Environment Committee on Nov. 9th, 2006

[Ken Ogilvie]

No, but we can benchmark against it. It's an important number.

[Mark Warawa, Conservative, Langley, BC]

Mr. Jaccard, you said that if we were serious about reducing greenhouse gas--and I look forward to reading your book, and you've already answered regarding the carbon tax in clarification. You're recommending strongly that we have a graduated scheme.

My background is in local government. I was a city councillor for almost fourteen years, and whenever you made an adjustment, you did it gradually. Otherwise you would have a huge outcry.

It just realistically cannot be done unless you do things gradually, because the infrastructure has to be built. You have to adjust, and you can't ask everybody to drive hybrid vehicles or low-emission vehicles tomorrow, because they're not available. I think sequestration is the direction in which we need to go, but you have to have enough time to build that.

Regarding your comment that if we're serious about reducing greenhouse gases...I think you were indicating that to this point--and I don't want to get political--you have not seen a seriousness about reducing greenhouse gas emissions. Is that a fair comment?

[Prof. Mark Jaccard]

Yes, it is. That's because there was a lot of very good expert advice around, and it was being used by other countries, about the kinds of policies that you actually needed. When someone said, “This is a good bill for 1999”, I would say, “No, it still doesn't give you enough timeframe.” That was what I tried to say in my opening comments. The final point, though, is yes, graduated, we need time, but I believe the policy can be immediate.

We have talked about the details of these enough. We have countries that implemented carbon taxes fifteen years ago. So when I heard Ken saying--I thought I heard him say--by the end of the Kyoto period we should have the policies in place, I disagree with him completely. The policies can all be in place by next year. I would be greatly dismayed.... I was just meeting with someone from EPCOR the other day, who was telling me, “We're thinking of putting in a conventional coal-burning plant without capture”, and I'm thinking, my goodness, at the margin we can start to pay for some of these new kinds of technologies. We have to have the policy in place now.

[Mark Warawa, Conservative, Langley, BC]

The parting comment--

[The Chair, Conservative, Bob Mills]

You are at six minutes.

[Mark Warawa, Conservative, Langley, BC]

The parting comment is that Bill C-30, the Clean Air Act, I believe is the direction in which the government needs to go. We need the support of all parties. Hopefully you can come back as witnesses when we deal with it.

[The Chair, Conservative, Bob Mills]

Mr. Watson.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair, and thank you to our panellists for appearing today.

Mr. Godfrey said clearly we can't go it alone. I think the government agrees with that perspective. That's why we're participating in the Kyoto dialogue and what the future looks like.

One of our panellists said we have to clean up our house first. I guess this is where I want to focus on something specific. Bill C-288, of course, the idea of enshrining Kyoto's target and timeline in law, I would submit--since we've all agreed that we can't really meet that target and timeline--makes it difficult for us to clean up our house first, at least in the short term.

I want to turn for a moment here specifically to emissions trading. I'd like some comments on the concept of emissions trading. It seems to me that in the short term, with the types of quantities, to trade emissions would lead to an exodus of capital that would be necessary for long-term investment in this country--in other words, cleaning up our house first. It would lead to sending that to other jurisdictions, including international jurisdictions, with no measurable immediate environmental impact. It's just a transfer of capital, in the short term. I'm not talking about the medium to long term.

What are your thoughts on that? Am I on the right track with that?

[The Chair, Conservative, Bob Mills]

Mr. Page.

[Dr. Bob Page]

Yes, as a company we've been a strong supporter of emissions trading for a long time as the least cost means of addressing that regulatory need. So in principle we're in agreement. We are totally opposed to things like Russian hot air, which is not emissions trading but a transfer of AAUs or credits between Russia and Canada, or Russia and some other country.

A domestic emissions trading system keeps the money within the country and would spur the development of new bioenergy, wind, and a variety of other renewable sources right now. An emissions trading system can be carefully calculated to provide benefits for Canadian consumers, even in instances where we have some recourse to the international market as a safety valve in terms of a price rise.

I'd just like to give you one very hard example of that. Our company has in fact invested in a CDM project in Chile. We did that because from January 1, 2005, our company had to meet CO₂ regulatory requirements in Alberta for new power plants. There was no Canadian policy in place and no way we could get appropriate Canadian credits in order to meet those regulatory obligations, so we had to go to the international market.

So we like to use the words “safety valve” in terms of the international market, and we're totally opposed to the kinds of credits from Russian hot air.

[Jeff Watson, Conservative, Essex, ON]

Did the product in Chile improve your emissions?

[Dr. Bob Page]

The product in Chile lowered global emissions. That's the concept that I think we have to deal with, because CO₂ is a global problem, not just domestic.

[Prof. Mark Jaccard]

Very briefly, I often hear this point that any kind of constraint on your domestic economy, a carbon tax or a cap-and-trade system--and I don't say tradeable, it has to be a cap, otherwise nothing is going on--will lead to flight of capital. I think it's too late now to be making that argument any more. There's lots of evidence of how you can design these policies I've just been talking about, so that they're happening gradually. If ten or fifteen years down the road our costs of production are rising significantly and the rest of the world is not going along with us, then we can stop our policy and have a party with everyone else while the earth burns, or whatever else is going to happen. But for now, incurring those costs will lead to little, if any, flight of capital.

You've got the Europeans incurring costs right now with cap-and-trade systems, so Canada can't even talk about our going first any more. We've dithered around; other people have already put the policies in place.

[Ken Ogilvie]

I'm of the opinion that you can design a good trading system for Canada and that the uncertainty created by not having a system will cost us much more than having one.

[Jeff Watson, Conservative, Essex, ON]

How long would it take to establish such a system?

[Ken Ogilvie]

Bob was saying it could be by 2012 or so. I don't think it can be a year.

[James Bruce]

Mark said next year.

[Ken Ogilvie]

Mark said next year. I'm not in agreement with Mark, but I think we could have a really robust system by 2010.

I don't know; Bob might be a little more knowledgeable.

[Dr. Bob Page]

Well, we have proposals in to the Government of Canada today, and my estimate is that the federal, provincial, and other cooperation needed would take about a year and a half to two years.

[The Chair, Conservative, Bob Mills]

Mr. Rodriguez.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you, Mr. Chair. Thanks to everyone of you for being here today.

I simply want to mention to Mr. Page that no mention is made here anywhere of purchases of credits in Russia, what you call hot air, or whatever it may be. And there's definitely no desire to do so. Through this project, there is a way of investing in green credits outside Canada. There are good green credits outside Canada. I agree with you that we shouldn't turn to Russia, and that's not the intention, not at all.

It's possible not to agree on the possibility of not meeting the first stage objectives of the Kyoto Protocol on time. First, we have to clarify what we're talking about.

If that seems difficult and even, for some of you, impossible, is that a reason to abandon the project or even not to test it in the short term? Does anyone have a comment on that subject?

[The Chair, Conservative, Bob Mills]

Mr. Page.

[Dr. Bob Page]

This is a very good point. It's really central to what we're doing.

I think all of us said we can't wait; I know Mark was very explicit on this. We need to move quickly on it. My investors are looking at a new $1.8 billion power plant for Alberta. We want to know what the conditions are going to be for the 40-year life of that pipeline. So the time issues are important.

I just want to say why I focused on Russian hot air. I worked very closely with the Martin government on the international credits issue. I was chairman of the International Emissions Trading Association out of Geneva. I participated in Moscow and Ottawa, where discussions took place in connection with this. So my comments are not abstract comments; they are comments on the attempt to define a bilateral trade agreement between Russia and Canada that would allow those to take place.

The issue I want to come back to is that we really want to do something. I mean, in the year 2000, we put forward a 25-year plan for our company. We've never had any response to that.

We're looking, from this committee, for what I hope will be a bipartisan effort to put this in a focus that is manageable.

The only point I was trying to make in my presentation was not that we shouldn't do anything, but, please, consult with industry so that it is manageable for our customers, managers, and our shareholders. That's the only thing I'm trying to say.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

All right. Thank you.

I agree with you. I also want to hail all the efforts your own company has made over the years to reduce your emissions.

Now I'd like to speak to Mr. Ogilvie. A little earlier I was talking about the importance of not giving up and of trying, even if the challenge is a big one.

If, on the other hand, we decided to give up and to do nothing in the short term, do you think it's realistic or responsible to have objectives, just for 2050, for example, and nothing in the short term?

[Ken Ogilvie]

Absolutely not. In fact, when I'm talking about a full policy infrastructure, I mean systems up and running and working. You need the interim targets along the way. You absolutely need targets.

We should have renewable energy and energy efficiency strategies with targets for reductions. That's how these things happen. That's why Ontario is now making progress with its energy efficiency mandate. This was a tough one in the past for people to really make progress on.

So we absolutely need targets; we absolutely need systems and standards that are up and running and that work.

But how do you weigh how much you're going to invest in these things? Without the targets and the clear goals, I think it's very, very hard to quantify the level of investment that's needed to get there and to report to the public and the world about how you're doing.

So absolutely, yes.