Environment Committee on May 26th, 2009

[Scott Vaughan]

Thank you for your question.

First of all, the next audit will take place in two years. Clearly, there are changes coming globally and in North America. I can say two things. One of the options in the plan involves an emissions market. That is currently in the government's plan. I do not think that any targets are tied to that measure. I believe that Mr. Prentice said that we were waiting to see what happened in the U.S. If there are changes, it may be an opportunity to work together with the U.S. on the emissions market.

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

Based on your current audit, do you think that Canada is ready to bring its measures in line with those of its partners to the south in order to establish emission caps by industry or region?

You say that there is no system for measuring reductions in greenhouse gas emissions. There does not seem to be one, and, if that is the case, does that not complicate the future implementation of a harmonized cap on greenhouse gas emissions? Will the sorry state of the current system not hamper future efforts on the North American front?

[Scott Vaughan]

I have three things to say about that. First, as I have already said, we cannot measure real reductions. That is a problem that we found in this area.

Second, I think that there is still much work to be done as far as auditing real reductions is concerned. There are two parts to that: one is a measurement system, and the other is an audit system.

Third, there is a difference between a credit and a real reduction. It is not up to me to say whether Canada is in a good position to sign agreements with the U.S. That is a question for the minister.

[The Chair, Conservative, James Bezan]

Thank you very much.

Mr. Cullen.

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

I want to congratulate you for your persistence. Some of your folks have less experience, some have more. I've been looking at all the reports in which these criticisms, particularly on the fisheries habitat, are accepted by government but not acted upon. Some years later, the criticism comes again, is again accepted by government, and still is not acted upon. So it's remarkable that you folks are able to stay at this—particularly in light of the so-called debate earlier today in which my colleagues spent a majority of their time confirming that neither Liberal nor Conservative regimes have been very good at measuring and accounting for greenhouse gas emissions, or at acting on what these emissions require the Canadian government to do. Unlike my colleagues, I don't think most Canadians care so much about distinguishing between Liberal and Conservative governments in this matter. These commitments are Canada's obligations, regardless of how an election distributes the votes.

What disturbs me most now is that the mistakes in the measurement and accountability of greenhouse gas emissions seem as if they are being repeated. I want to connect this to what is happening south of the border. Have you found in your audits that the government has any understanding of the cost to Canadian companies of not having a verifiable greenhouse gas target or accounting? The cap and trade system that's in place in Europe and envisioned by the U.S., in the current legislation, requires companies to be able to verify what they hope to trade on the market. Since Canada does not have a verifiable accounting mechanism, does the government have any assessment of how much the lack of such a mechanism will cost Canadian businesses?

[Scott Vaughan]

We didn't look at what it will cost if Canada is not able to engage in a global market. We said in the introduction to the chapter that the global market for carbon trading was $30 billion in 2006. Expectations are that this is going to double or triple in short order. So in addition to the cost of implementation, there are quickly emerging opportunities for companies and individuals engaged in these evolving markets.

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

So aside from the economic costs to business that were outlined in the Stern report and others if climate change is not acted upon—there are costs to not doing things—the market has since doubled, in 2007, up to $68 billion. If Canada doesn't have a verifiable way of measuring our greenhouse gas emissions, not only is Canada unable to negotiate with other countries as to what their commitments would be, because we can't stand there, but Canadian companies also don't have access either to a North American trading scheme or to a European one. Is that, with the evidence put forward, correct? Is my logic following the right path here?

[Scott Vaughan]

I think your logic is correct. That isn't something we looked at with this audit. We didn't look at the scope of what the different options are within emission trading schemes. There's obviously a lot. There's the western climate initiative, the New England governors' conference, the Western Governors' Association. Provinces are engaged in the western climate initiative and the registry, so there's a lot going on. We looked specifically within the context of what the KPIA requires.

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

I was at a talk this morning with the U.K. presenting part of what their initiative is. One of the things they've done is they've required, under their legislation, that any climate change initiative must have a report to Parliament with a five-year backcast, what's happened so far, and a five-year going forward, what they expect. That, based in that model, allows for greater transparency and accountability, and not what we have today, which is sort of two years after the fact saying, “Oh, we missed again, we missed again”.

The government recently came out—and you mentioned this in your report—about biofuels and how much they're expecting from biofuels in terms of greenhouse gas reductions. This has gone under some certain controversy. How verifiable were the government's initial expectations of what they were going to get, in terms of bang for buck, for that $2 billion investment for biofuels?

[Richard Arseneault]

We looked at, again, the rationale behind the numbers and whether they were able to demonstrate to us that these numbers are solid, and we said there was an adequate rationale, in terms of what they're planning to do.

Now, obviously, this is not implemented yet. There are regulations that have to be passed. Until they're in place, and until they're in place for a while, we won't be able to really say with certainty. But based on the numbers the government provided to us, we had to agree with them that the rationale is right.

There are other concerns about biofuels that we did not touch.

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

But they've also, even since their 2007-08 plan—

[Richard Arseneault]

They've changed the numbers.

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

—reduced their own estimation by 65%. The cost per tonne gets more expensive every time you do that. It's efficiency as a measurement and as a tool.

[Richard Arseneault]

There are multiple objectives that the government is pursuing with biofuels.

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

Right.

There was the notion of “just transition” placed within the Kyoto Protocol Implementation Act, and it is being debated in an act that's in front of this committee right now. Is there any notion and update on this notion of just transition and the effectiveness of the government transitioning workers who are affected by a price on carbon?

[Scott Vaughan]

That's one of the areas where we've said there was missing information. There was a requirement of the act; Parliament wanted to have information on just transition of workers. What we said is that there wasn't enough information to make a determination of how the government even defines--let alone what their analysis of it might be--just transition of workers within the plans.

[The Chair, Conservative, James Bezan]

The time has expired.

Mr. Woodworth.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you very much, Mr. Chair.

I just want to begin by picking up on the point that I was striving toward at the end of my earlier questioning.

The Kyoto time period of 2008-2012 is not the period during which emission reductions were supposed to have occurred but the period during which they were supposed to have reached the targets. Is that correct?

[Scott Vaughan]

Yes, within the 2008-2012 period. But at the end of that period, at midnight, December 31, 2012, every country that's made a commitment will have to go back and add everything up and see what the totality of their commitments are.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Yes, but they are also to have reached the target set out in schedule 2 of the Kyoto accord. Is that correct?

[Scott Vaughan]

To reach the target that they've committed to, correct, yes.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

It strikes me that putting in a period like that means that there was even an expectation that some might reach their targets by 2008. Is that the way you would read it?

[Scott Vaughan]

Other people would be better placed to.... There was a lot of work in the lead-up to that period. There was a lot of credit for early action; there were bankable credits. From my recollection, from working at the international level, I don't think there were any countries that were going to reach their target in the first year of the Kyoto period. I may be wrong and there may be somebody from the department who will correct me.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

All right. It just seemed to me, because they specified a range, that they must have at least been working toward that possibility.

I want to go back to some comments that were made by one of the Liberal members opposite regarding my earlier questions. I'm going to repeat some of what I mentioned earlier, because I think, with respect, the Liberal member opposite didn't hear what I said.

If he says the Kyoto accord was signed in 1998, even though I have a copy that says it was done in 1997, I'll grant him that. Maybe I'm wrong and it was 1998 instead of 1997.

As to everything else, I didn't in any way, shape, or form say that I wasn't aware that it took a few years for the Kyoto accord to be ratified. If that's all the member opposite heard, I want to make it clear that, sure, I know the Kyoto accord took a few years to be ratified, but what I was trying to say is that I'm just absolutely astonished that the Liberal Party would use the ratification process as an excuse for not dealing with greenhouse gases in accordance with their 1993 red book commitment to reduce them.

In fact, I've read the Kyoto accord, and I'd point out that in article 3, paragraph 2, there's a requirement that each party to the accord was to achieve demonstrable progress by 2005. I think it would surprise the signatories of the Kyoto accord to believe that the delayed ratification by Russia or any other country would be an excuse for not showing demonstrable progress by 2005. Nonetheless, that seems to be the position the Liberal Party is taking today.

In fact, do I understand correctly from exhibit 2.1 in your report that emissions in fact continued to increase in Canada after 1997? Is that the way I read that chart?

[Scott Vaughan]

Yes, sir, that's correct.