Environment Committee on Dec. 5th, 2006

[John Godfrey, Liberal, Don Valley West, ON]

For clarity's purpose, I might just come back to Madame Gélinas.

Did you ever actually say that the Kyoto targets were unachievable?

[Johanne Gélinas]

That's not what I had said. I said that based on the pace and what was in place at the time we audited the federal government, I had some doubt that the government would have been able to achieve the Kyoto target, but with leadership and by addressing some key elements rapidly and urgently, it could have been possible. The jury is still out; we don't know.

[John Godfrey, Liberal, Don Valley West, ON]

Thank you very much.

I'd like to turn to Mr. Alvarez.

This is a question that Canadians would want to ask you, Mr. Alvarez. You are a representative of an industry that is experiencing record high prices and where I think increasingly we recognize that if there are costs attached with business—the whole concept of polluter pay—particularly in a time of high prices, industry should absorb those costs and should be part of a regulatory final emission system. Why is it that a company like Shell can suggest, for example, “Well, I don't think we can afford to do sequestration unless you give us a hand”, when they're making record high profits? I think most people would say it's only fair, if you're going to be making money, that you cover the costs of polluting the atmosphere.

[Pierre Alvarez]

Thanks very much, Mr. Godfrey.

Let me answer the question in two ways. As you well know, in the government of Mr. Chrétien, a plan that included targets for the oil and gas industry was put forward, on the basis of which we said we were prepared to proceed. When Mr. Martin was Prime Minister, and Mr. Dion was the Minister of the Environment, he put forward a plan that included targets for the large final emitters. We said we were prepared to proceed on the basis of that plan. We have said we are prepared to go, and we are waiting, and that's what I said in my presentation: show us the rules within certain parameters; we're ready to go.

I would add that there's something that goes beyond that in terms of where the money is being spent. The biggest biodiesel project in Canada is about to be started near Red Deer. The sponsor is Pioneer, which is a big refiner. The biggest wind generators in this country are TransAlta and Enbridge. The biggest user of solar power in this country is BP, the biggest sponsor of CO₂ projects, capture and storage, are oil and gas companies, and the biggest ethanol producer in Canada is Suncor. The money that these companies are making is being reinvested into the ground in terms of real live projects.

So I guess, Mr. Godfrey, what we're saying is that we don't agree with the architecture of the Kyoto agreement, but it certainly does not and has not stopped us from saying we're prepared to proceed on the basis of a set of rules, once government makes them.

[John Godfrey, Liberal, Don Valley West, ON]

I just have a question. What would be the proportion of money that your industry is looking forward to investing in the oil sands versus investing in wind, solar, and biodiesel? What would the proportion of those investments be? What sums of money are we talking about here?

[Pierre Alvarez]

I don't have the numbers.

Let me give you an example. The next biodiesel project near Red Deer will cost close to $500 million. Ethanol projects all cost multi-hundreds of millions of dollars, as do wind farms. Those are just the actual projects. That does not include anything for compliance under a large final emitter program, nor does it include R and D. I can get you those numbers if it would be helpful, Mr. Godfrey.

[The Chair, Conservative, Bob Mills]

Send those to the clerk, Mr. Alvarez, please.

[John Godfrey, Liberal, Don Valley West, ON]

What amount of money, what order of magnitude of money will be spent overall on the expansion of the oil sands over the next few years?

[Pierre Alvarez]

Chair, the industry broadly this year will be investing about $40 billion in capital. That's across the country. About a quarter of that, on an annual basis, is in the oil sands.

[The Chair, Conservative, Bob Mills]

Ms. Donnelly, I believe you wanted to get in.

[Aldyen Donnelly]

I just wanted to add an anecdote here, and this goes to Kyoto structure. According to their financial statements, over the last five years British Petroleum globally has spent $50.48 on the development of increased oil production capacity for every dollar it has spent on all alternatives, renewables, and natural gas production capacity. But under the Kyoto Protocol, under those rules, British Petroleum hits the market with a bag full of free quota. Every Canadian oil and gas producer spends proportionately more, and when Rick's numbers come, you will see. Every Canadian oil sands producer spends proportionately more of their new capital on the alternatives and renewables than BP does. In the Kyoto Protocol, every Canadian producer starts way below the table.

If the Kyoto Protocol were in full effect and functioning right now, Petrogas would not be asking Petro-Canada for an equity position in the Canadian LNG plant. The Canadian LNG plant would not be built unless Petrogas or BP deigned to come to Canada with their pocket of free quota. The Canadian numbers are great. Canadian politicians have to understand that.

[The Chair, Conservative, Bob Mills]

We'll go to Mr. Bigras, please.

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

Thank you, Mr. Chairman.

I'd like to welcome our witnesses. You may all have different views on this issue, but I do hope there is some convergence in terms of your all having the same concern regarding the need to address climate change and lower greenhouse gas emissions.

Mr. Guilbeault, you said, quite rightly, that in 1997 in Kyoto, the European Union was better prepared and better organized than Canada.

I would like you to give me an assessment of the options in terms of the preparation and the approach used in 1997—a territorial approach that focussed on setting reduction targets by territory and the whole mechanism and system of trading emissions credits.

In your opinion, if the federal government were to introduce regulations limiting greenhouse gas emissions by province, while at the same time allowing the provinces to take whatever measures they deemed necessary to meet their greenhouse gas reduction targets, would that be a viable option in terms of addressing climate change, while still ensuring some flexibility?

[Steven Guilbeault]

I think it might have been in 1997, or shortly after the Kyoto Protocol was adopted, but it would be difficult in 2006.

That said, I think the federal government could certainly implement a hybrid system, so that the provinces that want to could address this on a territorial basis. Certainly, a province like Quebec would be interested—there may also be others—in this kind of system.

If a cap on territorial emissions were put in place, I'm not sure that would go over very well in Alberta, politically. During the ten years that we wasted, we didn't even consider this. It might have been difficult, even in 1997 or 1998, but we didn't even go through the exercise. I guess we will never know. For some provinces, it is certainly a possibility. Some have made it abundantly clear that this is how they intend to proceed.

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

Thank you very much, Mr. Guilbeault.

My second question is addressed to Mr. Manson and deals with Ms. Gélinas' presentation and report.

Ms. Gélinas referred to lax standards with respect to reporting on spending, assessment of climate change measures, accountability and governance measures—in short, to a number of deficiencies.

When will the government clarify its responsibilities as part of the comprehensive processes that are intended to better assess climate change programs and policies in Canada?

[Alex Manson, Acting Director General, Domestic Climate Change Policy, Department of the Environment]

Mr. Chairman, I'm going to ask my colleague from the Treasury Board to answer that as well, because some of the points that Madame Gélinas was making in her speech were directed more to the Treasury Board than Environment Canada.

The government is developing its plan for addressing climate change and clean air right now. A notice of intent to regulate was issued a few weeks ago. In answer to the honourable member's question, we will be taking into account most of the recommendations that Madame Gélinas made in her report and addressing them as decisions are made on the measures. Once the plan is fully outlined, I presume a decision will be made on a date for reporting to Parliament and Canadians on progress under that plan. I think it will be presumptuous of me to suggest a date today. We need to wait until that is done.

Perhaps my colleague would have a few other points that he'd like to add.

[Roderick Raphael, Executive Director, Climate Change and Sustainable Development, Treasury Board Secretariat]

Thank you, Mr. Chair.

It's clear that the climate change file is a horizontal issue. Treasury Board Secretariat fully agrees with the report issued by Madame Gélinas, and we've worked on that report with Madame Gélinas through that process over the last year.

I would also say that climate change is not the only such file that we at the secretariat are dealing with as the central agency with respect to horizontal files.

The Auditor General released a report last year, and one of her chapters was generally on horizontal files. The secretariat is using that information as well as the information generated by Madame Gélinas's report to frame a more robust approach to horizontal file management across the government. For example, with respect to the issues raised by Madame Gélinas, it's clear that new and different approaches to horizontal management and governance are going to be required on this and maybe some other horizontal files, but those governance approaches must respect accountabilities of the departments and the senior officials and ministers in departments.

We're working through that this year right now with Environment Canada and others on the climate change file, as was mentioned, to respect the roles and responsibilities of departments and to increase accountability. It is also to focus on results and to see, when we approve programs such as the climate change programs that are going to be coming before the board, that there is a focus on the ongoing cycle and results within that cycle, as well as on reporting.

We did do a review last year at the secretariat, as Madame Gélinas has mentioned. It was the budget 2005 review of existing climate change programs. The secretariat did the first phase of that review, which was to look at the performance of over 106 climate change programs. Other phases to the review, as Madame Gélinas noted, were led by other central agencies, but in terms of the performance review--

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

I understand, Mr. Raphael. You could probably spend 10 minutes talking about that. I see that you have accepted Ms. Gélinas' report and are undertaking to respond favourably to it. But when will you clarify everyone's roles and who will be responsible for this? I know you did a program evaluation, and we all read your evaluation, but do you have a work plan that will one day tell us who will be responsible for evaluating theses processes?

[The Chair, Conservative, Bob Mills]

Mr. Bigras, Ms. Gélinas wants to get in as well. Then we'll go back to Mr. Raphael.

[Johanne Gélinas]

Mr. Chairman, it's important to make a distinction between two different things. We often talk about an action plan on climate change that the government is currently developing, but there is also what is called the machinery of government, which has nothing to do with that plan. Knowing exactly what system will be put in place to account for progress and costs has nothing to do with a plan.

Mr. Bigras has raised the same question we have been raising: what are the results? And let's be clear: although my report was tabled in late September, people in the departments were aware of the recommendations long before that. So they could have started to address these issues.

Mr. Bigras also talked about governance. This is something the Treasury Board has left up in the air for months now. In conducting our own work, we were incapable of finding out when the government would present a governance structure defining roles and responsibilities.

So, the plan is one thing, and the internal departmental mechanism that will allow us to know, in a year or two, how much money has been spent and what the results are, is quite another. That mechanism is not yet in place and has nothing to do with the plan itself.

[The Chair, Conservative, Bob Mills]

Go ahead, Mr. Raphael.

[Roderick Raphael]

Thank you, Mr. Chair.

To respond directly to Mr. Bigras' question, and as Madame Gélinas has mentioned, we are working on this in the response to the report issued in September. We do not have a fixed date that we can divulge today to the chair and to the committee with respect to responding.

[The Chair, Conservative, Bob Mills]

Mr. Bigras, your time is up. I think that's something, though, that we would as a committee really like to know. When you do come up with that date and that plan, I'm sure all members of the committee would like to hear about it. Thank you very much.

Mr. Cullen, please.

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

Thank you, Mr. Chair.

This past weekend I got to sit on a television panel with a former and present minister of the same department. When the cameras were turned off, the former minister turned to the present one and said, “Beware the power of the bureaucracy. They will tell you certain things and not others; they will do certain things.” This is casting no aspersions on present company, but Canadians might be forgiven for lamenting our progress on this one issue, the ability to account for moneys spent. Business can be forgiven frustrations for not having clarity of purpose, when we can't account for what it is we wish to do and who is actually running the show.

Just to clarify, Madame Gélinas, I'm trying first to understand, under previous regimes how much money was announced, versus actually spent, for climate change initiatives. Can you remind the committee?

[Johanne Gélinas]

As of 2005, it was $6.3 billion that had been announced. In terms of spending, at the end of the 2003-04 fiscal year $1.6 billion had been spent.