Environment Committee on Dec. 11th, 2006

[The Chair, Conservative, Bob Mills]

I call the meeting to order.

Of course, as you all know, we have the Minister of the Environment here. We would like to welcome the minister, and of course we remind all members that we do have a CEPA meeting this afternoon from 3:30 to 5:30 p.m.

Minister, would you like to begin? I believe you have a presentation, and then we'll go to our round of questions with the members.

[Rona Ambrose, Conservative, Minister of the Environment]

Sounds good. Thank you, Mr. Chair.

Thank you for inviting me back. As you all know, I'm here to respond directly to a motion that was tabled by the honourable Nathan Cullen.

[The Chair, Conservative, Bob Mills]

Order, please.

I would ask that the cameras be turned off, please, gentlemen, before the minister begins.

Now we can begin.

Minister Ambrose.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Thank you, Mr. Chair.

I'm pleased to be here, and I'm looking forward to sharing a constructive dialogue, both here and also in our new legislative committee dealing with Canada's Clean Air Act.

Again, I'm here specifically to deal with a motion that was tabled by Nathan Cullen, to clarify some of my previous points when appearing in front of this committee, and to take questions from you. I have to say that I appreciate the chance to bring some context to the work of this committee and indeed some much needed honesty and clarification to Canadians about how the previous governments spent some of our taxpayer dollars on the environment. I would also like to discuss the progress that was actually made and discuss why our government feels strongly about moving forward towards setting new targets.

I am very pleased to be here, and I want to say that I'm looking forward to sharing in a constructive dialogue around the actions Canada's new government is taking to improve the health of Canadians and our environment.

I have to say that I appreciate the chance to bring some context to the work of this committee, and indeed, some much-needed honesty to Canadians around how previous governments have spent taxpayers' dollars on the environment, what little progress was actually made and why our government is now stepping forward to get things done.

I would like to take this opportunity today to speak directly to the motion tabled by my honourable colleague, Mr. Cullen.

When our government assumed office less than a year ago, it soon became clear to us that measures being pursued by the previous governments to address climate change were insufficient.

This is not a political observation. This is a statement of fact. Years after signing and ratifying the Kyoto Protocol, and despite having spent or committed billions of dollars of taxpayers' money, the previous government had still not implemented a domestic plan to address climate change.

On the trust of Canadians, previous governments spent--and spent liberally--but delivered precious little in return. In fact, the sole outcomes were soaring greenhouse gas emissions--35% above Canada's Kyoto target--and a divisive politicized debate that Canada's new government is determined to move beyond.

The absence of any coordination or implementation of legitimate measures by previous governments to address climate change is indisputable. That is confirmed by the Commissioner for Environment and Sustainable Development, who, in her most recent report, stated that:

A lack of central ownership, clearly defined departmental responsibilities, integrated strategies and ongoing evaluation systems all point to problems in the government's management of the climate change initiative.

And she continued as follows:

On the whole, the Liberal government's response to climate change is not a good story. On the government-wide level, our audits revealed inadequate leadership, planning and performance. It has not been effective in meeting and deciding on many of the key areas of control. Change is needed.

The environment commissioner reported that:

On the whole, the Liberal government's response to climate change is not a good story. At a government-wide level, our audits revealed inadequate leadership, planning, and performance. ... It has not been effective in leading and deciding on many of the key areas under its control. Change is needed.

The commissioner's messages are important to keep in mind as we move forward as a government to achieve meaningful results on this file. We must create an accountability framework that for the first time in this country will oversee all climate change programs across governments, ensuring Canada's first ever coherent approach. To that end, I've also asked the President of the Treasury Board to have the Auditor General audit all climate change spending across government.

Indeed, the commissioner's observations are reaffirmed as we examine Mr. Cullen's motion and consider just what Canadians and our environment received in return for all the taxpayers' money that previous governments spent so freely.

I believe we have a table to outline the international programs, which we are going to be discussing. Could the clerk please hand them out at this time, in order to help take you through my points in the discussion?

It's important to take you through what the previous government spent, or planned to spend, internationally in four main areas, and how, if at all, that spending has helped Canada toward achieving our Kyoto target: the Clean Development Mechanism and Joint Implementation Office; the Canada climate change development fund; the multilateral World Bank carbon fund and their proposed climate fund.

The Clean Development Mechanism and Joint Implementation Office within the Department of Foreign Affairs and International Trade was allocated a total budget of $25 million between 2001 and 2006. Tax dollars invested through Canada's CDM office were intended to support the development of an international market for carbon credits and eventual Canadian private sector participation in that market.

The Government of Canada will neither receive credits for this investment nor move closer to our Kyoto target. Instead, a modest portion of this investment facilitates the purchase of international carbon credits for private sector companies, not for the government. At this point, we have no clear indication of how many international credits have been, or will be, generated by the money we invested. CDM is a project-based market mechanism that is intended to provide Canadian companies with a means to access markets and investment opportunities and to stimulate development and marketing of Canadian technology companies.

Based on our support for market-based mechanisms and on the urgency for Canada to engage in projects and programs that directly count towards achieving our Kyoto target, I continue to believe that this program demands strict oversight, and taxpayers' dollars should not be used to facilitate the purchase or generation of international credits for private sector entities. If taxpayers' money is involved, the objective of the program must be clear, and it would be my opinion that we should ask for third-party verification of emissions reductions. We must focus our investments on government-led projects that could count towards our Kyoto target.

The Canada climate change development fund, or the CCCDF, was designed to also help address the causes and effects of climate change in developing countries. The program focused on four main areas: adaptation to climate change, greenhouse gas reduction through the transfer of technologies, carbon sequestration, and building capacity in developing countries.

On this fourth area of focus, the fund specifically emphasized capacity-building assistance for development countries.

When the previous government established this fund, credit generation or purchase was still an option internationally. It wasn't until 2001 that parties to the UNFCC agreed that public funding for these projects should not result in diversion of official development assistance, and that it should be separate from and not counted towards the financial obligations of parties.

The line between international climate change policy and official development assistance begins to blur. In 2004, the OECD's development assistance committee decided that the value of any certified emission reductions or credits from these kinds of projects should be deducted from our official development agency reporting, and some countries have stated since that they intend to do that. It is not the intention of our government to use official development assistance funding to replace our efforts to invest in projects that generate reductions in greenhouse gas emissions or count towards our Kyoto targets.

This program was budgeted $110 million from 2000 to 2001. This money was mainly disbursed for grants to Canadian companies or organizations called Canadian executing agencies as proponents of these international projects. The program also allowed these companies or organizations to keep up to 12% of this public investment for overhead costs. These projects did not result in any verifiable emissions reductions to date. Therefore, the investments in this program did not result in any certified emissions reductions credits, and therefore also will not count towards our Kyoto target. Instead, they will count for our official development assistance through CIDA.

We believe that clarity needs to be brought to this issue. We believe funding for ODA, for official development assistance, is crucial, but must be based on the policy priorities identified through our ongoing work with developing countries.

Canada also invested in the World Bank's carbon funds. The objectives of these emissions trading pilot projects are to generate experience in project implementation, facilitate the transfer of technology, and provide a stream of Kyoto greenhouse gas reduction credits to fund investors in the 2008-2012 period. Through this investment, the Government of Canada purchased an estimated 2.6 million tonnes of greenhouse gas reduction credits. These were called “learning by doing” projects. They will, between 2008 and 2012, deliver an estimated 2.6 million tonnes of international credits, representing a mere 1% of the reductions necessary to meet Canada's Kyoto target.

We're obliged here to consider the facts: $160 million of Canadian taxpayers' money was spent--on what? It was spent on our international climate change programs. In return, 1% of our Kyoto target has been achieved.

We are obliged to consider the facts: $160 million of Canadian taxpayers' money spent. And, in return, 1% of our Kyoto target achieved.

The previous government also planned to spend $1 billion over five years to manage the climate fund, otherwise known as the Canada Emission Reduction Incentives Agency. This fund was not an investment vehicle, but solely a purchasing vehicle for credits. It was also planned that this fund would grow to cost taxpayers about $5 billion for the purchase of further credits.

It became obvious to our government, as we tried to piece this information from various relevant departments together in a coherent fashion, that there was no clear policy framework tying these initiatives together or accounting for results to help meet our Kyoto target.

It spoke truth to that which the Commissioner of the Environment and Sustainable Development observed: the previous government did not have an across-the-government coherent approach.

I'd like to address the second part of the motion in terms of my previous comments on the estimate provided by my department on the cost impact if Canada were to meet its Kyoto target entirely through regulatory action.

The analysis shows that making the reductions required by the Kyoto Protocol, which amount to nearly one-third of our projected total emissions in 2010, through domestic regulatory action alone could have a crippling effect on the Canadian economy. Of course, this kind of analysis is complex, and there will always be debate about specific numbers, but it gives a clear picture of the magnitude of impacts that consumers would face.

It is estimated that we could see increases in electricity prices of about 15% in Atlantic Canada, 40% in British Columbia, 65% in Ontario, and between 150% and 200% in Alberta and Saskatchewan. That means between a doubling and a tripling of prices in Alberta and Saskatchewan. Natural gas prices could increase by over 300% in Alberta and by 130% in Ontario. As for our oil industry, there is a possibility that we could move from being a net exporter of oil to a net importer, as production costs soared and facilities closed in response to the punitive regulation that would be required.

I'll also emphasize that this would be a best-case scenario, were emissions reductions of this magnitude even feasible and achieved in the least costly way.

In the real world, the emissions reductions needed in Canada to achieve the Kyoto target are not technically feasible in that timeframe. This is why we need new targets and a new Kyoto framework, and this is the opportunity before us.

That is why we need new targets and a new Kyoto framework. This is the opportunity before us.

Let's move now to the impact of Canada's Clean Air Act, or Bill C-30, on reducing greenhouse gases.

You're familiar with our notice of intent, where Canada's government said we will regulate both air pollution and greenhouse gases, with targets for the short, medium, and long term. By spring 2007, our government will announce ambitious short-term targets for air pollution and greenhouse gases, with sector-by-sector regulations that will come into force starting as early as 2010. As you know, for the medium term, which is 2020 to 2025, we will implement intensity targets that will lead to absolute reductions in emissions and thus support the establishment of a fixed cap on emissions.

Our government also committed to a long-term target of absolute reductions in greenhouse gases by up to 65% from 2003 levels by 2050. We've asked again the National Round Table on the Environment and the Economy for advice on specific targets to be selected, and also scenarios of how the targets would be achievable in Canada.

Let me tell you, then, what the long-term target means in terms of emissions reductions. Based on what Canada's greenhouse gas emissions are projected to be in 2050 in a business as usual scenario, this 65% reduction target would reduce our emissions by about 1,435 megatonnes. This is a reduction of almost twice our current total greenhouse gas emissions. A 65% reduction from our 1990 emissions level, which I know is of interest to some of you, would require an emission reduction of 1,485 megatonnes from business as usual.

Some have also called for a long-term target of 80% reduction. This would reduce emissions by 1,575 megatonnes, which is actually only about 10% more than the emission reductions we would see under the 65% target based on 2003 emissions that was put forward or recommended by the national round table.

In its June 21, 2006, report entitled Advice on a Long-term Strategy on Energy and Climate Change, as you know, the National Round Table on the Environment and the Economy provided a possible scenario on how a 60% reduction from 2003 emissions levels might be achieved. The key elements of this scenario include increasing energy efficiency and carbon capture and storage, cogeneration, and increased use of renewable energy. These, I would suggest, are the issues we should be discussing and debating today.

By spring of 2007, our objective is to have finalized discussions on a number of important issues, including our short-term reduction targets for both air pollutants and greenhouse gases, the proposed compliance options associated with those regulations, reporting requirements, and timelines.

As you know, the previous government intended to spend some $10 billion on this proposed climate change plan. Here's what Canadian taxpayers might have received for their money. I'll quote from a recent C.D. Howe Institute report written by Professor Mark Jaccard, who heads the energy and research group in the School of Resource and Environmental Management at Simon Fraser University.

He found that the previous government's proposed climate change measures would have cost Canada $12 billion by 2012, with much of that money being spent outside of Canada.

Professor Jaccard estimated that the previous government's proposed measures might have reduced emissions by only 175 megatonnes, which is far short of the almost 300 megatonnes we need to meet our Kyoto target.

Professor Jaccard also concluded that if the previous government's plan were to have been implemented for the long term, Canadian taxpayers would have spent “at least $80 billion over the next 35 years” without reducing greenhouse gases below our current levels.

What is needed today is a new Kyoto framework with a strong and accountable domestic vision. The key difference in Canada's new government's approach is our recognition—and this speaks to the other part of the motion—of the need to take coordinated action on air pollutants and greenhouse gases. It only makes sense because most sources of air pollutants are also the sources of greenhouse gases. This will be the first time the federal government takes this kind of coordinated action.

The issue is not smog before greenhouse gases or the reverse, and the issue is not air pollution versus climate change. Both of these issues are of concern to Canadians and both impact upon their health and their environment. The right course of action is to tackle both in a coordinated and efficient action to deliver results for Canadians. By taking that kind of coordinated approach to both types of emissions—a new Kyoto framework, coupled with Canada's Clean Air Act—we will drive solutions to get the greatest results for our effort.

For the first time we will have an integrated, nationally consistent approach focused on mandatory regulations that will achieve significant reductions in emissions from all major industry sectors. We also need a new global approach to addressing climate change, one with achievable targets that maximizes global participation.

Currently, as you know, under the Kyoto Protocol, countries with targets account for less than 30% of global emissions, and this percentage will only continue to decline in the coming years as the emissions of developing countries rise.

Contrary to what you may have seen or heard in the media, this work is beginning to take shape globally, and Canada is participating. In Nairobi, as you know, I led the Canadian delegation to the twelfth conference of the parties to the climate change convention and second meeting of the parties to the Kyoto Protocol.

Canada worked very intensively and successfully with many other countries on initiatives that will help set the scene for a better global approach to climate change in the post-2012 period, and for Canada, this approach must be one that includes broader participation, maximizes the use of technologies and market mechanisms, and takes the country's national circumstances into consideration.

Of the key issues that were taken up in Nairobi, four related to the future of international cooperation on climate change, and Canada secured the results we wanted to enable us to continue to participate in Kyoto. On each of these issues, Canada's negotiators were actively and constructively engaged, based on the positions laid out in our public submissions.

As you know, an extensive work program to inform consideration of our future commitments post-2012 was developed. Canada agreed to this rigorous work program and will undertake our work with diligence.

On the review of the Kyoto Protocol, agreement was reached to conduct a review in December 2008. All industrialized countries, the African countries, the small island states, and several Latin American countries supported the launching of this review so we can move forward with the knowledge of what worked and what didn't work in the next phase of Kyoto.

Canada has consistently stated that more countries need to take on targets or Kyoto will fail. On the issue of the review of procedures for countries taking on commitments, agreement was reached to hold a workshop in May 2007.

As president, I took on the responsibility for moving this issue forward personally. The support of the EU, South Africa, and Russia were key to assuring Canada was able to push for progress on this front, and I am pleased that the question of how countries can voluntarily take on commitments under the protocol will now be formally taken up within the process.

These are all important issues for all countries, but they were a high priority specifically in Nairobi.

I would note that this was a consensus-based approach. If we were trying to “push global warming off the international agenda”, we could have easily blocked consensus on any of these issues, but we did not. On the contrary, the conference was considered a success because of the results achieved on these key issues and the Canadian delegation's crucial role.

Canada's new government is charting a fundamentally new and more productive course on the environment.

Our government is charting a fundamentally new and more productive course on the environment. We are taking, as you know, action on both air pollution and greenhouse gases to protect the health of Canadians and our environment. We're replacing the previous government's unenforceable voluntary approaches with tough mandatory regulations, and we're focusing on achieving clear, measurable, and realistic results in Canada. We are working through the United Nations process to develop a more effective and inclusive global approach to addressing climate change, one that will build on the lessons learned from the current Kyoto and one that maximizes new technologies and mechanisms for reducing greenhouse gases.

We believe this domestic and international approach is the right one for Canada—now and over the long-term. It is an approach that will ensure that Canadians and their children enjoy a healthy environment in the years to come.

We believe this kind of domestic and international approach is the right one for Canada, now and over the long term. It's an approach that will ensure that Canadians and their children enjoy a healthy environment in the years to come.

Merci. Thank you. I'm pleased to take any questions related to the motion before us.

[The Chair, Conservative, Bob Mills]

Thank you very much.

I would ask the members to try to watch their time judiciously. I know you will be sharing. I will try to keep it as tight as I can.

There will be ten minutes for the first round, beginning with Mr. Godfrey and Mr. Scarpaleggia.

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

I would like to start by saying, Mr. Chairman, that I find it quite incredible that a minister of the Crown would submit documents that are not in both languages. It is really quite astounding.

I am trying to sort out, Minister, your explanation of the testimony you gave to us last time. Am I right in summarizing it in the following way: that you were confused when you last appeared about the way in which the clean development mechanism works and that it was wrong for you to say that the previous government had spent over $100 million to purchase credit internationally, that what we were talking about instead was international development assistance, but none of it was tied to the clean development mechanism?

I just want that on the record.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Depending on which program you're looking at, some of the projects laid the groundwork for clean development mechanism projects. Others were through the clean development mechanism itself.

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

But the examples you quoted, which added up to $100 million, were not tied into the clean development mechanism.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

That's not necessarily the case. Some of the ones I listed that are part of the CCCDF program laid the foundation for the clean development mechanism. They're in the list, referred to as CDM in brackets. Again, I can assure you that there are a number of these international programs. All of them have different policy priorities. Why I brought these to bear is for you to understand that some of them resulted in the purchase of international credits or emission reduction credits that benefited Canada in the sense that they will help the government reach its Kyoto target. Others benefited the private sector in terms of us facilitating, through the use of taxpayers' money, the purchase of credits for private sector companies. We unfortunately will not get any credit for that as a government, so we will not be any closer to reaching our target. After the $160 million spent, we are 1% closer to our target.

It's actually important for you to recognize that these are the only verifiable emissions reductions that we have found across government. This is how much closer we are to our Kyoto target. It's 2.6 million megatonnes, or 1%. That's where we are today.

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

But you did misspeak yourself in lumping together things that you said were under the clean development mechanism but are clearly not.

Let me ask you about the clean development mechanism. Are you in favour of it or not? When you were last here, you suggested that you didn't want to be involved in the purchase of international credits, yet when you were in Nairobi you said you were open to having Canada invest in the clean development mechanism. Are you open to that or not?

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

What I've stated clearly is that the clean development mechanism is a market-based mechanism that can be used for private sector entities to be able to purchase or invest in third world country projects for emission reductions. What I believe is necessary is that if the government is going to facilitate these kinds of projects, we should make sure we have oversight, that there is third-party verification that there are emissions reductions happening. If taxpayer money is involved, there should absolutely be third-party verification. I would rather see the government invest taxpayers' money directly in projects that will result in verifiable emissions reductions and therefore help us toward our Kyoto target.

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

So you are now in favour, in fact, of the clean development mechanism being used to purchase verifiable credits abroad where conditions warrant. Is that a fair summary?

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Yes. As I said, the problem is that we don't have, to date, any verification that the money invested resulted in—

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

We're talking about the current clean development mechanism, which has a whole verification process.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

As I said, I'm talking about investments to date. We don't have any amount right now of verifiable reductions in terms of helping Canada get closer to our Kyoto target. I think that's what Canada's interest should be, in terms of the government, if we're investing the taxpayers' dollar. If the private sector wants to use the market-based mechanism, which is what it's obviously hoped to be used for in the long term—and as you know, one of the things we discussed in Nairobi was ensuring that there is third–party verification when any of the international mechanisms are used—it's good for the government so that we know we're getting verifiable emissions reductions for our tax dollars. It's also good for the companies so that they have certainty and trust in the process they're interested in using, if they are interested.

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

As a final question, you said you needed a new target for Kyoto. What are the new short-term targets for Canada, up to 2012, for greenhouse gas reductions?

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

As you know, it's one of the things we're doing right now. We're working intensively with all industry sectors across the country. We hope to have our short-term targets, both for air pollutants and greenhouse gases, in place early in the new year. Again, I invite the committee, working through this committee or through the Clean Air Act committee, to bring forward witnesses and ask them questions on what would be achievable in terms of meeting, by 2012, a target for emissions reductions. It's key to Canada that we move forward.

I know you've had a number of people in front of you who talked about scenarios about how we could potentially meet the present Kyoto target. Many of those have stated to you that it would involve a great deal of taxpayer money being spent overseas. You know there hasn't been a domestic action plan in place in terms of mandatory reductions. We need to move there and we need to set—

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

Limiters were to be mandatory—

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

That was never implemented.

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

—in 2008.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

You need to confront the record that we're 1% closer. We have to move past this debate and set new targets, set a new framework for Kyoto, and move forward.

[The Chair, Conservative, Bob Mills]

Mr. Scarpaleggia, you have three and a half minutes, please.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you, Mr. Chair.

I'd like to talk a bit about conservatism. It seems to me, Mr. Chair, that a real conservative believes in building on what has come before. In other words, a real conservative believes there is some good, although perhaps not perfection—

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

You're not calling me a liberal, are you?

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

No, and I'm not calling you a conservative either.

There is some good, but not perfection, in what others have done before. A neo-conservative, on the other hand, it seems to me, likes to wipe the slate clean and start all over. A neo-conservative is not particularly interested in what might have been good in what others have done before and is not interested in studying what has come before.

My question for the minister is this. Why did her government cut both mitigation programs and adaptation programs created by the previous government without a proper review of these programs? As a matter of fact, I believe she admitted, when she was before another committee, in an exchange with Senator Grant Mitchell, that there has never been a comprehensive audit or review of climate change programs. Why, then, would she cut programs like EnerGuide or the Canadian Climate Impacts and Adaptation Research Network, which was doing valuable work in the area of how we can adapt to protect our freshwater resources from the effects of climate change, without really knowing if there was anything good in those programs? Both were very popular, especially EnerGuide. Was that an ideological decision? Was that a neo-conservative decision? It obviously wasn't a conservative decision.