Bill C-30 (39th Parliament, 1st Session) Committee on Feb. 12th, 2007

[The Chair, Conservative, Laurie Hawn]

Folks, we will call the meeting to order. I know we're grabbing lunch. Just go ahead, and we will kick off.

We have a couple of administrative items to deal with before we get into the witnesses and the rounds of questioning. This is a working meeting.

We have two items of business to take care of before we get into the meat of the meeting. The first one is to adopt the second report of the subcommittee, which you all have, which lays out the witnesses on the air pollution panels for February 13 and February 15. You have it in front of you. It's as discussed.

Mr. Godfrey is the mover.

(Motion agreed to) [See Minutes of Proceedings]

[The Chair, Conservative, Laurie Hawn]

The second item is on the budget. The motion is that the proposed budget in the amount of $65,300 for the period of February 1 to March 31, 2007, be adopted, and that the chair present the said budget to the Board of Internal Economy.

It is moved by Monsieur Lussier.

(Motion agreed to)

[The Chair, Conservative, Laurie Hawn]

Thank you for that.

This is a working meeting. Those who feel the need to further graze or slake their thirst, feel free to get up and do that. No slacking going on here--slaking is okay.

I want to welcome our witnesses today: from the Canadian Chamber of Commerce, Nancy Hughes Anthony and Michael Murphy; from Greenpeace Canada, David Martin; from the National Round Table on the Environment and the Economy, Alexander Wood; and from Simon Fraser University, via teleconferencing, Professor Mark Jaccard.

Professor Jaccard, can you hear us?

[Professor Mark Jaccard, School of Resource and Environmental Management, Simon Fraser University]

Yes, I can. Can you hear me?

[The Chair, Conservative, Laurie Hawn]

Yes, you bet. I just want to make sure we're all on the same frequency here.

Witnesses, many of you have probably testified at these things before. We give each witness about ten minutes. Please try to keep to that, or a little bit less, if you can.

We'll run through all the witness testimony, and then we'll open up the floor to questions, which will go to the opposition party first, then the government, and then back and forth until all members have had a chance to ask their questions.

Without further ado, I will ask Nancy Hughes Anthony, president and chief executive officer of the Canadian Chamber of Commerce, to make some opening remarks. Ms. Hughes Anthony, the floor is yours.

[Nancy Hughes Anthony, President and Chief Executive Officer, Canadian Chamber of Commerce]

Thank you very much, Mr. Chair, and thank you very much, members.

It's a great pleasure for us to present our views on Canada's Clean Air Act today.

As many of you I'm sure know, because you have chambers and boards of trade in your ridings, the Canadian Chamber of Commerce is the largest advocate for business in Canada. On behalf of our members, once again we thank you.

The Canadian Chamber of Commerce recognizes that climate change is a serious and complex global issue that requires effective short-, medium-, and long-term strategies and actions.

The international community is engaged in a variety of processes to determine the most appropriate future framework for international cooperation on action to address the greenhouse gas challenge. This provides an opportunity for Canada and other countries to refocus the domestic and international climate change issue to a discussion of effective actions to improve energy efficiency while still meeting the energy needs of the economy. In addition, a concerted international effort is needed to develop the technological solutions required to bring greenhouse gas emissions under control over the long-term.

Industry is part of the solution. Many members of the Canadian chamber have already taken actions to reduce energy use and slow the growth in greenhouse gas emissions. We are committed to further efforts.

We have been encouraging our members for many years to participate in and to enhance their commitments to programs such as the Canadian Industry Program for Energy Conservation, CIPEC. We've also partnered with Pollution Probe to develop a primer on climate change for SMEs.

I've asked the clerk to distribute copies around the table to you today.

This document is available in French and English.

This describes two smaller enterprises, the challenges of climate change, and the actions they can take individually to contribute to reductions in greenhouse gas emissions. This is very often a neglected segment of our economy when we discuss these issues, and I would encourage the committee to make sure that small and medium-sized enterprises are considered.

I'd also like to give an example of progress that has been made in manufacturing in Canada, a sector that gets so much attention when it comes to greenhouse gas emissions. While increasing production between 1990 and 2003 by 48%, manufacturers reduced their emissions by 7.4%. The large final emitter component of manufacturers reduced emissions by 20%. This represents a 38% reduction in emission intensity. One of the key lessons learned from this data is the important connection between investment and emission reductions. We need to encourage that investment in technology.

While we continue to take action to slow the growth of GHG emissions, there's no doubt that new technologies will be the key to the large-scale emission reductions needed over the long term. As you know, Canadian industries are currently developing new technologies and fuel sources, but many initiatives are only at the pilot stage and will have to be scaled up to full projects and programs to prove successful. Examples to these technologies include recovery of oil from drilling muds, utilization of gas from oil refining that would otherwise be flared, and improved animal waste management.

Given the importance of energy to the economy, new technology such as clean coal and carbon capture and storage deserves significant attention. A longer-term focus is necessary to support full development and commercialization of these technologies and to undertake the necessary research into other potential breakthrough technologies.

The business sector is part of the solution and is always quite prepared to continue doing its bit by playing an active and committed role.

Specifically on the question of targets—I know they are the subject of discussion for this committee today—Canadian industry supports the setting of responsible targets, along with an effective compliance regime. However, any targets, whether short-, medium-, or long-term, must be realistic and reflect the fact that Canada has a very energy-intensive economy with increasing energy exports. Also, in the case of industrial investments, it will be critical to look at investment cycles to ensure that we deal adequately with capital stock turnover realities.

Targets for industry should ramp up over time, recognizing that technical limitations are faced by most firms and that arbitrary short-term targets can divert capital from investments that have the potential for greater reductions in the long term. The key will be to closely integrate the targets with the capital stock turnover cycle so that new investments are timely, affordable, and most likely to have the double benefit of productivity and environmental improvements.

An integrated approach to dealing with both energy and the environment that provides for fair contributions from all regions and segments of society is needed if we want to adequately address both climate change and clean air. It must include a dialogue with Canadians about their own responsibilities and must develop measures that adequately address the consumer contribution.

We agree that the targets for greenhouse gas emission reduction should be based on emission intensity, where emission levels are compared with the level of output of the firm or sector, rather than on absolute emission levels. This ensures that companies are not penalized for growing their business even when they achieve significant environmental improvements.

I have two other points, quickly, Mr. Chair. One is on the issue of equivalency. We support the approach in Bill C-30 whereby regulations are not needed when existing provincial regulations have an equivalent effect. This ensures that industry initiatives to achieve further environmental improvements are not thwarted by overlapping and possibly conflicting regulations. You will agree, I'm sure, that we need only one regulator in each jurisdiction.

Finally, with respect to the notice of intent to regulate that was tabled in conjunction with Bill C-30, a number of principles were listed as guiding the development of industry regulations. The Canadian chamber would like to emphasize our support for these principles, and we hope they will continue to be the foundation on which regulations will be built. I don't need to repeat these principles. Some of them are ones that we feel are very positive—for example, maximizing environmental gains through a multi-pollutant approach; having some flexible compliance mechanisms; and, certainly, promoting investment in the development and deployment of new technologies. If these principles are followed, we believe the resulting regulations will enable us to make measurable improvements to the health and environment of Canadians, while promoting sustainable economic growth and competitive Canadian enterprise.

We would like to thank the committee members for giving us this opportunity to provide you with our comments.

We would encourage you to consider an integrated approach that accounts for energy and environmental issues fairly and equitably.

As one final thought for the members as you proceed with your deliberations, once again I encourage you to avoid artificial targets and instead keep foremost in your mind that in dealing with climate change in particular, we need to take into account the energy and economic realities of the country.

I'd be very happy to answer any questions you might have.

Thank you, Mr. Chair.

[The Chair, Conservative, Laurie Hawn]

Thank you very much, Ms. Hughes Anthony.

The next witness is David Martin, from Greenpeace Canada.

Mr. Martin, the floor is yours.

[David Martin, Greenpeace Canada]

Thank you, Mr. Chair and members of the committee.

You should have before you a submission from Greenpeace entitled “Targeting Climate Change in Canada”. I would also like to note that you have received a letter dated January 22, with recommended amendments to Bill C-30 from eight different executive directors of environmental groups. Our presentation this evening addresses climate change issues, but Greenpeace would like to adopt those submissions that are in those amendments.

As drafted, Canada's Clean Air Act targets no greenhouse gas reductions before 2020, and only sets a distant and, in our opinion, inadequate target for reductions by 2050. The notice of intent calls for emission reductions of between 45% and 65% from 2003 levels by 2050. Just to put that in perspective, Canadian greenhouse gas emissions in 2003 were 754 megatonnes. That means that by those targets, we would come down to between 264 and 415 megatonnes in 2050.

Reductions of emissions are usually calculated, as you know, against a baseline of 1990. As a signatory to the Kyoto Protocol, Canada committed to reduce emissions to 6% below 1990 levels by 2008 to 2012, so our target for 2012 is in fact 563 megatonnes. In order to prevent dangerous climate change, Greenpeace calls on Canada and other industrial nations to meet their Kyoto commitments as the first step, and then to target further deep reductions of emissions relative to 1990 levels: 30% by 2020, and 80% by 2050.

Why these levels? These levels are science-based targets designed to prevent, in the words of the Kyoto Protocol, “dangerous climate change” by keeping the global average temperature increase as far below two degrees Celsius as possible.

In terms of the actual levels of carbon dioxide equivalent in the atmosphere, pre-industrial levels were at 280 parts per million, and the current level is up to 430 parts per million. The Stern review concluded that the greenhouse gas concentration should be limited to a range of 450 to 550 parts per million. The environmental community thinks we should be targeting it at the lower end of that range. Just so you understand the implications, it's thought that the planet could reach 550 parts per million as early as 2035. At that concentration, there's a 77% to 99% chance that the average temperature increase will exceed two degrees Celsius. It's widely accepted that temperature increases of more than two degrees Celsius will dramatically increase the risk of serious and irreversible climate change impacts.

The longer we delay those emission cuts, the faster they're going to have to be reduced. That's just simple mathematics. We have only a short window of opportunity, so it's vitally important to start reducing immediately.

With regard to intensity-based targets, the notice of intent states that “the Government intends to adopt a target-setting approach based on emissions intensity”. Emissions intensity is a measure of greenhouse gases emitted per unit of economic activity. Unfortunately, these intensity-based targets can be used to misrepresent progress—or the lack of progress—that's being made. Canada's greenhouse gas intensity measured in megatonnes per billion dollars of gross domestic product has actually decreased—that is, improved—14% between 1990 and 2004. However, this improvement has occurred largely spontaneously as a result of energy efficiency improvements, at the same time that the absolute levels of greenhouse gas emissions have increased 27%. Therefore, Greenpeace rejects the use of intensity-based targets and supports the use of absolute targets for greenhouse reductions.

What about Canada's climate crisis? Despite making a commitment to the Kyoto Protocol in 1997, Canada has had only three plans: one in 2000, another in 2002, and finally the 2005 project green plan in April 2005.

The early plans relied primarily on voluntary actions instead of effective regulation, incentive programs, or market-based programs. Thus, greenhouse gas emissions were not reduced. We know that by 2004 emissions had risen to 758 megatonnes, 27% above the 1990 level and 35% above our Kyoto target. This places Canada among the worst countries in the world in emission changes since 1990. Canada ranks fourth from the bottom among the 41 industrialized nations known at the annex 1 parties. This is a worsening of Canada's ranking since 2005, when it was sixth from the bottom.

The former Liberal government did a dismal job of fighting climate change, but their 2005 project green plan laid the foundation for positive action to fight climate change in Canada. In our opinion, it would have allowed Canada to meet its Kyoto commitment by a range of measures. The Clean Air Act as drafted would take Canada even further backwards in the fight against the climate crisis.

In our opinion, Canada's Kyoto target is achievable. While the government has not withdrawn from the Kyoto Protocol, lack of aggressive action will mean an effective abandonment of our commitment. The Kyoto target has been falsely characterized by the government as unachievable or unrealistic, and it is neither. However, Canada must be prepared to spend money.

The government's first budget in May 2005 slashed climate change spending from $4 billion to $2 billion over the following five years. If we need money, this is the time to create a green fund, a carbon tax similar to that of Quebec, by taxing fossil fuels. Determine the size of the fund by the amount of money required to meet our targets. The design of that fund should be a top priority.

It's scaremongering to suggest that Canada's Kyoto commitment would result in “economic collapse”. Sir Nicholas Stern, head of Britain's government economic service and the former World Bank chief economist, put that fear to rest last fall when he said that the cost of not acting against climate change will be immeasurably higher, typically amounting to about 20% of global gross domestic product per year, whereas the cost of action to reduce greenhouse gas emissions can be limited to about 1% of GDP per year.

Last month, Greenpeace released a global energy blueprint to 2050. It confirmed the findings of the Stern review and emphasized that the world can have its cake and eat it too. We can have clean, safe, renewable energy while improving efficiency, enjoying economic growth, and phasing out dirty and dangerous energy sources such as coal and nuclear power.

We were very glad to hear Mr. Baird say before this committee that the era of voluntary compliance is over. Now is the time for mandatory emission reductions for big business, starting in 2008. These targets should be designed to achieve a Kyoto-level cap for the commitment period. Industry should do its fair share. Since they produce 50% or more of emissions, they should be responsible for at least 50% of the reductions.

Canada also needs automobile efficiency standards matching or improving those of California. We need incentive programs for green energy and conservation to be expanded, and Canada needs a million-solar-roof program for solar hot water.

We need to improve the economic playing field and level it out by eliminating direct and indirect subsidies for fossil fuels and nuclear power. Start by eliminating the 100% write-off for tar sands under the accelerated capital cost allowance. The tar sands produce five times as many greenhouse gas emissions as conventional oil.

We can also stop the subsidies for Atomic Energy of Canada Ltd.; $20 billion is enough to have wasted on this dirty, dangerous, and expensive technology. Nuclear power can't solve climate change, and it will actively prevent investment in more cost-effective green energy alternatives.

We also think you should set the market to work with a truly effective emissions trading system. Put tough emission reduction targets in place for each industry. Don't place a ceiling on the cost of emission credits, and don't allow industry to avoid the true cost of their pollution by paying into a technology fund, as suggested in the notice of intent.

It's also vitally important to make this trading system international. Industry should be allowed to purchase offshore credits--not so-called hot air credits, but credits for investment in green technology and other meaningful greenhouse gas reducing activities.

Finally, I'd urge you all to remember that Kyoto is not just about a 5% global reduction in greenhouse gas emissions by 2012. It's an unprecedented international movement, starting with greenhouse gas reductions by the developed nations, but bringing in the developing nations in the subsequent Kyoto periods. It's the integration of those burgeoning economies into a climate change regime that is so vitally important to preventing a global catastrophe. China, India, and Brazil have already committed to the process, and we can't allow it to falter.

Canada has never before shirked its duty in either wartime or peacetime. I don't think Canadians are quitters, and we have to deliver on our Kyoto promise. We believe that these priorities should be reflected in the upcoming budget. Together we can do it a year at a time. Starting at a level of about 800 megatonnes, a 50-megatonne reduction per year from 2008 to 2012 will bring us to our Kyoto target. So let's get going.

Thank you.

[The Chair, Conservative, Laurie Hawn]

Merci, Monsieur Martin.

Now, from the National Round Table on the Environment and the Economy, we have Mr. Alexander Wood, acting president and chief executive officer, for ten minutes or less.

[Alexander Wood, President and Chief Executive Officer, National Round Table on the Environment and the Economy]

Thank you, Mr. Chairman.

I would like to thank the committee members for providing the National Round Table on the Environment and the Economy with this opportunity to present you with our views on the issue at hand.

At the outset, I would like to apologize for not bringing the documents that I would have liked to have with me today. We had problems with translation and producing these documents, but they will be available from the clerk as soon as possible.

My testimony today, Mr. Chair, is going to be of a fairly general nature. I'm going to talk about work the national round table has done on the issue of long-term targets for the country, specifically with reference to an advisory note the national round table released this summer on how Canada could achieve a 60% reduction in its GHG emissions by 2050 while still meeting the energy needs of its growing economy.

I'll also talk a bit about the fact that the round table has been asked under Bill C-30 to provide some advice to the government on a number of matters. That's an issue I'll discuss later, but just to say at the outset that our response to that is being developed right now, so I'm not in a position to comment too much on the specifics of that advice as yet.

Over the years, the round table has provided a number of reports related to the subject before the committee. We've done reports dealing with GHGs in transportation, we've done reports on domestic emissions trading, and we've done reports on the use of fiscal policy when it comes to energy and the need to decarbonize our energy system.

Our signature work in this area is a report that was issued in June 2006 called Advice on a Long-Term Strategy on Energy and Climate Change. That piece of advice to the government, requested by the previous government, was an analysis that we undertook using a model of stabilization wedges that had been pioneered by some Princeton professors. As I said, what we did, essentially, was lay out a long-term scenario by which Canada, through a series of technology measures and energy efficiency measures, might in fact reduce its emissions by 60% while maintaining economic growth in the context of a growing population as well.

To provide the right context, our analysis violated just about every principle of scenario planning, as our consultants reminded us regularly. We did one scenario, and you're never supposed to do just one; you're always supposed to do more than one. You're never supposed to do an odd number because people think you're suggesting the one in the middle. We did just one, and it does have some important messages and some important lessons have emerged from it. Those, generally speaking, are that it can be done in terms of meeting our energy needs while substantially reducing our long-term emissions. If it is to be done, it has to start now in terms of the policy response required. It will require all available technologies and all available energy efficiency opportunities to be realized. There is no silver bullet when it comes to this question. It presents a massive energy technology and energy efficiency technology deployment and uptake challenge. That is the message we want to carry forward.

In terms of the particular focus of this committee, the basic message I would like to offer is that whatever decisions are taken about short-term targets need to be set in the context of a long-term framework and a statement of a long-term objective. It's no coincidence in the minds of the round table members that the most successful of the OECD economies when it comes to meeting or substantially reducing emissions of GHGs is the U.K. We see that as proof of the necessity of setting in place a long-term target and a long-term framework for approaching this issue, as the U.K. has had for a number of years.

Turning now to the Clean Air Act notice of intent, I won't go too much into the details of what's being requested at the round table, as I assume members are familiar with that. Essentially, we have three separate issues before us: advice about national ambient air objectives in the long term; advice on national emission reduction targets in 2050; and criteria on air contaminants in specific sectors--and I can remind the members what those sectors are if it's required.

On greenhouse gases, here I'll use the specific language of the notice of intent, because I do want to be precise. The round table has been asked to provide advice on emission reduction targets for 2020-25 for specific sectors. I can identify these sectors, if required. This advice should be based on a recognition of the outlook for Canadian economic growth and the government's intention to build on an emissions intensity approach, with targets that are ambitious enough to translate into a fixed cap on absolute emissions.

The second piece of advice sought on the GHG side is advice on the national emission reduction target that should be adopted, within the range of 45% to 65% from 2003 levels, by 2050. Of particular importance, obviously, are the scenarios by which Canada could in fact meet the target that, as we are going to be suggesting to the government, should be the one to adopt.

There are a couple of things to note here. One thing that we know is going to be very difficult in terms of the basic research we need to conduct is this transition period that clearly will occur between 2010-15 and 2025, when, as is anticipated in the act, there is this transition from an intensity-based target approach to an absolute target approach. It's an issue that needs considerable thought and to which we will be devoting considerable research resources.

The second point I'd like to make is on the question of that long-term range, the 2050 range. Obviously it's consistent with the approach or the research that we've already undertaken, looking at that 60% number, the number that we've already provided our advisory note on. I should be quite clear on that. The round table was not advocating that particular target when that advisory note was put out. That was a nominal target chosen for research purposes, but we now have, from a research perspective, the beginnings of an approach towards meeting the requirement to actually come up with advice on a particular number.

Just to wrap up, Mr. Chair, as I said at the outset, we have been given this piece of work under the Clean Air Act notice of intent. The timelines are fairly short for the round table. We have been asked by the government to provide advice in the form of a preliminary report by the spring of this year, with a final report to the government by the fall. We are right now in the course of developing the research agenda, the basic methodological approach that we're going to use.

A large part of this is still to be discussed with the members of the round table. We're meeting with them later this week to walk them through our suggested approach. So I may not be able to give you a clear sense of what the round table members themselves are feeling about this question right now, but I'll try to answer whatever questions you might have.

Thank you.

[The Chair, Conservative, Laurie Hawn]

Thank you, Mr. Wood.

We will now hear from our last witness: Mr. Mark Jaccard, a professor at the School of Resource and Environmental Management at Simon Fraser University.

Mr. Jaccard, welcome again. We can see you fine; you're looking marvellous.

The floor is yours, sir, for ten minutes.

[Prof. Mark Jaccard]

Thank you very much.

I'll focus my comments on greenhouse gas emissions with respect to the Clean Air Act. I have provided some slides. I'm actually going to refer to just one of them, and that would be the third slide, entitled “History of Canadian targets, policies, emissions”.

Do you all have that page?

[The Chair, Conservative, Laurie Hawn]

Yes, we do.

[Prof. Mark Jaccard]

All right, I'll speak to that, then.

The first point I want to make is that we're learning something about the use of the word “targets”. That is, one can talk about targets quite loosely, and those targets may not mean a lot in terms of what actually happens in the economy and what actually happens to emissions. I'm pointing that out simply because when I hear some of the other witnesses just now, or politicians in general, or the media, or interest groups talking about targets, I immediately get a little bit edgy and nervous, and curious to see what someone will say next in terms of how we actually achieve those targets.

I wanted to just make the point that discussions about targets in the absence of very specific, compulsory-type policies that are strongly linked to those targets are highly suspect. I think we need to start getting that into our discourse and not be as loose with terms like “targets”. In my view, for our discussion, what we've learned is they have to be linked to the actual policies.

What I'd like to report in the few minutes that I have is on what we're learning from a lot of independent research around the world that I'm engaged in with other independent experts from academia, from government, from various institutions about policy effectiveness, how to link targets to policies, and therefore some things to watch out for that I want to alert the committee about.

If you look at the overhead, what you see on the bottom in red are the different targets that Canada has set at various times. What you see on the top of the line are the policies we enacted that we said would get us to those targets. Of course, the line you have going up shows the actual emissions and what they've done over that timeframe.

It was hard to argue in 1992 or 1993 what might happen with various types of policies looking at the Canadian data, but now we have the advantage in 2007 of looking at data and experiences in Canada--the example I'm showing you here--and in other countries around the world with their ability to link policies that actually are effective in achieving the targets they set. So there are a couple of points I want to make about that, some of which are hopefully very obvious; nonetheless, I think they bear repeating.

The first point is that voluntarism does not work when we're talking about something that is as profound a technological change as dramatically reducing greenhouse gas emissions. By voluntarism, I mean policies that are primarily subsidy based or providing information: television advertising, labelling of products, small subsidies, large subsidies, those kinds of things.

I also want to point out that to the extent that policies have been very focused on energy efficiency, there's an additional challenge. I can talk to this later in questions if someone wants to speak about it, and I have a slide on it that I don't have time to talk about right now.

Research from electric utility programs over 25 years in the United States and from government programs in Europe, Canada, and elsewhere is indicating that energy efficiency is much more expensive than its advocates would have us believe because of differences in risks of the new efficient technologies and the length of paybacks from those technologies. Energy efficiency is much more difficult to achieve from a policy perspective, because when you're giving a subsidy it's hard to sort out who was going to make an efficiency investment in the first place.

Then, finally, when you improve the productivity of energy in your economy through energy efficiency actions, we talk about small rebound effects where people might actually demand more of a service if it becomes cheaper, such as heating and so on. I think that's small and is dwarfed by a larger rebound effect that I and several international researchers are very interested in right now, which is that general productivity gains in energy lead to a plethora of new energy-using technologies that are all around us.

So if you were to ask me if I thought that Canada would use dramatically less energy 40 years from now, even after having made a concerted effort to do so, I would be very skeptical of that potential.

What that tells me is that from a policy perspective, we need to be focusing increasingly on emissions, rather than on energy efficiency. When you do that, there will be energy efficiency gains that come from that. But when I hear people say we should work on efficiency first, and then we'll turn to the more difficult question of emissions, that, to me, is part of the explanation for the figure I just showed you, which represents a huge gap between the targets we set and what actually happened with the policies we used. Those policies shown in green along the top were all primarily dominated by subsidies and information programs, so there was a voluntary approach.

What I also want to point out is that advocates of renewable energy will argue that if subsidies are provided for renewable energy and removed from fossil fuels, very soon renewable technologies will beat out fossil fuels, so that's a good policy approach.

I would argue that the evidence does not support that. The evidence tends to support that as long as fossil fuels, which are a very rich and in many ways wonderful form of energy, can use the atmosphere as a free waste receptacle, we are going to see that innovations will continue to find ways--developing a backyard patio heater that burns propane, or whatever--of using fossil fuels to provide new services that you and I can't even imagine right now, but which will emerge over the next 10, 15, 20 years.

This leads me to the point that our policies have to be of a compulsory nature. They can be designed in ways so they don't have huge economic impacts in the short term, and that's where I would put my effort, on that design side. But those policies have to be something that constrains people in a regulatory way or through financial penalty from using the atmosphere as a free waste receptacle.

All other discussion about targets and voluntarism and energy efficiency should be dwarfed by our policy focus in that particular area. What this means is that all sorts of subsidies are probably not as important. So when people talk about super-funds and getting government to spend more money, I'm not convinced of that.

When it comes to policy design, we're now in a conundrum in Canada. We're looking at a large final emitter policy that would have a cap-and-trade character to it, which is something I support, but which would only apply, then, to about half of the economy. So we may be heading down a road where--and I heard people say we really need industry to cover its load--I would argue that we're going to end up with industry perhaps cutting emissions with the LFE program, depending on how it's designed, and if it doesn't have too many escape clauses, but the rest of the economy will continue to follow the same trajectory unless we get those kinds of signals out to consumers.

To do that, for example, the large final emitter program would actually go further upstream and would be a program not looking at emissions from industrial facilities, but instead one that looked at the carbon content coming from the fossil fuel sector, and charging for that. Otherwise, the large final emitter program would have to be tied to strong similar types of policies affecting the transportation sector and affecting the building sector, including everything that's inside of buildings, such as appliances and so on.

I have some proposals that are well recognized around the world, and that various governments and countries are starting to implement now, for how one would get there, but I won't talk about the details of those right now.

This can mean that when we look at the wedges of emission reductions that Alex Wood was just talking about from the preliminary study that the national round table did, one showed a considerable amount of energy efficiency being the way to get to deep greenhouse gas reductions in Canada over several decades.

I just want to alert you to the fact that there is research out there that suggests that such energy efficiency, when you get down to its cost and policy constraints, could be much more difficult to achieve, which means we need to be focusing right now on forceful policies to get the signal out there that you can no longer emit greenhouse gases. And those policies need to be coming into place right away with this act.

Thank you. I'll conclude there.

[The Chair, Conservative, Laurie Hawn]

Thank you very much, Professor. We appreciate that.

We've got a little over 68 minutes, so we'll get in 68 minutes' worth of questions, and without further ado we will turn it over to Mr. McGuinty, who is splitting time with Mr. Godfrey for the first seven minutes.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you, Mr. Chair.

Thank you very much, guests and witnesses.

Thank you, Professor Jaccard. It's good to see you on TV again.

Professor Jaccard, I wanted to go to your remarks about the importance of making sure that whatever compulsory measures you're recommending, for example, and I want to come back to that in a second, ought to be considered in a larger policy context. One of the challenges we're facing now, as a committee, is that the government is actually announcing policy decisions as we undertake this work as a committee. Just last week, the Prime Minister announced new standards for vehicles by 2011. Today he reannounced our government's partnership fund, with $1.5 billion apparently split, somehow, between clean air and greenhouse gases--we're not sure how yet; that's to be defined.

I'm a little concerned about the government's being off and running, with the Prime Minister making announcements on policy. And I guess I want to get now to the concept of how this policy the government is announcing is going to actually come down to targets. We've had no announcement from the government on immediate, mid-term, or long-term targets of any kind. So I want to ask you about what compulsory measures you think would take us on the right trajectory. You've talked about constraining people in a regulatory way.

The second question I want to put to you is about the target. The only witness here today who actually gave us a target was Greenpeace, and they told us that they'd like to see the country be bound by the target under Kyoto. What target are you recommending for the people of Canada?

[Prof. Mark Jaccard]

Thank you.

You've raised the question about the government coming out with policies while it's also engaged in the whole process of this act. I only want to make one comment here, and that is that in some senses, with different minority governments, if there are areas where the previous Liberal minority government had moved with some progress, and we have some evidence of the direction to go, I would be interested in the government moving on that, where possible. I'm thinking of the large final emitters program. I hate to see us get bogged down. Likewise, I had some regrets that the vehicle emissions policy was voluntary. If that one could be shifted, I would be happy about that.

I take your point, because I've just been hearing these announcements myself. I'm very keen to know how, for example, the ecotrust policy, I guess it's called, or something like that, differs from the subsidy programs I was just engaged in critiquing when they came out under the guise of Project Green, which I'm sure you're familiar with. It took us some months, but we analyzed Project Green by simulating the subsidy side of that policy--the climate fund, and so on--and we were rather skeptical about some of the impacts that were being suggested. So I'm intending to subject the new policies to the same kind of analysis, and I'd like to know what kind of analysis has already been done before jumping out with that.

You also asked me about the kinds of policies one should use. I don't want to take a long time to answer, but I'll just direct people to the fifth slide in the group you have before you. It says “Policy package of market-oriented regulations”. Number one is what I call a carbon management standard. One could call that an upstream cap-and-trade system, which I described earlier. Number two, a vehicle emissions standard, which is what California has and what Arnold Schwarzenegger is moving ahead with, I would apply widely across the transportation sector, and ultimately even think about it for air transport, which may involve biofuels or various things. The building standard is a way of carrying that over, as well. Again, it would take a fair bit of time to describe those in detail, and I don't want to go too far. But I can come back to those.

Finally, you asked me about the target and the analysis I've been engaged in, and that would be the final slide. My group also did some work, some of it for the national round table and some of it independent of the national round table, looking at how Canada could get those very deep reductions by 2050. In doing that, we still see that this could be very expensive, so it's important to understand that a target for the United Kingdom and what that might cost can be very different from a target for Canada. In Canada, a country with higher rates of economic growth and population growth and an expanding fossil fuel industry, it can be much more expensive to turn that around.

I hope I've answered the three questions you've asked.

[David McGuinty, Liberal, Ottawa South, ON]

You didn't answer the last question. What is the target you're recommending for the country?

[Prof. Mark Jaccard]

I'm not recommending a target for the country. What I'd like to provide to the country are the marginal costs of different target levels. The target you see in the diagram in front of you says that we would have to shift toward a carbon tax or its equivalent through regulation of about $180 per tonne of carbon dioxide. We'd have to get to that by about the year 2020 in order to have our emissions fall by about, I believe, 60% from where they are today or 80% from where they would be in the future.

I'm an expert on analyzing what the costs of abatement are. Then someone has to mix that together with the environmental evidence of the impacts, and I'm not prepared to do that.

[David McGuinty, Liberal, Ottawa South, ON]

Can I ask our guest from the Canadian Chamber of Commerce, Ms. Hughes Anthony.... Forgive me, I don't have my glasses. It's good to see you again, Nancy.

I just wanted to ask you what you think the position is right now of most Canadian industries. You've been at this for some time. You participated in our former government's issue tables. I dare say you had a hand in crafting the green plan that was eventually announced by our government.

Can I take it as a matter of record that the Canadian Chamber of Commerce has never supported the Kyoto Protocol?

[Nancy Hughes Anthony]

If I may respond, Mr. Chair, no, I don't think that's true. I think what you say is very accurate, that the Canadian chamber and many other business organizations all joined in when the protocol was signed in 1997 in many round tables, discussion groups, various kinds of consultation mechanisms that were organized by the government, trying to come to some collective conclusion about what kind of plan should be there.

That was 1997. That's ten years ago. We have wasted ten years in discussion and tables and plans and all kinds of things. I think in the interim Canadian business has become very aware of the issue of greenhouse gases and has in many cases taken a number of initiatives.

At the point at which we were asked--I think it was probably around ratification time, in 2002--whether we could support the Kyoto Protocol, we were forced to say that we didn't think Canada would be able to achieve the targets and timelines that we'd signed on for in Kyoto without very serious damage to the economy. I think that's certainly still our position today.

But is our membership attuned to the issue of reducing greenhouse gases? Absolutely. So I would want to stress that there's a lot of effort being made along that line, and what I've said today is that we certainly feel our members would agree with the setting of targets along with an effective compliance regime. So I'll put that on the record again.

[The Chair, Conservative, Laurie Hawn]

Just before we go on, for the folks in the back, there are extra sandwiches up here, so feel free to help yourselves.

Mr. Bigras, it's your turn.

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

Thank you, Mr. Chairman.

Today we are examining Bill C-30, which deals with targets. Over the next few weeks, the government will probably be announcing, as part of its fight against climate change, targets for the industrial sectors which it feels to be quite audacious. However, in its notice of intent on October 16, 2006, the government was clear that its targets would be intensity-based. Consequently, greenhouse gas emission reduction indicators must take production into account. However, the Kyoto Protocol does not give any consideration for intensity-based targets, but rather the absolute value of the reductions.

My question is for Mr. Martin in particular. Have you done any projections regarding the gap that will be created between the intensity-based targets and those based on the absolute value as provided for in the Kyoto Protocol? To what extent will the method that the government is proposing to use push us further away from the Kyoto objectives?

[David Martin]

Thank you for the question.

Let me put it into perspective by talking a little about Alberta. Alberta is where the intensity-based emission targets started, through the Alberta government's climate plan in 2002.

I think the plan underlines the fact that intensity-based targets are simply a way of deflecting attention away from the need for real absolute decreases in emission levels. Alberta's intensity targets are for reductions of 16% by 2010 and 28% in 2020, but these targets would allow absolute increases of emissions of 34% in 2010 and 38% in 2010. That's what they're predicting.

I think it shows that the intensity-based emission targets are misrepresentative, false, and ultimately not useful. We need absolute levels of reduction. It's how we can best understand the environmental imperative and the fact that the targets I was talking about, the 30% reduction by 2020 and the 80% reduction by 2050, are based on science.

I understand Mr. Jaccard is not addressing that, but it is what's being addressed by the world community, the Intergovernmental Panel on Climate Change, and others. It's why we need absolute emission reductions, not intensity-based targets.

Thanks.

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

My second question is for Ms. Hughes Anthony.

You told us that you were hoping to see Canada adopt an integrated approach based on the fact that both energy and the environment must be taken into consideration. I fully agree with you. However, the most recent report released by the Commissioner of the Environment and Sustainable Development teaches us a great deal about the type of policies that we should be adopting in Canada.

Ms. Gélinas clearly stated that as soon as the provinces produce, distribute and consume, they must, as a matter of course, be involved in all climate change policies because this is where, to a large extent, the decisions are made.

What role do you believe the provinces should play in Canada's policies to fight climate change? Do you feel that the best way to improve our greenhouse gas emission reduction record is to put the provinces in the loop, to tell them clearly that greenhouse gases must be reduced on a territorial basis and that they must reach an objective?

Inevitably, we may wind up with an interconnected east-west energy policy, I agree, but the reality is that the decisions are made in the provinces and production occurs in the provinces. If the provinces are not in the loop, we may wind up repeating the sad history that we all know today.