Thank you, Mr. Chair.
I, along with my colleagues at the Climate Action Network, welcome this opportunity to talk to you about the contribution emissions trading can make to the cost-effective reduction of greenhouse gas emissions.
Let me begin by restating what everyone here says they accept, but which I sometimes think not everyone truly appreciates: before long, within the lifetime of our children, the earth will warm at least two degrees. It doesn't sound like much, but don't be fooled. It is a calamity, an environmental crisis, an economic disaster—at least it will be, if met with continued half measures and indifference. If we know what costs $1 today to fix now will cost $5 to fix in the future, why would we possibly reject the idea of doing everything reasonably possible to take action right now? How can we logically and intellectually rationalize doing less than what we know to be necessary and realize is possible?
There is a massive gap in logic taking place. For me, this inexplicable resistance to Canada's full participation in both an international and domestic emissions trading system is the perfect example of this gap in logic.
Let me make three points is support of why Canada's policy-makers must urgently employ an emissions trading system, and why Canadian politicians must quit trying to make emissions trading a four-letter word.
First, we need an emissions trading system because the problem we face—call it carbon pollution—doesn't care a whit for national borders. Climate change is like no other environmental problem. Reducing emissions at home will not change the climate at home, as emission reduction will when we cut smog and acid rain pollution. For the security of Canadians and for our environment, Canada has a vested interest in ensuring that greenhouse gas reductions occur both at home and abroad. Like all other problems that are transnational in nature, we need a transnational approach. We need an international system of emissions trading to address the international reality of climate change.
Second, I believe by far the most important or at least the most logical reason is that we won't make substantial progress until we employ the financial incentive of the business sector. When will we surely make progress? It will be when businesses can make money from not polluting—and trading is all about that. Canadian companies that operate globally can generate credits through their business activities as part of their day-to-day operations. These credits don't need to be purchased. Companies like SNC-Lavalin, Alcan, Inco, and TransAlta, just to name four, operate internationally and can benefit in this way. Companies like these can generate credits through project-based changes that lead to fewer greenhouse gas emissions being generated than original project designs may have anticipated. These credits are assets on the books of Canadian companies and can be used to meet domestic targets or be sold to generate revenue.
If we're making carbon scarce, then we're making carbon valuable. Look at the practical experience; it tells you this is working. The clean development mechanism has more than 1.8 billion tonnes of potential credits in the project pipeline; more than 500 projects, valued at 740 million tonnes to the end of 2012, are already registered; 32 million tonnes of credits have already been issued, and 37 million tonnes are waiting for final approval. More than 110 methodologies have been completed, with more in development.
Those who argue we should not let business offset emissions by simply buying credits don't get it. The way we incentivize business to lower emissions is by putting them in a market where they can make money from keeping emissions low. If this works for precious metals, it can work for carbon.
A final point, as the Prime Minister has argued, is that we need to engage not only the United States, but also emerging high-growth economies like China, Indonesia, Brazil, and India in the fight against global warming. It's good enough; I totally agree. What better way, and the surest way, is there of engaging these nations than through emissions trading? So why would we oppose it?
My third argument is that emissions trading, as proposed under the Kyoto Protocol, could become one of the largest sources of international development for emerging economies and the poorest of the poor. International trading mechanisms, like the joint implementation and clean development mechanisms, have an important role to play in driving emissions reductions and in introducing new job-creating technologies.
In fact, I would also argue that Canada has foreign policy interests for also participating in the carbon market, particularly where a low-carbon project contributes to international development objectives where a low-carbon project could also be deploying a Canadian technology, or improves Canada's international competitiveness, expands trade, or otherwise advances our national interest, as in cutting greenhouse gases or other pollution affecting Canada through atmospheric transport.
Canada may deprive Canadian business of these opportunities because it is not building the infrastructure needed to register these tradeable units. A domestic target for industry that allows participation in international mechanisms but that does not include a Canadian registry for recording international transactions will deprive our economy of business development and international reduction opportunities.
The price of international carbon credits and allowances provides an important price discovery benchmark that we can use to assess domestic approaches, whether industry-led or by governments. Clearly, existing technologies can deliver reductions at prices ranging from $10 to $25 a tonne. It makes one wonder why a tax-free transit pass at $2,000 a tonne would be an acceptable government expenditure, while business claims that anything over $15 a tonne requires a switch to long-term technology solutions.
Driving companies to invest in these existing technologies requires an absolute cap to the Kyoto target level, as the Pembina Institute recently proposed. The government must resist industry demands for weak, near-term targets with over-reliance on a technology fund to generate hot-air credits for long-term R and D. Such fraudulent arrangements undermine true price discovery, and if current proposals by industry that are under consideration by government proceed, emissions from the oil sands could increase 180% to 300% over the next decade, while emissions intensity improves 16%--a worsening intensity improvement, by the way, than in the last ten years. Industry proposals and Government of Canada analysis of target options and emissions trends resulting from these target options must be transparent, and must be reviewed by third-party stakeholders and, I would argue, this very legislative committee before regulations are finalized.
In short, I say to everyone here that we have an obligation to put politics aside and do the smart thing. We need to urgently put in place new transparent targets for business to lower emissions. We need to match that with full participation in an emissions trading system that will financially reward business for lowering their emissions. Nothing else makes even a whit of sense.
Thank you.