Evidence of meeting #4 for Bill C-30 (39th Parliament, 1st Session) in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was emissions.
A recording is available from Parliament.
10:45 a.m.
Liberal
Francis Scarpaleggia Liberal Lac-Saint-Louis, QC
So it's better to make that gap as small as possible.
In terms of credits, you say there aren't enough non-hot air credits for Canada to buy at the moment to achieve our Kyoto targets. Do you see the possibility that the situation may reverse itself? Markets tend to be volatile, or at least they can change direction sometimes rather rapidly. What's your prognosis for that market?
10:45 a.m.
Adjunct Professor, Policy, University of British Columbia
Well, sir, the problem is that under the Kyoto Protocol there is a mechanism called the “clean development mechanism” that establishes the process that has to be gone through for certifying international credits as compliant with the Kyoto regime, and the architecture of that process is very cumbersome. Despite efforts to fine tune it that have been made in recent years, it continues to take a long time. There's a long lead time in getting projects approved through that mechanism that are eligible as Kyoto-compliant international credits.
It's not like a free market where the market has the ability to respond. It's a cumbersome and bureaucratic process, and that's one of the aspects of the Kyoto Protocol that Canada needs to work on improving for future periods. I think you will get pretty widespread agreement from experts in the field that it's unlikely that there will be sufficient numbers of good international credits available by the year 2012.
10:45 a.m.
Liberal
Francis Scarpaleggia Liberal Lac-Saint-Louis, QC
In terms of a carbon tax, revenue neutral, if I understand, means that the government does not benefit from the tax overall. Is that correct?
10:50 a.m.
Adjunct Professor, Policy, University of British Columbia
Yes, there's no revenue impact.
10:50 a.m.
Adjunct Professor, Policy, University of British Columbia
The revenues that are raised are offset by decreases in other taxes.
10:50 a.m.
Liberal
Francis Scarpaleggia Liberal Lac-Saint-Louis, QC
So if we had an export tax on oil and gas, we would use the revenues to offer incentives on the purchase of hybrid vehicles, for example. Is that correct?
10:50 a.m.
Adjunct Professor, Policy, University of British Columbia
There are a number of options for what you can do in terms of what you do with the revenues. Certainly, they could be earmarked for programs to reduce emissions. They could be used to reduce other taxes, including payroll taxes, income taxes, or the GST, or the revenues could also be used to address the negative impacts on low-income households. There are a number of options, but it is important that it be revenue neutral.
10:50 a.m.
Liberal
Francis Scarpaleggia Liberal Lac-Saint-Louis, QC
So a carbon tax doesn't necessarily penalize Canadian consumers and individuals. It can be used creatively to achieve greenhouse gas emissions without impacting too greatly on individuals.
10:50 a.m.
Adjunct Professor, Policy, University of British Columbia
That's absolutely right. One option would be to impose a carbon tax and then take the revenues and distribute those revenues right back to Canadians in the form of an annual cheque. What that would do is create an incentive right across the economy to reduce emissions, so that you pay less carbon taxes and yet you would still get money back at the end of the year. If you are a responsible citizen using less energy, you'd actually come out ahead. It would be the people who are driving gas guzzlers and being energy gluttons who would quite rightly pay more in terms of carbon taxes.
10:50 a.m.
Conservative
Fabian Manning Conservative Avalon, NL
Thank you, Mr. Chair.
My question is for Mr. Villeneuve. If I understood you correctly, you talked about carbon trading with a fixed cap. From the point of view of hard caps, what would you see as some possible negative outcomes if we had a situation of hard caps?
10:50 a.m.
Biologist, University of Quebec at Chicoutimi
I'm sorry, what are you calling air caps?
10:50 a.m.
Conservative
Fabian Manning Conservative Avalon, NL
No, hard caps, fixed caps.
I need a new interpreter, I expect.
February 6th, 2007 / 10:50 a.m.
Biologist, University of Quebec at Chicoutimi
Oh yes. The cap is there just for the market to get a certain price and to achieve a goal. If you don't put on caps, you will never get an economic incentive to reduce, really, because anything goes. You can see that markets that work without a fixed cap will not bring interest, will not raise the demand for credits. Actually, if you don't set a cap, what will you trade?
10:50 a.m.
Conservative
Fabian Manning Conservative Avalon, NL
Thank you.
I have a question for Mr. Boyd in relation to a comment that we cannot realistically meet our Kyoto targets and that the intensity-based approach is fraudulent. I'm just wondering, with regard to Bill C-30 and air pollution here in Canada, how we formulate policy that will take us to where we all want to go at the end of the day.
10:50 a.m.
Adjunct Professor, Policy, University of British Columbia
Sorry, on air pollution or on climate change?
10:50 a.m.
Adjunct Professor, Policy, University of British Columbia
Well, I guess we need to recognize that climate change is a problem that is caused by all sectors of the economy. We need to put policies in place that are going to address emissions from all sectors of the economy. That would include some form of carbon tax, which is possibly complemented by a cap and trade system.
The first thing we need to do is to address that the market is failing to price carbon emissions. It's what economists call an “externality”. So we have to put a price on carbon, and that can be done either directly through a carbon tax or indirectly through a cap and trade system.
As I said, we also need a whole range of regulations to deal with things like energy efficiency: standards for renewable energy, goals, and quotas for the sales of low- and zero-emission vehicles. I would also say we should have a minimum requirement for a carbon sequestration, to require the oil and gas industry to capture some of the emissions they're producing.
So we need a range of regulatory tools and economic instruments as well as investments in low- and zero-emission technologies. We really need a comprehensive suite of things. Some of those programs could already be done under the Canadian Environmental Protection Act. As I mentioned, the act will need to be amended to make carbon taxes and other environmental taxes available, because they're not currently in the list of economic instruments authorized by CEPA.
10:55 a.m.
Conservative
The Chair Conservative Laurie Hawn
Thank you, Professor.
Thank you, Mr. Manning.
Mr. Holland, for five minutes, please.
10:55 a.m.
Liberal
Mark Holland Liberal Ajax—Pickering, ON
Thank you, Mr. Chair.
Mr. Boyd, I want to confirm what you said, which is essentially that the measures as presented in Bill C-30 as it stands now are either redundant, because of existing legislation under CEPA, or otherwise exist to deal with what it's presenting, or there are minor augmentations.... Really, your suggestion to the committee is that we should be focusing on other measures, other suites, other tools, if you will, to reduce our greenhouse gas emissions and begin going down the road of meeting our reduction targets. Is that correct?
10:55 a.m.
Adjunct Professor, Policy, University of British Columbia
That's right, Mr. Holland.
The legislative structure is there, and we need the programs and the regulations and the targets and the policies that are actually going to do the work to get us where we need to go.
10:55 a.m.
Liberal
Mark Holland Liberal Ajax—Pickering, ON
So if we're going to be successful in developing a plan, we'd be best to really look at those new measures, the measures that really aren't in Bill C-30 at all right now.