Bill C-30 (39th Parliament, 1st Session) Committee on March 27th, 2007

[The Chair, Conservative, Laurie Hawn]

Thank you.

Mr. Cullen.

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

Thank you, Chair.

I have just two small comments. I won't argue on behalf of the Liberals too hard on this one. It's just not in my nature, generally speaking; try as I might, it's difficult.

First of all, the notion of the carbon tax is something you have no choice but to pay, and the notion of collecting funds from those who choose to pollute beyond their caps is a choice being made.

Secondly, what we're encouraged by is that this is holding in trust the money that will then go back to the polluters themselves if they're able to design projects that would then mitigate the emission of greenhouse gas reduction. Those are two fundamental principles. If only we could have income taxes in this country that worked this way, where you simply had some relevance in choice as to whether you paid it or not. Then, if you did end up paying, you would have a two-year window from which to draw it back down to improve your own life or something else. It doesn't work that way in the nature of a conditional tax.

I see the chair is taking feverish notes.

[Some hon. members]

Oh, oh!

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

The one important thing I want to say, though, is that as we approach the conversations of the substantive tools and measures we need to wrestle greenhouse gases under control in this country, almost to an amendment the government has tried to get them ruled out of order, has chosen to seek delay or to bring in notions of political rhetoric and these types of things. I'm getting disturbed by the trend. If what we want to do is to debate substantive choices—this cap over that cap, this target over that target, or this measure over that measure—then let's do that, but there's a disturbing trend that I would encourage the government members to avoid, which is to seek to rule out of order everything that would actually lead Canada to doing something about greenhouse gas emissions, or to seek to bring in notions of a political conspiracy or debate.

Let's talk about the substantive. That's why we suggested the creation of this committee in the first place; it was to debate policy, to debate options, and not to seek to throw wrenches into the works. So let's proceed in a more constructive way and have the courage to debate targets, hard caps, and measures that we think will get us to where Canada needs to be.

[The Chair, Conservative, Laurie Hawn]

Is there further debate?

Mr. McGuinty.

[David McGuinty, Liberal, Ottawa South, ON]

Very quickly, Mr. Chair, I'm wondering if the government has any semblance or even a small, thin iota of positive commentary to make about a creative solution for the country. Do they have anything positive to say, or do they want to make an amendment to this amendment? Are they proposing something constructive? It would be helpful, as opposed to a pre-election speech. Is there anything positive on the table from the government members now, Mr. Chair, through you?

[The Chair, Conservative, Laurie Hawn]

Mr. Jean.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I think it's clear. I proposed three or four different amendments and I asked six or seven different questions to the member in relation to this, and I asked some of the NDP members. So how can he suggest that this is diatribe and political pondering? They're the experts at it. They would know better than I. Certainly, I think my questions were asked in good faith and I expected answers to them, and I received some assurances, although not very many, to be blunt. I do still have serious concerns with this carbon tax.

[The Chair, Conservative, Laurie Hawn]

No further debate? Are we ready for the question? I just need to be clear that you're voting on L-19.1 with a friendly amendment at 63.1(2)(h), where it's replaced with:

where funds are transferred out of the green investment account of a large industrial emitter into a green industrial fund, the mandatory expenditure by the agency of those funds for the purpose of furthering the progress to reduce greenhouse gas emissions in Canada, a target of 50% of which will go into a building retrofit revolving fund program, the remaining 50% to be invested in greenhouse gas reduction projects with a minimum of 80% of the funds to be spent on projects in the province or territory in which the large industrial emitter is principally situated.

Also, (h)(i):

Funds shall be allocated in a manner that maximizes verifiable GHG emission reductions.

(Amendment agreed to)

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Are we done with L-19.1?

[The Chair, Conservative, Laurie Hawn]

We are done with L-19.1, so new clause 10.1 is carried.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

My comment is not in relation to that, but I did promise the committee I would provide a copy of the report and also where my conclusions came from. I have a copy of the report that I would like to table, because members have asked for it. It confirms that the Kyoto commitment in relation to the credits themselves would cost somewhere in the range of $38 billion. As well, I have...the number I remembered was $80 billion over the next 35 years, and that's from the C. D. Howe Institute. It says if this policy approach continues--referring to this particular committee--we will spend at least $80 billion over the next 35 years, but without reducing GHG emissions.

I would like to table this because it was asked for. Thank you.

[The Chair, Conservative, Laurie Hawn]

Thank you, Mr. Jean.

We are moving on.

(Clauses 11 to 13 inclusive agreed to)

[The Chair, Conservative, Laurie Hawn]

Now we have new clause 13.1, which is covered by NDP-16 on page 31, which adds two new sections.

Mr. Cullen, over to you.

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

In the spirit of the sudden pace and proficiency, I won't be moving this clause, Chair.

[The Chair, Conservative, Laurie Hawn]

Terrific. So we'll just move on to clause 14.

(On clause 14)

There's one amendment to clause 14, NDP-16.1 on page 31.1.

Back to you, Mr. Cullen.

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

Thank you, Chair. I would seek the permission of the committee to stand this clause until we deal with L-21 which is, I believe, two away. They're connected. Beginning on this one without having had the discussion on L-21 wouldn't make a lot of sense, so we'll seek to stand this until L-21 is finished.

[The Chair, Conservative, Laurie Hawn]

Okay. The committee concurs?

[Some hon. members]

Agreed.

[The Chair, Conservative, Laurie Hawn]

(Clause 14 allowed to stand)

We are moving on to new clause 14.1, which is covered by one amendment, L-20. I'll point out that L-20 is consequential to L-21 and L-21.1, and there are a number of consequences if L-20 is negative. But I'll turn it over to Mr. McGuinty.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you very much, Mr. Chair.

It's a pleasure to speak to this amendment and to move it formally and take a few minutes to explain how this would connect to the previous amendment, which we've just passed, that spoke to the negotiations for the creation of a green investment bank, green investment accounts, and a green investment fund, as amended by the NDP.

This amendment does several things. It amends Bill C-30 by providing that the Governor in Council can create, for example, a greenhouse gas emissions trading system that will require issuing and trading transferable carbon permits here in Canada by large industrial emitters, the same group referred to earlier by my colleague, Mr. Godfrey—roughly 700 large industrial emitters that are responsible for approximately 54% of all of Canada's greenhouse gases.

It also provides, Mr. Chair, for the creation of a domestic offset system, which of course talks about making sure that any transferable carbon credits that are traded are incremental and verifiable annual GHG reductions. They're linked, of course, to the notion of an individual carbon deficit of any single large industrial emitter.

We're also calling for a clear description of what person or classes of persons can actually own a carbon permit or a carbon credit—in other words, who can trade. We would be calling for the Governor in Council to set up the rules and the procedures for trading carbon permits or carbon credits.

Here, in proposed paragraph 94.1(2)(c), we would be doing something very important. We would be making sure that the greenhouse gas emissions trading system and the domestic offset system that we would like to see created in this country would be linked with international greenhouse gas emissions trading systems that establish incremental and verifiable greenhouse gas emissions reductions. These, of course, would have to be compliant with the Kyoto Protocol, as that, of course, would be amended from time to time. It speaks more directly to the two mechanisms inherent in the Kyoto Protocol, the first being joint implementation and the second being the clean development mechanism.

Here I think it's important to pause and remind ourselves of the overtures and the testimony given by the president of the Montreal Exchange and the president of the Toronto Stock Exchange, and in particular the 10-page memo that was sent to the government last December by the president of the Toronto Stock Exchange pleading with the government to not penalize Canadian companies by shutting them out of international carbon markets, thereby driving up the price of carbon for our Canadian large industrial final emitters and of course rendering the Canadian market an illiquid and small market with very high greenhouse gas carbon costs.

This amendment also goes further by prescribing the price for carbon in 2013 at an amount equal to or greater than $30 and of course giving flexibility to the government to take into consideration foreign and international greenhouse gas emissions trading systems. This will be important for us, Mr. Chair, as the European Union carbon markets take hold more formally on January 1, 2008, as the emerging carbon markets out of the United States hook up eventually to international markets, and so on.

This amendment also goes further to address some of the concerns raised on numerous occasions, particularly by government members, the Minister of the Environment, and the Prime Minister in his speech in Montreal just this week, because this amendment, under proposed paragraph 94.1(3)(a) prohibits the use of prescribed hot air credits to reduce the individual carbon deficit of large industrial emitters. So it ought to I think fully address the concern of the government. I cannot see how they could not support this, given that their opposition to international carbon markets has been chiefly, if not solely, predicated on the notion of what they describe as hot air purchases.

It also goes further by ensuring that at least until 2010, not more than 25% of the individual carbon deficit of a large industrial emitter is offset by using credits from foreign and international greenhouse gas emissions trading systems. This is again something we heard from some witnesses, but chiefly to ensure that the lion's share, by far, of investment made to reduce greenhouse gases stays right here at home. In fact, it really does provide the basis for a real made-in-Canada plan to deal with greenhouse gases.

And finally, and very importantly, in proposed subsection 94.1(4), it empowers the Governor in Council to make regulations to limit the quantity of carbon credits it issues, to ensure that the price of carbon is not less than $30 a tonne. This will be important as Canada does eventually continue to trade in the emerging and booming international carbon markets. It will be important for us to give the government flexibility to achieve an appropriate price by using allocation of the number of credits or the total number of credits in circulation in Canada, for example, to ensure that carbon price is never less than $30 a tonne on a CO₂ equivalent basis.

So we can see that this is obviously very much connected to the previous amendment that we have just passed, or discussed and debated, and spoken to chiefly by my colleague, Mr. Godfrey. We believe it is the second piece of a new approach to immediately start on January 1, 2008, to achieve our greenhouse gas reduction targets, and we rule out the chief concerns of the government as manifested at this committee now over the last several months.

Those are my remarks.

[The Chair, Conservative, Laurie Hawn]

Thank you, Mr. McGuinty.

Monsieur Bigras.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chairman.

I will try not to take as much time as the member who introduced the amendment.

This type of amendment has been a long time coming. Canadians have been waiting for an international greenhouse gas emissions trading system. Business people, environmentalists and investors have been anxious to have this type of system in place. The Montreal Stock Exchange has already signed a derivative products agreement with the Chicago Stock Exchange.

We have everything we need, and all of the stakeholders are ready to commit to a greenhouse gas emissions trading system. It is interesting to note that the motion ties the greenhouse gas emissions trading system to international systems as provided for in paragraph 94.1(2)(c). This would give our companies access to foreign markets. Already, Europe has estimated the potential of a future hot air credit market at $70 billion. This motion would allow our companies to have access to foreign markets while, at the same time, allowing us to meet our Kyoto objectives and as I said earlier, it would minimize the implementation costs.

The European estimate of the impact of applying Kyoto is 0.1%, precisely because the carbon market represents a powerful tool to meet the Kyoto objectives while minimizing the financial impact on the economy.

The government will probably also be happy with paragraph 94.1(3)(a), which would prohibit the use of hot air credits designated by the regulation to reduce individual carbon deficits of large industrial emitters. This week, when the minister appeared before the committee, he accused the opposition of wanting to buy foreign hot air credits. In my opinion, the amendment shows that it is not and has never been the intention of the opposition to use these hot air credits to reduce the carbon deficit.

Through this amendment, we will ensure that not more than 25% of the individual carbon deficit of a large industrial emitter is offset by using credits from foreign and international greenhouse gas emissions trading systems. So, through this amendment, large industrial emitters will have to put mechanisms in place to reduce their greenhouse gas emissions at source.

I think that this bank, where companies and large emitters can open an account, will ensure that companies will not have to go abroad to meet their carbon deficit requirements, but, from time to time, they will also have to ensure that they reduce greenhouse gas emissions at source, by, of course, using available technologies. The large industrial emitters told us that they didn't have the funding that they needed. So we are creating an account, or a fund, that they will be able to use to a limited extent, for the purposes of the carbon market, to deal with the carbon deficit, while ensuring that there will be reductions at the source.

[The Chair, Conservative, Laurie Hawn]

Merci, Monsieur.

Mr. Jean.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair.

Thank you very much for lunch. It was very tasty. And I would like to thank the environment committee as well, and Mr. Mills.

First of all, is this amendment in order, Mr. Chair?