Thank you, Mr. Chair.
I appreciate the opportunity to be able to come and discuss this topic today. I've been working on climate change with CAPP since 1988. I think some of you remember the issue tables process, which was the huge process that got us launched.
We've been working on policies for pricing carbon in Canada since the fall of 2002. So it's been a long time, seven years, since we first started becoming articulate about carbon pricing. CAPP has been supportive of carbon pricing since.... I think our public position was around 2001, 2002. We've been studying ways to make good policy.
I want to give you some comments on how we perceive the greenhouse gas policy and how our perception leads to the position we have adopted.
I'm sure you all know the nature of the greenhouse gas challenge globally: incomes and population are rising dramatically in the developing world, and incomes are rising in the developed world as well. All of that gives rise to an increase in the demand for energy.
Hydrocarbons are the dominant form of energy supply in the world, and our energy comes to us through huge capital-intensive systems that take a long time to put in place and to change. So in light of the dangerous rise in greenhouse gases, the world faces a challenge: to develop future economic alternatives to hydrocarbons, while reducing present hydrocarbon emissions. In the face of the rapidly growing demand for energy, that's no small task.
There are major actions that we need globally to deal with this and try to slow down and reverse the growth in greenhouse gas emissions. First, we need to focus on energy efficiency and conservation so that we can slow down the demand for energy, which is going to happen for some time to come. We need to deploy the existing technologies we have available to us that are economic that can reduce the carbon emissions. More importantly, we need to invest heavily in energy technologies that will get taken up in the developed and the developing world as the demand for energy grows. Finally, we need to reduce global deforestation, which is crucial to the health of the planet and a necessary part of our long-term strategy to transform the global energy system.
Canada must do its share in this global effort, but we've discovered just how different our Canadian circumstances are from those of other developed countries. We have roughly 10% of the world's land mass, with all the resources that go with it. But we have only 0.5% of the world population. So it's no surprise that Canada has a resource-based economy, which depends on resource-intensive industries that are both energy-intensive and emissions-intensive. Canada has high per capita emissions because of our climate and our focus on the resource sector.
Unlike many other developed countries, which are undergoing deindustrialization and have stable populations, we are facing rapid growth in greenhouse gas emissions as our economy expands. We're naturally going to look much worse than economies that are deindustrializing and have stable populations. So comparing our efforts in Canada with those of other countries is misleading. In any assessment of our emissions, it is important to take our special circumstances into account.
If we adopt a target relative to history that is similar to what other countries are adopting, we're going to be in a situation where we have an unachievable target relative to these other countries. What that will do is cause us this endless debate that we have seen since the Kyoto Protocol has been signed over how we're going to do this and achieve the impossible, and who's going to pay for it? All of that debate slows us down from actually getting on with what Canada's contribution can be, which is improving efficiency, deploying existing technology, and investing in new technology to deploy and get greater reductions in the future.
So let's just look and see what the target proposed in Bill C-311 actually implies. And I'm just looking at the 2020 target—for me, 2050 is pretty far out and lots of things can change dramatically between now and then. But if we look at the 2020 target of 75% of 1990 emissions, that's 38% below the 2006 emissions, and it's 49% below Environment Canada's projected business as usual--BAU--or current trend emissions for 2020.
Obviously, if we're not going to have a major reduction in economic output or drop in population or incomes per capita in this country, that means we would have to reduce the emission intensity of gross domestic product in this country by large amounts—49%, if we compare the BAU for 2020.
If we just look at some recent trends in the U.S. and Canada to see how significant that is, in the U.S. the carbon intensity of GDP decreased by 2.2% per year from 1980 to 2006. That was overwhelmingly because of the reduction in energy intensity of GD, and only a small amount through fuel switching from hydrocarbons to non-hydrocarbons.
If we look in Canada from 1990 to 2007, the decrease in carbon intensity of GDP was 1.3% per year. If we look at Environment Canada's projection for business as usual for 2020, it's 0.73% per year from now till 2020—that's the anticipated trend improvement in intensity of GDP. So if we're trying to reduce the emissions to the target level from the current level, that's a 6.7%-per-year drop in emissions. And with a growing GDP of, say, 2.1%—which is, I think, in the latest budget information from the government—you add those two together and that would require an improvement in emission intensity of GDP by 8.7% per year.
That's over seven times, roughly seven times, the 1990-2007 improvement, and it's over ten times the BAU anticipated improvement to 2020. That's unprecedented. It's unobserved anywhere else. It is just inconceivable that we could actually improve our GHG intensity over that timeframe by that amount.
We could go and buy foreign credits, hypothetically, so what we don't do here we pay somebody else for doing. But there are a couple of things that stand in the way of that. It assumes that other countries are doing far more than their commitment to improve their GHG performance and have this extra space to sell to us, which begs the question of why we have taken on a commitment or why we would take on a commitment that is so much more onerous that we can't do ours and they have one that they can overperform on.
The second thing is that, if countries like China and India, which are the big industrial developing countries, are actually contributing to the global effort, they're going to need their own reductions for their own commitments. So this idea that there are these gigatonnes of foreign credits floating around that we can buy and thereby meet our commitment, I think, is a bait-and-switch game going on. Most of the informed observers I've run into believe that the amount of foreign credits that will be available when the whole world is actually acting on climate change will be much smaller than what people are assuming in some of these projections.
I think Bill C-311, with its target of 25% below 1990 in 2020, is counterproductive to Canada's getting on with doing our part in the global effort.
What should our GHG policy be?
We need to align with the U.S. in the obvious areas of industry and transportation, given our strong economic ties to the U.S. and our integrated energy systems. So we need to keep in mind that whatever we do, we need to do in a way that is compatible with the U.S. We need to establish a price on carbon emissions. We've been trying to work on that policy, as I said, for seven years with the federal government and some of the provincial governments. We need to increase the price, over time, in line with what the price is set in the U.S. and other major economies. And we need to increase our investment in low-carbon emission technology, especially in those areas that are particularly relevant to the Canadian industry and circumstances.
We need to keep in mind that at the provincial level, Canada has already taken a leadership role. Alberta put in a pricing for large industry emissions in the middle of 2007, and so far it's $15 a tonne for emissions above 88% of their base period intensity. Quebec put in its carbon tax of roughly $3.30 a tonne, covering broad combustion emissions from hydro carbons, and it did that in October 2007. B.C. put in carbon pricing through its broad carbon tax on combustion emissions in July 2008. It started at $10 a tonne, it has gone up to $15 a tonne, and it's headed for $30 a tonne in 2012.
We're already leading. What we need is a national policy on carbon pricing, one that will work together with the provinces, and we need to ramp that policy up in line with what the other major economies are doing. We need to get on with our contribution to the global effort in pricing emissions to drive that efficiency, and investing in technology to be able to provide solutions for Canada and the rest of the world in the future.
Mr. Chairman, I look forward to a discussion following Mr. Turk's presentation.
