Thank you, Mr. Chair. It's a pleasure to be here.
For those of you who may not be aware of it, let me just give you a brief introduction to my organization. The Canadian Council of Chief Executives represents 150 CEOs of Canada's largest companies. They're active in all sectors and regions of the country and are responsible for the vast majority of Canada's private sector investment, exports, and research and development. As such, our members will be affected by climate change and clearly believe they must be part of the solution.
Industry believes climate change is a serious issue that must be addressed. To the extent that there is a debate, it is about the means and the timeframe, not the overall goal of reducing emissions.
Mr. Chair, the record clearly shows that Canadian industry has acted. The major industry sectors are prepared to do more. They have worked and will continue to work with federal and provincial governments to develop targets that are reasonable and achievable. Indeed, industry is not opposed to regulation, as many of our critics have tended to suggest. In fact, most of the key sectors already are regulated with respect to air emissions, through provincial operating permits that usually incorporate the best technology to address emissions.
Let's take a moment to look at the issue in the context of the Kyoto Protocol, since Bill C-288 would compel the government to try to meet that target. We are barely more than one year away from the start of the Kyoto commitment period and our Canadian emissions are still growing. We are not the only country facing this kind of challenge. I'd refer you to pages 2 and 3 of my presentation, which outline how various countries are doing in meeting their targets under the Kyoto Protocol.
Page 2 details the results for the fifteen members of the European Union. While those countries have clearly committed to do more, this chart shows their progress from 1990 to 2004. I would note that in the case of both Germany and the United Kingdom, which have the most impressive results to date, there are issues related to major economic restructuring in both of those countries. Indeed, their governments have had to admit recently that their emissions have actually been going back up in the last year.
With respect to a number of other countries that have commitments under the Kyoto Protocol, on page 3 you can see how Canada is faring relative to a number of those other countries. I think what's interesting to note about all of this is that of course the targets vary widely between countries, both because of the burden-sharing arrangement within the EU and because a number of countries that arguably have a very similar emissions profile to Canada were actually given an increase over 1990, whereas Canada's target was minus 6%. So Canada is clearly not alone in trying to meet this challenge.
That brings me to one of the main difficulties we see with Bill C-288. A real plan to deal with climate change is more than just a target, however ambitious that target may appear. Indeed, the current debate that we've seen in the last few weeks leaves me worried that we will devote far more time to discussing the next ambitious target and not nearly enough time to what we actually intend to do to start slowing the growth of GHG emissions.
On that score, the various plans that we've seen to date rely more on wishful thinking than on any solid analysis of effective long-term policies. Indeed, this was reinforced by the Commissioner of the Environment and Sustainable Development in her recent report. Previous government plans would likely have had to rely on large purchases of foreign credits, at a price tag of as much as $4 billion to $6 billion per year.
The challenge of dealing with this is I think amply illustrated by the numbers I've put on page 4 of my presentation. This outlines the history of the attempts by the federal government to estimate the gap between Canada's Kyoto target, which is of course 1990 minus 6%, and projected emissions for Canada in the year 2010, the mid-period of the Kyoto commitment. In 1998, shortly after the Kyoto Protocol was negotiated, the first estimate by the federal government tagged our gap at 140 million tonnes of greenhouse gases. The most recent estimate, produced in 2005 in Project Green and confirmed again in Canada's Energy Outlook, which was just published by NRCan, puts that more in the range of 265 million to 270 million tonnes, which is almost double.
Obviously, a lot has changed both in terms of how our economy and our society have grown and used energy in that time period, but clearly too, I hope, has our understanding of what it would take to try to close that gap. It is interesting to note the growth in it, along with our growth in emissions.
I would argue that a big part of the problem has been the tendency to treat climate change in isolation from the social and economic reality that surrounds it; that is, the fundamental relationship between greenhouse gas emissions and how, both here in Canada and around the world, we produce and use energy.
That's to some degree illustrated by the chart I've included on page 5 of my presentation, which looks at our consumption of energy from the period 1990 to 2004, which is the latest year for which figures are available. As you will see, our population has obviously grown during that period, and our energy consumption per capita has also grown. What is interesting, of course, is that our economy has grown significantly as well since 1990. We're actually doing reasonably well in terms of reducing the energy intensity of our economy, but not so well in reducing the energy emissions per capita.
It's important to note that many of us in the industrial sector acknowledge, as I said earlier, that regulation is coming and is appropriate. Indeed, my view is that regulations upon industry will come more quickly than most critics have suggested, and once they're in place there will be a very high degree of compliance.
But the question, I think for all of us, is where the rest of the reductions come from in Canada's overall GHG emissions. Governments have been preaching energy conservation for many years, with limited success. The challenge is to figure out how to affect and influence in a positive way the energy-use decisions that millions of individual Canadians make every day.
Chart 6 gives you just a snapshot, by no means comprehensive, of some of the challenges we face in trying to address GHG emissions, in terms of how the population is growing and energy use in households is growing in a way that more than offsets the obvious energy and efficiency improvements of appliances and efficiency within those houses.
Clearly, challenges exist in the transportation sector as well. The average commute time is higher now than it was in 1992, while the proportion of Canadians using public transit has stayed pretty steady across the years, regardless of various government policies to try to change it. Of course, in the case of airlines, we've seen a huge growth in overall travel.
This really is a reality. Even if we were able to define effective consumer policies today, it clearly would take much longer to see their impact and begin to bend the trajectory we currently are on—arguably, much beyond the current timeframe of the Kyoto Protocol.
When it comes to Canadian industry, the question is whether we want to try to force incremental changes at the margin, which will come at a very high cost relative to the emissions reductions, or whether we can have a more far-sighted policy that better integrates climate policy with the technology investment and capital cycle realities of our most energy-intensive industrial sectors.
I want to finish the visual presentation with a chart I borrowed from Jay Myers of the Canadian Manufacturers & Exporters, who I think used it in his presentation last week. He gave you a fuller story on what the manufacturing industry has been able to do in the last few years.
I think what's important about this chart is that it shows very clearly that it's when industry is investing in new technology that emissions improvement really occurs. It is absolutely critical that we start thinking about that issue.
Investment planning and decisions for major technology changes take much longer. We need a fiscal and regulatory framework that encourages investment and the deployment of new technologies that improve environmental and economic performance.
In conclusion, I would like to briefly sketch how we can move forward effectively. This is by no means comprehensive, but these strike me as some of the key issues.
Clearly, we need concrete measures across all segments of society. More fundamentally, we need to build understanding and support for the changes and long-term transformational change that will be necessary. We need an honest dialogue with Canadians about what policies are effective and about what they will support that reinforces and builds on smart consumer choices over time.
We need real cooperation and coordination with the provinces—the important jurisdictions with respect to energy and natural resources, urban planning, and communities. Indeed, they own most of the electricity generation in Canada. Provincial coordination is essential, since industries already are regulated when it comes to air emissions, and in some cases greenhouse gases, through provincial permitting.
When it comes to a sounder framework for addressing industrial emissions, there are three essential elements. We need policies to support cost-effective energy efficiency opportunities; investment in renewables and other low-carbon energy sources; and a strategy to stimulate research, development, and deployment of leading-edge technologies such as biofuels, clean coal, and carbon capture and storage. This is not only essential for Canada, given our energy mix; these technologies can be used around the world in places where energy demand is growing even faster than here in Canada.
We were pleased to see the government's Advantage Canada strategy last week and the recognition that Canadian business pays some of the highest marginal tax rates on new investment among any of our competitors. We think it is essential to have an investment regime that allows firms to turn over capital stock on a timely basis, allows investments in new technology that have an environmental and productivity payoff, and grows leading-edge firms that can compete internationally from a Canadian base.
Lastly, Mr. Chair, we have to devote far more attention to the issue of adaptation, because it appears that global emissions of greenhouse gases are growing quickly, and even with aggressive policies, it will be some years before we can stop that growth, let alone achieve reductions on a global scale. Canada has some unique vulnerabilities to the effects of climate change, but also some important contributions to make in managing the adaptation to climate change.
Thank you, members of the committee. I look forward to your questions.