Environment Committee on May 16th, 2007

[Cécile Cléroux]

Various representations were made. You are very well aware of the fact that efforts made by some businesses have already been recognized in the energy field. In addition, certain businesses have already been recognized, in other situations, through incentive programs. The sum total of these arguments prompted the government to set up a system that will make it possible to give credits to businesses that have made efforts in the past. The envelope will be 15 megatons.

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

Since the plan was tabled, have representatives from certain industrial sectors or businesses told you that the 15 megaton-envelope did not enable them to cover all of their past efforts? I am referred here to Hydro-Quebec, in particular. Do you feel that Hydro-Quebec will receive enough credits to compensate for the dams that it has built since 1992? Moreover, do you feel that the credits would be higher than they are had there not been a cap?

[Cécile Cléroux]

Corporations such as Hydro-Quebec will not be covered by the regulatory framework, since it pertains solely to those corporations that produce electricity from fuel. Accordingly, corporations such as Hydro-Quebec will not be covered by either the regulatory framework or the new regulations, nor will they be covered by measures for early action. We are in the process of assessing whether or not we will be able to recognize businesses or hydroelectric-type projects in a compensation program.

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

I would like to understand what you mean. Are you telling me that the efforts made by Hydro-Quebec, starting from the time when it opted for hydroelectricity rather than thermal power plants, will not be recognized in the early action credit plan? Is that what you are telling me? Are there other mechanisms that will recognize Hydro-Quebec's efforts?

[Cécile Cléroux]

The regulatory framework includes early action measures and they pertain exclusively to industries covered by the framework. Hydroelectric corporations do not produce emissions, greenhouse gases, or air pollutants. Accordingly, they will not be covered by the industrial emissions regulatory framework. Early action measures pertain exclusively to those companies that produce emissions and that will eventually be covered by the regulatory framework. Measures to recognize the contribution to the overall effort to deal with climate change made outside of the regulatory framework fall under the general envelope reserved for various initiatives.

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

Consequently, Hydro-Quebec, which does have thermal power plants, will not have to abide by the regulatory framework. Is that what you are telling me?

[Cécile Cléroux]

Hydro-Quebec's thermal power plants will be covered, but not the hydroelectric plants.

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

Moreover, you are forecasting an 18%-reduction in emission intensity by 2010, based on 2006 levels. Have you determined what that represents, in absolute terms, given the increase in production and economic growth? Do you forecast a reduction or increase in emissions?

[Cécile Cléroux]

With the 18%-target and the ongoing 2% enhancement per year, we feel, that by 2010 or 2012, there will be an absolute reduction of emissions from industrial sectors.

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

Yes, but what will the situation be like between now and then?

[Cécile Cléroux]

We are forecasting, between now and the time that the regulatory framework comes into effect, that, given the economic growth, there may be an increase in emissions until about 2010 or 2012. We are forecasting that once the regulatory framework is implemented, there will be an absolute decrease in greenhouse gas emissions coming from the industrial sector.

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

Do you feel that intensity-based reduction is a way of calculating emissions that is compatible with a carbon market?

[Cécile Cléroux]

Intensity-based targets do not, in our opinion, represent any complication. Both systems are quite compatible.

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

Is that a statement of fact you are making? You are really saying that there is no incompatibility if we have intensity-based targets, whereas other markets are setting absolute targets? You feel that establishing a Canadian carbon market based on intensity reduction targets is viable and quite possible.

[Cécile Cléroux]

The answer is yes, because, what people are going to deal with in the market, are gaps between the established targets and what they have achieved in their sector. So there are no restrictions, no limitations to setting up a credit trading system, because people will be trading real credits that will correspond to the gap between their performance and the target they have to meet.

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

Have you read about Quebec's plan to reduce greenhouse gas emissions?

[Cécile Cléroux]

Yes.

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

Do you think that an equivalency agreement could be signed on the basis of this plan, given the regulatory framework that has been presented?

[Cécile Cléroux]

Equivalence agreements could be made based on the regulations, and not based on a plan for multiple interventions as called for in Quebec's current plan. We will have regulations for each industrial sector, and equivalency agreements could be negotiated for each of these regulations, because the equivalency agreements that we could enter into under the Canadian Environmental Protection Act can be reached based on the tool, on the system that we have for an industrial sector. We cannot compare plans or measures that are general in nature in order to come up with equivalency agreements. We really have to draw a comparison with a mandatory reduction system which enables us to impose restrictions.

[The Chair, Conservative, Bob Mills]

Mr. Bigras, your time is up. Did you have one quick question?

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

It will be brief.

You know that in Quebec, we have an air pollution regulation that was recently renewed. Let's just talk about regulations. Do you think that Quebec's regulations could lead to an air pollution equivalency agreement with the federal government?

[Cécile Cléroux]

At the moment, it would be premature for us to make any decision on that until we have completed our own regulations. When we are further ahead in developing our regulations, we would be pleased to discuss this issue with our colleagues from Quebec to see what could be done to converge on equivalency agreements as much as possible.

[The Chair, Conservative, Bob Mills]

Mr. Cullen.

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

Thank you, Mr. Chair.

Thank you to the officials for being here. I know you've put a lot of work into the presentation today.

I have a question to follow up on some of my colleagues.

Canada has an international obligation to be 6% below our 1990 levels between 2008 and 2012. The government stated that it's not possible, or they are unwilling to do that.

At what point under this new plan will we reach 6% below 1990 levels?

[Alex Manson]

Right now, I believe we'll probably reach 6% below our 1990 levels around 2025-ish, give or take.