all sectors, and Canadians at large, work together in a manner that fairly and sustainably addresses the issue.
Canada's steel industry has managed to move the needle very significantly in the past two decades because our members showed tremendous early commitment to coupling environmental sustainability with financial performance and investment. We have successfully worked to reduce emissions of major air pollutants. From continual adaptation of environmentally efficient technology to investments in energy efficiency, we have maintained that leadership role.
We're understandably very proud of these results, and we trust that in setting any new regulatory framework and targets, the government will fully recognize what has been achieved to this point. We further seek recognition of the practical limits to what more can be done in the short term. It would be wrong, we submit, to ignore this track record and to assume that large gains remain immediately or easily before us.
We believe it is vital for Bill C-30 to develop a policy framework that advances Canada's global environmental objectives with domestic policies that combine both environmental and economic sustainability.
The two are inextricably linked. If we, as a country or an industry, are not economically viable, we cannot invest in advanced environmental technologies. We know that investment, innovation and environmental improvement go hand-in-hand. Over the past two decades, Canada's steel companies have invested billions of dollars in equipment and processes that have brought the environmental progress I just discussed. Without economic as well as environmental returns, the steel industry could not—in fact would not, have made those investments.
Looking forward, Canada and other countries will need to make major investments and work collaboratively to develop and implement break-through environmental technologies, if we are going to achieve major additional gains in sectors like our own. I emphasize break-through technologies because the scope of further improvement in the short term is very limited, given what we have already done.
For this reason, new legislation and regulations must take into account several considerations.
First, as I said at the start, there are practical limitations to achievable improvements in the short term. If appropriate and affordable technologies do not exist, they cannot be deployed. This is not a Canadian-only perspective. Our counterparts around the globe agree that it will take a quantum leap in technology to achieve the same kinds of greenhouse gas reductions in the future that we have achieved over the past 20 years.
A second reality we face is cost and complexity of capital stock turnover in our plants. Our business operates on 25 to 30-year investment cycles, with long pay-back periods. So do our competitors abroad. We cannot quicken the pace, since to do so would escalate our already enormous capital costs to uncompetitive and unsustainable levels. This would cause migration of investment out of Canada's steel industry.
If a standard is set that is economically or technologically unachievable, the impact will be seen in the marketplace. What is not made in Canada for our market will simply be imported. Canada has probably the most open steel market in the world; already over 50% of our steel is imported. It would therefore frustrate our economic and environmental goals if it became necessary to replace Canadian steel with products from other countries with lower environmental standards. This would raise, not lower, global greenhouse gas emissions, and we would not be earning the capital to reinvest in productive technologies for the future.
Let me be clear, we do not advocate for lower standards than our competitors in the other advanced nations. What I'm saying is that Canadian policies must recognize that we do not operate in an environmental or economic vacuum. Our legislative and regulatory framework needs to allow Canadian steel to be competitive and environmentally responsible at the same time, in an international as well as a domestic context. We're looking for a legislative and regulatory approach that is sensitive to our capital investment realities, our performance and commitment to date, and the need for breakthrough technologies in the future. This means setting realistic medium- and long-term targets, not unachievable ones in the short term.
The Canadian steel industry wants to be part of the solution and to partner with governments and others to do so. To this end, we are working, on many different levels within our industry, on critical issues such as energy efficiency and improved emission performance. In 2005 we negotiated a memorandum of understanding with Environment Canada and the Ontario ministry to work together on short-term and longer-term means to address reductions in greenhouse gases without undermining the competitiveness of the Canadian steel industry. The MOU provides a valuable framework for ongoing analysis and collaboration, which we wish to continue.
In addition, we focus seriously on energy efficiency, which improves environmental performance. We play an active role in the CIPEC program of Natural Resources Canada. We're working in conjunction with the Brussels-based International Iron and Steel Institute to benchmark best practices throughout the world, based on the best available technology economically achievable for individual steel processes. This is a critical principle that needs to be followed in the short term.
For the longer term, we're working in partnership with the Government of Canada in an international research program through the IISI to develop precisely the kinds of breakthrough technologies that other steel-making nations will need.
Let me conclude my remarks by highlighting a number of our specific concerns.
Most of all, we're asking you to appreciate that Canada needs a steel industry that is both environmentally and economically sustainable, one that can continue to generate the capital necessary to improve performance in both areas, just as we have for more than two decades.
Second, we ask that the government consider the relative size of the contribution our industry has made so far and the significant improvements we've already made.
Third, we ask that any regulatory regime not duplicate or contradict existing requirements for industry. Recognizing provincial governments' regulations through equivalency agreements would minimize the compliance burden on government and industry.
Fourth, we ask that regulations be developed that recognize the limits of science and technology that can be applied to our process in the short term. A failure to do so will simply tax the sector and push production to other countries. We also ask that you support policy and fiscal measures that stimulate investment in new technology, understanding that environmental improvement as well as reduction in energy usage will flow from investment in new products and processes.
Ladies and gentlemen, I thank you for the opportunity to appear before you this morning.