Environment Committee on Oct. 27th, 2009

[David McGuinty, Liberal, Ottawa South, ON]

Right. So the Europeans have announced that they're going to hit their 20% hard reductions from 1990 by 2020. They said that they are prepared to go to 30%, depending on the outcome of Copenhagen.

[Dr. Rick Hyndman]

Right.

After 1990, Eastern Europe's economy collapsed and their emissions with them. Germany folded East Germany into Germany; so, wow, they have a lot lower emissions. The U.K. switched from coal to gas and deindustrialized; got into the banking industry. So their emissions actually fell for things that had nothing to do with their making an effort to reduce greenhouse gases--

[David McGuinty, Liberal, Ottawa South, ON]

Dr. Hyndman, I was practising corporate law in Europe during that time, and I can assure you that I have heard those myths put forward a number of times. The Germans and the Germany Treasury ate an awful lot of cost in terms of supporting East Germany's joining West Germany. I lived in Britain, in London, and I saw the costs incurred by the British Treasury and the British people.

So to assert that the Europeans achieved this without pain, because the wall fell, is exactly the kind of myth that the Republicans in the United States perpetrated for a decade and that this government has been perpetrating for four years. I don't buy that for a second. I just wanted to make sure that we got on the record that it isn't true that these targets being put forward by the NDP in this bill are the most aggressive in the world.

I also want to remind you--I think you said something about 2005-06--that of the 182 signatories to the Kyoto Protocol and the UNFCCC, Canada is the only Annex I country to have formally abandoned 1990 as the baseline year.

[Dr. Rick Hyndman]

Right.

I disagree with you on the extent of reductions from climate change-specific actions in Europe. I mean, it is true that they tax their gasoline consumers heavily and that they have lots of mass transit and all that stuff. They do a lot of good things. But the big reductions in emissions came from closing down Eastern Europe's industry and from switching from coal to gas. And they did that not primarily for greenhouse gas reasons--

[David McGuinty, Liberal, Ottawa South, ON]

Who cares?

[Dr. Rick Hyndman]

Well, it doesn't matter who cares. I'm just saying that their business as usual gave them lower emissions in those two countries. Their population is basically stagnant. They don't have growth in energy-intensive resource industries in most of Europe.

Their business as usual is basically going along at a flat level. They have to do a 30% reduction to get to 30% below 1990 or less. That compares to 50%; I'd say their reduction is far less than that, and ours is a 50% reduction from business as usual. It's far more onerous.

[The Chair, Conservative, James Bezan]

Thank you.

We'll go to Mr. Bigras.

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

Thank you, Mr. Chairman.

Mr. Turk, I would like to come back to one of your statements. You said, and I quote: “[…] any plan that results in increased costs for some, but not others, will not be accepted by the public.” I come back to that sentence because that is the very reason why Quebec is opposed to the government's plan which, in actual fact, is intended to provide massive assistance for carbon capture and storage technologies. The oil industry has said that it would not be in a position to commercialize that technology without federal government assistance.

Have you done an assessment of what investments in this technology would mean for the Canadian public?

I would also be interested in your reaction to comments made by the president of Alstom Power, who said this last week with respect to the Project Pioneer: “The considerable size of the project shows that we are no longer in the testing phase, but ready now for commercialization.” So, we are no longer talking about research on this technology; we are talking about commercialization.

How much public funding will be required to commercialize this kind of technology?

[Eli Turk]

Alstom Power may say that it is ready for commercialization, but as I said at the outset, we need to define what is meant by commercialization. Will the project be carried out at a certain cost, based on a certain performance and a penalty for costs? I am not sure we have reached that stage just yet.

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

Are we still in the testing phase or are we in the commercialization phase?

[Eli Turk]

We are in the commercialization phase. In terms of whether the technology is commercially available, that is another matter.

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

If public money were to be invested, it would have to be invested in commercialization, rather than research.

[Eli Turk]

Project Pioneer is a societal issue. It is important to support the development of these technologies. We have seen this in other industries as well. Commercialization of certain technologies may require some financial support.

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

How do you explain this strategic choice on the part of the government, which is prepared to provide financial support for the commercialization of a technology such as carbon capture and storage, when other environmental industries are having trouble making ends meet and have been waiting for years for the Wind Power Production Incentive Program to be funded?

There is no money available for environmental technologies, but there is lots available for the industry that is developing carbon capture and storage technology. How do you explain that unfairness in the distribution of public funds to these two sectors?

[Eli Turk]

Over the years, a great deal of money has also been invested in renewable energy. There have been some geothermal energy projects. A whole framework was put in place to try and encourage the production of wind energy. We do not only advocate CO₂ capture and storage; we are in favour of all the other technologies and encourage development of renewable energy. We have also recommended developing hydroelectric energy.

[The Chair, Conservative, James Bezan]

You're out of time.

Ms. Duncan, you have the floor.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks, Mr. Chair.

Mr. Turk and Dr. Hyndman, you both have testified that there would be monumental cost implications for your respective fossil fuel sectors if we had to meet the targets in Bill C-311.

Those targets, by the way, are not invented by the NDP, they are the targets that the world climatologists have said we have to meet. The Canadian lead climatologists testified to us a week ago that these are the bare minimum targets that we have to meet. That's why they're chosen.

An independent assessment of coal-fired power in Alberta and also in Ontario has shown that coal could readily be replaced by 2020 by affordable proven renewable technologies.

When we talk about cost, the thing that troubles me when the fossil fuel industry and the government talk about the cost of reducing greenhouse gases, they talk about balancing with the environmental impact. But what they fail to talk about is the cost to health and environment of the NOx, the SOx, the particulate, and the heavy metals associated with the fossil fuel industry. The cost about to be imposed on the consumers of Alberta is 100% of the cost of a massive power line to send coal-fired power expansion to southern Alberta and for the expansion of power plants.

I would like your comment on that. It sounds more like it's about the sustainability of the fossil fuel industry as opposed to a sustainable supply of transportation and home heating and electricity for Canadians. It sounds to me that it's far more about a narrow analysis of what the implications might be for the fossil fuel industry if we don't continue to subsidize and downgrade our standards.

Perhaps you both could answer that.

Dr. Hyndman, you mentioned that it would be a great bar to the continued upgrading of fuel in Alberta. Yet the very reason why all the upgraders have been cancelled in Alberta is because the Government of Canada chose to fast-track the approval of pipelines so that the product can be processed in the United States. So I'm seeing that as a bit of a specious argument.

[Dr. Rick Hyndman]

I'll take the last one first.

The reason why some of the upgraders have been cancelled is because of the underlining economics of it. It's already marginal or worse to upgrade the oil, the bitumen, in Alberta relative to adding an upgrader onto a big refinery in the U.S.

I mean, the pipelines can ship light crude oil or bitumen. The existence of the pipelines is not what kills the upgraders. It's the underlying economics and the challenge they have.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

And regulatory uncertainty.

[Dr. Rick Hyndman]

Yes, but there is regulatory uncertainty south of the border as well.

I think if we were to add on something that multiplied the regulatory uncertainty in Canada, my point was that this would be a death knell for anything, and soon, such as for upgraders where people just say, “I can't invest; I'm not going to put down billions of dollars in this environment until I know what the costs are going to be relative to my competitors.”

I think the policy is not about the sustainability of the oil and gas industry that you talked about in your earlier point. It's about supplying energy to Canadians. We don't have any easy answers. If there were easy answers, we would do them. But they're aren't any easy answers to replacing coal in the next ten years in Alberta.

What is it that we're going to meet it with? Wind is getting up to the limit on what that system can take. It's a thermal system. Unless with every coal plant you put another gas-fired turbine next to it to meet the fluctuations in supply and match the demand.... You know, you can't just build out wind indefinitely.

I'm in Mr. Turk's territory here, but I spent a lot of time in electricity in a former life, and I know that there are system requirements. And oil and gas? I don't see anybody giving up gasoline and diesel yet. So the development of the Canadian oil supply and the oil sands is providing a secure source in North America. It's an economic opportunity. We're doing what we can on technology and on implementing what is already available to reduce the emissions intensity of this activity. But--

[The Chair, Conservative, James Bezan]

I'm going to have to cut you off there, Mr. Hyndman.

One more question.

Mr. Warawa, take us home.

[Mark Warawa, Conservative, Langley, BC]

Thank you, Chair.

Again, thank you for your very enlightening testimony.

The fact is that the target set in Bill C-311 came before the global recession and came before President Obama's new administration in the United States. It came with no obligations on the major emitters. So the targets now in this new reality are unrealistic and, as you've said, do not provide a good policy.

The fact is that before we became government, the Liberals were in government for 13 years. They set targets and ended up 35% above those targets, with growing emissions. The fact is that this government is committed to targets of 20% reductions by 2020, and none of the witnesses have supported Bill C-311 as being a good policy that would cause us to remove ourselves from a North American approach.

In summary, are we on the right track by having a North American approach, North American targets, as we go into a new international agreement? In summary—yes or no—should we have a North American approach?

[Dr. Rick Hyndman]

Obviously, we need to align with what's going on in the U.S. As was stated earlier, our automobile industry is integrated and our energy systems are integrated. We need to reflect that in the policy we put in place here. Yes, we need to be comparable to and aligned with the U.S.

[Eli Turk]

Yes, we obviously need to take into consideration our largest trading partner. As I said, for our sector the integration of the North American electricity grid is a key component, so a North American perspective is very important to any kind of solution.

[Mark Warawa, Conservative, Langley, BC]

Thank you.