Evidence of meeting #25 for Environment and Sustainable Development in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was targets.
A recording is available from Parliament.
November 9th, 2006 / 9:05 a.m.
Conservative
The Chair Conservative Bob Mills
I would like to start by thanking our witnesses.
I know it was difficult for some of you to make it. Some of you made the trip just for this meeting; Mr. Jaccard flew in on the red-eye. We really appreciate you making the effort to be here to testify.
Please keep your comments to about ten minutes. We do have a magic box that tells us how long you've gone. When you see me fidgeting, you'll know you've done your ten minutes and we'll go to questions.
We'll start with Mr. Page.
9:05 a.m.
Dr. Bob Page Vice-President, Sustainable Development, TransAlta Corporation
Thank you very much, Mr. Chairman.
My name is Bob Page. I am vice-president of sustainable development for the TransAlta Corporation in Calgary.
We're Canada's largest private sector electrical utility. We have assets in Canada, seven U.S. states, Mexico, and Australia. We're a Canadian success story of internationalization. In terms of power generation, we use coal, natural gas, hydro, wind, and geothermal. We have been a pioneer in offsets and emissions trading.
Before we get into the substance of the bill, I want to emphasize that our climate change strategy has been to have continuous improvement. We are currently at 8.8% in terms of greenhouse gas emissions, which is intensely below our 1990 levels--and that's with our capacity being up 77%. We've had a very important growth phase in Alberta and also into the international market.
In connection with it, we've been a pioneer in Canada on offset projects and credits--by that I mean CO2 capture. We are the largest investor in wind power in Canada. We are also a major player in geothermal in California.
Along with several of the other witnesses here this morning, we're strongly into the bioenergy area. I currently chair BIOCAP Canada, which this committee has heard from before.
On technology change, as quickly as the public policy framework is in place, we're very committed to developing clean coal. By clean coal, I mean the gasification of coal, the capture of all emissions and impurities, and the underground sequestration of that total package. In terms of this, our company's overall policy goal is for no net emissions of greenhouse gases by 2024. This is a commitment our company made in 2000. We hope the public policy framework will be such that we'll be able to keep to that time schedule.
We were invited to testify about our Canadian policy to the U.S. Senate environment committee because of its interest internationally.
In terms of where we're going today, I just want to take a couple of moments to talk about the cost of the Kyoto target. This is background to your bill, and it's something where I may differ from my learned colleagues on the panel this morning.
Under the 2005 Martin plan, the target was 270 megatonnes, which has grown since then. Currently, we are approximately 35% short of that target of minus 6% of 1990 levels. Canada is a tougher target than any of the other countries. The 2005 plan included companies such as my own under the large final emitters program. This program was to deliver about 15% of the Canadian target.
Other parts of the plan involved soft estimates. We were supportive of those, but nonetheless they were soft in terms of being able to ensure delivery.
The remaining 190 megatonnes would come from international purchases, which the Auditor General estimated could be $20 a tonne. The basic economics with 190 megatonnes, times $20 a tonne, times five years, is $19 billion for Canada. This is a significant hit for the Canadian taxpayer.
There would be no environmental benefits from some of the international credits such as Russian hot air. The bureaucracy and the corruption involved with securing some of those credits would make the delivery difficult. I have spent significant time in Russia on credits issues, so I am very aware of what I'm saying here.
I am just trying to lay this out in terms of background to what I'll be saying.
The next area I want to talk about very quickly is thermal electricity. Most of the electricity sector in Canada is owned by the province; all of it is regulated by the provinces. It's something we have to keep in mind as we go forward. Thermal electricity involves Nova Scotia, New Brunswick, Ontario, Saskatchewan, and Alberta.
For our company and our PPA partners—these are the wholesalers of electricity for our generation—the economic cost of the Martin LFE plan would be about $37 million a year. The total over five years for our company and our electricity partners would be $185 million. This is our estimate, given some uncertainties in terms of the market.
The hit for the Alberta electricity system as a whole has been estimated at about $1.4 billion over the same period. Under Canada's Clean Air Act, we would face equal or even larger costs, especially involving mercury. These have to be added to the climate change costs that we're dealing with as a company.
Clean coal is just around the corner. It is a solution, but there can be no commercial-scale development before 2012. That is the difficulty for the bill in terms of delivering in the Kyoto period. Secondly, we have a 25% capital cost and a 25% operating cost premium that we would have to meet.
On the targets, in our opinion, the scale of the Canadian target is not achievable at this late date. The committee must look seriously both at the timing issues and at the cost issues in connection with it and the equity issues across Canada. The point I want to make is that the issue is not the target per se. The issue is the timing in terms of the delivery. Our company has no hesitation with the targets if they can be integrated in the technology sense.
The policy tools are not available to the government today on climate change. I co-chaired one of the sector tables in connection with this several years ago, and we've gone through this in great detail in other formats. In trying to look at the targets, we have to look at the fact that, domestically, the Martin LFE program would have covered 25% or 30% of our Kyoto target. If your focus is domestic policy, what are the new measures you're proposing that would increase that up to 100% of those targets, changing it from 30%? In our opinion—and I say this very respectfully to the committee—the bill is useless without an implementation plan with the costs attached.
I understand the frustration that all members of the committee are facing in terms of the issues of Kyoto. At the same time, I have to say, on behalf of our customers and our shareholders, that this has to be put into a doable, viable program.
On other matters, just very quickly, most of the Kyoto countries will not meet their targets, in our opinion. I've been in Europe twice in the last month, at the International Energy Agency meetings and at other meetings in connection with it. The offsets in credit system and emission trading will take five years to establish. So, please, when we're looking at that, understand the time delay in delivering for a Kyoto target, given its timeframe.
The greatest emphasis today needs to be post-2012, when I think we're all facing real challenges in terms of going forward. Our investors need certainty if we're to invest in coal plants or if we're to invest in offset projects.
Lastly, I do want to emphasize that if we can move quickly to develop a policy framework, Canada has the real opportunity to be a world leader on clean coal and sequestration and other climate....
In conclusion, Mr. Chairman, in my view, the issue here is a very serious one, in that we're proposing a timeframe under Kyoto that is not doable for industry, especially large final emitters like us. The only way this issue can be addressed is with the purchase of very large quantities of international credits. Given my own experience in terms of the international market, I'm not sure this would deliver very much, certainly in terms of Russia or the Ukraine, in terms of environmental advantages.
Secondly, in connection with it, our company does not have the resources needed both to do the large purchase of credits for immediate compliance purposes under Kyoto and also to fund the technology change that is essential for our long-term future in terms of the deep cuts in the post-Kyoto period.
Thirdly, we really want to emphasize the importance of the longer-term technology change that is the real solution and will keep the money in Canada, on something that will be of benefit to our country later on.
Fourthly, this will allow our company to go way beyond Kyoto by taking this longer-term approach with deep cuts. As I mentioned, our commitment is carbon neutrality by 2024, which is a major commitment for a thermal utility.
Lastly, in connection with this, by trying to meet the immediate short-term Kyoto targets, we will in fact impede the kind of investment pattern for technology change that, for Canada and globally, is so important in terms of trying to address those long-range targets.
Mr. Chairman, thank you.
9:15 a.m.
Prof. Mark Jaccard Professor, School of Resource and Environmental Management, Simon Fraser University
Thank you.
I've been a professor at Simon Fraser University, in Vancouver, since 1986. My specialty is sustainable energy systems and energy system modelling, especially energy economy models that try to assess the costs of mitigating or reducing various externalities or other damages from energy systems, be they greenhouse gases or other kinds of emissions, even land use impacts, and so on.
I've been a professor for twenty years at the school, but I did take a five-year leave of absence in the mid-1990s to be chair and CEO of the British Columbia Utilities Commission. Also, I've been involved in various international organizations. In the 1990s, I spent time as a member of the Intergovernmental Panel on Climate Change, which produced the second assessment report. For a long time I was a member of the China Council, which is a group of seven international experts who advise senior levels of the Chinese government on sustainable energy systems. All those kinds of experiences of an applied nature and energy system modelling are what back up the research and work that I've done.
In the period from 1998 to 2000, my energy research group and consulting arm were commissioned by the national climate change process to be one of the few teams that were doing energy economic system modelling in an effort to see how we could reach the Kyoto targets. The analysis we did looked at all different kinds of actions, like technology choices, behavioural change, and so on. We looked at capital stock turnover, or how long it takes for new technologies to penetrate the marketplace. We ran the targets for Kyoto in our models and produced the information that then went into the national report that accompanied all of that process.
What our research found was that for Canada to achieve its Kyoto target, you would need immediately a carbon tax of $150 per tonne of CO2. In fact, initially we said $120, but that was because we had been given some information that was not reliable about transportation behaviour. When we adjusted within half a year of the model, it came out at $150 per tonne. That would be a tax implemented immediately. We've also calculated the different effects on energy costs and so on.
What was frustrating to me as a researcher and consultant was that the government, from there, took our results about the reductions in greenhouse gases, but didn't take the policies required to make that happen. Instead, it opted primarily for voluntary policies of information programs and subsidies, which, according to our analysis, simply will not provide or motivate the technological and behavioural change required for significant reductions in greenhouse gas emissions. Here, we are talking about significant reductions, because Canada is on a trajectory with drivers like population and economic growth that exceed most OECD countries. We're a rich energy country, and that also is very different from most of our OECD partners.
So you have these drivers going up, and we had them in our model. We said right away that this was a signal that you're going to have to have very strong policy immediately if you're serious about this, but that simply was not what happened. The policies that followed were ones that would have very little effect, according to independent experts basically anywhere among the top researchers that I know—people from Harvard, Stanford, Cambridge, and so on, with whom I've worked a lot on these kinds of issues.
That policy was not implemented, and that motivated me to go away and write my own book about this. It's called The Cost of Climate Policy. So at least I have it down for posterity that I basically predicted that Canadian emissions would continue to rise even with the policies we were putting in place.
I believe you were going to distribute.... Does everyone have that? Basically, there's your listing of the various policies that have been implemented over time. They are strongly characterized by information and a little bit of subsidies. Those are not the kinds of policies that will turn the ship around when it comes to reducing greenhouse gas emissions.
I have only a couple more comments here in my introduction. From early on I've been astounded sometimes at the people who say we should do nothing about climate change because we're not 100% certain that we're affecting the climate. That's not how we make decisions in our society and it never has been. There is a risk there. The experts are telling us there's a risk there. We can do a proper analysis that tells us the actions we can take immediately and over a longer timeframe.
My conclusion in 1995, 1998, and today is that we should have strong policies implemented immediately that are modest at first but provide a signal over time of a graduated intensity. The only policies that will work to reduce greenhouse gas emissions are ones that put a financial penalty or a regulatory constraint on the use of the atmosphere as a free waste receptacle. There is no way to worm yourself around that obligation. The evidence of the past ten years in policies implemented and experiences in Europe and elsewhere, not just Canada, are bearing this out very clearly. When I talk to experts around the world who are independent of political parties and so on, they're unanimous on the kinds of policies that are needed.
We spend more time talking about, if you used a carbon tax, how would it be--very small initially. But it would give the kind of signal Bob says his company needs for investments that they know will provide a fair playing field for them and their competitors. Then they can communicate to their customers what that cost effect will be. You spoke in millions of dollars, but I always want to talk in cents per kilowatt hour; the number is a lot smaller then. When I do surveys of people, they're kind of interested in a quarter of a cent a kilowatt hour over ten or fifteen years. They're willing to pay that for these gradual reductions.
That's the policy framework there. We know policies are available to us. People have done a lot of work on these. The United Kingdom is implementing a lot of these policies. They have a carbon levy, although it's not uniform. They're part of the cap-and-trade system in Europe now. They have tightening efficiency regulations, and they have some subsidies in the case of low-income housing and so on. So all of the policy is starting to come into place.
The general message I want to close with is first of all in terms of the costs of Canada trying to achieve Kyoto, and I have some numbers here. They're very similar to the ones Bob was just talking about. But if we have three or perhaps four parties in Parliament today that really want to do something about the climate change issue, this is the time right now to put together some kind of legislation that sets a regulatory constraint or a financial penalty that starts tomorrow and is graduated to climb over time. I think we're quite desperate for something like that.
Thank you.
9:20 a.m.
Conservative
9:20 a.m.
James Bruce As an Individual
Thank you, sir.
As an introduction, I was an assistant deputy minister in Environment Canada for many years. Then I worked as the deputy secretary general of the World Meteorological Organization in Geneva, where I helped establish the Intergovernmental Panel on Climate Change.
I'll be speaking about a few of the major impacts of climate change in Canada and try to drive home the costs of inaction on this issue.
While it has been clearly demonstrated that up to about the mid-1960s, natural factors such as changes in the sun's energy, the earth's orbit, and so on had a significant influence on the rise and fall of the global mean temperature and climate, since 1970 the rapid warming we've seen is almost entirely due to greenhouse gases. It is the only reasonable explanation. The climate changes in the coming decades will also be driven overwhelmingly by increasing greenhouse gases in the world's atmosphere.
It is not just air temperatures that signal the changing climate. With a warmer atmosphere comes warming oceans in the upper layers of the atmosphere. The ocean warming has two unfortunate or even devastating effects.
First, as the water warms, it expands and the sea level rises. The second effect is more intense hurricanes and tropical storms, such as Hurricane Katrina, and Hurricane Juan, which hit Halifax. Their intensity increases, since the source of their energy is the warmer surface temperatures of the oceans.
How do these changes affect Canada? They do so in many ways, most of which are negative, but not all. Sea level rise has already resulted in increased shore erosion, forced relocation of buildings in the north, in Inuvik, and of roads on Quebec's north shore. Charlottetown and Delta, B.C., are particularly vulnerable to sea level rise, especially when you get a storm.
The changes are also manifest in the declining flow of most rivers in southern Canada where people live, because of increased evaporation, with higher temperatures overwhelming the small changes in precipitation. Most of the rivers and lakes, which we share with the United States, are showing declining flows, and that's increasing the stresses in trying to deal with the sharing of those waters and dealing with water pollution.
The Prairies are being particularly hard hit with the retreat of glaciers, and the headwaters of rivers are rising in the Rocky Mountains—in addition to the increased evaporation.
For example, the flow of the Athabasca River at Fort McMurray, the main source of water for the tar sands projects, has been declining rather steeply and will continue to do so. The tar sands projects use large amounts of water, about 2 to 4.5 litres for every litre of oil produced.
The $125 million estimated investment in the tar sands projects will produce a situation, ten or twelve years from now, when there will not be enough water in the Athabasca River's low flow periods to support both the oil sands needs and the requirements that Alberta has specified for protecting aquatic ecosystems and the people downstream on the river's system.
On the Great Lakes, levels have been falling, with more evaporation in autumn and winter when the lakes are warmer and more ice free. As a result, flows of the Niagara have been declining since 1970, with about a 17% projected loss of hydro power by 2050, both in Ontario and Quebec along the St. Lawrence.
An estimated value of the lost hydro power is somewhere between $350 million and $500 million per year.
Climate-related disaster losses have been on the rise in Canada, with heavier rains causing floods—especially in urban areas—water back-up, intense droughts, and more severe autumn and winter storms, especially in Atlantic Canada.
Forests are increasingly attacked by insects and diseases, such as the mountain pine beetle in B.C. and now in Alberta, and by forest fires. The area burned in Canada has increased in an average year by 800,000 square kilometres since the 1970s, as temperatures rose.
Arctic sea ice is rapidly disappearing, a threat to the way of life of indigenous people and wildlife as well as a challenge to Canadian sovereignty.
Permafrost is melting, particularly up the Mackenzie Valley, and usable winter ice roads are available for a much shorter period than they were twenty, thirty years ago. These will make the proposed Arctic gas pipeline $12 billion investment much more costly and much more difficult to construct safely.
Agriculture is a mixed story. With the longer growing season there are some positives; however, recent research suggests higher nighttime temperatures, and that's a hallmark of climate change; the nighttime temperatures go up more than the daytime temperatures, and higher nighttime temperatures will reduce wheat yields.
Health issues are a serious threat worldwide due to heat stress and the spread of tropical diseases like malaria, dengue fever, and increases in diarrheal diseases. These are currently estimated to be causing 150,000 deaths worldwide per year—this is the climate change component of these—and five million additional illnesses.
I think Quentin Chiotti, if he gets a chance, can tell you a lot more about the health impacts in Canada.
While many of these and other negative impacts can be reduced with suitable measures to adapt, and some of these measures are already under way in some of our larger cities and across Canada—cities are ahead of almost every other level of government, I might say, on this matter—adaptation will be much less costly if the rate of change can be slowed by slowing the input of greenhouse gases into the earth's atmosphere.
This has to be an international enterprise. Canada's climate will be very strongly influenced by the decisions taken in countries like India and China, and even the United States. North Americans currently contribute the most per capita per person in the world, but Canada cannot expect developing countries like India and China to help reduce the greenhouse gas burden if we are not ourselves, if we do not even try to live up to our international commitments under Kyoto and the 1992 Framework Convention on Climate Change.
Thank you.
9:30 a.m.
Conservative
The Chair Conservative Bob Mills
Thank you very much.
Now, finally, from Pollution Probe, Mr. Chiotti...or Mr. Ogilvie first.
9:30 a.m.
Ken Ogilvie Executive Director, Pollution Probe
I'll say a couple of words first.
I was going to be the presenter, and then I realized to my horror that I was to talk about impacts and adaptation and Jim Bruce was going to be sitting next to me. So Quentin got packed onto an airplane this morning in a panic, so he could maybe add some supplemental comments to this rather great gentleman next to me.
My first comment is that you should believe everything you just heard. You're into this issue of how do you weigh the costs of action against inaction. It's a question of how much, when, and it's a dilemma, a “damned if you do and damned if you don't” situation that we've got ourselves into. Had we started twenty years ago, we might not be in such a bad predicament, but we're in it.
Part of my background...I have been in government most of my career, twenty years out of my thirty-some-odd years of being around, and I have been the manager of policy for the Ontario ministries of Environment and Energy. I've been an executive director of a round table in Ontario. I was on the Canadian Environmental Advisory Council when Bob Page was the chair many years ago. Pollution Probe's position on a whole bunch of policy or relevant areas.... So we're on the board of BIOCAP Canada, which Bob chairs; we're on the board of Sustainable Development Technology Canada; we're on advisory panels to commissioners of environment, both Ontario and federally; we're on the ADM steering committee on energy efficiency under the Council of Energy Ministers; we're at the energy sector sustainability table; and so on.
I'm trying to illustrate that we are very much engaged in a multi-stakeholder way with industry, governments, NGOs, health groups, and others. We're quite happy to talk about policy and litigation, although we understood that the primary emphasis of what we're going to talk about, and Quentin will talk about, is on the impact side and some of the costs of inaction.
I won't go any further than that, other than to pass to Quentin to supplement, if he can, some of the interesting stuff we just heard from Jim.
9:30 a.m.
Dr. Quentin Chiotti Air Program Director and Senior Scientist, Pollution Probe
I'm Quentin Chiotti, the air program director and senior scientist at Pollution Probe. I always like to point out that I have a PhD in geography, not medicine.
That said, Pollution Probe has actually been actively involved in the whole issue of impacts and adaptation for quite a while. This month in fact is the tenth anniversary of the Pollution Probe, Environment Canada, and York University national conference on climate change and human health that took place in November of 1996.
Speaking for myself, I've been working in the area of climate change impacts and adaptations since 1993, primarily in the areas of energy, health, and agriculture, and more recently in terms of the linkages between air quality and climate change. I was employed with Environment Canada, in their climate change adaptation impacts research group, from 1995 to 2002. During that period I was the science adviser for a multi-stakeholder study on the atmospheric change in the Toronto-Niagara region.
I was also a contributor to the Canada country study, the first national assessment of climate change impact in Canada, in the late nineties. I was a contributing author to the chapter on the costs of inaction. That probably, more than anything, is why I decided to fly to Ottawa early this morning.
I'm currently a member of the advisory committee to the Climate Impacts and Adaptation Research Network of Ontario, as part of the national C-CIARN network. I'm also the co-lead for the Ontario chapter of the 2007 national assessment on climate change impacts and adaptation.
I did circulate earlier a letter that was sent to Prime Minister Harper in April of this year, signed by 90 climate change scientists, emphasizing the significance of climate change, the confidence that there is in science, and the urgency of taking action. That letter was in part initiated because of the urgency to take action that was more or less discussed at COP 11 in Montreal in November. I had circulated as well a diagram that outlines the fact that if we wait five years, ten years, or twenty years before we take significant action to reduce emissions of greenhouse gases, we'll be looking at very substantial reductions in the future for every five years or ten years that we wait.
I think the people at this table will agree that there's broad consensus that we need to reduce global emissions of greenhouse gases between 60% to 80% by the year 2050. I want to remind everyone that the European Union is very much talking about a 25% commitment of reducing greenhouse gases by 2020 in order to avoid what the UN Framework Convention on Climate Change has described as “dangerous” interference with the earth's climate.
I'd like to also point out that in terms of the impacts research, and anything you've heard this morning, it's largely based on a two-time CO2 scenario. If in fact we go beyond the dangerous level and look at higher concentrations of CO2, then the impacts are likely going to be much greater.
Jim Bruce mentioned some of the impacts for Canada. I'd just like to reiterate the significance for the far north and its vulnerability to climate change, the vulnerability of our coastal regions, particularly to floods and storm surges, and in the Prairies, as mentioned, in terms of water shortages, especially for agriculture and oil sands development.
I would point out that in Quebec, the concern on water resources is so great, particularly in hydro capacity, that Quebec has actually taken the lead of all provinces in Canada, looking at climate change impacts and adaptation through their Ouranos consortium of industry, government, and academia to tackle the problem.
Similarly, the Province of Ontario has just embarked on a series of round tables to deal with climate change and air quality, of which impacts and adaptation will be a significant component. In terms of Ontario, the impact on the Great Lakes water quality and quantity were mentioned. There are very significant implications, based on historical experience, in terms of critical infrastructure--storm sewers, electricity, as well as communications--and significance for our forestry and agriculture, including, in the case of forestry, the resource communities dependent on it. In particular there's the significance on human health.
Unfortunately, when I got the call last night to attend this morning, I had only one copy at home. It is a primer on climate change and health that we released in 2004, based on a three-year study we had done on human health in the Toronto-Niagara region. I would like to table that for the committee, for your interest.
Just going back to the overall costs of inaction, in the Canada country study we estimated, based on international experience, that the costs of climate change would be somewhere in the neighbourhood of 2% to 4% of GDP, which at the time, in 1988 dollars, was in the neighbourhood of $10 billion to $12 billion a year. A broader range would likely have been a low of $3 billion to a high of $24 billion annually.
I would say that although the 2007 assessment is unlikely to present economic impacts in a dollar value, I think we can be pretty confident that the impacts of climate change, based upon what we know now, will be higher than that amount.
Thank you.
9:35 a.m.
Conservative
9:35 a.m.
Liberal
John Godfrey Liberal Don Valley West, ON
Thank you very much to all the witnesses. Those were very interesting presentations.
If I were to try to summarize the purposes of the bill we're looking at today, I think, first of all, it is attempting to focus on short-term targets, and it also focuses on the issue of...if your first targets don't work, that doesn't mean you throw out the targets; you try to establish another target.
Secondly, it deals, again in the spirit of the Commissioner of the Environment's recommendations, with accountability. How do you link what your efforts are with what the results are?
Thirdly, it recognizes that we have to be part of an international solution. Unless we're talking to each other about what we mean and working on common solutions.... We can't go it alone.
I was very much struck by Professor Jaccard's unmistakable message that very strong policies have to start immediately.
In fact, if I may quote Professor Jaccard from an article that appeared in the Calgary Herald on October 7, I think you said, sir:
You have to start immediately, and then over four or five decades we might make it. If Stephen Harper says 'I'm going to start a two-year dialogue process to discuss policy,' then he is a traitor to this issue.
I guess what I'd like to know--I hope it's true--in terms of starting tomorrow with a regulatory regime, is what is the connection between starting tomorrow and issues of short-term target setting, accountability when we start tomorrow, and playing our part in an international process?
9:40 a.m.
Professor, School of Resource and Environmental Management, Simon Fraser University
First of all, just for the record, I think I was misquoted on that one. I guess you must be used to being misquoted by the press sometimes too--I don't know.
But I would have used strong language in the sense of what I've already said, that if we're serious about this issue we have enough information to start immediately.
I understand your question to be on how we link short-term targets, long-term targets, and international responsibility. Is that fair?
9:40 a.m.
Liberal
John Godfrey Liberal Don Valley West, ON
And accountability.
In other words, if you put a target off, as Bill C-30 does, until 2020, 2025, 2050, and you neglect the bits between now and then--known as phase 1 under Kyoto, for example--is that helpful, if you don't start with immediate accountability, immediate targets?
9:40 a.m.
Professor, School of Resource and Environmental Management, Simon Fraser University
So in terms of the year 2010 or 2012, from the view of an energy economy modeller who feels he understands the inertia in these systems, today, in 2006, a year like 2010 or 2012 is meaningless to me in terms of targets. The uncertainty in trying to do anything between now and then seems incredible to me, that one would even do that. That's why after about 1999 I really stopped talking about Kyoto, except when the media would ask me and I would say, “Well, it's getting more expensive every day, and even then I don't see how you would actually do it.”
So you're maybe raising issues of how Canada would approach the challenge of the short term with the long term. But what I can say in terms of the long term--
9:40 a.m.
Professor, School of Resource and Environmental Management, Simon Fraser University
Yes. In terms of policy, I laid this out fairly carefully in a C.D. Howe study I did two years ago called The Morning After, and again in another work I just did for the national round table. If I hear you correctly, it's not good enough to say, “Here's what we're going to have achieved by the year 2050.” That would be a travesty, in my view. What you'd have to do is say, “Here's where the forceful policy instrument, the compulsory policy instrument that I'm talking about, is set in the year 2015, here's where it's set in the year 2025”, and so on and so forth.
If you believe that your policy instrument is something like a carbon tax--that would be one of my two options, something that puts a financial penalty on using the atmosphere as a free waste receptacle--you would literally have to have a graduated schedule so everybody knew what that tax would be five years from now, ten years from now, and so on.
So that's my answer to your question about the link between the long and the short term, and likewise, that would have to be the same if you had a cap on emissions. That schedule would say, “Here's the level of the cap in 2010, 2015”, and so on and so forth. The policy I'm particularly interested in now is something close to what some people call an upstream cap and trade. That means going back to the fossil fuel industries and allowing electricity generators to sell into them.
I call it a carbon management standard, and it's been getting some coverage internationally by researchers and policy designers. It simply involves saying to the fossil fuel industry, “We know that if we're going to get the deep reductions that scientists are telling us we need to get over this multi-decade period, you're going to have to be responsible for the fate of the carbon you extract from the earth's crust.” That responsibility will be small in the first ten or fifteen years--2% of the carbon that you extract from the earth's crust must not end up in the atmosphere--and ultimately it has to graduate on a schedule toward 50%, 80%, or whatever we think we can achieve.
The benefit of that kind of approach is that as you move into the future, though, you may adjust that. The scientists may give you new information that you need to accelerate this or they may give you information that you don't need to accelerate it. You might even slow it down. You may learn more about the costs and find that it's easier to go faster or that you want to go slower. So these kinds of schedules have some flexibility built into them.
9:45 a.m.
Conservative
9:45 a.m.
Vice-President, Sustainable Development, TransAlta Corporation
Yes.
Mr. Godfrey, I dealt with some of this in my presentation, so I will repeat this. I understand the pressure of this, so I'm in no way conflicting.
First of all, in connection with it, one of the points I try to make is that under this bill our company would have no option to just buy domestic and international credits when our purpose is long-term technology change. Under the Kyoto rules we cannot be given credit for technology investments until the emissions are actually being cut with the commissioning of the new plant. It's a five- or six-year process to go through all the regulatory hurdles and this kind of thing.
Our clean coal sequestration technology, which will virtually eliminate all the emissions from our coal-fired plants, could only come in about 2012.
Our difficulty with your bill is, then, how do we meet the heavy costs of the credits that we would have to be purchasing? I gave figures in my statement to document all of that. The difficulty is that we would have to then use the money that otherwise we'd be investing in that new technology change, which Mark was talking about as well.
So we're in this dilemma that if we focus exclusively, as the bill is, on the short term, then we're in fact interfering with the achievement of the long term, which is the fundamental technology change that Canada needs. I think you'd agree that our really deep cuts beyond Kyoto are only going to come from fundamental technology change.
So this is the kind of dilemma we're in here, which this bill imposes on us. I think it's really sad that we're being put into that kind of either/or situation, but for our company it's very clear that we need long-term targets, we need long-term goals, and we need to start tomorrow on that.
I think all of the panellists here are agreed about the urgency. Our company is committed to regulation. Our company is committed to the science that is behind climate change.
9:45 a.m.
Conservative
9:45 a.m.
Executive Director, Pollution Probe
If I had talked at the policy level today I would have said there is an absolute related to Kyoto. I think Mark was sort of heading into this territory when he spoke, but I don't know if he totally got there. The first absolute is to have a full, robust policy infrastructure around climate change by the end of the Kyoto commitment period. We need to have emissions trading systems, updated building codes, and energy efficiency standards. We need to have the entire architecture, technology drivers, in place.
Aside from the reductions, we should have a commitment that if nothing else, Kyoto means we are completely ready with these. We should have auto fuel efficiency standards and they should be designed to be robust, meaning they could be pressed down over time in sensible ways as the urgency of the issue and the cost of inaction ups the premium and the value of pushing harder, which I think it's going to do.
Second, we've accepted a target and we should measure ourselves against that target. If we fail, we fail. Ontario just released its first conservation report by the chief conservation officer yesterday. They had a C minus last year, but they rose to a B plus this year because they've invested in energy efficiency, they've added up the peak reductions in kilowatt hour usage, and so on.
We need to measure ourselves against the target. Even if we're failing, there's nothing wrong with measuring against that target and using it as pressure to do better. So I would leave it in that context.
9:50 a.m.
Bloc
Marcel Lussier Bloc Brossard—La Prairie, QC
My first question is for Mr. Page.
Mr. Page, in your presentation, which was very dense, you provided a lot of figures. One of them very much struck me. You said that 15 percent of Canada's greenhouse gas reduction objective is attributed or attributable to power companies.
9:50 a.m.
Vice-President, Sustainable Development, TransAlta Corporation
No. The electrical utilities would be delivering one-third of the LFE totals. My apologies if I wasn't clear, but the LFE targets when rolled together--oil and gas, electricity, and industry--would total about 15% of the total Canadian target of 270 megatonnes.
I was just trying to say there was a huge gap between what industry was being asked to do here and the overall Canadian target.