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

[The Chair, Conservative, Laurie Hawn]

Yes, it is.

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

I'm just wondering if the mover would take a friendly amendment in relation to this, and I'll go through the reasons why.

First of all, I did have an opportunity to meet with the Australian National Emissions Trading Taskforce, and they indicated at the time that they were considering the possibility of being very flexible in any legislation they put forward to allow other international agreements to link to their trading market.

I'm wondering about proposed paragraph 94.1(2)(c), speaking of politics, the Kyoto Protocol, etc. I'm certain that's why they put that in there. Instead of the specific reference to the Kyoto Protocol, which obviously limits our future ability to either change the legislation or to continue to include international agreements to which Canada is a signatory or that Canada has ratified...instead of the specific reference to that, which obviously limits our ability in the future to link with others.

Of course, we don't want to limit the application of this section, but I have a second question. Weren't the Liberals the $15-a-tonne government, with $15 a tonne being the amount industry was going to have to pay as a maximum and taxpayers footing the bill for anything more? Now we've moved to $30 a tonne. I'm just wondering if, two years from now, it's going to be $45 a tonne or $60 a tonne. Where did this number come from? As we know, the European market has traded from one extreme to the other, so I don't understand why they flip-flopped on this one, from $15 to $30.

So there are the two questions, first of all on the amendment and secondly on the number.

[The Chair, Conservative, Laurie Hawn]

Before moving on to the next member with his hand up, I'll just ask if you will accept that friendly amendment, and then you can comment.

[John Godfrey, Liberal, Don Valley West, ON]

If the point of the amendment is to say “compliant with Kyoto—as amended from time to time” and it adds “any successor agreement”, which would imply that it was a successor within the United Nations process—in other words, as opposed to outside it—then some form of words along those lines might work. That's provided we're explicit about the United Nations process and are recognizing that there will be something post-2012 that won't be called Kyoto, of course.

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

Of course, just to respond to that, you realize that the G-8 plus 5 is not under the United Nations framework, and they account for 70% of the GHGs and the UN only 30%. We're limiting ourselves to 30% of the countries in the world that emit 30% of the greenhouse gases. It just seems like we're limiting ourselves for some political point that seems to be, quite frankly, irrelevant to the point of reducing greenhouse gases. Wouldn't we want to be able to link up to any international agreement?

[John Godfrey, Liberal, Don Valley West, ON]

With respect, the G-8 plus 5 is not an international negotiation like the Kyoto Protocol. It is the coming together of like-minded parties trying to advance the file, but it doesn't have the same function under international law. It's not part of an international institution. The only international institution within which this all occurs is the United Nations Framework Convention, of which the Kyoto Protocol is a subset.

The rest is nice. It's like the AP-6 or something else. These are all nice things, but they have no authority, they have no enforcement, they have no timelines, they have no deadlines, and they have no targets. Apart from that, they're perfect.

[The Chair, Conservative, Laurie Hawn]

Mr. Jean, I think what I'm hearing is a lack of agreement on the friendly amendment.

[John Godfrey, Liberal, Don Valley West, ON]

I think you got that right, Mr. Chair.

[The Chair, Conservative, Laurie Hawn]

It's not accepted as a friendly amendment, so we'll have to move on.

Mr. Harvey, please.

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

I never received an answer on the $30-a-tonne question, where we went from the $15 to $30. I'd like some clarification on where they came up with the number.

[The Chair, Conservative, Laurie Hawn]

That's out of order. The amendment is proposed as proposed. We can get back to that debate if you wish, but it's not a point of order.

Mr. Cullen.

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

The concept and the need for an emissions trading regime is critical for the NDP, and I think for a lot of the witnesses we heard. There has been a growing move, even with some of the more slow-moving parts of our industrial sector, toward this as one of the options they seek to have.

There were some moments of irony, I suppose, when members from the oil and gas sector were asking for access to this market and didn't want to be limited. So you wonder who the holdouts are at the end of the day, who is actually left resisting a cap and trade system in emissions trading.

I think there's something important in this. The NDP first put two similar amendments forward for the creation of this. The Liberal one has come up first. We seem to be happy with it, although I have one pressing question.

There is the notion of being able to have a free-flowing market that can interchange. There has been much speculation in the United States and some other jurisdictions that are not yet involved in a cap and trade system about the ability to trade across boundaries that has to be built into the flexibility of the Canadian system, which we need to go beyond.

While I don't yet have clarity from the environment minister as to his openness to this—he seems to one day be open and perhaps the next day be not so favourable to it—the general momentum and trend within this conversation in Canada has been very much toward this option of allowing people to trade credits through a system designed in Montreal or somewhere else.

The one question I have for the mover of the motion is around the section prescribing persons or classes of persons that may or may not own a carbon permit or a carbon credit. There has been interest from some in the non-profit sector in gaining access to the market and taking a certain number of permits off the market, thereby not allowing the pollution to be emitted at any point. This is sort of the old buying a hectare of rainforest kind of thing, where for some other motivation people just wish the pollution not to be created in the first place.

I wonder if I can get a short answer from Mr. Godfrey or someone else on the team as to the acceptability of that. It's just not clear in the motion whether that would be available to individuals to take those permits off the market.

[The Chair, Conservative, Laurie Hawn]

Mr. Godfrey.

[John Godfrey, Liberal, Don Valley West, ON]

I think I have the answer to this.

The first thing to note is that the first category of persons is really the 700 large final emitters that are spelled out elsewhere.

However, if one goes back to proposed paragraph 94.1(1)(b), which prescribes the creation of the domestic offset system that includes the requirement for and the issuing and trading of transferrable carbon credits for incremental and verifiable annual greenhouse gas emissions reductions, those credits are beyond the 700 polluting entities and may come from a not-for-profit organization or municipality, but they are subject to a couple of constraints. First they have to be incremental and verifiable. Second—and this is in anticipation of one of the comments that was made earlier about the European system—the government may wish to make sure that in the total issuing of credits, it doesn't inadvertently flood the market, which is what happened in Europe.

So I think the answer to your question is yes, because of the offset provision, credits will not be issued to just any old entity or person. They will have to demonstrate that they are incremental and verifiable.

I hope that helps.

[The Chair, Conservative, Laurie Hawn]

Monsieur Bigras.

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

Thank you, Mr. Chairman.

I know that the government seems to have reservations about the reference to the Kyoto Protocol, but I believe it is essential.

Mentioning a compliance with the UN Framework Convention on Climate Change—the UNFCCC—is essential, for two reasons. First, people at the Montreal Stock Exchange and other stakeholders in the emissions trading system have told us that the system Canada establishes will have to be compatible with other systems. The system compatibility issue is crucial in ensuring a viable carbon market in Canada.

As a result, insofar as the systems established so far have been founded on the joint application concept provided for in the Kyoto Protocol, that reference to the protocol is crucial to ensuring that Canada's future emission rights trading system is viable.

Second, the reference to the Kyoto Protocol is crucial in enabling us to trade credits internationally. You want those credits to be recognized. And for them to be recognized in the achievement of our environmental targets, the benchmark must be the Kyoto Protocol.

So, for both the above reasons—the need for systems compatibility to facilitate access by Canadian companies, and the issue of credits traded internationally being recognized in Canada's attainment of targets—the Kyoto Protocol and UNFCCC reference must be expressly set out. That is what amendment L-20 achieves.

[The Chair, Conservative, Laurie Hawn]

We are coming up to one o'clock, at which time we had suggested that we may stop. I can't cut off the debate. Is there more debate?

Mr. Warawa.

[Mark Warawa, Conservative, Langley, BC]

Thank you, Chair.

I think the points made by Mr. Jean are quite relevant. The scope that is being proposed here with the Liberal amendment is quite narrow, focusing at the 30%, saying that you play by our 30% rules and disregard the 70% of the polluters. I think that narrow scope is not the way to go.

I was quite surprised by some comments made by Mr. Cullen, unaware apparently.... Hopefully, he has read the Clean Air Act. Under clauses 29 and 33, it very clearly talks about carbon trading. It's on pages 28 and 29. So carbon trading has always been part of the Clean Air Act. The market should decide where that trade will occur. So it is already part of the Clean Air Act, and I don't support the Liberals' attempt to a very narrow scope. There would be no prohibition on the release of greenhouse gases without a permit, nor would there be any authority to create such a prohibition through regulation. I think what's being proposed in the Clean Air Act is a much better and larger scope and it's a better way to handle it.

[The Chair, Conservative, Laurie Hawn]

Mr. Cullen.

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

A small suggestion. Perhaps it would bring the government on side to this if the mover were willing to take an amendment, to subsequent international agreements. If that's the scope you're worried about, that under Kyoto it's too limited.... I believe this government is right now encouraging subsequent international agreements around the reduction of carbon on a global scale. Is that the type of change they're looking for?

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

We proposed that they make it less restrictive.

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

On your suggestion that you're going to vote against this because the carbon market is too restrictive to delineate just to Kyoto, if the wording could be tacked on that if there are subsequent—

Excuse me. Mr. Godfrey can clarify. I might get on the wrong track.

[The Chair, Conservative, Laurie Hawn]

Mr. Godfrey.

[John Godfrey, Liberal, Don Valley West, ON]

I understood Mr. Warawa's point to be that it was unnecessary to introduce this particular system because it was anticipated in the original wording, although I'm just having some—

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

No, I'm not referring to Mr. Warawa's last point. There was a motion made that this is just over-restrictive to industry, that it can apply to further—

I realize we're coming up to the end of our time here, Chair. However, if the notion is that there's a future international agreement that Canada is a signatory to, which includes emissions trading, and that's what the government is seeking to have, maybe we could make it a possible amendment whereby we could have unanimity around the creation of the carbon market.