Bill C-30 (39th Parliament, 1st Session) Committee on Feb. 13th, 2007

[Christian Paradis, Conservative, Mégantic—L'Érable, QC]

Thank you, Mr. Chairman. I have three questions. The first two are for Mr. Delbeke.

Mr. Delbeke, I would like you to describe the actions that have been taken and that have been the most beneficial to the European Union concerning the development and utilization of clean energies, which includes energy efficiency and renewable energies.

[Jos Delbeke]

We have an action plan on energy efficiency, which was adopted not more than six or eight weeks ago. It puts a tremendous emphasis on the use of energy-efficient appliances, buildings, and cars. This is where we are going to act. We just discussed the car issue. It's a very important one that is now coming forward in terms of concrete legislation.

On renewable energy, it is expected that at the meeting on March 7 and 8, the heads of state are going to decide on a binding target to use 20% of the primary energy sources of Europe by 2020. So renewable energy is going to get a boost. That is going to be very compatible with what other major trading partners are doing. Of course we follow very closely what happens in Canada, the United States, and Japan. But the use of renewable energy is going to be stepped up by a factor of two to three between now and 2020. That is going to be a very important one.

On carbon capture and storage, the jury is still out. There is a lot of effort in the field of research and development, but our experiences in deploying this technology, I would say, are not yet completely at a point where we can put carbon capture and storage in legislation. In targeting, I would say it is energy efficiency first, and renewable energy second.

[Christian Paradis, Conservative, Mégantic—L'Érable, QC]

In Canada, we are concerned that the worst kinds of waste in terms of energy are caused not only by energy use, but also by non utilized devices. I am referring to devices that are put into what is called the standby mode.

In Canada, 5.2 TWh a year are used by devices that are in standby mode. That is why the government intends to regulate a one-watt standard.

Is this taken into account in the European Union? Do you also intend to act in this regard?

[Jos Delbeke]

Yes, this is very heavily debated these days in the EU, as well. It was on the table of the heads of state of the G-8 countries. Commissioner Pielbags, who is responsible for energy, would like to have a worldwide agreement to have more energy efficiency and more demanding energy efficiency standards imposed across the globe. The standby equipment is very much a part of that initiative.

[Christian Paradis, Conservative, Mégantic—L'Érable, QC]

I have one last question for Mr. Drexhage.

I would like your opinion, Mr. Drexhage, about the fact that the government indeed intends to put into place the regulations that I just referred to, in order to regulate some of these devices for the first time.

What do you think of the Canadian initiative vis-à-vis what is presently being done in the European Union or at the international level? Do you look favourably on this? I would like your opinion in this regard.

[John Drexhage]

I think it's one part of an overall menu that certainly should be promoted. I like standards in that respect, because they promote energy efficiency. Frankly, I just don't think that in North America we appreciate the extent to which we really are a pariah internationally, when compared to the rest of the world. We're ten times less energy efficient than countries such as India or China, and four times less energy efficient than countries in the EU. That's where we really, really have to attack this problem.

Our national circumstances were mentioned before, and I entirely agree. We are a cold country and we have many distances. But Norway is a very cold country too. Let's not kid ourselves, it has nothing close to the energy inefficiencies we do.

I would submit in fact that on the large distances, it's not so much the problem between the cities, it's in the cities. It's our whole post-World War II urban development.

These are not easy things, but they're very, very critical if we're going to be effectively addressing this in the future. We cannot continue to have these 905 communities that we have around Toronto. That's just not sustainable.

[The Chair, Conservative, Laurie Hawn]

Mr. Holland, for five minutes, please.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Thank you, Mr. Chair; and thank you to the witnesses.

I want to start on the voluntary agreements, with a question to you, Mr. Drexhage, just to make sure that your understanding is mine.

As I was aware, there was only one voluntary agreement that Canada had in place, and that was with the automobile sector—which is now being continued, actually. It's going to continue to be voluntary until the year 2010. In fact, we did have under Project Green, for large final emitters, a hard cap that was to come into place in 2008, if I'm not mistaken, with reductions of 45 megatonnes. Am I correct on that?

[John Drexhage]

To be absolutely honest, that's an issue of some debate, because on the one hand it was 12% intensity, and on the other hand, it was 45 megatonnes, and it was never clear where the final emphasis was going to land in terms of compliance. That wasn't completely sorted out.

As far as other voluntary agreements are concerned, I think you're right, that the only one that we have in place right now is the one with the auto industry.

[Mark Holland, Liberal, Ajax—Pickering, ON]

I'm wondering if I could go to Mr. Delbeke on the issue of renewable sources of energy. You were speaking a bit on that.

Can you talk about, first of all, in percentage terms, where you are today, where the European Union is today in terms of utilizing renewable forms of energy and what your target is—you say you intend to take that up by two or three times, if I heard you correctly—and what you're doing to incent the production of green power, or renewable power.

[Jos Delbeke]

I don't have the precise figures with me, but in terms of the use of primary energy in Europe, it is in the order of magnitude of 6% or 7%, depending on which sector. It is more in electricity. It is less, for example, in other sectors, such as biomass. But the objective is to go with a binding target, by 2020, up to 20%. So it is three times what we have in place today.

The real question that is hotly debated now is to what extent we are going to have incentives in place that are in line with the liberalization of the electricity market that we are currently undergoing in the European Union, because most of the incentive schemes for renewables are very much tied to the different member states. For sure you will know that in Denmark, for example, wind energy has been booming, as it is also in the north of Germany, but the support systems of Denmark and Germany have been particularly generous to the development of the wind energy there.

When we are moving from something covering 6% or 7%, up to 20%, it becomes a major vector in the energy production and in the liberalization of the electricity and energy markets we have today in Europe. So we will see in the coming year or two quite a bit of intensive debate on what kind of specific support systems for renewable energy we are going to have, on top of the carbon market that we have today, because we know that the carbon market—today around 15 euros per tonne of carbon dioxide, up to prices for the 2008 to 2012 period—is a very important stimulus or incentive for the development of renewable energy. The question is, what should we do on top of that? It's clearly not enough.

Some are expecting a price that is higher than the 15 euros we have today. To the extent that the prices are going to be higher, less other support and specific support systems are going to be needed. But that is one of the issues where the commission is going to take more initiatives after the explicit support that we hope we will get from the heads of states and government on March 8 and 9.

[Mark Holland, Liberal, Ajax—Pickering, ON]

I know this is probably my last question in terms of what I have time for, so I'm wondering if both the witnesses could talk about their perceptions on the importance and utility of carbon tax as part of a variety of measures that could be utilized to reduce greenhouse gas emissions.

[John Drexhage]

Can I let Jos answer that first?

[Jos Delbeke]

We have gone almost a decade in Europe on the question of whether carbon taxes can or should, and to what extent they should, be developed. We did not sort it out at the European level. You may know that the European construct has advanced tremendously on many things, except on tax issues. So we had a kind of institutional handicap, so to speak, to raise the carbon tax issue at the European level.

Due to that, most member states do not have carbon taxes but have significant energy taxes on energy products. For example, motor fuels or the heating fuel that you buy have a substantive tax on them. But these are basically energy taxes, not carbon taxes, and that is an important element to have in mind.

Where we are going for carbon taxes is on the use of—

[Mark Holland, Liberal, Ajax—Pickering, ON]

Sorry. In your answer, could you perhaps talk about the experience of member states that have utilized carbon tax, and whether or not that has been an effective vehicle for them, relative to other member states?

[The Chair, Conservative, Laurie Hawn]

It's going to have to be extremely brief.

[Jos Delbeke]

They were effective towards the individual consumer. We saw that when the carbon tax was implemented to industrial activities, there were limitations to the extent that such a tax could be levied.

[The Chair, Conservative, Laurie Hawn]

Very briefly, Mr. Drexhage.

[John Drexhage]

No, I think in addressing such a question you can't do it in a political or a policy vacuum.

I'm from Edmonton, Alberta, and I know what that phrase represents. Call it anything but a carbon tax and maybe we can talk, but call it a carbon tax and it's just not constructive as far as the overall national dynamics of this country are concerned.

I'll just leave it at that.

[The Chair, Conservative, Laurie Hawn]

Mr. Watson for five minutes, please.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Mr. Drexhage, I want to come back to something you were talking about a little bit earlier and I just want to verify this again. What is the total number of verifiable credits available internationally under the CDM?

[John Drexhage]

The total number I don't have handy with me at this point in time, and a lot of that is subject to discussion.

Maybe Jos has those figures. I'm not sure. But they are growing, and growing quickly, that I do know.

Do you have anything, Jos?

[Jos Delbeke]

I have no figures with me here, but what I know is that our companies were planning to buy something more than $4 billion Canadian for CDM credits in the period between now and 2012, if that gives you an order of magnitude. That's the only specific element I have here in front of me. Sorry for that.

[Jeff Watson, Conservative, Essex, ON]

You had mentioned 45 projects, currently representing 93 megatonnes of verifiable emissions. Are there more than that, or—

[John Drexhage]

Yes, it's an awful lot more than that. And in fact those are only projects with Russia and the Ukraine, dealing mostly with oil and gas-firing, fugitive emissions and that kind of thing.