Bill C-30 (39th Parliament, 1st Session) Committee on Feb. 22nd, 2007

[The Chair, Conservative, Laurie Hawn]

Thank you, gentlemen.

Mr. Scarpaleggia, you're giving up some of your time to Mr. McGuinty.

Mr. McGuinty.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you, Mr. Chair.

Can I go back, Mr. Fraser, to something you said, and maybe get some response from Mr. Gagnier afterwards?

I thought I heard you imply that participating in international carbon markets would accelerate the offshoring of steel manufacturing in other countries. I think you made some remarks about the verifiability and trustworthiness of the clean development mechanisms. We now know that there are over 500 international projects under the clean development mechanism, including 12 or 13 out of Canada. We had TransAlta tell us just the other day that their own CFO, corporate board of directors, shareholders, and investors would never let them get away with fraudulent or financially unsound projects.

So let me just get something straight. There are 168 signatories to the Kyoto Protocol. There are about 184 countries internationally in total. Can you give me some indication of which countries that you referred to are not signatories to the Kyoto process and would be seeking to cheat, using your language?

[Denis Fraser]

It isn't so much a perspective. I did not communicate clearly what I meant by the situation.

You cannot look independently at target setting and a trading system. I think the trading system gives us confidence that we can set just about any target for an industry, and there is an easy solution. I'm trying to speak to the complacency around that. Once you go around what's technologically feasible, it becomes a tax to industry, and I have to compete against China, Brazil, and Russia, which have not taken the same discipline in the process and therefore have not exposed their industries to the same amount of pain.

Remember, I said that pain is a relative term. If everybody has the same rule, the same level of difficulty, and has to achieve the absolute same level of technological proficiency, it doesn't become an issue of competitiveness. The minute you have large participants in the world system that are not subject to the same rules, the comfort of the trading system—becomes a higher risk for us to create conditions that will constitute progressively offshoring our own production capacity.

[David McGuinty, Liberal, Ottawa South, ON]

But you've been competing for 40 years in international markets where environmental, regulatory, and labour standards are lower than in this country. I would argue in return that the Canadian standard has driven your competitiveness in the international market place. It's not new that China, India, Brazil, or Russia are perhaps operating under laxer environmental standards. This is nothing new to your industrial sector, or for that matter to any Canadian industrial sector. In fact, the Mining Association of Canada, which is leading the world right now, and the Canadian Chemical Producers' Association, which is leading the world right now through it's Responsible Care program, are trail-blazing and showing that the rest of the world has to be pulled up to international standards.

In closing, I'd also suggest to you that the Kyoto process is all about engaging those countries and bringing them up to higher standards on the environmental, regulatory, and other fronts so we can enhance global standards overall and deal with our one single atmosphere.

[Denis Fraser]

I entirely agree with the position you're expressing. To the extent that the goals that are set and the environment that is created can continue to foster an environment where you can continue to invest economically in new technology, we will increase productivity and achieve greater energy efficiency. At the same time, as we've demonstrated over the last 20 years, we will also achieve very large and significant reductions in emissions.

So your point is well taken and valid. The only thing we're advocating is that we have to be careful in the way we set up the targets, because we can overstep economic feasibility and therefore have no economic mechanism to defend ourselves with.

[David McGuinty, Liberal, Ottawa South, ON]

I understand completely.

Thank you very much, Mr. Chair.

[The Chair, Conservative, Laurie Hawn]

Thank you.

We'll move on to Mr. Lauzon for the final five minutes, please.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

Thank you very much, Mr. Chairman. It's a pleasure for me to be here. I'm here as a guest, you might say, just filling in for a colleague, but I find it a very interesting topic, and in some ways I wish I were part of this committee.

As a novice, when I look at the witnesses here, it's obvious that you represent well-managed, very forward-thinking, well-established companies, and I commend you on how effective you've been in meeting your targets. But I can't help thinking about the companies that aren't in your enviable position.

There was a recent quote in a newspaper by Professor Mark Jaccard from Simon Fraser University. His assessment was that you would have to destroy one-third of the buildings and equipment in your economy in the next four years to meet the Kyoto target. Some people might think he's a gentleman who has that opinion in isolation. But further on in the same article they quote Buzz Hargrove. I guess he's not NDP anymore; he's a Liberal spokesperson. But he said it would be devastating for the whole community; it would be suicidal for our economy; you'd almost have to shut down every major industry in the country, from oil and gas to the airlines and the auto industry, and that just doesn't make sense.

Mr. Fraser, I understand your point of view so well, but it just doesn't make sense to me that you would set those hard targets right away, and if you couldn't meet those targets, people who buy your product would have to find it somewhere, so they would go offshore to buy it. We would lose employment. When I first read the professor's quote, I thought maybe that was a bit much. But then Hargrove substantiated it.

What is your opinion? Do you think it would be that devastating?

[Denis Fraser]

I'll give you just one statistic to complement what you're saying. If I shut down the entire steel industry, it would be 1.8%.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

If you shut down the whole aluminum industry, it would be 1%.

[Denis Fraser]

I can understand why you people want some reasonable long-term targets and some time to meet them. I guess I'm hearing that you want some targets that are reasonable and attainable over a fixed period of time, but in order to meet these hard targets we'd have to shut down a third of our economy.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

In essence, one has to look the cost of the carbon emissions, and consumer habits have a lot to do with it.

That's not the main subject here, but you cannot set targets and put the burden totally on industry that has demonstrated that it's done a lot already. We can demonstrate very easily that even by shutting it down completely you'd still be short of the objectives being set.

So the issue is a difficult one that we're not backing away from. We'll do our share, but we cannot do others' share.

[Denis Fraser]

I want to say a word for your 2,600 employees. You have 2,600 employees in your company and $1.5 billion in sales. I think this committee should consider that when we are making a decision as to which approach we should take.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

The steel industry has 35,000 employees and represents nearly $15 billion in sales.

[The Chair, Conservative, Laurie Hawn]

I think we'd better consider what we're—

Mr. Peeling, do you have a short comment?

[Gordon Peeling]

The manufacturing sector in total, which includes us, accounts for about 40% of Canada's total emissions. We keep leaving the consumer and the individual out of this. Until we bring the consumer in, which is maybe the longer-term part of this solution, we're only going to get part of the answer.

[The Chair, Conservative, Laurie Hawn]

Thank you very much.

Thanks to all the witnesses for being here. There was some very good testimony and some very good questions. We appreciate it all.

Before we break, Mr. Cullen, you had a notice of motion. Do you wish to proceed with it?

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

No, thanks, Chair.

[The Chair, Conservative, Laurie Hawn]

Thank you very much.

Thank you again, witnesses and members.

This meeting is adjourned.