Environment Committee on Oct. 29th, 2009

[David McGuinty, Liberal, Ottawa South, ON]

I'm sorry, what other signatories to the UNFCCC have agreed to use 1990 as the baseline year?

[John Drexhage]

Parties to the Kyoto Protocol have—

[David McGuinty, Liberal, Ottawa South, ON]

Yes. Are we the only country, then, that's saying we no longer use—

[John Drexhage]

The United States has not made it clear. They've said 2005.

[David McGuinty, Liberal, Ottawa South, ON]

Yes.

[John Drexhage]

But the informal word in the corridors is that this won't be a showstopper at Copenhagen for them. I'm not sure whether it will for the Canadian government. We'll see.

Then there was a very clear enunciation by the Canadian government that as far as reaching that target is concerned—and this brings in Matthew's point about the costs associated with this—the target would be reached by domestic means alone; there would not be any international purchases. But we don't have any details yet in terms of how much flexibility would be provided to industry for making purchases overseas so that they can make their internal targets.

[David McGuinty, Liberal, Ottawa South, ON]

So the Government of Canada is saying to the world right now that we will achieve a 20% intensity reduction from 2006 without using international credits? Did I understand that correctly?

[John Drexhage]

The absolute target of 20% reductions from 2006 levels will not be met by international carbon mechanisms. That's right.

[David McGuinty, Liberal, Ottawa South, ON]

That's what the government is saying?

[John Drexhage]

Yes. That's what it has said internationally.

[David McGuinty, Liberal, Ottawa South, ON]

Is that possible, Mr. Drexhage?

[John Drexhage]

I guess Aldyen wants to answer for me, but I'll go on the National Round Table's analysis. They say it's possible, but that you're looking at a cost north of $100 a tonne, as Matthew has indicated as well.

[David McGuinty, Liberal, Ottawa South, ON]

Right.

[John Drexhage]

You're looking almost immediately at a price of $100 a tonne, and north of that, if you don't take advantage of the international mechanisms.

[David McGuinty, Liberal, Ottawa South, ON]

The minister said again yesterday, in media interviews widely, that there will be no agreement in Copenhagen. You mentioned that it's in deep trouble because of developing and developed country differences. Can you give us a flavour to help Canadians understand what that means? For example, is this a U.S.-China showdown, a U.S.-China-India showdown; is it about wealth transfer? What's really happening here?

[John Drexhage]

I'm sorry if it all sounds a bit too arcane for everybody, but it's whether you're going to go down one negotiating track or two negotiating tracks. What it's about is trying to get major developing economies more engaged in the mitigation issues.

The United States is forcing the issue by insisting that it will not sign on to the Kyoto Protocol as an amendment and hence will not participate in those discussions where developed countries are, down the track. So all developed countries now have said, and the EU is the last one to do it—and that's why it exploded in Bangkok—that they only want one negotiating track. The G77 and China see that as a betrayal of the terms of reference from the Bali action plan.

We'll see what transpires on Monday in Barcelona, but it could get pretty ugly.

[David McGuinty, Liberal, Ottawa South, ON]

So when the Chinese announced, I understand, in New York at the United Nations that they were seriously contemplating—I think for the first time ever—targets, and even intensity targets, and when our government turned its guns on the Chinese government and attacked it publicly through our minister, saying that it's not good enough, that we want harder targets, deeper cuts, and fixed percentages, how was that received, in your experience, within the Chinese government and administration?

[John Drexhage]

I have to be honest; I haven't heard at all how the Chinese government received that particular message from the minister. I didn't hear one thing or the other. I think there was a strong sense for many that it was an interesting.... The fact that there was no number yet is perhaps what pressed some governments to say that you can say it's going to be about a certain magnitude but that they'd like to hear what the number is. People are speculating that this will come out either in the summit with Obama in November or at the Copenhagen conference.

[The Chair, Conservative, James Bezan]

Thank you. Your time has expired.

Mr. Calkins.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you, Mr. Chair.

I know we're down to the wire for talking to our witnesses, so I'll get to the point, and hopefully I'll have a little time to share with my colleague Mr. Watson to make sure we both have an opportunity to get on the record.

I'm going to preface my comments. In testimony before the Senate banking committee, Bank of Canada Governor Mark Carney said that “Overall, there will be a subdued recovery, but there will be a recovery”, and this is good news for Canadians.

I'm going to ask Ms. Donnelly in particular, do you think that Canadians are particularly ready to buy into targets and a plan that basically is, from what I can see, just a recreation of the green shift that was offered to Canadians in the last general election, which the chief economist of the Toronto Dominion Bank, Mr. Don Drummond, called the “biggest fiscal shock” in Canadian history in the Globe and Mail today?

[Aldyen Donnelly]

My opposition to Bill C-311 is due to the shock it would promote. Every time we jump out and set a target that feels out of reach—I'm setting aside the question of whether or not it is in reach—we back whole communities into fear-based tactics. My position is that we know which those communities are; that's not uncertain. The prudent next move is to develop a strategy for working with the communities and finding out what's possible.

I don't mind the whole strategy being about trying to get to Bill C-311 types of objectives or another set of objectives. But I think that if you pass one more bill and haven't gone through that process, there's difficulty.

I also want to add a little comment about the whole international trading thing. Last year, in 2008, the United States discharged just over one billion tonnes of CO₂ equivalent from coal-fired power plants that are over 55 years old. We don't have a coal-fired power plant in Canada that is yet 45 years old, so when we're having this dialogue and talking about money flows, it's expensive to cut emissions here. I'm not saying don't do it, but when we have a new economy, writing off a 20-year-old plant is a lot more expensive than walking away from a 65-year-old plant.

Those are our special circumstances. Our 26% increase in goods-producing jobs since 1996 was from capital investment that came here and that did not go to the United States, and it was capital investment that came here from Europe. We have a special challenge and we have to go at this differently from anyone else.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

September's unemployment rate in Alberta was 7.4%. The provincial government is projecting a deficit of $7 billion this year. Under the scenario presented in this report, Mr. Bramley, Alberta's economy would be 8.5% smaller in 2020 than projected, our GDP would shrink between 7% and 12% below business as usual, and we would provide as much as $5 billion more in revenue to the federal government than we would receive back—that's over and above what we as Albertans already contribute to the Government of Canada beyond what we receive in services.

Albertans are responsible. I can tell you right now that they are responsible stewards of the environment; we stand ready to do our part. But the implementation of these requirements, I'm afraid, would drive investment out of and away from our province and our country, and I think the comments made by Ms. Donnelly have demonstrated that implementing unachievable targets in Europe has clearly driven investment out.

So I'm asking you, yes or no: does your model take into account potential capital flight out of Alberta and Canada?

[Matthew Bramley]

It certainly takes into account the flows of capital within Canada. The model—

[Blaine Calkins, Conservative, Wetaskiwin, AB]

So the answer is no, it doesn't take into account capital flight leaving Canada.

Does your model take into account the impact that the slow recovery or another recession or a double-dip recession would have on Canada's and Alberta's economy?

[Matthew Bramley]

The model uses a fairly modest projection of business as usual emissions growth between 2010 and 2020, which I think is a conservative assumption.