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.