Environment Committee on Oct. 3rd, 2006

[The Vice-Chair, Liberal, Mario Silva]

Thank you.

Mr. Bigras.

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

Thank you very much, Mr. Chairman.

I would like to begin by thanking you once again for your 2006 report. It is, in general, highly elucidating, although it makes only scant reference to how climate change programs are performing. Even though you may not be able to categorically state that these programs have met their objectives, it has to be recognized that progress has been made.

What I find particularly interesting about your report was that it promotes a comprehensive approach to help us reach our target of a 6 per cent reduction in greenhouse gases. It is all very well to talk about annual reports, but if we do not have a strategy allowing us to maximize the overall greenhouse gas reductions, then we have not achieved anything worth writing home about.

I understand that your intention this morning was to walk us through the various chapters of your report, however, I would like us to turn our attention to page 12 of the booklet entitled “Main Points”. You state:

The government cannot effectively address climate change without considering changes in the way Canadians produce, distribute and consume energy.

Further on, you add:

Any new approach must confront this reality.

I would like to know what you mean by that. A few pages further on, you state that energy production is under provincial jurisdiction.

You clearly state that any effective attempt to curb climate change has to take into account this reality. In terms of fighting climate change, do you not think that a new approach encouraging cooperation with the provinces would be more effective than the essentially sector-based approach favoured by the government thus far?

[Johanne Gélinas]

The section you are referring to is entitled “Integrate energy and climate change”.

In our audit, it became clear, quite quickly, that economic development was increasing, as was consumption and energy production, and that in this context, climate change was at stake.

The question was how to reconcile two objectives that may seem, at first sight, completely opposite. The principle here is to be able to dissociate economic growth and energy production. We must move towards a transformation that will enable us to reduce the use of fossil fuels as much as possible.

We know that other countries, mainly Sweden, have successfully dissociated these two aspects. It is not impossible. Of course, we can always enforce programs or measures to reduce greenhouse gases, but what we are talking about here is the need for an in-depth look at how to continue along the road to economic development while taking into account what that requires. To achieve that, our management practices must be more effective. So we are talking about energy conservation and using renewable energy.

It is not up to us to determine the model. We are simply saying that you are currently talking about an approach, but that we did not see anything in our audit that would lead us to believe that there is a federal approach designed to reconcile energy development and the reduction of greenhouse gases.

We need an element like that to start with. That is why we mentioned, among other things, Minister Lunn's presentation before your committee last June, according to which there is a policy paper on energy development in Canada.

In our opinion, it is important for us to be familiar with the general thrust of the policy and for Canadians to take a stand on the suggested approach. Following that, it will be a question of implementing the programs needed to meet the greenhouse gas reduction objectives.

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

Okay.

My other question deals with pages 26 and 27 of Chapter 1 of your report. They deal with emissions trading. From what I understand, you do not consider this system a panacea, but instead an interesting climate change mitigation policy tool. Moreover, I am very happy that you are urging the government to establish this type of mechanism. As you said, the previous government generated considerable delays. The current government does not seem to have the political will necessary to enforce such a mechanism.

On the topic of the emissions trading system, you say that it has made it possible to reduce sulfur dioxide emissions. That is true. I am thinking namely of the Canada-U.S. agreement on this issue which, we can say, is a success story. You also say, in point 1.64, that emissions trading is the approach favoured by the European Union, which launched a trading system in 2005 involving 25 countries.

From what I understand, the two mechanisms that you are presenting for emissions trading are part of approaches referred to as territorial. The Canada-US agreement on acid rain was a territorial type of agreement, as is the one in the European Union, which applied to 15 countries at the time and which applies to 25 countries today.

Do you think that this mechanism could prove more effective in a geographic context than in a sector context?

[Johanne Gélinas]

I am not in a position to answer your question. We did not examine it with a view to drawing a comparison. We used the two examples that you have just mentioned to show that this type of system was in place and, as you said, could be successful. We used the European example to show that there were risks, such as the fluctuating cost of a tonne of carbon on the European market. Apart from that, we do not have enough comparative analyses of the various types of approaches used for emissions trading. That is why it would be very difficult for us to address that.

For the time being, it is important to know that we have absolutely no idea how the Canadian system will operate. In the report, we stated that there was relatively limited expertise available for developing this system. Bear in mind that when the government was advocating this approach, we were supposed to be in a position to use it to cut greenhouse gases by 50 per cent. If the approach is not retained, we will know, because it is purely mathematical, that most of the reductions will not be achieved. It was a tool that was favoured to substantially reduce greenhouse gas emissions.

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

Do you think this tool would still be advantageous for Canada and that it should be taken into consideration in the future climate change mitigation plan?

[Johanne Gélinas]

All that I can say is that the system has worked elsewhere, for example in the case of sulfur dioxide in acid rain. It appears to be working in Europe. Here, in our audit, we were not even in a position to see what stage the development work for the architecture of the emissions trading system was at. We have not even gotten that far, but the system should be operational within 15 months, in other words for January 1, 2008.

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

Given the circumstances, should we be shelving this system or continuing to explore it?

[Johanne Gélinas]

It would undoubtedly be in our interest to explore it. The fact remains that government policy will determine whether it is retained or not. Regardless, it undoubtedly warrants closer consideration.

[The Vice-Chair, Liberal, Mario Silva]

Mr. Cullen.

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

Thank you, Chair, and thank you, Madame Gélinas, and your team.

This audit went on for 18 months. I remember a comment from your testimony before, that in searching out the answers for some of these questions, the departments were spurred into action to do the accounting, to find where the money had been spent.

Prior to your team questioning various departments on where money had been allocated and how it had been managed, was there any reporting system in place to do that?

[Johanne Gélinas]

I guess Richard will--

[Richard Arseneault]

Yes. The National Climate Change Secretariat produced a report in 2003, if I'm not mistaken, the latest one. Their function was one of coordination amongst the departments.

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

Whose direction was this under?

[Richard Arseneault]

Under Environment Canada, the deputy minister, and NRCan, the deputy minister. They had no authority but were playing a role of coordination, of facilitation between all of the departments involved in the file, not only NRCan but others. They prepared a report on the financial side of things.

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

What happened to that secretariat?

[Richard Arseneault]

It was disbanded by the government at one point. I guess the government decided it had served its purpose. It was going to be replaced by something else, but we never saw that come out.

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

So the one office that had been set up to track and monitor money being spent...this is in the billions, simply to get the context of how much money we're talking about.

[Richard Arseneault]

There's a big difference in what was announced and what was actually spent. I think in the media we could see there were all sorts of variations on that. As far as we could see.... Once the secretariat was disbanded, Treasury Board got involved in terms of.... They saw there was a situation that needed to be better controlled, and they decided to pilot this. With respect to climate change and horizontal issues involving a number of departments, they wanted to put a system in place so that we could capture this kind of information, so they piloted--

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

Just to be clear, though, the difference between announcements made and actual money spent out the door--

[Richard Arseneault]

Yes, $6.36 billion was announced by the government between 1997 and 2005. But based on Treasury Board information, it appears that $1.6 billion was spent by 2003-04. Since then, we don't know how much has been spent. And when I say “spent”, I mean that the government disbursed, but some of it was transferred to foundations, and the foundations have not spent all their money yet.

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

Okay. So to be clear, it was $6.3 billion announced, $1.6 billion disbursed--maybe spent and maybe not spent, but certainly less than the $6.3 billion announced.

[Johanne Gélinas]

One last thing, if I may. There's a differential between these two numbers, because one goes up to 2005, with the $6.3 billion, and the other one goes up to 2004. From 2004 up to now, we cannot know how much money was spent.

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

Why not?

[Johanne Gélinas]

Because the system is not in place for the information to be provided for that.