Environment Committee on Nov. 28th, 2006

[The Chair, Conservative, Bob Mills]

If we could get started, I would let the committee know that Mr. Glen Murray is stuck in Calgary, probably much like all of us were on Sunday. We got to sit in an airplane and in Vancouver. Because of this global warming, it's minus forty degrees and snowing heavily. Anyway, Mr. Murray will not be joining us today, but I'd like to welcome our other witnesses who are here.

Just to review the procedure for you, each of you has ten minutes, and then our committee members will have the opportunity in a ten-minute round and then a five-minute round.

We'll begin with the Canadian Council of Chief Executives, and you, Mr. Dillon. Welcome.

[John Dillon, Vice-President, Regulatory Affairs and General Counsel, Canadian Council of Chief Executives]

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.

[The Chair, Conservative, Bob Mills]

Thank you very much, Mr. Dillon.

From the Canadian Chamber of Commerce, we have Nancy Hughes Anthony. Welcome.

[Nancy Hughes Anthony, President and Chief Executive Officer, Canadian Chamber of Commerce]

Thank you very much, Mr. Chair. I'm very pleased to present the views of the Canadian Chamber of Commerce to this committee on Bill C-288.

The Canadian Chamber of Commerce has 170,000 members, including local chambers of commerce, SME's, and large companies representing all sectors of the Canadian economy in all regions of the country.

I imagine most of you have chambers of commerce or boards of trade in your ridings and know the kind of work we do. We are very pleased on behalf of our members to provide some comments. I believe you do have our brief; I just want to highlight a few of the important points.

First of all, the Canadian Chamber of Commerce recognizes that climate change is a serious and complex global issue that requires effective short-, medium-, and long-term strategies and actions. However, with little more than a year to go before the start of the first Kyoto compliance period, we are concerned about the timelines and reduction levels the protocol requires of Canada, as well as the methods for implementation.

We also believe that the fixation on targets has been counterproductive to developing a practical and effective domestic contribution to the global effort on climate change. The international community is engaged in a variety of processes to determine the future framework for international cooperation on action to deal with greenhouse gas challenges. This provides an opportunity for Canada and other countries to refocus the domestic and international climate change issue from a debate about national targets to a discussion of effective actions to improve efficiency and develop the technological solutions required to bring GHG emissions under control over the long term.

Many of the members of the Canadian Chamber of Commerce have already taken action to reduce greenhouse gas emissions. We are committed to further efforts. We have been encouraging our members to participate in and enhance commitments to voluntary programs such as the Canadian Industry Program for Energy Conservation. These efforts have been working. For example, while Canada's emissions grew almost 20% between 1990 and 2000, industrial emissions grew by only 1%, and many sectors achieved significant reductions.

The Canadian Chambers of Commerce recognizes that climate change is a serious and complex issue that requires short, medium and long term action. Many of the members of the Canadian Chambers have already taken action to reduce greenhouse gas emissions and they continue to implement projects of their own creation. We continue to encourage our members to pursue their important work in the development of new technologies.

And new technologies are the key to the large-scale emission reductions that are needed over the long term.

Canadian industries are currently developing new technologies and new fuel sources, but many initiatives are in the pilot stage and will have to be scaled up to full projects and programs if they prove successful. Some examples of these technologies include the recovery and utilization of gas from oil wells that would otherwise be flared and improved animal waste management systems in animal feeding operations.

Unfortunately, while some development of these technologies has already begun to take place, in most cases it will not be feasible to have large-scale implementation by the 2012 Kyoto Protocol deadline. A longer-term focus is necessary to support full development and commercialization of these new technologies.

Another point, Mr. Chairman, is that the challenges of adapting to the effects of climate change have been largely ignored in the policy debate so far. It's clear that regardless of what actions are taken to reduce greenhouse gas emissions, no action will be enough to absolutely stop the effects of climate change; it can only slow those down. I think Canadians will need to anticipate the possible effects of climate change, take the necessary and practical precautions, and make changes in their lifestyles to make sure they are prepared. Obviously, individual companies and communities need to make their own decisions on how to best prepare for potential changes in the environment, but there is some useful research on adaptation being conducted within Natural Resources Canada, and that will be a key for companies and communities in their planning for climate change.

Governments in Canada have taken little action since 1997 to facilitate broadly effective energy efficiency improvement programs. While many industries have substantially reduced their energy use per unit of output--their energy intensity--the growth of the economy, as expected, has raised total emissions. There was serious doubt about the possibility of achieving Canada's Kyoto targets when they were announced, and more than eight years later, they are, in my view, virtually unachievable.

Irrespective of the mechanism used, industry broadly agrees that there must be a full review of greenhouse gas regulation policy before a legislative instrument is chosen. Furthermore, since provinces and territories are not only critical to moving forward on any approach to climate change but have jurisdictional responsibilities and policy priorities, it is essential that provinces and territories be fully consulted and fully engaged in this process. In addition, capital investment and the life cycle of capital is the key to reducing emission intensity, particularly in manufacturing, and those realities must definitely be taken into account in any plan going forward.

To conclude, we believe that Canada needs to develop a realistic plan to reduce greenhouse gases. But for it to be effective and practical, it must focus on long-term technology changes to achieve the desirable goal of environmental improvements in conjunction with sustainable economic growth and development. In addition, it must involve all Canadians, not only those who cause and create emissions but those on the consuming side as well.

The Canadian Chamber of Commerce asks you to vote against this particular bill and look at other approaches that will provide a realistic plan that all Canadians can participate in.

Thank you.

Thank you, and I'll be happy to answer questions later in the morning.

[The Chair, Conservative, Bob Mills]

Thank you very much, Ms. Hughes Anthony.

We'll go to Mr. Matthew Bramley from the Pembina Institute, please.

[Matthew Bramley, Director, Climate Change, Pembina Institute]

Thank you, Mr. Chairman.

Although this isn't the first time I've had the privilege of addressing the committee, I'll take a moment to introduce myself. I'm the director of the climate change program at the Pembina Institute, which is one of Canada's largest environmental NGOs. The Pembina Institute is a strictly non-partisan, not-for-profit organization focused on sustainable energy solutions. We work with any political or corporate leaders who want to take meaningful action on climate change. We're not afraid to criticize either, when we see a failure of leadership or responsibility.

I've worked full time on Canada's response to the climate change issue for the past seven years, and I believe I've participated in all the key federal and national policy discussions and processes during that period. I've published numerous analytical reports and opinion articles on Canadian climate policy, and I've addressed the issue many times in the media.

I will continue my presentation in English but of course I would be most happy to respond to any questions in French.

There's abundant evidence that climate change is among the biggest threats facing the world, and perhaps the biggest. Tony Blair, to give one example, has called climate change “a challenge so far-reaching in its impact and irreversible in its destructive power, that it alters radically human existence”.

So this is an issue that goes far beyond the environment. We're talking about impacts on billions of people and economic costs that could be catastrophic. Responding adequately to this challenge demands extraordinary leadership and commitment from those who find themselves in positions of responsibility.

The Pembina Institute strongly supports Bill C-288, and I'd like to make three points today to validate that position. The first point is the urgency of implementing policies to begin cutting greenhouse gas emissions and the importance of Kyoto in making that happen. The second is that meeting Canada's Kyoto target is a legal obligation that cannot be treated as optional. The third is that Canada is certainly able to meet its Kyoto target at a reasonable cost if our government acts quickly and recognizes the value of the international Kyoto mechanisms.

First, then, on urgency, this committee has already heard very clearly from leaders of Canada's climate science community that there's an urgent need to cut greenhouse gases. They explain to you that the long time lags in the climate system demand action now to prevent future impacts. Mark Jaccard, one of Canada's most accomplished climate policy experts, told you that strong policies should be implemented immediately, precisely because long-lived capital stock is being replaced continually and we now have to start replacing it with less “greenhouse gas intensive” choices.

That brings me to my point. To start playing a responsible role in preventing climate change, Canada need an ambitious, legally binding, short-term target for reducing its greenhouse gas emissions total so that governments feel obliged to act immediately with strong policies. That's why Kyoto is so important, not because it's perfect or it is more than a first step or necessarily has exactly the right target, but if Canada abandons that target, the pressure will be off. Even if the Kyoto target is replaced by a different short-term target, it will be a voluntary one at the international level because other countries are not going to let Canada reopen negotiations on this, and we know that voluntary does not work.

I will turn to my second point. For nearly two years now Kyoto has been part of international law. Bill C-288 calls for the Government of Canada to do two things: first, to meet the emissions targets set by Kyoto by any combination of regulations or other measures that it chooses; and second, to be transparent about how it intends to do so.

I don't believe that opposition to this bill arises from the transparency provisions. Opposing it because of a belief that Canada cannot or should not meet the target is equivalent to saying that Canada cannot or should not obey international law. I think we need to be very clear about this because Canadians care about Canada being a good international citizen, about keeping our promises and meeting our obligations.

We also need to be mindful of the possibility that another country that is party to the Kyoto Protocol could pursue legal action against Canada on this issue.

Because our Kyoto target is a legal obligation, I believe the time has long passed since we could have a debate about the target as a “take it or leave it” option. Canada had that debate in 2002. It was a very vigorous one, and the government of the day decided to ratify the treaty. My understanding is that the present government has made a decision not to withdraw, so now we need to focus on meeting our legal obligations, not call them into question.

In my view, it is not only inappropriate but also unnecessary to call those obligations into question--and this is my third point--because Canada's Kyoto target is achievable. Achieving it will require the government to move as quickly as possible to implement a comprehensive set of regulations and financial incentives to drive energy efficiency and a switch to clean energy sources, but as you've heard, that will only get us part of the way to the target in the limited time that remains.

Canada will also need to embrace the option of financing cost-effective emission reduction projects in poorer countries. This option must stop being treated as something wasteful or shameful. We need to challenge the assumption that, as the quote goes, “sending billions of dollars abroad is necessarily a bad thing”. Canadians constantly send billions of dollars abroad in exchange for goods or services. Why not for environmental benefits?

Kyoto credits from developing countries come from specific emission reduction projects that have to go through a rigorous, transparent process to show the reductions are genuine. It needs to be clearly understood that reducing greenhouse gas emissions in India, Kenya, or China has precisely the same benefits in preventing climate change in Canada as reducing emissions here, and there are opportunities for Canadian technology providers as well.

Richard Paton was simply wrong when he told this committee that buying credits will neither help our economy nor help our environment.

Jayson Myers claims that the total cost of credits to meet Canada's Kyoto target would be $20 billion, but he's using a price of $20 per tonne, which is considerably higher than current prices.

John Drexhage's estimate, $10 billion plus, is more credible, although I still think it likely underestimates the domestic reductions that could be achieved if sufficient efforts were made with sufficient urgency.

These funds need to be thought of as a type of specially targeted official development assistance. The amounts are modest when they are viewed in that light. To take John Drexhage's figure, $10 billion, to be spent between now and the end of 2012, would make $1.7 billion per year. In 2005, Canada spent $4.5 billion on official development assistance. If we had met the international standard of 0.7% of GDP, Canada would have spent $9.6 billion annually.

Here's another comparison. In 2005-06, the federal government received $33 billion from the GST. That means a cut in the GST of one percentage point is worth about $5 billion per year, three times more expensive than what is being estimated for Kyoto credits. Parliamentarians might wish to consider the relative importance of cutting the GST by one percentage point versus keeping Canada's international promises, providing targeted and much needed assistance to poorer countries, and significantly reducing the emissions that are causing one of the biggest threats facing the world.

There's something else to consider here too. The financial liability that Canada faces as a result of sharp increases in our greenhouse gas emissions should not be borne solely by the government, but shared, where that can reasonably be done, by those whose emissions increased. For instance, one-third of the increase in Canada's greenhouse gas emissions between 1990 and 2004 came from the oil and gas industry. Nancy Hughes Anthony's numbers about emission increases cannot have included oil and gas or electricity. If regulated targets were in place for industrial emitters by 2008, when the Kyoto compliance period starts, those emitters could shoulder some of the costs of acquiring Kyoto credits. And these costs can be small compared to profit margins. The most efficient oil sands producers could reduce their net emissions all the way to zero for less than $1 per barrel of oil if they acquired credits at $12 per tonne, which is the current average price.

Overall, then, we need to view emissions trading as a bridge to enable a company or a government to take responsibility for emissions cost-effectively now, when its optimal opportunity to put in place new technology may be a few years down the road.

I'd like to conclude by reminding you of Kofi Annan's remarks at the UN Climate Change Conference in Nairobi two weeks ago. He said:

While the Kyoto Protocol is a crucial step forward, that step is far too small. And as we consider how to go further still, there remains a frightening lack of leadership.

In other words, Mr. Chairman, meeting Kyoto targets is a minimum and Canada needs to stay the course.

Thank you.

[The Chair, Conservative, Bob Mills]

Thank you, Mr. Bramley.

From the Sage Centre, Louise Comeau, welcome.

[Louise Comeau, Director, Sage Climate Project, Sage Centre]

Thank you.

Thank you for this opportunity to provide an overview of the recent outcomes of the Nairobi climate negotiations.

I am the director of the Sage Climate Project at the Sage Centre. Sage is an operating charity carrying out a number of projects that are focused on conservation, education, leadership development, capacity building, and social sustainability.

I have worked on climate change since 1990, attending my first international negotiation on climate change in 1991 in the lead-up to the Rio Summit in 1992, where the UN Framework Convention on Climate Change was agreed on. The 1992 convention established an operating structure, and further structures were then created, with the agreement on the Kyoto Protocol in 1997.

All of this can be confusing, so I have tried to provide you with some visual charts to help you understand what the structure is. The first chart lays out the actual operating structure that we have today within the UN system. I'll explain it very quickly.

In the centre, you have the convention and the protocol, where we have annual meetings of ministers. This is where the terms “conference of the parties” and “meetings of the parties” come from. Each of these bodies is supported by something called the “subsidiary bodies”; one is on implementation and one is on science and technological advice. Those bodies support both the protocol and the convention and meet each year in Bonn, in May, in the lead-up to these sessions.

But we have also created some very important additional structures out of Montreal. The Montreal action plan created the ad hoc working group on article 3.9, which looks at future obligations for developed countries and the dialogue under the convention that allows non-Kyoto parties and developing countries to explore options for post-2012.

I wanted to make sure you also saw that in the context of Nairobi, we also began a process looking at what's called article 9, which is the entire operation of the Kyoto Protocol. I'll come back to that in a moment.

That gives you a little overview on what it all looks like and how it all fits together.

The convention was ratified by 189 countries, and 168 have ratified the protocol.

It's an important point to make that China, India, and Brazil do have obligations. Under article 10 of the protocol, it's “shall”. It's not maybe get to it when you think about it. It's a “shall” requirement that developing countries also develop action plans aimed at reducing emissions and report on those efforts.

In fact, key developing countries are making progress in that area and are reducing emissions, as has been noted. In particular, when we were in Nairobi, countries like China spoke quite explicitly to the fact that it's controlling greenhouse gas emissions in China, putting forward an objective of a 20% reduction per unit of GDP energy consumption over that of 2005 by 2010.

In his report, Nicholas Stern congratulates China for such an aggressive target. It's far in excess of what Canada is in fact achieving.

The Kyoto Protocol, through long negotiations, established a foundation not only for future developed country commitments but also for flexibility mechanisms like emissions and credit trading that will be important to any future agreement that broadens participation.

I think this is a critical point for the committee to understand. This foundation will be the basis for negotiating the next 2012 instrument, even if we don't know precisely how all those elements will formulate that new agreement.

Other venues, like the G-8 plus five climate change dialogue, Asia-Pacific 6, as well as a host of other partnerships through the World Bank, the OECD, and the International Energy Agency, are important and critical for consensus building and for implementation, but they are not the negotiating venue. In our view, that will take place within the UN.

As with any negotiation, and as is most certainly evident in Nairobi, a number of elements are now in play that will be critical to securing an agreement on the way forward post-2012.

It is the second chart that I've included in your package. This is very important, because if you actually keep this and we follow this over the course of the next few years, you will be able to see how all of this comes together.

I want to quickly review what is in fact in play here and how important it is. When I printed the chart, I eliminated some of the bars, but the blocks in the chart do in fact link and essentially form moving pieces in a unit under the convention and the protocol.

Let me just explain the elements that are in play there. Under the convention, you have, as I mentioned, the dialogue. It's simply workshops. No decisions are coming out of those, but two important discussions are happening under the convention with developing countries--one on how to reduce emissions from deforestation and one on how to improve our capacity with respect to technology transfer. These are critical discussions. It's critical that we achieve agreement in these areas if you are going to engage developing countries. We all agree that this is essential.

Under the protocol, though, you have the meat. Frankly, that's where the action really is and where it will continue to be. Canada needs to pay attention to that reality, that is, you have the ad hoc working group, as mentioned. In Nairobi we agreed to a work plan of activity for 2007 and beyond. We agreed, under article IX, the review of the protocol, to agree next year in Bali on a frame for a second review that will take place in 2008.

On the adaptation fund, we agreed on principles for how this fund would operate and how it would be governed. It's a very important fund that is paid for by levies through the clean development mechanism that many countries now agree would be expanded over time by having levies associated with all the flexibility mechanisms.

Then we have our proposal from Russia, which relates to creating a process to facilitate taking on voluntary commitments to join annex B in this case. It could be future annexes and so on. All of those pieces are in play, are active, and will form, over time, the elements of an agreement.

With respect to what happened in Nairobi, I want to focus in on targets, timelines, and money. Those, really, in the end, will be what constitutes our agreement. As I mentioned, the adaptation fund and the technology fund are the money issues. In Nairobi, Canada was clearly under instructions to commit nothing with respect to money, as were many other countries. The time for discussing money is not now. It was not in Nairobi. It will be as we get closer to finalizing a deal. Money will be on the table and it will be a factor. In that respect, Canada was essentially not exposed, if you will, at this time, and that's appropriate.

With respect to targets, the position of Canada as well as other countries was that there would be no discussion at this meeting of targets with respect to developed countries. Developed countries clearly wanted to advance discussion around developing country targets. We were therefore unable to secure an end date for the work of the ad hoc working group, which would have been an important signal to developing countries. We did, however, get agreement that the review of the entire protocol would come back in 2008, and that's particularly important.

With respect to developing countries, I just point to the fact that a number of important gestures are being made that I think, if we're smart negotiators, we will begin to recognize in the context of these discussions, particularly from countries like China, which stated very clearly in its high-level intervention that it is committed to targets and indicated the kinds of targets it would be prepared to take on--things like renewable energy targets and per unit of GDP reductions in emissions intensity. Those kinds of targets are definitely in play. Brazil is very active in proposing options for reducing emissions from deforestation. We need to be open to and welcoming of these gestures.

With respect to timelines, the most important issue from our perspective is the point that Matthew raised, and that is a serious lack of a sense of urgency. I hope you all have read carefully at least the executive summary from the Stern report, which clearly points out that if we are to avoid dangerous climate change, we need to have global emissions peaking in the next ten years or so. This is serious.

We need a mandate to negotiate, and that mandate to negotiate must happen at next year's meeting in Bali. It should be within a two-year timeframe that allows for parties to agree on a new instrument for post-2012 no later than 2008-09, to allow for ratification that meets the objective we set in Montreal, that stands behind this country's name--that's a Montreal action plan, not a global plan. We promised the world there would be no gap between commitment periods. We need to make sure that we put our efforts into making sure that occurs.

Finally, just a couple of words on, obviously, the change in the U.S. in terms of the congressional elections. It was very welcome. We're not clear yet, of course, how that will play. The point simply to be made here is that the aim is to negotiate an instrument that's flexible, that allows countries to join the regime as and when they are ready, rather than wait for the U.S. administration to be able to come formally into the negotiations, which would lead to a gap between commitment periods.

Finally, I'll say a word on Canada. I would like the committee to be aware and to fully appreciate that despite the rhetoric in terms of Canada's position and how we essentially performed in Nairobi, we are alone in our approach to our target. All parties, whether they are off the mark at the moment, close to their target, or have beaten their target, are indicating strongly that they intend to put further measures on the table to meet their target. It is important for this committee and for Canadians to realize that Canada stands alone in its approach.

There are also I think important changes in how Canada was perceived in Nairobi. An important concern you should have is that in fact Canada is no longer trusted in the negotiations. It's not clear what we're saying anymore and what our interventions mean. This is an important aspect.

In closing, I would say that in order for Canada to properly prepare for post-2012, it's important that this committee seek a commitment from the government to engage something like the Academies of Science in doing a Stern-like analysis in Canada, for Canada, to help us understand the cost of the impact so we can relate that to the target we take on.

Thank you.

[The Chair, Conservative, Bob Mills]

Thank you.

Mr. Rodriguez.

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

Thank you very much, Mr. Chairman.

Thank you to all of you for coming this morning. We have heard several interesting comments and perspectives.

My question is Mr. Bramley. There is currently a lot of discussions focusing on wether or not it is possible to achieve the Kyoto targets. The opposition parties and the government have different points of view on this.

The government would like to set long term hypothetical targets. Do you not think would be better to set short term targets that would point us in the right direction for long term measures?

[Matthew Bramley]

It is essential to have short, mid and long term targets. In fact, that is what the Commissioner of environment said in her report last September. We absolutely need to have short term targets in order to keep this issue at the top of the list of the government priorities. We need not only short term commitments, but also short term targets. Any business that wants to make changes sets goals and targets. The national government should do the same.

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

Fine.

Ms. Comeau, you spoke about Canada's legal obligations under the Kyoto Protocol. If I understood you correctly, Kyoto is an international treaty that is binding on Canada because Canada ratified it and because a sufficient number of countries ratified it. It became international law. Canada is thus bound by the Kyoto Protocol.

If Canada states that it will not comply with the Kyoto Protocol, then it is openly stating that it will act illegally, that it will act outside the legal framework, that it will not obey the law. It is very serious when a government says that it will not itself obey the law.

My question is for Ms. Comeau or for Mr. Bramley. What are the actual or specific consequences of failing to comply with this international law?

[Louise Comeau]

Yes, it has two impacts. One relates to the compliance regime of the protocol, and of course there's already been a request for the compliance committee to consider Canada's situation. I think it is an international embarrassment that Canada would be the first country to be brought forward for a peer support group, if you will, under the facilitative branch of the compliance regime. I think that is an important aspect of the process. We will have to go through a process of review, and more than rhetoric, we'll need to legitimately show why it is that we simply haven't been able to achieve our objectives when in fact every other country has taken measures similar to what we've been saying for years that we should be taking.

But the more important thing I think is the implication for the post-2012 negotiations. Who will take Canada seriously in its attempt to argue for a weaker target, an intensity-based target, or a voluntary target, or whatever it is we're proposing we're going to do, when countries like China have moved in their areas, as I mentioned? Or take the case of Japan, or the U.K., or the European Union, more broadly. They look at us and say, “Well, hold on. We did regulations. We've done emissions trading. We've used all of the instruments available to us, but Canada has not done that. Why should we give you such a break in the second Kyoto Protocol period?”

I think it's been a bad negotiating tactic on our part. I think our objective is to prove to the world we're serious about this issue, to do everything we can to achieve that target. Then we will be in a better negotiating position for post-2012.

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

You were in Nairobi and therefore you had an opportunity to see Canada's credibility questioned.

My question is now for Mr. Bramley. The government often states that Canada cannot meet its Kyoto targets. I do not think that issue is that it cannot meet them, but rather that it does not want to meet them.

Do you think we can meet those targets?

[Matthew Bramley]

I think I made it clear in my initial intervention that there's no doubt we can meet the target if we want to meet the target. We have this full flexibility to combine domestic action and international action. We want to do the most we possibly can domestically, and when we've done that we can complete the rest of the job by using the international mechanisms. So there's no doubt we can meet the target. I think that was made clear in the testimony of John Drexhage and even of Jayson Myers.

I don't think it's a question of whether or not we can meet the target. There are some people who are not willing to contemplate the use of the international mechanisms, but I think we need to look at those mechanisms in a much more realistic way and recognize that they are ways of obtaining real emission reductions that benefit Canada's environment and actually have export opportunities for Canadian companies as well.

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

Ms. Comeau, the government also often states that most countries that have specific targets under Kyoto will not meet those targets, and therefore why make any effort to achieve our own? I understand, however, that our situation is somewhat different.

What do you think?

[Louise Comeau]

Absolutely. In fact if you look at the demonstrable progress report that the UN published, in fact if you go through it carefully and not just cite certain aspects of it in terms of where countries are today with respect to their targets, every single country in their national communications has done three things. They've said this is where we are today relative to our target; some are below it, some are at it, and some are above it. Then they've indicated that these are the measures we currently have in place and where we expect to be by 2012. And then they have a third section that says these are the additional measures we intend to put in place to ensure we meet our target. Every country has done that.

That's what Canada needs to do. That's what the process of having ongoing plans and constant updates of our climate plans is all about. Every country is in the third or fourth iteration of their climate plans. That's absolutely appropriate, and Canada should be doing the same thing.

[The Chair, Conservative, Bob Mills]

Mr. Dillon, I believe you want to comment.

[John Dillon]

Thank you, Mr. Chairman.

It's a long and complicated answer, but I think there are a couple of points.

First of all, could Canada meet the target? Yes, if we were prepared to buy massive amounts of foreign credits, we could meet the target.

We could have a debate about how much that would cost. Matthew says the cost is much less than $20 a tonne. That would depend on how many countries are out there buying credits when the time comes, if many of them are off their targets, as they appear to be. Many of the countries that have filed plans indicate that they may have to use international credits. Many of the countries in Europe are suggesting they will use carbon sinks, something they argued against Canada being able to include when the protocol was under negotiation. It's a debate about how much it will cost and whether that's the best way to spend the money.

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

Thank you, Mr. Chairman.

Mr. Dillon, I am pleased to hear your say that we can meet the objectives, but that from now on this should mainly be achieved through foreign investment. But it is nevertheless possible to meet these objectives. Mr. Bramley said that there were some very good projects abroad which we could invest in and which would significantly affect climate change.

There is the issue of cost, which is evaluated at a maximum of $20 billion over four or five years. It's a question of political will: is our future and that of our children worth it?

The government decided to reduce the GST by one percentage point. I'm not saying that it should have done this, but it could have, instead of reducing the GST, spent $20 billion, which would have been more than enough, over four or five years to meet our Kyoto objectives.

You said that we may not necessarily have the means to achieve this, but can we afford not to act on climate change beginning today, given the costs contained in Mr. Stern's report and the other costs related to phenomena happening here in Canada?

[Matthew Bramley]

The Stern report's main conclusion was that it would be irrational, from a strictly economic point of view, not to act immediately to reduce greenhouse gases. Apart from every other environmental consideration, and from a strictly economic logic, it would be irrational for us not to begin making changes beginning now.

For us, the most important thing is to remain true to the Kyoto protocol.

[Louise Comeau]

Could I just add to that?

[The Chair, Conservative, Bob Mills]

Actually, your time is up. You'll get a chance to get that in, I'm sure.

Mr. Bigras.

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

Thank you very much, Mr. Chairman.

Welcome to the committee. We have many interesting witnesses, who all hold different opinions, but who are contributing to the debate, which I believe is important.

My first comment is about the Canadian Chamber of Commerce. I find its brief rather depressing. I noticed that half of your brief deals with adapting to climate change rather than on ways to reduce greenhouse gases. It is as if you had thrown in the towel with regard to greenhouse gases. Let met quote from your brief:

It is clear that, regardless of what actions are taken to reduce greenhouse gas emissions or to meet our Kyoto target, no action will be enough to stop the effects of climate change—it can only slow down the changes.

So you are focusing more on changes to our lifestyle to address climate change. Don't you think it is a mistake to focus only on adaptation rather than to have an effective plan which establishes objectives to reduce greenhouse gases at the source?

I think that ultimately adaptation will cost us much more than taking significant and strong measures to address climate change. Don't you think that the price will be much higher in a few years if we adapt to climate change rather than beginning immediately to reduce emissions at the source?

[Nancy Hughes Anthony]

Yes. Let's be clear, Mr. Bigras. Of course, adaptation is only one aspect of the action plan. There is no doubt that there must also be an action plan to reduce emissions. As I underscored in my presentation, the plan must set short-, medium- and long-term objectives. I completely agree with Mr. Bramley in that regard.

What I deeply regret, however, is that seven or eight years ago, the former Liberal government presented a plan which did not make sense and which did not focus enough on consumption. As you know, consumers contribute significantly to greenhouse gases and to the Canadian economy.

Instead of tightly regulating Kyoto deadlines, I would have preferred that this committee focus on a practical plan of action dealing with regulations. Several witnesses said today that initiatives to encourage new types of technology are absolutely essential. And I would say that adaptation is part of that plan.

You may be right, Mr. Bigras, when you say that my brief perhaps focuses more on adaptation. However, we cannot forget that it is important to have a practical plan which calls upon all Canadians, including industries which produce emissions, and consumers, who are often forgotten in this debate.