Environment Committee on May 16th, 2007

[Geoff Regan, Liberal, Halifax West, NS]

John.

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

Of course, Mr. Brown, if you would like to answer this question, I would invite you to do so, but it is in the deck we have, the Environment Canada deck, on page 18, which deals with estimated sector GHG reductions in 2010.

My colleague Mr. McGuinty began a line of questioning by asking about the minus 49 megatonnes that we might expect as a result of this plan. So I have a feeling this might possibly be more a question for Mr. Beale.

Mr. Beale, would it be fair to say that this is what you might call a best-case estimate of what would happen in an ideal world?

[Mike Beale]

No, that's not correct.

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

Is it possible to construct, though, a case that is somewhat less cheery by going through the following calculations involving the government's plan?

Supposing we began by saying, all right, in 2010, companies that are covered by the plan can meet 70% of their obligation by paying into a technology fund at $15 a tonne. That would be a legitimate compliance mechanism. So it would not be inappropriate for us, in a worst-case scenario, to deduct 70% of the 49 megatonnes. We could do that and it would be legitimate under the plan. Is that correct, Mr. Beale?

[Mike Beale]

That's right. I believe I clarified earlier that the 49 megatonnes is the target reduction and that there are a number of compliance mechanisms available to meet that.

[Cécile Cléroux]

You have to remember that the technology fund will have to make the equivalent reduction for anything that gets paid into the fund. So the reductions, estimated at 49 megatonnes, will have to be done by the sum of the actions of the different stakeholders.

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

By the year 2010, by the technology fund?

[Cécile Cléroux]

In regard to the technology fund, there's going to be a delay, because we have to invest—

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

That's what I'm trying to find out. What can we expect? So we cannot necessarily expect the technology fund to make investments to cover that loss in 2010.

[Cécile Cléroux]

There could be a delay in when the reductions will happen, but they will happen.

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

That's my point. So it would be legitimate, then, to take away from 49 megatonnes, 70% of the target, which leaves us 14 megatonnes. Also under the plan we could take away an additional 5 megatonnes for a special R and D technology fund in 2010. Is that correct? That would bring us down from 14 megatonnes to 9 megatonnes. Then there's also an early action credit fund, which is a further 5 megatonnes. So under a scenario that is entirely plausible under the rules of the game as constructed in the plan, we could be down to 4 megatonnes. Is that correct?

[Mike Beale]

The amount of actual megatonne reductions that would result from the plan depends on decisions by individual firms as to how much they invest in their own operations versus how much they invest in the technology fund versus how much they use credit for the action credits. At this point we don't know what choices they will make.

As I said a couple of times, the 49 megatonnes is the overall target reduction that firms in total are going to have to meet through this variety of mechanisms.

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

But in actual reductions of megatonnes, it would be entirely plausible under this plan that we could have four megatonnes of actual reduction if firms chose the compliance mechanisms that you have made available to them under the rules, if you have done so.

[Mike Beale]

As you know, the way we have the framework, the target is increasing every year and the access to the technology fund is declining every year. So the wedge that is met by absolute reductions has to increase year by year.

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

Mr. Beale, I understand that. All I'm trying to say is that the figure of minus 49 megatonnes could be equally plausibly minus 4 megatonnes under the rules that have been established, if everybody chose to exercise the options as I've described.

Furthermore, it would seem that a most conservative estimate of the likely increase of oil sand production, hence megatonne production, between 2006 and 2010, could equally be up by as much as 29 megatonnes. In other words, if you took the entire industrial picture and subtracted your 4 megatonnes from your 29 megatonnes, we could be up by as much as 25 megatonnes in 2010. That is not an implausible figure.

[The Chair, Conservative, Bob Mills]

I think, Mr. Brown, you were looking like you wanted to answer there.

[Howard Brown]

Appearances can be deceiving, Mr. Chairman. I'll defer to—

[Some hon. members]

Oh, oh!

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

Nice call, Mr. Brown.

[Mike Beale]

Just to clarify, the projections we use to calculate those megatonne reductions are the Natural Resources Canada projections.

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

Well, now, Mr. Brown, we're over to you.

[Howard Brown]

Mr. Godfrey, I'd have to say that I'd be happy to get back to you with the detailed numbers on what the projections are. I don't have those numbers with me. I must say that 29 megatonnes sounds a bit high to me, but I'll certainly check into it and get back to you, if that would be acceptable.

[The Chair, Conservative, Bob Mills]

You may get that to the clerk, and then we can distribute it to all members, please.

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

Thank you very much.

[The Chair, Conservative, Bob Mills]

You have two minutes.