Thank you, and I thank the committee for allowing us to speak today. I know that you hear a lot of witnesses and that we must occasionally bore you, but I have to tell you that for us, it is really important to have a chance to be heard.
There's really only one policy issue we're facing, which is how to address climate change and keep jobs in Canada. That's the debate, and no one is saying that we should do one or the other. We all agree that we have to do both. We have to keep jobs in Canada, and we have to face climate change.
I am going to address this from three perspectives, all of which deal with jobs and the environment.
First, in the forest industry we have 900,000 jobs that depend upon healthy forests, so our jobs depend upon a healthy environment. And unless we address climate change in an effective way, those 900,000 jobs are threatened. In fact, they are threatened today by the pine beetle that's moving across Canada, and they are threatened by forest fires. So for the forest industry, this is not a future thing, it's not a theoretical thing. Effective action on climate change is necessary to have healthy forests, and without healthy forests, we don't have jobs.
We haven't waited for governments to show the way or to regulate us. Our industry has reduced its greenhouse gas emissions by 44% since 1990, seven times Kyoto, without regulation, and we intend to keep doing more. We've done a similar thing on air quality; we've improved it by 60%. We've moved away from fossil fuels, and now 60% of our energy comes from renewable fuels. We produce enough renewable energy in our mills--just in our factories, in the mills across Canada--to replace three nuclear reactors.
The forest industry, because we recognize how important nature is and how important the environment is, has not waited for regulation. We have moved, and we have moved quickly, and we have done what we had to do to reduce greenhouse gas emissions by 44%--seven times Kyoto. That's the first perspective on jobs and the environment.
The second is that any time we have a law, a regulation, or a penalty that drives production out of Canada, we are not helping the environment; we are merely displacing the gas emissions from Canada to a third country. In the forest industry, every time you close a mill, that slack will be taken up by a country that is not controlled by Kyoto--by Brazil, by China, by Russia--which can emit to its heart's content. We are not helping to address climate change by driving production out. What we have to do is keep production here in a cleaner way, and the only way to keep production here in a cleaner way is to retool industry. That is the policy imperative.
How do you retool industry quickly enough so the jobs stay here and the greenhouse gases go down? In the forest industry we've done the retooling by switching from fossil fuels to renewable fuels. In other industries there will be other solutions. But it's the speed of retooling that is the critical point in keeping jobs here and in addressing climate change.
We have some specific suggestions for speeding up retooling, and none of them is terribly surprising. What do you need to retool? You need mountains of money. You have to buy new equipment, so you need capital, and that's it. If you have access to capital, you can retool. Unfortunately, for manufacturing in general in Canada and for the forest industry, capital is scarce, because we're not making a heck of a lot of money. So any incentives that government can give--tax breaks or any sort of incentive--or any financial signal that makes it easier for us to accelerate buying the new equipment that would reduce greenhouse gases, will keep jobs in Canada and address climate change.
A system that has regulations without any accommodation for the need to retool, the need for capital, won't work. All it will do is drive businesses that are at the edge to China, and the greenhouse gases will come from there and the jobs will stay there. So we need a strong regulatory regime, but we need the regulatory regime together with a tax incentive system or some other incentive system that will make it easier for businesses to buy the equipment necessary to quickly retool.
On a regulatory regime, there are a few things that have to happen. The first is that reductions made since 1990 have to be recognized, and fully recognized. I don't care if the base year is 1990 or 2000, but whatever it is, the calculation has to respect what's already been done. Industries that have not waited for regulation should not be punished by the government by pretending everything we did doesn't count, and industries that have done nothing until government forces them should not be rewarded by having where they are now considered to be the baseline. It is a fundamental question of integrity in government regulation that those who have acted before regulation have their efforts recognized. Otherwise it sends a simple message to industry--don't do anything unless we force you, because if you do, what you've done will turn out to be the floor for further improvements.
Two, a regulatory regime must involve the capacity to trade credits and to offset, because without market mechanisms we won't find least-cost solutions. If it's detailed regulation, if it's the heavy hand of officials and bureaucrats, doing their best, trying to figure out how to regulate, finding the solutions, it will never work as well as having market mechanisms. We need a trading and an offset regime that allows us to find least-cost solutions. I promise you that industry will find the best and smartest way of doing it if there is an economic incentive, which trading gives us.
Finally, on equivalency, we don't care who sets the standard if it's an intelligent standard, and we don't care who enforces it, but we don't want the province and the federal government coming and tromping all over our mills doing the same thing. So set a strong, intelligent federal regulatory machine and let the provinces enforce it. Let the provinces set the regime and the feds enforce it. We don't care, but let's not have both orders of government doing the same thing. When we say “equivalency”, we don't mean that you recognize every single standard set by a province. If it's a federal standard, everybody has to meet it, but it doesn't have to be enforced by federal regulators. It can be. We don't care who enforces it, but we don't want two sets of regulators tromping through our mills. One is quite enough. We'll meet the standards without having all those guests.
I want to draw the committee's attention to a submission from the environmental groups. This is a strange document because it is agreed to by the Sierra Club--I can list who's on here--Greenpeace, Nature Canada, World Wildlife Fund, and Ecojeunesse. They've all agreed for the first time, so this is an amazing document. I want to tell you that the Forest Products Association of Canada agrees with it too. It might be possible, actually, to take it seriously and do it.
I also want to draw your attention to our annual report. In the back flap you'll find our sustainability report, which gives all the details of the forest industry's environmental performance--the pretty, the less pretty. We're holding ourselves accountable. We're being transparent. It talks not just about our 44% reduction in greenhouse gases, our 60% improvement in air quality, our 40% reduction in what goes to landfill, but it talks about all our environmental measures, and we're pretty proud of it.
Chairman, members of the committee, thank you.