Environment Committee on June 19th, 2007

[The Chair, Conservative, Bob Mills]

Thank you.

Mr. Cullen.

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

Thank you, Chair.

Thank you, Mr. Drexhage, for being here again.

I have a couple of questions. I want to follow along this line of the nature of Canada's economy and how well it compares to many of the developing world's economies. I think this is something that Canadians might have a hard time with. If you assess Canada on health care status, education levels, those types of things, we are firmly placed within the OECD. But it seems to me when you track down into where we derive much of our economic benefit, we still are hewers of wood and haulers of water.

Can you explain a little further this break? If Canada can prove that we can break between growth and economy and growth and greenhouse gas emissions, then that test or that proof will be given over to the Chinas and Indias of the world. How important is this in this talk about post-2012?

[John Drexhage]

My personal view is that it's absolutely critical, because in many respects, even though they're in the form of embodied energy, the growth of China's economy is very, very materially based. It comes from the massive use of natural resources. Again, they are more concerned about the production curve than anything else and they are becoming more and more cognizant of the significant savings, both to the economy and to the environment, on issues such as energy efficiency.

Again, this is an area, I think, where we have to show an awful lot of leadership and where we are, frankly, just lacking. When it comes to North America, I'm afraid to say that from an energy efficiency perspective we're pariahs when compared to the rest of the world. We have to show a lot more example in that regard.

So it means, for example, that China is not the kind of country that's going to be the first out of the gate, to say they'll be the first ones to try something like carbon capture and storage. They're going to want to see that it can be used and developed and implemented in North America, in Canada, or in other constituencies before they're very enthusiastic about taking it on themselves. They want to see that it will work and that it will have returns for them.

It's the same thing with technology. We're going to have to have some very difficult discussions with them about the terms of technology transfer and bringing them on board in that respect.

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

You talked about the need for an international value for carbon. This is much of the conversation. Our government claims to have established a value for carbon in Canada through its current iteration of a plan. Is that job not done? You also said later on that we need to have a solid value for carbon in this country. Do we have one?

[John Drexhage]

We have the beginnings of one, but as Dr. Jaccard pointed out before, it's only for a certain sector, the large final emitters. You have a small surcharge being put on by the Quebec government that may be having some implications at the consumer level, but for the most part, we're not getting out that signal throughout Canadian society yet.

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

How much risk is there if we only value carbon in some parts of the economy and not others?

[John Drexhage]

I think considerable. I think we've always underestimated the contribution of Canadian society to greenhouse gas emissions. I think there is a lot of political sensitivity that has made it difficult, but I don't think there's any doubt.

Just look at oil sands development. On one hand, people put that as an isolated issue, but what is it being produced for? Well, 98% of it goes to road vehicle transportation in both Canada and the United States. What drives road vehicle transportation in Canada and the United States? I would submit, from an energy efficiency or climate change perspective, it's the rather disastrous policies on urban planning.

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

My last question is on this notion of targets and global targets. I was quite frustrated with the elegant words of our sherpa, and I suppose that's his job, to paint things in a certain light. This 50% commitment by 2050 that Canada has bought into, supposedly, how is that interpreted by the global community and developing countries in Europe in particular, in terms of the implications for a country like Canada? Is that simply doing 50% by 2050 of some strange 2006 baseline? What does it mean?

[John Drexhage]

It depends on who you talk to. The G77 and China, as well as the EU, would suggest that a 50% global emissions reduction means 80% to 90% on the part of developed countries. I'm not sure that's the position of what is commonly referred to as the “umbrella group alliance of countries”, the U.S., Canada, Australia, New Zealand, and others, but for the most part, out of some 170 countries, about 150 would assume that 50% global emissions would eventually mean something in the area of 80% to 90% for OECD countries.

It's a huge challenge; there's no question about it.

[The Chair, Conservative, Bob Mills]

Mr. Cullen, your time is up.

Mr. Allen.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

Thank you, Mr. Drexhage, for your comments.

There are a couple of areas I'd like to question on, carrying on the carbon price issue. You indicated the carbon price had to be high enough and broad enough in the future. Dr. Jaccard's comments on Bill C-288 were about the extremely high GHG tax and what the impact of that would be in the short term. So what I'm wondering is, from your perspective, what does “high enough” mean? It doesn't seem reasonable to do it between now and 2012, as Mr. Jaccard has said, without bringing the economy down. What is the right “high enough” from 2012 and beyond?

[John Drexhage]

I would suggest that the first signal that needs to be there is that we'll be talking about an escalating regime. So you could start at a relatively moderate rate, let's say even $20 or $25. I think $15, frankly, by 2012, will already be too low. But it could be at around $20 and ratcheted up, with fairly clear signals as to the extent to which you're going to be ratcheting it up over the next decade or two. The Intergovernmental Panel on Climate Change estimates that carbon capture and storage will start becoming a feasible option, from a price signal perspective, if you start going above $30 to $35. For me, that's the bellwether mark, getting it to $30 to $35, and then incrementally raising it thereafter.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Next, you talked about, on a national scale, bringing together the energy ministers and about the east-west energy grid. Mr. Jaccard made comments at our natural resources committee a few weeks ago that he's not necessarily sold on the idea of an east-west energy grid. But given that energy is a provincial jurisdiction, and you said we can't shy away from what happened many years ago, what form would you see that taking, given the fact that I doubt Quebec is going to give up its jurisdiction on certain issues on energy production? How would you see a national east-west energy grid working?

[John Drexhage]

First of all, as far as the national energy dialogue is concerned, there's a group out there called the Energy Dialogue Group that I'm aware of. It includes all the associations for energy groups, from the Canadian Wind Energy Association to the Canadian Association of Petroleum Producers, and they're all calling for a similar kind of initiative on the part of the Government of Canada. We truly do need a national energy dialogue. We have, from the Prime Minister on down, everybody talking about Canada becoming a clean energy leader. Well, what are the implications of that? And what is it we can do, and how can we cooperate together to do so? How, for example, in the North American context, can we cooperate with the United States to ensure that in fact we're able to be a clean energy exporter, whether in the form of carbon capture and storage for our oil sands or whether in the form of hydro or other means? Let's have a mature discussion about this.

I'll be blunt. I was always involved before, for quite a while, with the Government of Canada and with the climate change issue itself, and I've become more and more conversant with the energy issues. I have to say--and this is by no means unique to Canada--that it's a remarkably parochial industry, and that's one of the really unfortunate hurdles. One of the side effects and impacts, unfortunately, of the Kyoto Protocol is that because there isn't an effective international regime or forum for discussing these critical energy issues and how to have sustainable clean energy access for all the world's peoples, Kyoto almost became, by proxy, an energy agreement. I think we want to try to avoid that kind of thing in the future so that at least there will be the same kind of input coming in from the energy side.

As far as a clean east-west energy grid, I'm not suggesting that there necessarily be huge government coffers or a purse opening wide for it. What I am suggesting, and I would suggest it, as well, for carbon capture and storage, is that rather than directing subsidization--and I certainly understand Dr. Jaccard's reluctance on those issues--at least give some kind of fiscal signal. For example, expand the definition of exemptions under the Income Tax Act under which environmental goods could actually be exempted from some charges and tariffs, thereby interesting the trust funds of this world--the Ontario Teachers' Pension Plan, the other pension plans, and so on--in making those sorts of investments. I think that, more than any sort of government largesse, is what will make the final difference.

[The Chair, Conservative, Bob Mills]

Thank you, Mr. Allen. Thank you, members.

Thank you, John, for being here. We appreciated your input.

Members, I talked to Mr. Cullen briefly, and he's suggesting that possibly we look at smog, which was scheduled for today.

Mr. Godfrey, do you have a comment?

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

I'm overwhelmed with the idea of talking about garbage. That's the one that gets me. I don't know about you.

[The Chair, Conservative, Bob Mills]

I'm not interested at all.

[Mark Warawa, Conservative, Langley, BC]

Whatever the committee decides is fine, garbage or smog, whatever.

[The Chair, Conservative, Bob Mills]

Am I getting the feeling, then, that garbage has all of a sudden moved to the top of the agenda?

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

Absolutely.

[The Chair, Conservative, Bob Mills]

That's wonderful. Do you want a speech now or later?

[An hon. member]

Hold it until Thursday.

[The Chair, Conservative, Bob Mills]

I should tell members that we didn't have lunch because we didn't have a chairman. That was the reason.

We'll ask the clerk to set that up and you'll be advised.

Thank you. The meeting is adjourned.