Evidence of meeting #22 for Environment and Sustainable Development in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was c-377.
A recording is available from Parliament.
Conservative
The Chair Conservative Bob Mills
Everyone has clause 10 in front of them and they know what it says. I would rather that you deal with the issue.
Conservative
Mark Warawa Conservative Langley, BC
It is clause 10. I'm sharing the importance of having targets that are realistic and that are achievable. The difficulty we've had with Bill C-377 is that there are targets that haven't been costed.
We've asked Mr. Cullen if he would accept a motion, but we haven't made a motion. I was just testing the waters: would he accept having it costed, as recommended by the witnesses? The instructions he has from his leader now are not to have that, which is disappointing. The Commissioner of the Environment advised that there be an analysis. This is what we heard from every witness group. Of course, the NDP, after introducing the bill and recommending that it be costed, is now suggesting that they don't want Parliament to be making a decision based on facts; they want emotional targets.
We agree that we need to set the toughest targets in Canadian history, and we have done that. Our Turning the Corner plan does that. It builds on intensity targets, and within a very short period of time, by 2012, we have absolute reductions coming. By 2020 we'll have absolute reductions of 20%, again the toughest in Canadian history.
We heard from the witnesses previously that intensity isn't bad; what's important is how tough those intensity targets are. Of course, they are mandatory, concrete intensity targets that will result in absolute reductions, which is good news for Canada and good news for the world. The targets will also make a vital contribution to the government's commitment to reduce the national absolute greenhouse gases by 20% by 2020.
The government is introducing the toughest action in greenhouse gases ever proposed by a Canadian government. The government's emission intensity targets are 6% more stringent, at 18%, than the emission intensity targets proposed on July 16, 2005, at only 12%. Unlike the 2005 proposal, our Turning the Corner plan also requires annual improvements in emission intensity of 2%, meaning that by 2015, a 26% emission intensity improvement will be required under this plan. It's huge.
Short-term mandatory reductions in greenhouse gas emissions by sector are defined in terms of reductions in emission intensity from their emission intensity in 2006. That's the base year.
Each country has its own unique circumstances. Globally, everybody needs to reduce greenhouse gas emissions, as we all agree, hopefully; some may not. The reality is that everybody has to do their part globally or greenhouse gas emissions will continue to rise. We need to get all the major emitters, including the United States, India, and China, reducing their emissions too.
Greenhouse gas emissions per unit of production are capped under our plan. We don't hear any details in Bill C-377. It's unfortunately missing any details. We heard that from the witnesses. All they are, are targets, with no idea how they are going to be achieved. The NDP leader, Mr. Layton, equated it to building a railway, with no idea how he was going to do it, but he had a dream.
Our plan, the plan, which will be effective and is already being effective in reducing greenhouse gas emissions, has the units of production capped. The regulatory release limit for individual facilities within a given sector that will be needed to achieve this overall percentage reduction will be determined as part of the process to develop the detailed regulations.
The emission intensity approach ties targets to production. This means that firms will not be able to claim emission reduction credits by shutting down production for environmental reasons or obtain credits for moving production out of Canada. Rather, credits can only be earned through cleaner production. More importantly, these rigorous targets will yield absolute reductions, even as the economy grows. As the World Resources Institute noted in a 2006 report, “For environmental performance, what matters overall is that targets are set at reasonably stringent levels and subsequently are met. This may be achieved with absolute or intensity targets.”
Again, this is what we see missing in Bill C-377--no details, no direction, no substance on how their targets can be achieved, no costing, and no impact analysis.
The approach for determining the emission intensity targets for each sector in the Turning the Corner plan is based on an improvement of 6% each year from 2007 to 2010. This yields an initial required reduction of 18% from 2006 levels in 2010, the year the proposed greenhouse gas regulations would come into full force. Every year thereafter, a 2% continuous improvement on emission intensity would be required. By 2015, therefore, a reduction in emission intensity of 26% from 2006 levels would be mandated. This basic approach will be applied to existing facilities in each industrial sector.
The 18% emission intensity reduction calculation applies only to combustion and non-fixed-process emissions. Regulatory release limits per unit of output for existing facilities would reflect this.
Predefined fixed-process emissions would have a zero percent reduction in emission intensity from 2006 levels in 2010. Fixed-process emissions are emissions tied to production for which there is no alternative reduction technology. The only way to reduce these emissions is to reduce production. Processes that are currently considered fixed may not be considered fixed in the future if technologies or processes are developed that could reduce or capture and store the emissions. At the sectoral level, the share of total emissions that are fixed-process emissions varies. For each sector, the basic approach will be an 18% reduction from the 2006 levels in 2010, with continuous improvement in emission intensity thereafter.
Fixed-process emissions will have to be determined on the basis of the characteristics of firms and sectors. To provide sufficient time for the facilities to reach normal operating levels, new facilities will be granted a three-year grace period before they have to meet an emission intensity reduction target. After the third year, the initial greenhouse gas emission intensity target will be based on cleaner fuel standards. New facilities will also be required to improve their emission intensity by 2% each year, as do existing facilities. New facilities are defined as those whose first year of operation is 2004 or later.
The three-year grace period means that no improvements are expected in the first three years of operation, and no target will apply during these years. Targets begin to apply in the fourth year of operation, even if that year is before 2010. For example, a facility that began operation in 2005 will begin to face a target in 2008, based on its emission intensity performance in 2007 and on the application of the cleaner fuel standard. A flexible approach to implementation will be taken in those special cases where the equipment used in a plant facilitates carbon capture and storage or another technology offering significant potential for emission reductions.
The approach I've just described is the one that will be applicable across the full range of industrial sectors. Specific sectoral issues will be considered in developing the regulations, but all resulting emission reductions must be equivalent to those resulting from the general approach.
The continuous improvement of 2% in a sector's emission intensity would be applied through 2020. As I noted, there would be a review of the regulatory framework, including targets, every five years. The first review would take place in 2012. This is what's missing in--
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
As much as it grieves me to interrupt the parliamentary secretary in this oration, the simple reading of the government's own propaganda document about their plan does not speak to the article we're dealing with right now.
We have voted on the amendment. We are establishing whether this clause should pass, and that is the debate we're incurring. Reading the government's plans is both off topic and a repetition of what has already been said.
If the government member would like to refer us to some other concern he has with this piece of the bill, then we'd look forward to that debate. But I respectfully submit that repeating the government's plans and intentions, as they've told us a number of times over the last five filibusters, is not on topic and is a repetition, both of which are meant to be out of order for the discussion.
Conservative
The Chair Conservative Bob Mills
Mr. Warawa, I again ask you to try to be as relevant as you can and stay on topic.
We are all awaiting the food. It hasn't arrived yet, but possibly food will help the debate work more successfully.
Mr. Warawa, you want to speak to that, but I would rather you just carry on with your--
Conservative
Mark Warawa Conservative Langley, BC
Yes, thank you.
I appreciate Mr. Cullen's comments, but in fact I am speaking specifically to clause 10. I'm not going to read clause 10, because we've already done that and we all have clause 10 in front of us.
What we see definitely missing in Bill C-377 is the absence of what I'm presenting. Canada has a regulatory framework called the Turning the Corner plan, and this is missing in Bill C-377. We heard from the witnesses that it won't accomplish anything, because there's nothing there to accomplish.
In Canada, we already have the Turning the Corner plan, which sets the toughest targets in Canadian history. Mr. Cullen has asked for the target. So I'll remind him that it's 20% by 2020, which is the toughest target in Canadian history, and 60% to 70% reduction, absolute reduction of greenhouse gas emissions, by 2050. It's never happened before. We've never had such targets in Canadian history, but it's happening now.
The first review will be in 2012. Under the proposed greenhouse gas regulations, firms will have several options to take in meeting their legal obligations. Ideally, firms will reduce their own emissions through abatement actions such as energy efficiency measures, improved energy management systems, and deployment of carbon capture and storage or other emission-reducing technologies.
Are we seeing any of that in Bill C-377? No, we're not. In the Turning the Corner plan, there will be limited access to other compliance mechanisms. First, firms could meet their compliance obligations through contributions to a technology fund. That's good. Bill C-377 mentions the technology fund, which already exists in the Turning the Corner plan.
Secondly, they will have access to emissions trading, including inter-firm trading, emission reduction credits for non-regulated activities, and qualified credits from the Kyoto Protocol's CDMs, or clean development mechanisms. This is missing in Bill C-377. They have a bit about market-based mechanisms such as emission trading and offsets, but we already have that in Canada's Turning the Corner plan. So Bill C-377 is redundant. The few tools the bill mentions are already in the Turning the Corner plan. Maybe they're copying the plan.
Also, there will be a one-time recognition of firms that took early verified action between 1992 and 2006 to reduce their greenhouse gas emissions. Is that in Bill C-377? No, it's missing and it shouldn't be missing. Well, maybe it should be, because maybe we don't need Bill C-377.
Finally, linkages to the North America emissions trading system will be actively pursued. Over time, as the international carbon market becomes more developed and robust, and as emissions verification and reporting systems evolve further, government will consider further international linkages. All this is missing from Bill C-377.
It's important to have a plan that will be effective. This is the warning that the witnesses were giving us about Bill C-377. I'm going into details that may seem a little long, but details are important in a plan that will be effective. You can't just have ineffective targets like those of the Liberals—13 years of not getting it done. But we now have a plan. It has all changed. We have a plan that is effective in reducing greenhouse gas emissions. It's an effective plan. But we all have to actively participate and do our part and not come up with phony bills that aren't going to do anything. That's what we heard from the witnesses.
Over time, as the international carbon market becomes robust, you will see Canada taking an active part. Canadian business and industry will actively participate in trading in the carbon market, which will begin in Canada. We're glad it's going to be based in Montreal. I think Mr. Bigras is happy about that too. Canadians are. It's the market that's decided where that's going to be. It's in Montreal. It's part of our regulatory framework. Canadians need this dependability to be able to begin the trading regime. And it began because we have a Turning the Corner plan.
Bill C-377 would turn the clock back. It's a plan with no substance, no meat on the bones, and it would destroy the good inertia to clean up the environment that we now see in Canada. Bill C-377 is definitely a bad idea.
Technological advancement and innovation are critical to achieving significant long-term reductions in greenhouse gas emissions. New technologies, both under development and ready for deployment, provide a means to transform Canada's industrial production and thereby significantly reduce emissions. I'll refer again to Mr. Harvey's example of the number of tonnes of carbon dioxide that are created by producing a tonne of aluminum. One tonne of aluminum in Canada produces four tonnes of carbon dioxide; in China it's seven tonnes. So where should the aluminum be made if we're seriously concerned about the environment? With Canadian technology, those four tonnes of carbon dioxide will be reduced, and I believe reduced substantially.
That's just one example of one manufactured product that needs to be developed with the cleanest technologies, and that's why we need to get all the major emitters as part of the solution. Canada is doing its part, and those technologies are being developed in Canada.
Under the Turning the Corner plan--not under Bill C-377, which is missing all these details--firms would be able to meet part of their regulatory obligations to reduce greenhouse gas emissions by contributing to the technology fund. This fund would provide more than just a compliance mechanism for industry; it would act as an important means for promoting the development, the deployment, and the diffusion of the technologies that reduce emissions of greenhouse gases across the industry. Again, that is missing from Bill C-377.
A third party entity would be created to administer the technology fund. Is that in Bill C-377? No. This would be an independent, not-for-profit entity administered by a board of directors composed of individuals originating from industry, federal and provincial governments, and other stakeholders. It would operate under a federal mandate. Again, it's missing with Bill C-377. Is it an important tool that needs to be part of an effective plan that will see absolute reductions in greenhouse gas emissions? Absolutely, but it's missing in Bill C-377. It's not part of any of the amendments either. It's missing in clause 10 of Bill C-377.
The process of determining the allocation for funding to projects and the legislative authority, governance, and administration of the fund has to be developed, and it is being developed. The design of the fund will respect two basic principles: no inter-regional transfer of wealth and no government control. These are very important items, and again there are no details of anything like that in Bill C-377. It's missing a very important tool for industry.
Before finalizing the structure of the fund, the government will work with the provinces and territories, as well as the sectors, to determine the appropriate disbursements of the fund, taking into consideration the development and employment of technologies that would be used by sectors with facilities across the country and provincial initiatives that support the development of technology to reduce greenhouse gas emissions and potentially the air pollutants as well. Again, there are the dual benefits. Does Bill C-377 talk about those dual benefits? No, it doesn't. Should Bill C-377 talk about dual benefits for the health of Canadians and the health of our planet? Yes, it should, and they're missing. It's a big mistake and it's one of the problems with Bill C-377.
Again with reference to the technology fund, other funds that meet all necessary requirements could be certified to qualify as part of the regulatory framework. In particular, provincial funds that are consistent with the federal fund could be recognized as equivalent through working with the provinces. It's very important to have that.
The fund would primarily be used to fund investments that have a high likelihood of yielding greenhouse gas emission reductions in the short term. The primary focus will be funding technology deployment and related infrastructure projects. Carbon capture and storage is one of the most promising technologies for reducing greenhouse gas emissions associated with a broad array of industrial activities, and I don't want to go over again the importance of carbon capture and storage, but I believe the other country that has that technology is Norway. The amount of carbon it captures and pumps into a geological formation in the water from a platform is, I believe, about half as much as at the Weyburn, Saskatchewan, plant. We've had our plant in Weyburn pumping carbon dioxide into geological formations for the longest time of any plant in the world. It's the biggest in the world. It's about twice the size of that in Norway, I believe.
What happens is that carbon dioxide can be stored. It becomes limestone over the years. It solidifies into the rocks. When you first inject it into the strata that are holding the oil, it creates an increased viscosity for the oil. The oil is not in a big pool; it's impregnated in the rocks, and as you inject the water and the carbon dioxide into that strata, the viscosity of the oil is increased. So oil fields that weren't active anymore, like those in Weyburn, now become productive oil fields again. That carbon dioxide and water is recovered then and reinjected back in along with the enhanced oil recovery.
Liberal
Charles Hubbard Liberal Miramichi, NB
I just had an e-mail here, and I don't think the audience at home is picking this up. Maybe our system is not quite loud enough. Maybe the people looking after it could pick up the voice of the speaker.
Conservative
Liberal
Conservative
Mark Warawa Conservative Langley, BC
So with carbon capture and storage, I was sharing with you that as one injects the water and carbon dioxide mix into that geological formation—and Canada has an ideal geological formation in Alberta, up along the Rockies—we would be able to put that carbon back where it came from, below the earth. Carbon capture and storage is a technology that the world is hoping will accomplish about 25% of the problem.
So along with the efficiencies and cleaner fuels, the technology that is showing the biggest promise is carbon capture and storage. It is a great technology in Canada, and it's part of what we're proposing. Are these kinds of details in the plan of Bill C-377? No, they are not; they're missing. Again, there are general targets set, with no substance attached to how these targets are going to be achieved. There's no costing, and there are jurisdictional problems. So what it is important to realize is that Bill C-377, if it were to move forward and be supported by the Liberals and the Bloc—who would be supporting the NDP's bill—is a good bill in principle, but it is missing all the details.
Bill C-377 is missing a fund, yet the fund in the Turning the Corner plan would support critical infrastructure—for example, carbon capture and storage, including a pipeline in Alberta for carbon dioxide transport. We have the plant at Weyburn, Saskatchewan, that pumps the carbon dioxide from North Dakota, 300 kilometres north, and it's very effective. So we need to be able to come up with a pipeline that would be able to move the carbon dioxide. You purify it and condense it. And you have to have a program where we get the dollars where they are needed.
So you should build that technology, and it won't happen just by having Bill C-377. Bill C-377 won't accomplish that, whereas the Turning the Corner plan—what we have in Canada now—will accomplish that and is supporting that.
Now, I want to thank the Liberal members for their support of our Turning the Corner plan. They have supported that, but unfortunately the Bloc hasn't supported it and the NDP has not supported the funding of this great technology.
Our technology fund could also support an east-west electricity grid linking markets from Manitoba to Newfoundland. As a way of meeting part of our regulatory obligations, firms could contribute to the fund at a rate of $15 per tonne of carbon dioxide equivalent from 2010 to 2012, and $20 a tonne in 2013. Thereafter the rate would escalate yearly at the rate of growth of nominal GDP. This rate structure would be reviewed every five years as part of the general review of the regulatory system.
Do we see these details in Bill C-377? No, we don't. They're all missing. Yet in the Turning the Corner plan, it is very clear. Contributions to the deployment and infrastructure component would be limited to 70% of the total regulatory obligation in 2010, falling to 65% in 2011, 60% in 2012, 55% in 2013, 50% in 2014, 40% in 2015, and 10% in 2016 and 2017. The contribution limit would fall to 0% by 2018.
So what we see is a plan that will achieve an absolute reduction in industrial sectors, a plan that will begin to help industry to reduce their greenhouse gas emissions, a plan that they can buy into. But they can't continue to emit greenhouse gases; they have to clean them up. Every year they have to get cleaner, and they need the tools to put money into a technology fund to buy down their carbon. They cannot continue as they are. Eventually, by 2018, it's zero. These are very clear details that provide very clear direction to industry.
To the different industrial sectors now, in May they would provide their targets. They realize there's a carbon market now forming and they realize their targets are fixed. They report their 2006 targets, and their targets are fixed, and then, within a very short period of time, they have to provide absolute reductions. They have to. It's not voluntary; it's mandatory.
Those kinds of details are absent from Bill C-377. With those details being absent from Bill C-377, will Bill C-377 achieve what it says it would like the government to? No, it won't, and that's what we heard from the witnesses.
The Turning the Corner plan gives clear direction to industry, it gives them the tools to reduce their emissions, and it also lets them know it will be done. And there's a rationale that protects the environment and protects the economy and sets these high standards. Bill C-377 is missing all of this, which would then tell us very clearly that it will not achieve anything.
One would even question, what is this bill trying to accomplish if it's not going to accomplish a reduction in greenhouse gas emissions? Going back to what the commissioner said--and I will not reread that at this meeting--you've got to have a plan that is realistic, that is achievable, and that has had social, economic, and environmental assessments. If those are missing, which they are in Bill C-377, the end result is a phony bill that tries to make a party look like they care about the environment, a party that has had every opportunity to vote for the environment, for funding for the environment, that has a legacy of voting against the environment, against the environment, and against the environment.
Even in British Columbia—and I encourage people to come out and visit British Columbia, because I think it's the most beautiful province in Canada—we have the Great Bear Rainforest. It was protected, and the NDP even voted against protecting that very sensitive area and the $30 million that was funded.
So one would ask, what is the real purpose of Bill C-377 when it's not going to accomplish anything?
On the other hand, the government's plan will explore the option of providing credits to individual companies for government pre-certified investments on specific projects. This option would allow a company that invests in a transformative technology that would incrementally reduce future emissions to receive credits from the government for that investment. These credits could be used towards its regulatory obligations. Criteria for such investments would be determined in advance by the government in consultation with the industry and other experts, and that takes time. But it's good.
Imposing a mandatory requirement for investments to be made in specific infrastructure products and a smaller component of the fund limited to an additional five megatonnes per year from 2010 to 2017 would help finance research and development projects aimed at supporting the creation of transformative technologies that are expected to achieve emission reductions in the medium to longer term.
Emissions trading is very important. It'll be an important component, and it is now the government's market-driven approach for reducing greenhouse gas emissions.
What detail do we have about market trading? We have eight words: “market-based mechanisms such as emissions trading or offsets”, with no details. Well, details are needed, and they're missing in Bill C-377.
Well-designed emissions trading systems can reduce overall costs associated with regulatory compliance by allowing firms with a high cost of emission abatement to fund lower-cost emission reduction projects at other firms. In addition, emissions trading systems create an economic incentive for companies to do better than their regulated targets and bring innovation to bear on the challenge of climate change.
The emissions trading system that will be part of the regulatory framework for greenhouse gases will have a number of components. Inter-firm trading, through which regulated firms may buy and sell emission credits among themselves, will be the centre component. A domestic offset system will allow regulated firms to invest in verified emission reductions outside of the regulated system. There will be no limit on firms' access to domestic emissions trading and offsets.
In addition, Canadian firms will have limited access to certain types of credits from the Kyoto Protocol's clean development mechanisms, or CDMs, for compliance with the regulations.
Potential linkages with regulatory-based trading systems in the United States will be actively pursued. In particular, the government will examine the flexibility of linking with such emissions trading systems as the western regional climate action initiative and the regional greenhouse gas initiative, as well as with other systems as they become established. Over time, as national and regional carbon markets become more mature and the market becomes more global in nature, with robust emission reduction verification systems--and you have to have verification systems--Canadian firms will have increased access to international trading markets for purposes of compliance with Canadian regulations. Canadian firms will not, however, be allowed to use hot air credits, which do not represent real emission reductions, for compliance with Canadian regulations.
It's important that you have a verification system. Is that in Bill C-377? No, it's not. It's missing. Will it achieve greenhouse gas emissions? Will it achieve a supportable carbon market? No, it won't. Do we need that? Yes, we do. Does industry need to have a carbon market? Yes. This is missing in Bill C-377, and yet we already have that with the Turning the Corner plan.
Recognizing the opportunity offered by emission trading, Canada's exchanges have been positioning themselves to launch trading when the regulatory framework is finalized. We've already seen now the good news about a carbon market being headquartered out of Montreal. The Government of Canada will not purchase credits or otherwise participate in the carbon market. It will not be happening with the Government of Canada; it will be industry-driven.
The central component of the emissions trading system for greenhouse gases will be a baseline and credit system. For each firm, the baseline will be its emission intensity target. Firms whose actual emission intensity in a given year is below their target will receive tradeable credits equal to the difference between their target and their actual emission intensity, multiplied by their production in that year. These credits could be banked for use in future compliance years or sold to other parties through an emissions trading market established by the private sector.
Is it important that you have those kinds of details? Yes. Are they in Bill C-377? No.
The emissions trading system would also include domestic offset credits. Offsets are emissions reductions that take place outside the domain of the regulated activities. Offsets credits, which regulated firms could use towards their regulatory obligations, would be issued for verified reductions in greenhouse gas emissions that were incremental to what would have happened without the regulatory system or other governmental programs.
An offset credit would represent one tonne of verified greenhouse gas reduction or removal achieved by a given project, measured in carbon dioxide equivalent. The credit would be recognized in the regulations as tradeable and could be used to meet the obligations of the regulated facilities. Offset credits would be issued for those activities where emission reductions could be accurately quantified and verified at a reasonable cost. Examples of possible offset project types include the capture of methane from landfill gas that is then used to generate electricity, energy efficiency projects, and projects that store carbon in agricultural land.
To lower the cost of participation, pre-approved quantification approaches would be provided and the aggregation of small projects would be encouraged. The framework for the offset system would be built on the experience gained in three Canadian pilot initiatives and on project-based crediting systems in other countries.
In addition, considerable work on the development of a framework has taken place in Canada, with the provinces and the private sector playing leading roles. Canada's private sector would play a major role in the offset system, including verifying emission reductions achieved from eligible offset projects and providing infrastructure and services required for the trading of the credits.
The offset system would start prior to the entry into force of the regulations in order to provide adequate time for projects to generate emission reductions. Credits would be issued to those verified emission reductions. These credits could be sold to regulated entities for use for compliance purposes.
Do we see that in Bill C-377, a clarification on an offset system, the mention of an offset system? No, it's not there. Have we heard mention from witnesses? Yes, we have. Is it deliberately missing from this, or is there an omission because the bill is poorly written? I would suggest that the bill was rushed. It was not well thought out and it probably needs to go back and be totally rewritten and reintroduced to Parliament because it's missing so much.
It's also missing mention of CDMs, clean development mechanisms. Generally speaking, an emissions trading system with a broader scope will provide more opportunities for cost-effective emission reductions.
Over the past five years a number of subnational, national, and regional greenhouse gas emissions trading markets have been implemented or proposed for implementation in the near future. The most comprehensive of those is the EU's emissions trading system, which began as a pilot phase in 2005, and it is moving to a more complete system starting in 2008. The experience of the EU trading system has provided valuable insights in developing Canada's regulatory system for greenhouse gases, and the government intends to continue discussions with the EU on what Canada can learn from the EU's experience with emissions trading.
Notwithstanding these developments, the international carbon market is still fragmented and in its infancy. As the global market develops and matures, there will be additional opportunities for Canadian firms to participate in it.
When we were in Berlin, Mr. Cullen, I myself, Mr. Godfrey--and I forget the member from the Bloc--heard clearly that carbon markets need to first develop domestically and mature before you go into international trading, and that's exactly what's happening with our Turning the Corner plan.
The government intends to start modestly by allowing Canadian firms limited access to certain types of credits from the Kyoto Protocol's CDMs for the purpose of meeting their regulatory obligations. The government will determine which types of CDM credits should be eligible for regulatory compliance in Canada.
Mr. Harvey has talked a number of times about Madam Donnelly and her experience in CDMs internationally. We heard that there is a limited number of CDMs, and not all CDMs may be good for the environment.
Conservative
Mark Warawa Conservative Langley, BC
So we have to be very careful, and that's why the government will determine which are good and appropriate for Canada.
Is there any mention of the CDMs in Bill C-377? No, it's missing. How much is missing? It seems that everything is missing from Bill C-377, and that's what the witnesses have said. There is nothing there.
Access to CDM mechanisms under the Turning the Corner plan, credits for compliance, will be limited to 10% of each firm's total target.
A number of U.S. states are currently considering implementing regulatory regimes with emissions trading to reduce emissions for greenhouse gases. The Western Regional Climate Action Initiative intends to establish an emissions trading system for greenhouse gas emissions from industry in five western U.S. states. Starting in 2009, the Regional Greenhouse Gas Initiative will implement a regional emissions trading system in nine northeast and mid-Atlantic states that covers carbon dioxide emissions from power plants in the region. Several other greenhouse gas emissions trading initiatives have been proposed at the state and federal levels in the United States.
Canada will actively work with U.S. partners to explore opportunities for linking Canada's emissions trading with regulatory-based emissions trading systems at the regional and state level, and with any that may be established at the federal level. Canada will also actively explore cooperation on emissions trading with Mexico. Bill C-377, again, is silent on all of this.
The government will monitor, under the Turning the Corner plan, the development of an international carbon market. As this market becomes more fully developed and robust, and emissions monitoring, verification, and reporting systems evolve further, the government will consider full linkages that could allow a broader range of international credits to become eligible for compliance with Canada's regulatory system in place. An essential condition is that any international credits used towards compliance with Canadian regulations represent real and verified emission reductions—again, the importance of having a plan that is working, in which you can verify the reductions in greenhouse gases. Do we see that in Bill C-377? No, we don't.
I wish I could share what good there is in Bill C-377, but it's missing all the fundamentals of a plan that will achieve reductions in greenhouse gas emissions. We don't see that, but we do in Canada's Turning the Corner plan, which is already taking action.
There needs to be credit for early action, and that's what we see in the Turning the Corner plan that Canada now has. Firms in a number of sectors have made efforts over the last decade to reduce emissions, and we applaud those. There would be a one-time allocation of credits to those firms covered by the proposed regulations that took verified action to reduce their greenhouse gas emissions between 1992 and 2006. A maximum of 15 megatonnes would be allocated, with no more than 5 megatonnes to be used in any one year.
Firms would be invited to make a one-time application where they would submit evidence of changes in processes or facility improvements they undertook that resulted in incremental greenhouse gas emission reductions in the specified timeframe. There would be eligibility criteria to determine which emission reduction activities would be considered, and evidence of emission reductions would be audited.
Once all applications were received, the reserve would be allocated to all qualifying applicants on a pro rata basis. The maximum allocation for emission reductions would be one credit for one tonne of carbon dioxide equivalent reduction. If the total tonnage of the emission reduction applied for were to exceed the 15 megatonnes, the credits would be distributed to individual firms in proportion to their contribution to the total emission reduction achieved.
So there is recognition for early action. Is it important that we do that? I think so. The government has recognized the importance of recognizing early action. Do we see any mention anywhere in Bill C-377 of giving credit for early action? No, you don't. Why not?
Under the Turning the Corner plan, the availability of different compliance mechanisms will provide industry with the access to emission reduction opportunities it needs to meet the regulatory obligations at a reasonable cost and will support the development of a functioning emissions trading market system. That said, the government recognizes there may be concern about the level of market liquidity in the trading system, both at the start of the system and over time. The government will carefully monitor the evolution of the emissions trading system and other aspects of the compliance mechanisms in order to determine any modifications that might be required. It has to be a system that works, and we're committed to that. And I'm happy, again, that the Liberals supported that plan.
The emission reduction targets for a given air pollutant will specify a maximum level of that pollutant that can be emitted from a given sector in a given year. These targets will represent national reductions from the 2006 emission levels for each pollutant.
Fixed emission caps will be set for the following air pollutants: nitrogen oxides, sulphur oxides, VOCs, and particulate matter. Fixed emission caps for certain other air pollutants from specific sectors, such as benzene from natural gas production and processing, refineries, and iron and steel, and mercury from electricity generation and base metal smelting, will also be set. As more information becomes available and regulatory development is undertaken, the government will consider whether the regulations for specific sectors should include targets for other air pollutants not already identified—for example, benzene from the oil sands.
Do we see any mention of that in Bill C-377? No. One would ask why not. Why is Bill C-377 void of all these important components?
I'll continue. Sectoral emission caps will be set for each air pollutant of concern in a given sector. Whether a cap is set for a specific pollutant in a given sector will depend on whether the pollutant is emitted in significant quantities from facilities in that sector. In some cases, caps will not be proposed for an air pollutant in a sector if the measures to reduce another air pollutant will significantly reduce emissions in the first. How the sectoral caps will be allocated among the facilities will be determined during the process of developing the detailed regulations. The targets will come into effect as early as possible, between 2012 and—
Conservative
Conservative
The Chair Conservative Bob Mills
I know you're excited, Mr. Hubbard. Take a minute, and we'll be right back.
Conservative
Mark Warawa Conservative Langley, BC
Could I make a motion that we suspend for five minutes so I can eat?
