Environment Committee on Dec. 5th, 2006

[The Chair, Conservative, Bob Mills]

If we could begin, I would ask Mr. Rodriguez to deal with the first item. I believe we decided yesterday we would have clause-by-clause of Bill C-288 on Thursday and then we would go on to CEPA on Monday, Tuesday, and Thursday of next week and try to complete it in that period.

Mr. Rodriguez, do you want to say a word about that?

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

Thank you, Mr. Chairman.

The motion was simply intended to clarify things. I can withdraw it, but I want to be sure—because I wasn't there yesterday—that the Committee has decided that clause-by-clause consideration will proceed on the 7th and be completed the same day.

[The Chair, Conservative, Bob Mills]

That's correct.

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

Then I can withdraw my motion, given that the Committee agrees that clause-by-clause consideration will be completed by the 7th.

[The Chair, Conservative, Bob Mills]

Yes, it hasn't been moved, so you can simply withdraw it, if that's fine with you.

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

But if I understood correctly, the Committee will have completed clause-by-clause consideration on the 7th. So, I am withdrawing my motion.

[The Chair, Conservative, Bob Mills]

That's correct.

Mr. Bigras.

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

Thank you, Mr. Chairman.

When should we table our amendments to Bill C-288?

[The Chair, Conservative, Bob Mills]

As soon as you can get them here, so they can be dealt with on Thursday.

Are there any other comments?

I'd like to welcome our guests. As you all know, we have 10 minutes slotted for each one of you. Then we'll go to our members, the first round being 10 minutes, and the second round being five minutes. I'd ask you to try to keep within your time as much as possible. I have a little grey box that tells me exactly how long you have, so if you need a signal, just ask.

We'll begin. I'd like to welcome, on our video camera, Pierre Alvarez and Rick Hyndman.

Perhaps we could begin, please, with Ms. Johanne Gélinas, environment commissioner.

[Johanne Gélinas, Commissioner of the Environment and Sustainable Development, Office of the Auditor General of Canada]

Thank you very much.

Good morning, Mr. Chairman.

Good morning, Committee members.

I want to thank you, once again, for inviting us to appear before the Committee. This time, I would like to discuss the issue of accountability and climate change.

I am accompanied today by Neil Maxwell, whom you now know well, and my other colleagues here are available to answer some of your questions as well.

As you know, all five chapters in our September 2006 report addressed climate change. I have outlined many of our findings at previous hearings, including the need for the government to develop and implement a clear, realistic, and comprehensive action plan that addresses both greenhouse gas mitigation and adaptation to climate change. But I am here today to talk about one critical issue: ensuring good governance and accountability on climate change.

Planning, management and performance go hand in hand. A good plan is important, but so is taking action and achieving results. Good governance and accountability are essential to the proper functioning of government. These mechanisms must operate properly to ensure that policies and programs are translated into results for Canadians. Through our audit of federal performance on climate change, we found that the government has built a foundation for future action but that there are serious deficiencies in the mechanisms required to put these ideas into action.

With an issue as complex as climate change, ensuring that theses mechanisms operate properly is particularly challenging and important. Climate change is a horizontal issue—that is, one whose management cuts across multiple departments, mandates, and jurisdictions. No single department, agency, or government has all the levers, resources, and expertise to manage this issue adequately. Our audits show that the government's response to climate change needs to pay more attention to several key areas.

First, clear roles, responsibilities, and authorities need to be established for all federal departments and agencies. The roles of key departments have shifted over time. While we have been told that Environment Canada is currently the lead on climate change, what this means in practice is not entirely clear.

For example, Natural Resources Canada is responsible for most large-budget climate change programs, but Environment Canada does not have authority over the activities of NRCan or of any other department and cannot compel others to act. This means that Environment Canada's policy lead will not necessarily translate into leadership at the operational level unless mechanisms are developed to ensure coordination across government.

In addition, the transition of responsibility for climate change among federal departments has not always been well managed. This has been an obstacle to progress.

For example, our audit found that the design and implementation of the large final emitter system was hampered by shifting responsibilities, by the turnover of key personnel, and by changes made from plan to plan. Similarly, we found that Environment Canada and Natural Resources Canada have made limited progress in developing a federal adaptation strategy. Neither department was assigned the lead role, and each had a different interpretation of its responsibilities.

Broadly speaking, the current transition between ongoing climate change programs and new approaches being considered by the current government also needs to be managed so that there is strong governance and accountability. There is a clear need for the government to design and put in place mechanisms to coordinate climate change activities across federal departments and agencies.

In 2001, in chapter 6, “Climate Change and Energy Efficiency”, we noted that the federal government had made some progress in developing a coordination mechanism. The Climate Change Secretariat provided a forum for interdepartmental coordination and integration, as well as for coordination with provinces and stakeholders on a national strategy. The secretariat prepared reports to Parliament on federal climate change activities and their results. Despite filling this critical gap, the secretariat was phased out in 2004 and has not been replaced.

Tracking expenditures and performances against agreed-upon targets and reporting this information to Parliament and Canadians are actions critical to ensuring results. This requires that the federal government assign responsibilities for monitoring on an ongoing basis the performance of all policies and programs. Our audit of energy production and consumption found that for the three programs, each worth over $100 million, performance targets were unclear. We also found that information on performance and expenditures was not being reported consistently.

Program-level performance evaluation must also be used to support monitoring and reporting against broader objectives. The federal government has made some progress in this area. By October 2005, the Treasury Board Secretariat had completed a comprehensive review of climate change programs to assess the relative success of existing programs and to develop options for the allocation of resources. This review was also supposed to initiate an ongoing cycle of performance assessment and expenditure review. The anticipated result was to have fewer climate change programs, but more information on their performance. The committee may want to ask Treasury Board Secretariat what progress has been made in putting into place an ongoing performance assessment and review process.

The large number of departments and agencies involved in climate change activities increases the complexity, and the importance, of effective performance management. However, our audit found that the framework for climate change performance management had not yet been completed. This framework should define performance expectations for climate change policies and programs, as well as indicators against which to measure progress. The Treasury Board Secretariat indicated that it intended to update the performance management framework during the 2006-2007 fiscal year, but that the framework cannot be implemented until the federal government finalizes its roles and responsibilities. The Committee may want to ask the agency for an update on the status of the performance management framework.

We found that the government also needs to improve its tracking of expenditures. The Treasury Board Secretariat is developing an electronic system to capture financial information on climate change programs. But, at the time of our audit, the information contained in the system was neither current nor verified. Until this system is improved, it cannot be considered adequate for management and reporting. The Committee may want to ask the Treasury Board Secretariat if the update of financial data, which it indicated was planned for the summer of 2006, has in fact been carried out. The Committee may also want to ask when they can expect a more robust and comprehensive reporting system to be put in place.

Tracking must be complemented by improved reporting to Parliament and the public. Reporting must be comprehensive so that spending and results can be fully scrutinized. Although the Treasury Board Secretariat reported summary information on expenditures in response to a parliamentarian's question in 2005, there has been no comprehensive report on climate change spending and results since 2003.

In its 2005 plan, the government committed to reporting on climate change annually, starting in 2008. The committee may want to ask Environment Canada for an update on when Parliament and Canadians can expect the next comprehensive report. The committee could also play an important role in identifying the information that Parliament requires for its assessment of federal performance on climate change.

Central agencies need to play a key role. Our audit found that considerable work remains to complete, update, and maintain the system that monitors and reports on climate change spending and performance. Although the Treasury Board Secretariat has undertaken initiatives in these areas, the central agencies have yet to assign final responsibility for these processes. To ensure authority for action, the central agencies will need to be involved in the development, implementation, and funding of critical interdepartmental coordination mechanisms.

In my 2006 report, I recommended that Environment Canada, the Treasury Board, and the Privy Council Office work together to develop the governance and accountability mechanism discussed here today. The government agreed with this recommendation but has yet to specify how it will be considered in its new climate change approach and to inform Parliament and Canadians to that effect. In short, while the government works to finalize its climate change approach, it is also urgent and essential that it work to put in place the mechanisms that will allow for the effective implementation of both ongoing climate change programs and new policies and plans.

Mr. Chair, this concludes my opening statement. I will be pleased to answer any of your questions. Thank you.

[The Chair, Conservative, Bob Mills]

Thank you very much, Ms. Gélinas.

I'd like to note to the members that we do have someone from the Treasury Board here, Mr. Raphael, so you might want to direct some of those questions to him, and also, of course, to Mr. Manson from Environment Canada.

If we could go on, it's now your turn, Mr. Alvarez and Mr. Hyndman.

[Pierre Alvarez, President, Canadian Association of Petroleum Producers]

Thank you very much, Mr. Chairman.

We greatly appreciate the efforts of the clerk to accommodate us on the schedule. Considering the subject of today's committee hearing, the fact that we're doing this by video conference, I think, is appropriate.

CAPP is the industry association representing about 150 companies and 98% of the production here in Canada from the east coast to the north. I am the president of the association, and with me today is Rick Hyndman, senior policy adviser, who has been involved in this climate change file since the beginning.

Bill C-288 is about the relationship between Canada's near-term action on greenhouse gas emissions and the country's Kyoto target. In essence, should Canada's Kyoto target be the guiding star for our initial GHG policy step? We think not. Looking at what the world and Canada have to do to make significant reductions in GHG emissions over the next half-century leads to the conclusion that focusing on Canada's Kyoto target would be a mistake. It would continue to divert the country from getting on with what needs to be done to arguing over who is going to pay for foreign credits.

The short note we sent you yesterday takes us through some of the questions in that regard, and I will address a few of them in short form today.

First, what should Canada be doing about GHG emissions from now to 2050? The concept of emission reduction wedges is now familiar to almost everyone debating near-term GHG policies and is being explored by the National Round Table on the Environment and the Economy as a framework for action in this country. The wedge concept emphasizes the need to begin action in several key areas, areas that can stabilize global emissions through major reductions in the developed world and slow growth in emissions in industrialized countries with rapidly rising energy demands. These areas include energy efficiency and conservation throughout the economy; carbon dioxide capture and storage; in this country, coal-fired electricity, oil sands production and upgrading, and some chemical production; renewable electricity and fuels; nuclear power; fuel switching and cogeneration; and forest and agricultural sinks.

The value of the wedge pictures of what can be accomplished by 2050 is the focus it brings to assessing actual actions and the policies required to make them happen. Policies now, initial actions now, investing in technology development now--but recognizing that results will take time.

Two, how can we get going? As was just indicated by the commissioner, we need to identify, analyze, and compare costs in deciding on actions and then pursue them. We need to move ahead where and when ready, and we need to take acceptable, affordable initial steps, get going, build on success, and increase our effort over time with other countries.

Three, what should the policies be for an initial step? To begin with, the federal government and the provinces need to work together in designing policies and programs for emissions across the country. Some of these are ready, or almost ready, and others will take some time.

One area where considerable work has been done and is ready for decision and implementation is the GHG intensity target system for large energy-intensive industrial sectors. The work on the target system over the past four years has been guided by principles that are extremely important to us and to many other sectors. These principles include the intensity approach to avoid penalizing economic growth; equivalent treatment across sectors; defined limits on the cost of compliance to address uncertainty and competitiveness; adjustment for increases in GHG intensity driven by compliance with new environmental regulations; phase-in of targets for new facilities; promotion of R and D through a compliance option, such as a technology fund; and efficient, harmonized federal-provincial implementation.

As billions of dollars have been invested and committed on the basis of these principles, they are very important to industry and the investment community. We are hopeful that the current consultation process dealing with completing the design of intensity targets will be successful and that we can move on to implementation early in 2007.

Four, how would properly designed intensity targets advance action on one or more of the wedges? Targets create ongoing pressure on existing facilities across all large energy-intensive industry sectors to improve GHG performance. The defined price compliance option provides for increased investment and advanced technology, again through a technology fund, and step changes can be incorporated into new facilities as they are brought on.

Complementary strategies are needed for key technologies to deliver significant improvements over the medium to long term. A notable example is CCS, carbon dioxide capture and storage. The federal government needs to work with the provincial governments involved in CCS and industry to agree on a strategy and to move forward in this regard.

Five, would committing to implement the Kyoto target in Canada help us contribute to the international effort? The 2050 wedges perspective focuses on required actions. The Kyoto targets focused the world on allocating near-term quantitative national emission targets. Canada's target focused this country on allocating the burden of paying for foreign credits to cover the country's Kyoto gap.

Kyoto targets are all about dividing up a pie. To stretch the analogy, the wedges perspective is about figuring out how to make the pie. The U.S. energy information agency's most recent projection on global emissions by region indicates that, in aggregate, the emissions by countries with Kyoto targets will be below their 1990 levels and close to their aggregate of targets. However, one of the problems with the Kyoto approach is the distribution of those targets. Canada has a target that is over 30% below its trend in emissions in 2010. It would make no sense for Canada to devote billions of dollars to buy credits to reach an artificial target when we need the resources to get us going on the right path for the longer term.

As we've seen by recent international events, the current Kyoto structure has no future. There is growing international recognition of the need to find ways to cooperate on actions that will produce results over time. Another round of debates over how emissions rights should be allocated internationally is a waste of time. It will not succeed. Committing to implement policies to achieve Canada's Kyoto target would set this country back another five years. Remember, we've been at this for a long time now. This country needs to take an initial step in the right direction and get going.

That concludes my remarks, Mr. Chairman. I'd be pleased to take questions later.

[The Chair, Conservative, Bob Mills]

Thank you very much, Mr. Alvarez.

We will go on to our next witness, Ms. Donnelly.

[Aldyen Donnelly, President, Greenhouse Emissions Management Consortium]

Thank you for having me. I'll try to be quick.

I'd like to point the committee in a different direction than prior witnesses have. I've enjoyed reading the blues, and for a change, I've decided not to cover ground that others have covered before me.

For a bit of background, GEMCo is a not-for-profit consortium of Canadian large emitters. The large emitters join GEMCo to share in the process of learning how to trade carbon credits, how to manage their inventories, and how to develop business strategies to accommodate a carbon-constrained future. GEMCo has existed since 1995. A typical Canadian company belongs to GEMCo for three or four years and then moves on. At any point in time, GEMCo companies are competitors. They don't like each other very much. They share in the cost of learning. As soon as they feel they've reached a certain threshold, the last thing they want to do is talk to each other about how they're going to approach the carbon market competitively.

Together, GEMCo and its members have fought carbon credits and greenhouse gas credits speculatively in the carbon market since 1995. Our market activity is much reduced now compared to years past. But because of our historical activity, I'm still the largest carbon credit buyer in Canada and the third largest in the world.

Having said that, it tells you more about how little real market activity is happening than about how large an influence I am in the market. To put our current level of activity together this year, which has been a slow year, by the end of the year, we and our members will have firmly contracted to acquire 350,000 tonnes of future greenhouse gas reductions from Canadian landfill gas operators, and we will have optioned another 350,000 tonnes. And this will be our smallest year for commercial activity.

The principal goal of our commercial work is not to scoop the market, but to learn how the market should work, and will work, before we're stuck in it. You'll find that we have recommendations or ideas that are fundamentally different from what you may hear from many others. I think the difference between our recommendations or views and others is based on our commercial experience.

I have two other points. I put together the very first agriculture biological sequestration credit trade in the world in 1998. Prior to our putting together that transaction, which committed us to buy 2.8 million tonnes of carbon credits from 137 farmers, Canada's position was opposed to recognizing soil carbon gains. Our sole purpose in doing that one transaction was to prove that you should change your position. In 2001, I put together the first ever CO₂ injection enhanced oil recovery carbon credit trade. It's not about to be done. We did a 700,000-tonne deal in 2002, where we are financing a CO₂ injection project in the Texas panhandle.

Based on those experiences, I guess my punchline is--and I should say that my views don't necessarily represent my members or speak for all of industry; I've already described our group as diverse--if this Parliament passes Bill C-288, you're sending a strong signal to industry that you still don't know where you're going. It's pretty reasonable to predict that if you pass Bill C-288, the civil service and the politicians will be thrown into a six-month tizzy of writing reports--on the one side why, and on another side why not, you can achieve the Kyoto targets. That adds six months to a schedule that we're already behind on--at least six months.

The question I would ask you to ask yourselves is what you need to move forward. We're revisiting an old topic.

What we've handed out is a two-pager, in two languages, that has my key messages. I apologize to those of you who are French speaking. At the last minute, I also decided to hand out the speaking notes I made for myself, because I have tables and data in my speaking notes that you might find useful.

The bottom line is that when you look at the speaking notes, you'll see that in the international market, before accounting for Russian hot air, the Kyoto Protocol created a massively oversupplied quota market. At the end of 2004, the global greenhouse gas quota supply, created under the Kyoto Protocol, exceeds the maximum physical capacity of the countries covered by the emissions quota supply by 1.7 billion tonnes.

To go at this number in a different way, assuming that Canada has to enter the international market to buy 1 billion tonnes to meet our Kyoto commitment, after we withdraw the required billion tonnes from the Kyoto market, there's still 1.75 billion extra quota units out there. As well if the CDM/JI board keeps approving projects at its current rate, another billion tonnes of excess quota units will added to the market.

To use up all of the Kyoto limit, every nation in the world would have to increase its greenhouse gas emissions at a rate of 4.5% per year from now on. In other words, there's no cap; it's a false market, and we don't know why Canada wants to participate in this market.

The Kyoto Protocol is a trade agreement; it is not an environmental agreement. The Montreal Protocol is a fine example of a very effective environmental agreement. I was surprised to see that witnesses before me actually described the Montreal Protocol and Kyoto Protocol as parallel. They couldn't be more different. If you want to know what an effective international greenhouse gas treaty looks like, it looks like the Montreal Protocol, and it doesn't look anything like the Kyoto Protocol.

So my view is that from today on, our Parliament has to step back and say, what do we do next? We have two options. One is to re-enter the Kyoto process, recognizing the serious implications of Kyoto as a trade agreement, as a trade treaty—as an unprecedented historical attempt to create a new global quota regime that fundamentally changes how national economies work. Or we can walk out of Kyoto and be the country that steps back on the international scene and tells the world what the Montreal Protocol for greenhouse gases looks like.

In previous hearings, I heard one member of Parliament ask at least twice why Canada thinks we could influence anybody in this regard, since we're so small. Read my lips: if we walk out of the fake Kyoto market, it crashes. It's in oversupply. There are only three buyers, if you take the European Union as a bloc. Everybody is in oversupply except Japan, New Zealand, and Canada. We walk; we call the shots. Don't lose this opportunity.

When you go through my speaking notes, you'll see that domestically, if we were going to walk, the first thing to do is to sit down to seriously develop and reach consensus on a greenhouse gas budget for Canada that applies to the years 2008 through 2050—not 2008 through 2012, not 2050, but 2008 through 2050, which I must admit I read as the intention in the recently tabled notice to regulate. I understand that others don't read this notice as having that intention.

In my document, you'll see that I'm trying to encourage you to think of our getting into a process in Canada where we agree to a budget. We don't think of that budget as 500 million tonnes or 700 million tonnes a year. It's 19 billion tonnes of Canadian right to discharge into the environment from 2008 to 2050, or 23 billion tonnes, or 26 billion tonnes. It's a budget for a long period.

You liberate yourself when you think that way, because when you step back for any budget over such a period, you can create a whole series of targets and timetables that don't exceed the budget. You can also put costs on, because 23 billion tonnes between 2008 and 2050 has the same impact on the upper atmosphere, whether you discharge a bunch of it in the first or the last part of the period, as long as you don't go over. Because every time you put CO₂ up, it stays up there for 150 years. You're not making a significant difference in timing.

So the question is, what's our firm long-term budget? Then given our firm long-term budget, given our economy and the sectors, now taking exactly Pierre's advice, what is the most effective set of targets and timetables, starting with firm, binding targets in 2015 at the latest and ratcheting down every five years to 2050? How do we get to that budget?

I want to step back, and I'll stop here, but one person asked me to tell you what I thought keeping the Kyoto commitment would cost. My position is that we can comply with Kyoto, and to estimate what it would cost, let's assume Canada accepts a very stringent 2008 through 2050 emissions budget. Let's assume that budget we've accepted equates to a straight line from 2008--actual emission levels down to 80% below 1990 levels in 2050. That equates to a budget for Canada of 19-plus billion tonnes over those years. I modelled the least-cost Canadian path toward living with that budget and then I modelled what living with that budget and complying with the Kyoto target and timetable would cost.

So I am suggesting that the differential between those two costs is the cost of that one compliance obligation, the Kyoto Protocol. My estimate is that that cost is a minimum of $26 billion, and it can reach $38 billion. All you buy for that increment is perceived reputational gain.

Our reputation is in tatters because we didn't recognize that Kyoto is a trade agreement and not an environment agreement. We can recover our reputation by returning the world to a Montreal Protocol type of approach to greenhouse gases.

[The Chair, Conservative, Bob Mills]

Thank you very much, Ms. Donnelly.

Mr. Guilbeault.

[Steven Guilbeault, Campaigner, Climate and Energy, Greenpeace Canada]

Thank you, Mr. Chairman.

First of all, I would like to thank you for inviting me. I want to apologize to the interpreters. My decision to appear today was made quite late, and thus I was unable to prepare written notes for the interpreters. I will try not to speak too quickly.

I have four points. First, on the international scene—I know you discussed this last week—I have had the privilege over the last ten years of following international negotiations on climate change. I attended the first Conference of the Parties in Berlin in 1995. I was also in Kyoto. I have taken part in more than a dozen such conferences in the last decade.

I was also in Nairobi. The international repercussions of the Canadian government's policy shift as regards our Kyoto commitments are extremely significant. For example, since the month of May, the Canadian position has been publicly criticized by a number of officials on the international scene: by the European Union's Environment Commissioner, Mr. Dimas; by the German Environment Minister, Mr. Sigmar Gabriel; by the President of France, Jacques Chirac and by the French Minister of the Environment, Ms. Olin, during the Nairobi conference.

The headline in the editorial of Le Devoir newspaper, following Ms. Ambrose's speech during the United Nations Plenary Session, read as follows: “Ambrose is a disgrace”. Le Devoir also published a column, that same day, by Michel David, a political columnist in Quebec, who said that it was clear that Ms. Ambrose lies as easily as she breathes.

What is emerging ever more clearly is that foreign delegates who come to see us really don't understand what is going on. In fact, Mr. Dimas, the European Commissioner for the Environment, summed it up rather eloquently in one of his statements, when he said that he doesn't understand the Canadian position on the Kyoto Protocol and that someone will have to explain it to him. People come to see us, saying what happened to Canada — Canada led the battle with respect to the ozone layer and signed the Montreal Protocol which Ms. Donnelly referred to earlier. They are wondering what happened to the Canada that led the charge on landmines, and where is the Canada which, for all intents and purposes, created the concept of peacekeeping forces.

Our international reputation is suffering tremendously as a result of this about-face. I totally disagree with Mr. Alvarez, who says that recent events demonstrate that the Kyoto Protocol has no future. Unless I am mistaken, there are some 168 countries who, once again, agreed in Nairobi to continue to move forward with international negotiations on climate change. Those 168 countries ratified the Kyoto Protocol. Is it complex to negotiate an international agreement with almost 170 countries around the table? Of course it is, and we have been doing that for more than a decade now.

Indeed, of all the countries that have made Kyoto commitments, commitments to reduce their greenhouse gas emissions—in other words, all the Appendix I countries—the only one to have turned its back on Kyoto is Canada. And yet, whether it was in Bonn or Nairobi, I heard the Japanese Ambassador, Mr. Nishimura, saying that it would be very difficult for Japan to meet its Kyoto targets, but in spite of that, it remained committed. I heard Norvegian representatives—like Canada, Norway is a major energy exporter—say that it would be very difficult for them to meet their Kyoto targets, but that they, too, were committed to meeting them.

And, for us, Bill C-288 is very important, because it brings Canada back on track to meeting its Kyoto targets and, of course, moving into the future, given that Kyoto is only the beginning of the solution. I believe that the report issued by the Briton Nicholas Stern made it quite clear what the cost debate revolves around. Mr. Stern basically told us that we can show leadership and invest now to combat climate change, or that we can bury our heads in the sand and pay dearly for our inaction later on. I believe that Mr. Stern's study pretty aptly summarizes, in economic terms, what decision we have to make now.

On the more specific question of the provincial commitment, I was absolutely astounded to hear the Minister of the Environment say that the federal government would not support the Quebec plan to implement the Kyoto Protocol, because it focused on voluntary actions. I guess she must not have read the same action plan on climate change that I did. In fact, under Bill 52, tabled in the National Assembly three weeks ago, the Quebec plan that I read about provides for the creation of hydrocarbon charge of $200 million a year that will be used to finance public transit projects and projects aimed at reducing greenhouse gas emissions.

Strangely enough, that is quite a contrast with what we heard this morning, particularly from our colleagues from the oil companies, since the CEO of Ultramar has publicly expressed his support for the Quebec plan to implement the Kyoto Protocol—a plan that imposes a partial levy of $200 million on its own industry. It is clear that this levy is anything but voluntary. Some statutes will have to be amended in order to implement that regulation.

Between now and 2008, the Quebec Building Code will be amended to improve the energy efficiency of all new construction in Quebec. There is nothing voluntary about that. As well, between now and 2010, we will be imposing new emission standards for light vehicles, taking our inspiration from the standards in place in California. Once again, there is nothing voluntary about any of this.

The only part of the Quebec Plan that relies on voluntary actions is, of course, the part relating to the large emitters. However, in Quebec—and this is not the case for all Canadian provinces—the problem with increased greenhouse gas emissions is not attributable to large emitters but, rather, to the transportation sector—something the Quebec plan directly tackles through funding projects for new infrastructure or improvements to existing service.

Indeed, an inventory review in Quebec shows that large emitters there have brought their greenhouse gas emissions down 7 per cent below 1990 levels. These are 2003 data, because we don't yet have 2004 data for Quebec. So, that is really not the sector the Quebec plan should be focussing on.

Quebec is the only province to have developed an action plan which, although it does not quite meet Kyoto targets, comes very close. Thanks to that plan, Quebec will move from about +8% to -1%, and the Quebec government is asking Ottawa for help to bridge the gap between the -1% and -6% called for in the Kyoto Protocol.

What kind of message are we sending that province by saying that its action plan doesn't meet the criteria and that we won't help it financially to meet its targets under the Kyoto Protocol? In fact, we don't even know what the government's criteria are.

In terms of federal-provincial relations, if the goal is to develop partnerships—we talked earlier about the importance of working with the provinces—it seems to me this is an odd way to encourage the provinces and territories, and even the municipalities, to take steps to lower greenhouse gas emissions.

I would also like to talk about emissions trading, the carbon market, and flexibility mechanisms. I fully agree with those who say that the Kyoto Protocol is not an environmental agreement.

It is rather ironic to hear several organizations now denouncing the market-based mechanisms contained in the Kyoto Protocol, when they were the ones promoting them when the debate was taking place on developing the Protocol. People who have been following the debate for some time will remember that the discussion focussed on two possible avenues: the adoption of joint measures by all Schedule I countries to implement the Kyoto Protocol, or the establishment of market-based mechanisms.

European countries, in particular, were promoting what were called joint measures. They were proposing the introduction of a carbon tax which would be the same for all countries. Many organizations who appeared before this Committee at the time said that such a tax should not be introduced and that we should instead be moving towards market mechanisms. But now, these same organizations are saying that market-based mechanisms don't work and should be abandoned. There is a certain historical irony in all of that.

I am not a scientist; my background is in the social sciences. However, the scientists I have talked to say that is wrong to claim that the actual time when greenhouse gas emissions are lowered in the coming years—or in the coming decades—doesn't matter. In fact, the fourth report of the Intergovernmental Panel on Climate Change, that will be released next year, will probably contain a lot of information on that. That is also what the Stern report says and what several other reports will say that are to be released in the coming months and years.

The longer we wait, the more we prejudice our ability to act on the global climate system, simply because at this point, we really don't know much about how sensitive our climate is to increased temperatures.

Let me explain. If our climate only reacts to significant temperature increases, then the temperature can rise without causing problems in terms of the global climate system. The system can withstand them.

On other hand, if the climate system is very sensitive to small variations in temperature, the longer we wait to lower greenhouse gas emissions, the more significant the impacts for our global climate system.

It is completely wrong to claim—there is no scientific basis for such a claim—that the moment in time when we reduce greenhouse gas emissions is unimportant. I haven't seen a single study that supports such a claim.

In cooperation with the Quebec Minister of the Environment, Mr. Claude Béchard, representatives of the financial sector, such as Desjardins, the Sustainable Development Investment Fund, Quebec unions, environmental groups, and industry stakeholders, I recently had the opportunity to launch a coalition in support of the Kyoto Protocol to try and force the federal government's hand.

When the coalition was launched, the Vice-President of Cascades, a well-know pulp and paper company in Canada, was in attendance to say how important it is to that company that it reduce its greenhouse gas emissions. He said that this year, his company will reduce greenhouse gas emissions by 3 or 4% inside its own operations, and that this represents a $12-million saving on its energy bill. He added that the pulp and paper industry really needs that money right now.

[The Chair, Conservative, Bob Mills]

I would ask you to wrap it up.

[Steven Guilbeault]

I will close with that example, Mr. Chairman. Thank you.

[The Chair, Conservative, Bob Mills]

Mr. Guilbeault, coming from Alberta, I know they've had a climate change plan in place for at least three to four years. You indicated that only Quebec had one.

[Steven Guilbeault]

I was referring to the most ambitious plan. Perhaps I didn't make myself clear.

They have the most ambitious greenhouse gas reduction plan.

[The Chair, Conservative, Bob Mills]

Okay. Thank you.

Mr. Godfrey, please.

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

Thanks to all of the witnesses.

It's certainly been a morning rich in presentations and in contradictions, and I suspect we're going to be exploring those contradictions over the course of the morning.

I'm looking forward to hearing Mr. Guilbeault talk in more detail, in response to Ms. Donnelly and Mr. Alvarez, but I'd like to begin with the commissioner.

I very much appreciated your presentation. In a sense, I think we had this conversation when you initially released your report for 2006 on climate change.

If I may return to Bill C-288, the whole point of this bill is to actually increase accountability and, in the spirit of your suggestions, to attempt to better define roles, responsibilities, and authorities so as to understand the performance of policies and programs and to monitor and report broader objectives. The language is picked up in regard to our obligations under the Kyoto agreement.

I know the Auditor General had some issues concerning the role that was proposed for your office under the legislation. I think we will be taking it into account in our amendments, which will suggest that some of the things we originally thought you might do might instead be done by the National Round Table on the Economy and the Environment and, I hope, would meet the objections.

I'd like to begin in terms of this bill, which recognizes that we have signed the Kyoto agreement and we've been trying to do our best. We need a plan and we need to understand what is expected from each element in terms of greenhouse gas reductions and how we're doing each year.

Does this bill go in a direction that helps to answer some of the suggestions you've made both in your report and in your remarks today?

[Johanne Gélinas]

As you know, I don't comment on those kinds of documents. But obviously, as I read the bill, I have to say yes, it goes in that direction with respect to good governance and accountability.

I will add, though, that whatever the new regulations are, whether we go with CEPA or with something else, as long as we don't have a good governance system internally within the federal government, you will never know and Canadians will never know what is happening. We have to work on that at the same time as parliamentarians are trying to find the best way or the best tools to make sure we comply with our Kyoto agreement. These two things can be done in parallel.

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

It's that we're just understanding everybody's appropriate role here. It's the role of the executive, the government, to respond to the kinds of governance issues that you talk about in terms of coordinating and making sure the departments know what they have to do. It's our role as parliamentarians, working with you, to help monitor how that's going. I think I'm quoting you correctly from your report, where you say, well, if you have a problem with this target, tell me your new target, don't just abandon the idea of targets. That would, I assume, apply to the short term as well as the medium term.

I'd like to turn now to Monsieur Guilbeault.

I would be interested in your reactions, first of all, to Mr. Alvarez's presentation in terms of his alternative ideas about moving forward. Would you give us your reaction?

[Steven Guilbeault]

Yes, I would. I think one important thing in life is to recognize one's own limitations. So on more specific questions regarding, for example, emissions trading, I would gladly pass the microphone--and I think it's been agreed upon--to my colleague Matthew Bramley from the Pembina Institute.

Obviously, Canada went into Kyoto not as well prepared as a number of other countries were. For example, when they walked into the meeting halls of Kyoto in 1997, the European Union already knew pretty much how the allocation system was going to happen amongst the member states. Everything was not finalized. For example, at the time, the attitude of the European Union was that they would probably not use emissions trading. They ended up changing their minds on this.

The fact that we were not as prepared as we should have been doesn't mean we should abandon—I think it's really easy for some in Canada to say that the Kyoto Protocol targets are unachievable, when we haven't even tried. In 2005 we had a plan that was put on the table. In her report, Madame Gélinas said there were some strengths and some weaknesses. I've heard a number of ministers and representatives from the government say that Madame Gélinas said in her report that the Kyoto Protocol was unachievable. I fail to read that in her report, but maybe she would like to clarify that.

Then, for the government to come in and abolish a number of the programs that would have enabled us, if not to achieve our Kyoto targets, certainly to come closer to them, I don't think it is the right attitude. We need to try. We have an international commitment, a legally binding commitment, I should point out, to achieve our Kyoto targets. Bill C-288 is what we need to get on with the program.