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

[John Moffet]

I think we could provide a slightly clearer response to Mr. Godfrey's question.

I'm sorry to interrupt, Mr. Cullen.

The Justice Canada policy is that when a bill is opened up to make specific amendments, Justice Canada seeks to use that opportunity to bring the bill up to the current state of the law. There's no systematic effort to go and look for these, but should other bills be opened up, this policy would be applied.

[The Chair, Conservative, Laurie Hawn]

Mr. Ares.

[Michel Ares]

As a precision to that, when a provision of a bill opens provisions, it's the policy to bring them up to the state of the law.

[The Chair, Conservative, Laurie Hawn]

If there's no further debate, are we prepared for the question on clause 15?

(Clause 15 agreed to)

(On clause 18)

[The Chair, Conservative, Laurie Hawn]

We'll move right along to clause 18. I suspect this one will generate a bit more discussion.

We will start with the Liberal amendment, L-21 or L-21.1, whichever one you choose to—

Mr. McGuinty.

[David McGuinty, Liberal, Ottawa South, ON]

We'll be withdrawing L-21.

[The Chair, Conservative, Laurie Hawn]

Okay, amendment L-21 is not moved.

We're on clause 18 and amendment L-21.1.

We will hear about amendment L-21.1 from Mr. McGuinty.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you very much, Mr. Chair.

This is obviously an important amendment. I'd like to formally move Liberal amendment 21.1 and speak to it for several minutes. I would appreciate my colleagues' indulgence.

It's a very important amendment, Mr. Chair, and I think it will complete a series of three amendments we've put forward to try to piece together a comprehensive Canadian approach to climate change actions and certainly greenhouse gas reductions as they apply to our largest industrial emitters.

I'd like to go through the amendment almost page by page and break it down in terms of its scope and its purpose.

The first thing I would say is that obviously the purpose of the purpose paragraph is pretty clear for Canadians who might want to read it and for our colleagues here, but I think the key first part of this amendment, Mr. Chair, is that it will create Canada's national carbon budget and will create other carbon budgets that would flow from Canada's national carbon budget.

It's fairly specific in setting out, under proposed subsection 103.02(1), a definition of what the national carbon budget is. For each year from 2008 to 2012, it defines a budget that corresponds to Canada's domestic greenhouse gas emissions levels in 1990 less 6%, which of course is our Kyoto commitment and our Kyoto target.

For 2020, 2035, and 2050 a carbon budget would also be developed by the minister, which would be less than the previous year's budget and would have to correspond with Canada's domestic greenhouse gas emissions levels in 1990, less 20%—as it goes on to explain—by 2020, less 35% by 2035, and less 60% to 80% by 2050. That is the core target; that would be Canada's national carbon budget going forward.

Under proposed subsection 103.02(2), this amendment would also create for Canada sectoral carbon budgets as a subset or a portion of the national carbon budget, and of course it gives the power to the minister to determine who would form part of each sector, something I'll come back to in a moment in the amendment.

Proposed subsection 103.02(3) then introduces the notion of an individual carbon budget. Individual carbon budgets are portions of these sectoral carbon budgets, and again a subset of the national carbon budget. Individual carbon budgets would be determined by the minister for each large industrial emitter, but proposed subsection 103.02(3) also gives flexibility to the minister in the future for any other person that the minister might consider to be responsible for a part of Canada's overall greenhouse gas emissions.

Following this proposed subsection 103.02(3) are a number of core attributes that speak to the question of allocation and how the minister might allocate these individual carbon budgets. They deal with a series of very important issues raised for us by expert witnesses, who spoke to the salient features of a strong trading system, in particular, that would reflect some important attributes.

The first is credit for early action. We want to make sure in this country that those large industrial emitters who just started doing it.... There are thousands around the country. We're not talking about the smaller ones in this case; we're talking about the dozens and dozens of our large industrial emitter group, of about 700 that have also taken a lot of early action.

They have done so because they subscribe to the Kyoto Protocol and they understand the targets. They've said they are going to do this because they are going to become more energy efficient and more competitive and because they recognize that we're moving into a carbon-constrained future. Proposed paragraph 103.02 (3)(a) talks about giving credit for early action to the person who has reduced greenhouse gas emissions between 1990 and the entry into force of this section. It reflects the work that's gone on since 1990.

The second thing it does in the allocation of the individual carbon budget is take into account that in some instances some of our large industrial emitters have many plants and many facilities. They are not single-facility or single-plant entities, so we need to leave some room here to adjust and to allocate on the basis that some of these actors, some of these large industrial emitters, can transfer their emission reductions from one setting to another. This is also a central tenet of those who are proposing, from the corporate sector in Canada, to see a robust trading system, which is why it's reflected here.

The third thing it does, Mr. Chair, is allow for comparisons between large industrial emitters, but more importantly between emitters in the same industrial sector. It is important to treat all these actors, these emitters, fairly. You treat them fairly by having regard to their economic growth compared with their sector's average economic growth to make sure it is adjusted accordingly. That's an important part of this amendment that I wanted to home in on from the beginning.

Proceeding through the amendment, the minister, at least six months before a national, sectoral, or individual carbon budget applying, would determine that budget, would publish the budget or give notice of it in the Canada Gazette, and then we would go on to empower the minister to make regulations to decide how we're going to calculate the individual carbon deficit in this case. The deficit is the amount of surplus emissions above the individual carbon budget allocated.

We also here are trying to introduce into Canadian society the concept that, just as we had a fiscal deficit that our government and other governments have struggled to deal with and have eliminated, we now need to introduce into Canadian society, in our view, the concept of a carbon deficit, because we are working towards and heading towards a carbon-constrained future. This, we think, would help to introduce this notion of carbon deficit into the parlance, into the working knowledge of not just the large industrial emitters but also Canadian society.

It goes on to give authority to the minister to issue carbon permits to those individual emitters.

Then we go into the second part, the core part of the amendment, under the heading “Climate Change Plan”. Here, we believe, it is desperately required that a climate change plan be prepared for Canada every year by May 31 from 2013 until 2050. That would reflect the end of our first commitment period under the Kyoto Protocol.

We go on in some detail to talk about what should be in the plan. What should be in Canada's climate change plan? You will see under proposed paragraph 103.03(1)(a), for example, a description of the measures that would be taken to ensure that our greenhouse gas emissions are equal to or less than our established national carbon budget. If we turn the page, we talk about the kinds of measures that ought to be included: regulated emission limits and performance standards; market-based mechanisms such as emissions trading or offsets; spending or fiscal measures or incentives that could be used; a just transition for workers; other cooperative measures or agreements with provinces, territories, or other governments.

Under what I call key accountability provisions in this amendment, we want to know under this national plan, this climate change plan, how many greenhouse gas reductions have actually occurred in a given year and how many are expected to occur in a given year. We want to compare that to the levels in our most up-to-date emissions inventory for Canada. We think Canadians should know what the projected greenhouse gas emission level in Canada for each year would be, taking into account these measures that I've just spoken to.

It also compels the government, Mr. Chair, to compare those levels with any international commitments that we have taken on, so we get to compare our performance and measure it against our international commitments.

It goes on, of course, under proposed paragraphs 103.03(1)(d), (e), and (f), to further detail other parts of the plan, including, under proposed paragraph 103.03(1)(f), a statement indicating whether each measure proposed in this climate change plan has been implemented by the date projected in the plan. We think this goes hand in hand with driving up environmental accountability for all governments—this government and any subsequent government that might follow—given the urgency of the climate change situation.

Under proposed section 103.05, we go on to define large industrial emitters. It's clear that under proposed paragraph 103.05(1)(a) emitters are those that are part of the electricity generation sector, including those that use fossil fuels to produce electricity; under proposed paragraph 103.05(1)(b), emitters are those that are part of the upstream oil and gas sector, including those that produce and transport fossil fuels, but we've excluded petroleum refiners and the distributors of natural gas; and under proposed paragraph 103.05(1)(c), the third category of large industrial emitters are energy-intensive industries, including large emitters that use a lot of energy from fossil fuels for their manufacturing processes.

Moving into part 5.2, Mr. Chair, I'm not going to go into too much detail, but you see quite an extensive amendment that puts forward an air quality action, basically a plan. The purpose of this plan is to protect the health of Canadians and improve the environment by addressing the anthropogenic deterioration of air quality. We talk about standards, which are clear—I'm assuming most members have read this amendment—and we go on from there to make a number of very precise and specific recommendations in order to improve air quality in Canada.

Those are my remarks, Mr. Chair. I think this is something that is deserving of serious debate. We have certainly tried to weave through this final amendment, in conjunction with the first two amendments.... Taken together, the three of them really do form, we think, a very viable plan for Canada's large industrial emitters to reduce their greenhouse gas emissions, to get used to working in the context of an overall national carbon budget, to understand a sectoral carbon budget and of course their own individual carbon budgets. They're complemented and supplemented by some of the other measures we've put forward earlier—for example, a cap and trade system, maximum trading offshore, and so on, Mr. Chair.

Thank you very much. Those are my remarks.

[The Chair, Conservative, Laurie Hawn]

Thank you, Mr. McGuinty.

Before we go on, I'll just point out that because of line conflicts, if L-21.1 passes, then all other amendments cannot be put in clause 18. You can only amend a line once, and that amends the whole clause. So just factor that into any debate.

Mr. Jean, you are first.

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

Thank you very much, Mr. Chair.

I do have a question, but I want to put my entire comments to Mr. McGuinty beforehand, before I have an answer. I'm very curious as to why refineries were excluded or any particular section was excluded.

I will say, first of all, if I didn't bring forward a challenge on the basis of a royal recommendation you'd be distraught over that, so I do challenge the admissibility of this on that basis and I want to go into an argument as to why.

Specifically, I am also surprised, and would be very surprised if the member from the NDP would support this, because proposed section 103.01 should in fact say, especially the vulnerable members of society and Canadians living in the north but not in case of economic hardship or if you live in Toronto or the oil sands because you don't deserve clean air.

I am quite concerned with that, because I think that all Canadians, no matter where they live, deserve the same quality of clean air. To suggest that some in one particular airshed should receive a lesser—or have us as parliamentarians achieve a goal towards a lesser air quality in one particular area of Canada than the other seems to me to be a constitutional question at the very least, but certainly one that I don't think any parliamentarian could support. This particularly applies in relation to proposed paragraph 103.02(3)(c): “the fair treatment of the person as regards the person's economic growth compared with the applicable average sectoral economic growth”. I am concerned with that particular proposed paragraph.

Proposed subsection 103.02(6) requires the minister to issue “a carbon permit pursuant to regulations made under paragraph 94.1(1)(a)”. Since the minister is required to issue, I can't see how that this would not need a royal recommendation.

Also, the minister is required to “prepare a Climate Change Plan that includes”, and it goes on to talk about what it includes. One of those measures that it does suggest to include is—and I would refer you to proposed subparagraph 103.03(1)(a)(iii)—“spending or fiscal measures or incentives”, which of course would require a royal recommendation.

Then according to proposed section 103.04, which is punched out but on the next page, “Within six months after the coming into force of this section, the Minister shall, in consultation with other departments…develop a reliable methodology for estimating and auditing…”. Again this suggests, in my opinion, a royal recommendation.

Then, to geographically, as I said, divide Canada into zones because Canadians in one part of Canada deserve less of air quality than the other seems preposterous.

Again, with respect to proposed subsections 103.07(3) and 103.07(4), I would suggest both require a royal recommendation. In particular, proposed subsection 103.07(7), which I referred to, regarding “severe economic hardship” and proposed subsection 103.07(8) on the requirement of the minister to “monitor” would both require a royal recommendation.

On those bases and the basis that I think all Canadians should be treated fairly, I would suggest that this amendment should be challenged.

Finally, the biggest issue I have with this is that the large industrial emitters would receive administrative authority that would and could be executed in an unfair or arbitrary manner. I think it should be left to regulations in relation to that. Certainly regulations would entitle all Canadians, all industries, and all commercial activities to fairness. At the very least, I suggest it would be unconstitutional.

[The Chair, Conservative, Laurie Hawn]

Monsieur Bigras.

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

Thank you very much, Mr. Chairman.

It is my pleasure to speak to Liberal amendment L-21.1. This is probably the most complete motion that we've had to study to date in the context of Bill C-30, concerning the fight against climate change.

We like various elements in this amendment moved by the Liberals, including the importance of establishing short-, medium- and long-term targets. We realize in reading section 103.02 that these short-, medium- and long-term targets appear there. So we think and have always thought it important that targets of this kind be included in any plan for the fight against climate change.

We also see a clear and definite tendency to opt for a sectoral approach. Virtually all the parties, except the Bloc québécois, want to apply this approach, which, in this case, concerns a sectoral carbon budget. We therefore take note of this clear wish of the other political parties.

In addition, we see that there is an obligation under the act to submit a climate change plan. To date, there has been no regulatory or legislative obligation in this regard. Starting with section 103.03, we are creating an obligation to file a climate change plan and certain measures that we previously favoured, that is the mechanism based on market conditions, emissions trading, for example.

Further provision is made that the large industrial emitters will be subject to regulation, which we think is entirely normal, in view of the fact that these major emitters produce nearly 50% of greenhouse gas emissions. To achieve our climate change targets, among other things, what is indicated in section 103.02, we will inevitably have to impose those regulations.

I move that we take note of the fact that the Liberals want to adopt a sectoral approach, impose regulations on major industrial emitters and establish a carbon market as well as short-, medium- and long-term targets. However, we are moving a friendly amendment, with amendment BQ-6.1, “GREENHOUSE GASES, Territorial Approach,” which would create a new provision that would be inserted between parts 5.1 and 5.2, just after “ACTION FOR CLIMATE CHANGE”. This new part would bear number 5.1.1, would be entitled “GREENHOUSE GASES, Territorial Approach” and would create section 103.051, as a result of which:

[...] on the recommendation of the Ministers, make an order declaring that the provisions of an Act or a regulation that relate to greenhouse gases do not apply in an area under the jurisdiction of a government, where the Green Investment Bank of Canada determines by notice in writing, on request from a province, that there are in force by or under the laws applicable to the jurisdiction of the government

A provincial government could very well opt out of the act or any regulations concerning greenhouse gases. However, the government in question would clearly have an obligation to introduce provisions designed to combat greenhouse gas emissions having an effect equivalent to the reductions required by the national carbon budget, as described in the three short-, medium- and long-term targets provided for in section 103.02.

Furthermore, before issuing the notice provided for in subsection (1), the Green Investment Bank of Canada must publish it in the Gazette of Canada within 60 days. There may be observations or notices. Following those observations or notices, the new notice is published in the Canada Gazette.

However, if some commitments or provisions made under the notice are not met, the notice could be suspended.

[The Chair, Conservative, Laurie Hawn]

Before we go on, I'd like to turn to Mr. McGuinty to see if that is acceptable as a friendly amendment.

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

I'm Mr. McGuinty's lawyer.

[The Chair, Conservative, Laurie Hawn]

You're Mr. McGuinty's lawyer, then?

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

No.

First of all, we do accept this as a friendly amendment in its current form.

Second, I would take advantage of having the floor simply to respond to a couple of the points. I'm afraid I didn't get them all written down, but let me deal with a couple of the points Mr. Jean made.

One was the comment about the royal recommendation.

Once again, the language that we find under the plan to which he referred and that he quoted—under proposed subparagraph 103.03(1)(a)(iii), “spending or fiscal measures or incentives”—that whole language of proposed section 103.03 is lifted from Bill C-288. The difference is that Bill C-288—and the language is exactly the same—says this is what we're going to do up to 2012 for the first Kyoto period; the language of this amendment picks up the story and reiterates exactly the same list of measures that may be undertaken: “market-based mechanisms such as emissions trading or offsets”, “spending or fiscal measures or incentives”, etc.

In other words, Bill C-288 was deemed to be in order by the Speaker of the House, so we used it as the precedent for using the same language while extending the principles out from 2013, so that the royal recommendation.... We were very careful about putting it that way. That's the first point.

On the second point, on air quality, I think we're probably going to have a more extensive discussion with the help of our friend Mr. Cullen in a moment, but I'll simply expand a little bit about what we're doing here.

Essentially the proposed bill speaks of objectives; it does not speak of standards. What we wish to do is be more ambitious in this passage and to speak of standards to be established for the country.

The basic format is taken from what happens currently in the United States, so the question that Mr. Jean was raising about zones very much picks up on the language of airsheds, which is used in the United States. We're doing this partly because where there are airsheds that cross borders, it gives us interoperability; we will be able to talk to our American counterparts for these airsheds and deal with those quality issues.

Simply, there are two points. The zones make sense because that's the nature of pollutants: they take place over certain geographic areas. They're not like greenhouse gases in that regard. As well, we have tried to make this consistent and interoperable with the American regime because we think it will allow us to recognize the reality that often those pollutants come from south of the border and we would want to be able to work cooperatively with them.

That is a beginning of the discussion on air quality, although it's a very important discussion that I think Mr. Cullen is going to want to pursue at some other length.

[The Chair, Conservative, Laurie Hawn]

Thank you.

It is Mr. Cullen's turn, so Mr. Cullen, it's over to you.

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

Look at that opportunity.

First of all, before we get in, I think we'll talk about the air quality thing last. There are a few amendments, small but important, that we're looking to change.

First of all, on the notion that has been put forward and that Mr. McGuinty spoke to earlier, the NDP members are supporting this because we feel quite honoured for having had it lifted from many of our plans that have been iterated over the last three or four years. As far back as February 2005, we put a plan forward that talked about many of the elements here in this L-21.1 package. We're encouraged to see many of those elements here today.

There are, as I said, a few important things that we want to change. The notion of having national standards and national goals shouldn't put too much fear into the government, as this is something they have claimed they wanted to do from the onset when dealing with this issue—perhaps not the onset, but soon after realizing that there's a need for this to happen. I'm not sure, perhaps that happened between ministers, or perhaps at some point the government had an awakening and a realization that this is important.

Mr. Jean has raised some concerns that he might want to modify some elements in a friendly amendment fashion, but I'm not sure that's the route we're taking today. I would suggest that the opportunity for courage exists here.

The amendment...let me start with a friendly one first, Mr. Chair. It might not be viewed as all that friendly, but we'll see how she goes.

In subparagraph 103.02(1)(b)(i)—I never thought I would actually speak in these terms, but a couple of years in this place will do that to you--the specific matter is the target being set for 2020. In this section as it sits rights now, the Liberals have shown us a target of 20% by 2020. We heard from a number of witnesses that...the problems we've seen with the Conservative plans or suggestions to this point of 45% to 60% reductions by 2050, or those notions contained in Bill C-30, are that they assume a business as usual case for too long, and then some imagined precipitous drop off a cliff in terms of greenhouse gas reduction. That's just not the way this has worked in any country to this point. There is a gradual decline or decrease. We want to put the country on the trajectory that we want to get to, which we believe is in the 80% category by 2050.

As a friendly amendment, let me start with this one first. We'll keep these separate. I have one that will follow.

Under that section it's very simple to change the 20% to 25% for 2020. We have elements of this Liberal motion contained both before and afterwards. This is a compilation. It seems it's easier for the committee to grasp in the compiled form, so that's fine, but this element and a couple of other important ones are critical for us.

[The Chair, Conservative, Laurie Hawn]

My next question is to Mr. McGuinty. Is that accepted as a friendly amendment?

[David McGuinty, Liberal, Ottawa South, ON]

I appreciate the effort, Mr. Chair. I wish.... Yes, I really do appreciate the effort.

In crafting this plan, we have come up with what we believe are staggered, transparent, and predictable targets for the country. We are using 1990 as a baseline to be perfectly consistent with Kyoto and also to work in harmony with most of Canadian society that's involved, most of the large industrial emitters, because they have, of course, been using 1990 as a baseline themselves.

We're looking to show a ramping up here in the short, medium, and long terms. The reason we believe it is possible to ramp up is that once we actually harness the technological know-how, the investment, and the reinvestment of the green investment account moneys being held in trust for each of the separate large industrial emitters, we believe we are going to unleash the full force and effect of the market in such a way that, as time goes on, we're actually going to be in a much better position to accelerate our reductions.

It's a question of capital stock rollover. It's a question of retrofits. It's a question of many measures that will flow from these targets, from the plan, and from the two previous amendments that connect with this third one.

We arrived at a 20% number because we believed it would be a realistic number for Canada, and we arrived at 35% for the same reason. We left a range of 60% to 80% to 2050, hoping that we would achieve an 80% reduction by 2050, but allowing for a margin after we actually, in a sense, shifted the ship of state in a different direction by harnessing the full power of the market, which is unstoppable once it gets going.

We think that by giving the 20% and 35% targets and then giving 60% to 80% as a range for 2050, we're really putting transparent and predictable targets here for the country and for each of the actors that would end up with their own individual carbon budgets.

I think we would have some difficulty, Mr. Chair, in increasing this number, for fear that it would not fit with so many of the achievable outcomes that we heard about from different expert witnesses. I know Mr. Cullen mentioned there were some witnesses who spoke about more aggressive targets.

In closing, I will say that we thought there was some importance in holding fast to the 20% number for 2020 because of all our discussions with the European Union officials and the new measures launched by the United Kingdom. The European Union has achieved a negotiation outcome in Europe, in the EU, of a 20% reduction by 2020 spread across all 26 member states, so we wanted to keep this number symmetrical with the European Union market.

I asked the Minister of the Environment to give us some indication when he came to another committee recently, Mr. Chair. I do believe there was talk at the G8+5 of holding to the 20% target by 2020, although the minister was not capable of revealing that to us and did not table any documents to indicate what he had talked about there.

That's the reason, Mr. Cullen, that we have kept to these numbers. We think it is an achievable number and we think these are predictable and transparent and in lockstep with the international community.

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

You do not accept the friendly amendment.

[David McGuinty, Liberal, Ottawa South, ON]

We do not accept the friendly amendment.

Thank you.

[The Chair, Conservative, Laurie Hawn]

Okay. I misunderstood you at the beginning; it's not accepted as a friendly amendment.

Mr. Cullen, I believe we have some more debate, but I think you have other amendments.

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

No, there is no debate. I want to continue on. If it has not been accepted, then there is no sense in debating it.

[The Chair, Conservative, Laurie Hawn]

No, I meant that you have other amendments you want to propose.