Environment Committee on May 28th, 2008

[The Vice-Chair, Liberal, Geoff Regan]

I understand that Canada's overall contribution to support international efforts in environmental issues will be reduced from almost $8.5 million in 2007-2008 to about $3 million in 2008-2009. What are the reasons for the decrease in the contributions to support Canada's international commitments?

I talked a moment ago about how my province receives air from another country, so to speak, and the air we're breathing today in Ottawa was somewhere else yesterday. Water and air move around the world, and the molecules that are polluted today may be somewhere else tomorrow. So it is an international issue.

Can you answer that question about why the decrease?

[Basia Ruta]

Just to understand a little bit of the funding mechanism, in the main estimates, you are correct, there is a reduction. However, in the supplementary estimates (A), which I know we're not discussing today, there is an amount of about $8 million that is presented for international actions in support of Canada's clean air agenda. Part of this is a technical arrangement. We needed to get approval from the centre on our results management framework for the clean air agenda. Once we had that, we got permission to go forward with the funding necessary to support the international actions in support of the clean air agenda.

So there is a bit of a timing difference, but there is not much fluctuation from the previous year. There is a little bit less, but I think it's pretty much onside. My colleague, John Arseneau, might be able to provide more information on that.

[Ian Shugart]

Mr. Chairman, I apologize if we have not responded quite as quickly as we might. We come to the table thinking of the numbers on an annual basis, and as Ms. Ruta has pointed out, between the mains and the various supplementaries they can sometimes come in different tranches over the course of the year.

[The Vice-Chair, Liberal, Geoff Regan]

Well, if there are gaps you're able to fill in later, that would be appreciated.

My time is near an end. I'm going to come in under time. I'll hand it over to Mr. Tilson, who has the last five-minute round.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Mr. Shugart, I have a question with respect to the $65 million that was in the 2008 budget. It was put in to establish the regulatory elements of a framework for air emissions to help the government establish the regulation of industrial greenhouse gas and air pollutant emissions. Can you be specific about or elaborate on what the $65 million is going to do?

[Ian Shugart]

I will ask Mrs. Cléroux to elaborate on that. She administers that program.

[Cécile Cléroux]

Thank you, Mr. Chairman.

The money that has been made available for the clean air agenda is for putting in place the regulations that will target the industrial sectors. So what we are proceeding with at this time is putting in place all the components of that framework. For the first time, we will use market instruments for the reduction of pollutants in Canada. We are putting in place those different market instruments at the same time as we are writing the regulations, which is as we speak. So as we are proceeding, different documentation will become public. We are soon going to publish the criteria for the credit for early action. They will be followed by guides for the domestic offset system. Next fall we will publish in Canada Gazette, Part I the regulations on the GHG component of the clean air agenda.

[David Tilson, Conservative, Dufferin—Caledon, ON]

What do you mean by market instruments?

[Cécile Cléroux]

We are going to put in place instruments that are going to help with reductions using a trading system, which will be available to all industries across the country for the reduction of their GHGs. To complement the trading system that will be created by the private sector, we are putting in place in the regulations the levers that are necessary and the rules of engagement so that the private sector--for example, the Montreal Exchange--can put forward the different mechanisms for putting a full-blown Canadian trading system for GHGs in place.

As we speak, we are putting in place different pieces of the puzzle. We're going to have a domestic system that will include sectors that won't be targeted by the regulations so that they can contribute to reductions in GHGs. There will be initiatives that will be municipal. There will be initiatives for the agricultural sector and the forestry sector. So different initiatives will be documented and verified, and we'll put in place different accountabilities to document the reductions that will be obtained.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Can you take one of those sectors, the agricultural sector, which interests me in my riding, at least, and tell me how the trading system will work?

[Cécile Cléroux]

Mr. Chair, I'm going to give an example from the agricultural sector. Many more projects can come forward, but one of the typical examples in that sector is the management of manure.

The different emissions coming from exposed manure are GHGs released into the atmosphere, and there are biodigesters that are able to reduce those emissions to the atmosphere. We will first put in place a protocol that will identify the methodology that will be able to account for the reduction of those GHGs. The farmers able to contribute or to become recognized for the diminution or reduction of their GHGs will be able to apply and get their project approved, and there will be credits issued to those farmers. Those credits are going to be tradable and bankable; they will be usable in the trading system. An industry that cannot meet its target will be able to buy those credits to be able to provide for compliance to the regulation. It will provoke.... The sectors that are not currently targeted by the regulations will also be able to contribute to the reduction of GHGs.

[David Tilson, Conservative, Dufferin—Caledon, ON]

How do you propose to inform the farmers, the agricultural people, of this system?

[Cécile Cléroux]

Part of the funding that we are receiving this year will be used to have sessions with the different groups across the country to inform them.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Do you mean the different federations?

[Cécile Cléroux]

It would be the different federations and communities that would want to be involved in the offset system. We will also have web information available to inform the population of those different offsets. It's going to be a progressive growth of the offset system.

[The Vice-Chair, Liberal, Geoff Regan]

Thank you.

We're going to have a third round. We're close to 5:30. I propose around two minutes for Mr. McGuinty, Mr. Bigras, Mr. Cullen, and Mr. Warawa, in that order.

Go ahead, Mr. McGuinty.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks very much, Mr. Chair.

Mr. McLaughlin, who is doing your analysis on cap and trade, carbon tax, or a hybrid version of those?

[David McLaughlin]

It's a range of people. We're just in the process of starting that research program. We have some internal staff, as I'm sure you well know. We have used consultants J&C Nyboer in the past and will probably use them again, as well as the CIMS from Simon Fraser University.

[David McGuinty, Liberal, Ottawa South, ON]

It's a series of outside consultants.

[David McLaughlin]

In most cases for economic modelling, it's a series of outside consultants, yes.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks very much for that.

Mr. Shugart, I made an ATIP request to your department in March. I got documents back about the industrial sector regulatory framework development, and 80% of it was blanked out completely, particularly the pages that were providing options to the minister about a cap-and-trade system or a carbon market. Can you tell us what analysis has been done internally in your department?

Analysis was done, because it's in the deck. What analysis was done? Can you please table it for the committee in terms of the options being presented to the minister around the cap-and-trade system he's planning on releasing in the fall, and the carbon tax, which he denies even looking into publicly?

The work was dated December 8, 2006. Can you help Canadians understand exactly what work was done by your department?

[Ian Shugart]

Mr. Chairman, I'm not familiar with the particular ATIP request, but if it was advice to the minister and the cabinet that accounted for the particular information not being released, I'm afraid I would still be bound by that restriction now in answering the question.

[David McGuinty, Liberal, Ottawa South, ON]

Is your department doing work now?

[The Vice-Chair, Liberal, Geoff Regan]

Mr. McGuinty, your time is up. Do you want information submitted in relation to this?

[David McGuinty, Liberal, Ottawa South, ON]

If you have it--if you're doing it now and contemplate doing it under these estimates, it would be important for this committee to hear what analysis you're doing, particularly around the pricing effects of the cap-and-trade system you're working on for the fall.