Environment Committee on Nov. 21st, 2006

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

I am only referring to a tax whose revenues would go directly into a climate change adaptation fund. This is key. There would be a tax on projects under the clean development mechanism. As long as the tax revenues are put directly into a fund, they could finance adaptation initiatives.

I am turning to my second question because the clock is ticking. Mr. Cleland, could you report on the technology available in your sector? You say that in 1997 you miscalculated the increase in GHGs. You say that by applying the Kyoto Protocol, we would stifle our economy. You also say that it may be possible to meet the Kyoto targets, but only by buying credits from other countries, which would result in capital flight. Have you assessed the technology available in your sector? Have you done an extrapolation to find out how much GHG you could reduce by optimizing use of this technology in your sector?

[Michael Cleland]

Just to clarify, what I said was that in 1997, in my estimation and I think that of several other people, we set a target that was completely unrealistic. I meant for the whole Canadian economy. I wasn't talking specifically about the natural gas delivery sector or any particular sector.

On the question about having today's available technology and applying it 100%, again, in the case of the natural gas delivery industry, we're a relatively small part of emissions. Our own use of energy is from pumps and compressors, and energy in our buildings and our fleets. You'd have to ask that question with respect to all those individual things.

We know there's all sorts of technology out there. We could in theory turn, let's say, the residential sector, which uses natural gas, into a much less emission-producing part of the economy if we could tear down all our houses and replace them and put in all the new technology that's available. But I don't see how that's a policy-relevant question, because we know that's not feasible economically or in any other way. Frankly, I don't want my house torn down even though it is not as efficient as it could be.

The individual technologies exist. The point I was trying to make is that we need to find ways to ensure that when we do new things we put the best possible technologies in place. I would argue that in the building sector, in particular, we think about how they come together, because often it isn't about individual technologies; it's about what people in the energy efficiency business call system integration. That is a big challenge. That's why I think we need the kind of strategy that I talked about.

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

Thank you.

To my great surprise, the minister told us that she intended to table regulations on fighting climate change in January, and she repeated this pledge in Nairobi. To date, have you had any negotiations with the government about these regulations?

[Michael Cleland]

We've had a couple of briefings with the government on what it might look like. It hasn't gone as far as negotiations.

What we have said to the government is that we think we've made a lot of progress over the past couple of years in understanding the emissions from our sector and understanding what we think might be a realistic framework for managing those emissions. We would like to use that as a starting point and hopefully, as soon as possible, an ending point for getting a framework in place that puts in place mandatory requirements. We think we need to get on with it.

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

Do you think that it is possible to meet the January 2007 deadline, given the current status of your discussions with the government?

[Michael Cleland]

Quite conceivably, yes.

With respect to greenhouse gas emissions, yes. With respect to other air emissions and air contaminants, no, and I think that's probably true for most sectors.

[The Chair, Conservative, Bob Mills]

Thank you, Mr. Bigras.

We'll go on to Mr. Cullen.

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

Thank you, Mr. Chair, and thank you, committee members.

Mr. Teneycke, you made some reference to the announcement of the 5% early on in this administration. How would you describe the activities since that point, from your industry's perspective? What further signs or investments or indications have you seen for encouragement or otherwise?

[Kory Teneycke]

You're seeing some investments that were in late-stage development to fill demand and to meet the requirement in Saskatchewan, Manitoba, and Ontario have proceeded since that time. However, new investments are really waiting to see what the federal policy looks like—

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

Maybe that's my specific question, not so much from the industrial side, but from the government side.

[Kory Teneycke]

From the government side, we've been in a very extensive period of consultation followed by, in the last couple of months, a period of waiting.

The timelines originally laid out have been missed in terms of having a second interprovincial meeting in the fall and some announcement in terms of what the regulation and the financial package would look like. We're now hearing that the financial package would be in the budget and the interprovincial consultation is being postponed indefinitely. It's not altogether good news. We're not hearing that this is not proceeding; we're hearing that it is, but the timelines are being stretched. I don't have any particularly great insight into the reasons why, but I do know it's concerning for us, given that expectations have been created that aren't being met.

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

Thank you.

Mr. Cleland, as a representative of a portion of the industry that doesn't itself emit a great deal of greenhouse gas but that is in the business of it, since either the folks producing the energy or consuming the energy are part of that equation, do you not think there is not a conflict of interest--and I do not mean this as a disparaging remark--when energy companies that make a profit from the use of energy are the ones that communities, society, and government look to to be the lead when there's a great call for a reduction in the amount of energy we use, particularly fossil fuel energy? I'm just wondering.

It doesn't seem to be your role. It's not what your shareholders expect of you. That's to use as much energy as possible.

[Michael Cleland]

Yes, that's a fair question, and there are a couple of answers to that.

First, I don't think we would claim to be the lead. I think we would claim that we can play an important role as a partner working with others in designing solutions. Yes, we sell energy, and we make money selling energy, but we also know a lot about energy systems. We also know a lot about solutions. In fact, we work with our customers to help them design ways of becoming more efficient. Those ways are mandated by our regulators and are set up in a way that doesn't impair our profitability but that does bring our expertise--and the fact that we connect to six million individual customers--to the table as one part of the solution.

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

Is it fair to suggest that those members of your industry see climate change as a significant problem?

[Michael Cleland]

I don't know very many people who don't see it as a significant problem.

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

The reason I ask is that when we're looking at questions of, say, the development of the tar sands in northern Alberta, the proposal to use your industry to transport natural gas to that development to then produce tar sand oil is, in a climate change analysis, a rather terrible equation in terms of the amount of greenhouse gas emitted throughout that process. It is using one of the cleaner products we have to produce what would be called one of the dirtier products. The full equation of that on a climate change front is rather disastrous.

Is it not, as suggested by former Premier Lougheed and even by Mr. Klein, up to government to play some sort of facilitating and cost accounting role? When you folks build the transmission and others produce the natural gas and others use the natural gas in that way, no one is picking up the tab for the emissions that are coming out. I didn't hear in your presentation any notion of a cap-and-trade system or any of those types of solutions that have been suggested. Does that not need to be developed in order to truly capture the cost of something like the tar sands project and bring it under some control?

[Michael Cleland]

I would argue that, yes, it does. And I'm sorry if I didn't make the point clear. In fact, we have been working with the government to develop a system for capping our emissions, albeit on an intensity basis, and that has been debated. It has ultimately the same effect.

It's a matter of creating the economic signal. That's the issue. So first, we think we do need a system that applies across the economy on an even-handed basis to send that economic signal. If you get that economic signal, the people developing the oil sands will be looking at other options to reduce their emissions. And indeed, we would not want to see the use of gas mandated for or against. We don't like the idea of mandates of one sort or another.

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

But it's more about including the costs of using natural gas versus something else.

[Michael Cleland]

Indeed, I think it makes a lot of sense for us to be thinking about a system that makes sure that the economic signal gets through. We would much rather have the natural gas to sell to our residential and commercial customers.

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

Fair enough.

Mr. Sauchyn, there has been a lot of talk from folks who are maybe a little less concerned about climate change that often what is talked about in the adaptation question is the negative aspects: the increase of flood activity, the storm intensity, and all the rest. Has there ever been any study on the positive aspects, like growing grapes in northern England and all that?

[Dr. David Sauchyn]

Well, I'm growing grapes in southern Alberta right now.

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

Congratulations.

[Dr. David Sauchyn]

So certainly, in terms of the extra heat and the productivity of our force and our fields--our farms--potentially, agriculture could be extended further north in Canada. But there is a serious constraint, at least in the prairie provinces, in terms of whether the water will be available. Therefore, the fact is that most of the impacts of climate change are adverse. And that's mostly because we have developed a resource management strategy in this country and in the western world that's quite inflexible, and we are not well adapted to the current climate. Therefore, any change in climate has adverse conditions.

We behave as if the climate is some static entity, when in fact the climate is quite dynamic and is currently changing at unprecedented rates.

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

There have been some denouncements of this bill. We're studying the implications of this bill, and the denouncements have been more on the economic front perhaps.

What support do you bring to the question of how we would be able to achieve the 2012 targets? It's been proposed that if the government and industry are unable to adapt in time to the emissions reductions that we need, there will be a need to buy an extraordinary amount of credits overseas, not necessarily enabling our economy to be ready for the next round of emissions cuts.

How do you answer that question?

[Dr. David Sauchyn]

With all due respect to Mr. Godfrey, I don't think we can isolate mitigation from adaptation. The degree of adaptation that will be necessary will depend entirely on the extent to which we're able to slow the rate of climate change. So we can't consider one without the other.

The fact that Bill C-288 is exclusively focused on a single paragraph in the Kyoto accord simply underscores the fact that there is a policy vacuum at the federal level and that we're not developing a comprehensive strategy for climate change.