Environment Committee on Oct. 27th, 2009

[Dr. Rick Hyndman]

I think the Americans are focused on their own situation.

[David McGuinty, Liberal, Ottawa South, ON]

Yes. I would agree with that.

[Dr. Rick Hyndman]

The people we talk to, of course, recognize the value of alignment of Canada to the U.S., and the form of that is a matter of opinion as to what's best.

[David McGuinty, Liberal, Ottawa South, ON]

Just in closing, if you could give a yes or no on some of these, I'll rhyme off a few elements of what a plan would comprise. Maybe you can just jot these down and respond.

Can you tell me what the government's policy is for your sectors for credit for early action? Can you tell us how they're going to have a cap and trade system with the United States based on intensity targets? Can you tell us for your sectors how they intend to allocate permits and recycle the revenue? Can you tell us what percentage the government intends to buy offshore credits?

You talked about that, Mr. Hyndman, saying they weren't available.

What percentage is in the plan for your sectors?

Just as a start, can you address those and let us know how those are going to affect the hundreds and hundreds of billions of dollars your sectors represent?

[Eli Turk]

Sure, I'll address them.

In terms of policy on credits for early action, in the “Turning the Corner” plan there were some provisions. Our view was that there should be more aggressive provisions for credit for early action. For example, in Ontario there have been some actions, I think, that are worth recognizing, so they need to be more aggressive there.

In terms of the cap and trade and intensity, I don't think there's a particular framework yet, and so we're following that very closely.

In terms of the allocation of permits, we haven't gotten to the details on that.

I'm sorry; what was your question on recycling credits?

[David McGuinty, Liberal, Ottawa South, ON]

How much revenue will be raised if there's going to be an auction? How are they going to allocate the permits?

[Eli Turk]

Right.

I guess our main message on that would be, of course, any kind of auction, any kind of payment in lieu of, or credits that are generated, but also payments in terms of emissions, we've argued quite strenuously that they should be rolled into some kind of technology fund to have transformative technologies happen. So we feel that any kind of revenues that are created should be rolled into a technology fund.

[The Chair, Conservative, James Bezan]

Very briefly, Mr. Hyndman. Mr. McGuinty's time has expired.

[Dr. Rick Hyndman]

On the intensity target issue, the vocabulary around this issue is highly polluted. People have concepts that are all quite confusing to people. It's important to know that in the Waxman-Markey and Kerry-Boxer bills, for the energy-intensive trade-exposed sectors, the allocation to them is in fact output-based—i.e., intensity. The Canadian system largely applies, apart from electricity, to energy-intensive trade-exposed sectors.

So in fact we're talking about aligning with a system in the U.S. that is intensity for the trade sectors we're covering. And we need to do the allocation in such a way that we don't tilt the balance between Canada and the U.S. for investment and competitiveness.

How will these systems tie together? Well, by doing allocations that are comparable and have a comparable burden on the trade-exposed sectors so that you don't create trade issues between the two countries.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Bigras, you have seven minutes.

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

Thank you, Mr. Chairman.

I consider it unfortunate that people representing industries such as the wind, forest and aluminum sectors, are not with us this morning. However, I do hope that, if they submit a brief, we will consider it as part of our analysis and report on Bill C-311.

I want to thank you for being with us today. It seems to me your briefs are quite clear. Over the last 12 years, we have had discussions with representatives of a variety of industries. Many of them are of the view that, when it comes to climate change, there is nothing worse than uncertainty. Whether you are in the forest or oil industries, uncertainty causes considerable harm in regulatory terms. We are in favour of regulations, but we would also like to see them come into force as quickly as possible.

The Minister announced yesterday that his regulatory framework would be postponed until later—until after the conference in Copenhagen, to be exact. Do you think this additional delay will be harmful to your industry? Will that again create uncertainty? Should we not try to bring a regulatory framework into effect as quickly as possible?

[Dr. Rick Hyndman]

Thank you, Monsieur Bigras.

I am afraid I am unable to answer you in French. My French is not good enough for that.

First of all, yes, I don't think we can get certainty, and we've changed our vocabulary on that, just to be clear. We need predictability and stability. I don't think there is any certainty that anybody can have for any length of time because the world has to adjust to what's possible, what's happening, new developments on science and everywhere as to what we have to do.

Clearly industry, and CAPP, have been pushing to have policy in place, as I've said, for seven years now, but we don't want just any old policy, obviously. We want certainty of good policy, and it's important to get that as soon as we can. I don't think a delay of a few months at this stage is what's critical; what's critical is to get in place a policy with the right orientation, the right structure, and be in a position to ramp up the price and the demands on industry in line with what our major trading partner and other major economies are doing so that we can move forward with those other countries in our contribution to the global effort.

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

I was reading one of the requests made last week by the Canadian Oil Sands Trust, which is that the government introduce intensity sites. I am trying to reconcile that, among other things, with the statements you made today. It is one of the points—number five—raised by Mr. Turk in his presentation. He says that he would like there to be “a fair and equitable burden among all industries”.

Does that mean that, as far as you are concerned, intensity sites represent a fair and equitable process for all sectors of the industry?

Do you not think it is totally unacceptable for companies that have been working at this since 1990 and have succeeded in lowering their greenhouse gas emissions—like the forest and oil industries—to be subject to an intensity regime? Basically, do you really believe that the intensity regime and sites that the government is preparing to introduce constitute a fair and equitable process and burden for all industries in Canada?

[Eli Turk]

Thank you.

In terms of fairness, it is obviously the details that matter when defining the program to be introduced. As for whether an intensity regime is appropriate or not, that is certainly the subject of ongoing debate. When we say “fair and equitable”, what we mean is that we would like to receive credits for past actions. This is what we advocate in our particular industry.

So, you need to be smart about this and see what the impacts are going to be in the different industries in order to arrive at something that is fair and equitable, from a national perspective and for the industries concerned. How can we do that? Well, there needs to be dialogue.

Coming back to your first question about targets, we are very much in favour of certainty. For large, long-term projects involving a significant investment, there obviously has to be certainty. Also, the context must be reasonable. In other words, you have to be sure that you are working in both the North-American and global contexts. Just to give you an example, here in Canada, we may have two or three new facilities. However, in China, there are two or three new facilities coming on live every week. And what happens in China, India and the United States clearly has an impact, not only on our industry, but on others as well. In the global context, that kind of perspective is a must.

So, yes to certainty, but as Mr. Hyndman said, as part of a reasonable context and process.

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

You mean that the context must be continental.

At the same time, when I look at what is being done in the United States and Canada, I have the feeling that… You commended the government today for its investments in carbon capture and storage. So, you believe that Canada has to reduce its carbon footprint, but that CO₂ capture and storage is the way to go in order for that to happen. In the meantime, the United States has decided to invest massively in renewable energy.

What I am hearing from people in the wind energy sector is that we are missing the boat and the green shift here in Canada, and that Canadian companies are considering no longer investing in Canada, and are heading to the United States because their tax and regulatory regimes are more favourable.

Are we not ensuring that the Canadian economy will remain in the Stone Age in terms of its development, while the United States, in the meantime, is adapting its tax and regulatory regimes?

Let's talk about the flight of capital, because it is often said that climate change regulations result in an outflow of capital. In the final analysis, is our current policy not resulting in an outflow of capital that could be invested in the industries and technologies of the future, such as sustainable and environmentally-friendly energy?

[Eli Turk]

There is no doubt that we need to be aware of what is going on on both sides of the border, in order to offer attractive incentives here in Canada.

With respect to renewable energy and carbon storage, that is only one option among many.

Canada—for example, TransAlta which I mentioned earlier—is investing heavily in the wind energy sector. Other companies, such as Hydro-Québec, are also investing heavily there. Canada is quite dynamic when it comes to wind energy. In Ontario, they have a policy in place to promote the use of solar energy. So, I think some considerable effort is being made in that regard.

Of course, we can always do more, and we are trying to do more. I can tell you that every member company of our association is very focused on renewable energy. In fact, some companies are focusing exclusively on renewable energy.

[The Chair, Conservative, James Bezan]

Thank you.

Madam Duncan.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thank you, Mr. Chair.

Mr. Turk, does your association also represent the renewable sector?

[Eli Turk]

The Canadian Electricity Association is a multi-fuel and multi-technology association. So a lot of our companies are large renewable players.

For example, TransAlta, which I pointed out earlier as doing CCS, has a very aggressive wind program. In fact, they're one of the first companies to get fairly aggressively into wind in southern Alberta. They bought a company called Vision Quest, and that has a large footprint. Hydro-Québec, Manitoba Hydro, and all those companies are involved in renewables, and wind and others.

[A voice]

Hydro.

[Eli Turk]

Yes, of course.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

So has your association lobbied the federal government to in fact put forward the dollars that were promised in this year's budget to trigger greater investment in renewable technology?

[Eli Turk]

There have definitely been some steps taken in terms of the ecoEnergy program and various other programs, including renewables. The wind power production incentive and other programs that have been precursors have been important ones. We're always lobbying for more incentives on renewables, no doubt about it.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

So you have gone to the federal government to ask them to finally bring forward the money that was promised in this budget.

[Eli Turk]

We're always looking at more support.