Environment Committee on Nov. 5th, 2009

[Jeff Watson, Conservative, Essex, ON]

Mr. Lazar, just as a quick starting point, I think Mr. Warawa was pointing to some previous testimony by Mr. Drexhage, who talked about the transformation that would have to occur when he was asked a question about whether or not we should be somewhat more like Sweden or Denmark.

You pointed to Finland with respect to your sector. How similar is the Finnish economy, broadly speaking, because obviously we have to consider beyond your particular sector? Is it a fair comparison? I think the question from Mr. Warawa was more pointed to a comparison to our economy. Should we be looking more like Denmark or Sweden? I don't believe we have similar economies, as a starting point. That impacts the question of what the end point should look like and how we get there.

Am I understanding you correctly that in this process of determining where Canada is going, you may be more inclined to see your sector coming out on top than perhaps other sectors in getting there? I think it's a fair question to ask. You're asking the government to make certain policy decisions. There will be some winners and some losers. To get where we're going, that decision has to start with an understanding of what the economy looks like.

I don't know if I'm coming across clearly enough on that. Let me just launch it toward you.

[The Chair, Conservative, James Bezan]

Mr. Watson, your time has expired.

Mr. Lazar.

[Avrim Lazar]

We're not looking for our sector to come out on top of other sectors. We're just looking to be able to keep the jobs we have in rural Canada. If you're talking about the trade-off between, say, oil and gas, and the forestry sector, we don't want to be disadvantaged to accommodate oil and gas. We want to make certain that what's done recognizes our position.

The reference to Finland wasn't to say that we should restructure our economy like theirs. We can't and we won't. But we would do well to learn from some of the smart players in global competition that we should enter this not as innocents but with a sense of self-interest as a country. So let's get our greenhouse gases down, and let's do it in a way that's responsible and aggressive. But at the same time, let's recognize that this creates a marketplace, a global, policy-driven marketplace that has huge implications for jobs for Canadians. In addition to wanting to see the regulatory scheme, we want to see a policy stance that asks where the jobs are and that integrates future employment into the thinking. We think Finland has it right.

[The Chair, Conservative, James Bezan]

Thank you.

Monsieur D'Amours.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Thank you, Mr. Chair.

Mr. Lazar, let's look at the reality of the pulp and paper industry. As you know, my riding is home to a few plants, despite the fact that there are now just two left. We lost a Bowater plant in the Dalhousie region. Fraser Papers in Quebec is a good example of a company that used green energy to make environmental changes. So there is a tendency to look to the future, to renewable energy.

Do you think that the government should do more to channel financial assistance directly to those plants that are willing to use bioenergy or a forest waste-based cogenerator? Indeed, wood can be used to make chips for burning, but forest waste that is not being used can also do the job.

Is your industry heading in that direction, trying to become more green, but with the government's cooperation?

[Avrim Lazar]

It is critical that the government work with us to bring about these changes, this transformation. We would prefer there to be a global market in which only private companies would compete. But that is a dream, not the reality. In Europe and the U.S., the government is still involved in achieving this transformation. If we want to save jobs at home, if we want to be in the game, we need the government's help. Here is something very interesting: according to a study we did, the future of bioenergy in Canada will involve companies, infrastructures and plants that are currently in existence.

You can't build a bio-energy plant using forest waste and make any money if it's stand-alone. It has to be integrated. There are seven times more jobs when it's integrated into the existing world of lumber, pulp and paper, and forest products than when it's stand-alone. And the environmental footprint is far smaller when it's integrated.

There is a real way to protect jobs at home and improve our environmental performance. It depends, however, on a government investment, one that is at least equivalent to that of other governments.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

I am happy to hear you say that, Mr. Lazar. The U.S. government is sometimes criticized for not being proactive, but on this issue, in certain areas, it has been much more proactive than the Canadian government. Just consider black liquor and red liquor, for example, waste. The U.S. government determined that companies could receive a direct subsidy so that they could cut some of their production costs. The problem we have here in Canada is that our plants were not in a position to compete with other plants on a level playing field.

The government created a program to deliver funding, but with certain conditions attached. In the end, the final condition is that paper manufacturers need to have the money to do their own retrofits or environmental improvements. It seems that the industry is always on the hook for making the changes. If it can afford to make the changes, the government might help out. The government should instead be proactive and ask what it can do to help the industry, to help it become greener, to ensure its jobs are protected and pave the way for the jobs of tomorrow, the jobs of a greener economy, all the while, keeping a traditional industry alive, even if it is pulp and paper, even if it is the forest industry. It is a traditional industry that is shifting to a green industry.

Do you agree with that?

[Avrim Lazar]

Yes, the famous black liquor subsidy in the U.S. is the government's response, and we are very grateful for that response.

We needed that billion. We would rather have mountains of cash delivered to the door, but having money to invest in our mills is very useful. I don't want to dismiss it. The bottom line is that if we continually wait to see what the U.S. does and then try to react with a program that's a little less generous or a little....

What we need is a Canadian policy on industrial transformation.

Not the pulp industry, but the pulp, power, and bioproducts industry.

We have policies, but we also need the funding to get it done.

[The Chair, Conservative, James Bezan]

Thank you very much.

Your time is up.

Mr. Braid, you have the floor.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you very much, Mr. Chair.

Thank you to both of our witnesses for being here this afternoon and for your presentations and testimony.

Mr. Lazar, I'll start with you, if I could, sir.

It's clear that you've made tremendous progress in your industry from a processing point of view—reducing your carbon footprint, reducing greenhouse emissions. From a best practice perspective, in terms of the opportunity to extend some of the work and the progress you've made to other sectors of the economy, other industries, I'm curious as to whether you've explored that. Have you had discussions? Are there proposals that you might have?

[Avrim Lazar]

Certainly the concept of switching to waste-based biofuels is being discussed all over the economy. A lot of the biofuel industry has suffered a bit from there not being a full accounting of the greenhouse gas production. If you plant a crop, harvest it, bring it to a processor, create ethanol, and not count the greenhouse gases in the production—and this is allowed by Kyoto, so I'm not criticizing anyone—the overall environmental footprint is not as positive.

Our biofuels are actually waste based. There's very little greenhouse gas production. You'll see, for example, that the captured burn of methane in the agriculture sector is exactly the same concept. Something that would have come out as waste, and methane of course, does 27 times the damage than carbon dioxide. Something that would have come out instead is being used to displace fossil fuels.

To be fair—and I think this applies to the whole economy—this is hard. Let's not pretend there's a switch you can turn and everyone is green, or you take a boy scout pledge and an economy that's totally dependent on greenhouse gas production becomes independent of that. We're all groping. We're all trying to figure out how to do it. It's easy when we're doing policy debates to make it seem either impossible or very easy, but the truth is that all the sectors are trying to find ways. Sometimes it's easier and sometimes it's harder.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you.

I'm curious to hear your answer to this. Simply put, deforestation contributes negatively to climate change and it increases greenhouse gas emissions. Your processes are very environmentally friendly and sustainable. How do you extend that to the issue of deforestation? What sorts of environmentally sustainable reforestation practices do you have? How do you walk the side of that edge?

[Avrim Lazar]

We don't walk the edge at all; we're right in the centre of it. Deforestation is a huge contributor to greenhouse gases.

I have to acknowledge that most deforestation is a result of farming, not forestry, because people clear the lands to plant crops to feed their families in developing nations. That being said, in Canada we replant every single tree we take out. The UN recently did a study and concluded that deforestation from forestry in Canada comes out net at zero. I think the UN got it wrong. There is a bit of deforestation because roads aren't always generated as quickly as they should be, but that's basically a rounding error.

Regimes in Canada are partly favoured by the fact that they're provincially owned, and by law we need to regenerate. We've done very well there. I'd remind people that in Canada we still have 91% of our original forest cover after centuries of logging. We harvest less than one quarter of one per cent of the forest each year.

In some ways you could say that replanting is the lowest possible bar. We're now being held accountable, not for just regenerating the forest but for the ecosystem integrity of the forest that returns. Has there been erosion? Has there been an impact on endangered species? Does the forest ecosystem maintain sufficient integrity, not just to be a source of carbon storage but a home for biodiversity? The requirements on us for action become quite a bit more severe than simply regenerating the forest.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you.

Mr. McCabe, perhaps I could turn to you for my final question. You indicated quite clearly that you would like to see an opportunity for the agricultural sector to participate in a cap-and-trade regime by providing offsets or selling offsets. I think you mentioned, if I heard you correctly, that there's a model or an example in Alberta. Could you elaborate a little bit on that existing model or example?

[Don McCabe]

The first thing I just want to refute, even though he's a good colleague here from the forest sector, is that in agriculture we don't have any waste; we just have underutilized, underpriced opportunities, and so does he.

Moving to the Alberta system, the Alberta legislation, I believe, is a reaction to wanting to move ahead. This legislation came into effect on July 1, 2007, for firms that were emitting more than 100,000 tonnes of greenhouse gases per year. The system allowed compliance by internal reductions in companies, a $15-per-tonne payment to a technology fund, and in the area of offsets. So when it comes to the offset arena, in particular, Alberta has, as I mentioned earlier, garnered five million tonnes of offsets through the protocols they have recognized within their system.

Fortunately, agriculture was able to have “no till” recognized there fairly quickly, and they just are in the process of doing other reviews there now to bring in a nitrous oxide reduction protocol. There will be beef feeding protocols. There are issues for anaerobic digesters and all the rest of it. So here are the initiatives that Alberta is putting in place. They actually came and copied work that had been done at a national level to take to Alberta, and then the current federal system chose to copy what Alberta was doing to recognize protocols that were under discussion within the offset guidance documents. They just completed consultation with this government here recently. We are awaiting the opportunity to see where this is going to take us.

[The Chair, Conservative, James Bezan]

Thank you. The time has expired.

Mr. Hiebert, you get to take the final round.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

I'll give my time to my colleague, Mr. Warawa.

[Mark Warawa, Conservative, Langley, BC]

Thank you. It's been very, very interesting thus far.

I'd like to focus on the challenges that are unique to Canada.

Mr. Lazar, you said it's difficult to reduce greenhouse gas emissions when Canada is an exporting country. What's unique in Canada is we have a growing population, as opposed to Europe, where the population is not growing to that extent. We have a fast-growing population, primarily through immigration, so we have more people every year in Canada. We also export substantially, the United States being one of the major countries that we trade with, and to diversify, the country is also focusing on new trade agreements.

What are those challenges that are unique to Canada that would be different from Europe setting targets with a stagnant population and not exporting, but Canada exporting and a growing population? Is that correct? Are those some of the unique and different challenges that Canada has that are also making it a challenge to accept European targets?

[Avrim Lazar]

I'm not going to talk about European targets, but let's just talk about what the risks are, and there are risks on both sides.

So let's say we institute a very vigorous regime and it's not instituted elsewhere. What happens is the jobs are exported and the climate is not helped. That's not good. So we would expect, as an exporting nation, that we would take that into account. At the same time, let's say we don't do anything and our customers are doing something. They will not let us in. I'd say that we are at severe risk if we do not take proper measures in Canada on greenhouse gases, defining import barriers both in Europe and the United States, because they won't be willing to let their jobs go for having done the right environmental thing. So I think any nation that integrates the economic consequences--acting early and acting aggressively--will feel a great deal of compulsion to make certain that their workers don't bear the brunt of this because others aren't behaving as responsibly.

[Mark Warawa, Conservative, Langley, BC]

I'll stop you there. You used two examples, showing two extremes: one doing some very dangerous things to the Canadian economy whereby we would lose jobs, making extreme choices—which is the case with Bill C-311, I believe—and in the other example, doing absolutely nothing. In fact, Canada, through the clean energy dialogue, is moving towards a harmonized approach. We have set 20% by 2020. The United States is adopting very similar targets. In that example, we aren't going to be losing jobs to the U.S., and where it is a harmonized approach, tackling climate change has a North American target.

[Avrim Lazar]

Certainly we applaud the idea of having it harmonized within North America. We would caution that it's not just the U.S. that we have to pay attention to. It is also Europe and the non-annex I countries.

And let's not pretend that it's a simple piece of policy. It's easy to put a target out there, but it's actually the measures used to implement the target that tell the story, both in terms of whether or not it really impacts the climate and also in terms of the economics.

[Mark Warawa, Conservative, Langley, BC]

I have one last, very quick question. Are you aware of Canada's commitment to having 90% of our electricity come from clean, renewable sources by 2020?

[Avrim Lazar]

No, but as long as they pay us a nice premium for electricity from biomass, we're going to applaud it.

[Mark Warawa, Conservative, Langley, BC]

Thank you.

[The Chair, Conservative, James Bezan]

Thanks, Mr. Warawa.

Before we kick off our final round, I have a few questions.

I appreciate both organizations being here representing primary sectors in the Canadian economy. I appreciate your talking about the opportunity for a new revenue stream, whether through biofuels or using biomass to replace coal, possibly, in some of the thermal generation electrical plants, and also the whole avenue of carbon sinks.

There has been a lot of talk about cap and trade with offsets or about carbon taxes. A book just put together by the Pembina Institute and the David Suzuki Foundation talks about both. I'm reading that both your organizations prefer to have a cap and trade with offsets rather than a straight carbon tax to price carbon. Is that correct?