Environment Committee on Nov. 19th, 2009

[The Chair, Conservative, James Bezan]

I call this meeting to order.

I apologize that we are starting a little late because of the votes in the House, but we'll try to get through at least two good rounds of questioning after we have our opening presentations.

We are going to continue with our study of Bill C-311, An Act to ensure Canada assumes its responsibilities in preventing dangerous climate change.

We're very pleased, and fortunate, to have two distinguished witnesses at committee today. From the European Union, we have His Excellency Matthias Brinkmann, Head of Delegation and Ambassador Designate for the European Commission. And from the British High Commission, we have His Excellency Anthony Joyce Cary, High Commissioner for the United Kingdom to Canada.

I want to welcome you both to committee.

We'll start with His Excellency Ambassador Brinkmann for opening comments. We'd appreciate it if you could keep it under 10 minutes.

[His Excellency Matthias Brinkmann]

Thank you very much, Mr. Chairman and honourable members of Parliament. I would like to thank you for inviting us here and giving me the opportunity to inform you about the position of the European Union running up to the Copenhagen meeting. I will explain that to you, and I am ready to answer some questions, but you will understand that I do not intend to comment on internal policies or positions in Canada.

First, I'll tell you overall what we are planning to do, and then I'll go into more detail on mitigation, low-carbon growth plans, and financing.

Copenhagen is a rare opportunity for global action. As we all know, it has been 12 years since the Kyoto Protocol was agreed upon. With world emissions still rising steadily, waiting any longer to act will be too late to prevent dangerous climate change. We're just weeks away from Copenhagen, and all parties to the negotiation need to inject new momentum into the process. The pace of the negotiations must be stepped up.

For us, the outcome of Copenhagen needs to include provisions on the two-degree Celsius objective, ambitious comparable emission reduction commitments by developed countries, appropriate mitigation action by developing countries, adaptation, technology, and the deal on financing.

To achieve this, we have been going for a binding agreement. That seems to be unrealistic now, but we at least need the elements for a legally binding agreement that should start on January 1, 2013, build on the Kyoto Protocol, and incorporate all its essentials, including the principle of common but differentiated responsibilities and respective capabilities. Such an agreement should be ratified by all countries, including those that are presently not bound by the Kyoto Protocol. These countries should all take immediate action.

As to the mitigation and low carbon growth plans, climate change must be limited, as much as possible, in order to prevent the multiplication of extreme weather events and their catastrophic consequences. Keeping the global average temperature rise within two degrees Celsius compared to pre-industrial temperatures is the objective recommended by the scientific community, and it is recognized by the recent G8 summit in L'Aquila.

To achieve this objective, global greenhouse gas emissions must peak by 2020, at the latest, and be reduced by at least 50% by 2050 compared to 1990 levels. They should continue to decline thereafter. This 2020 objective should provide both the aspiration and the benchmark to establish mid-term goals subject to regular scientific review.

Obviously the developed countries have the greatest responsibility to contribute to these emission reductions. Science tells us that they should reduce their collective emissions by 25% to 40% by 2020, and by 80% to 95% by 2050, compared to 1990 levels.

The European Union has consistently reiterated its commitment to moving to a 30% emission reduction target by 2020, provided that other developed countries commit themselves to comparable emission reductions, and that developing countries contribute adequately according to their responsibilities and respective capabilities. I can also say that independent of an international agreement, the European Union has already made a legally binding commitment to a 20% emission reduction by 2020 compared to 1990 levels.

We are happy to see that some developed countries have increased their level of ambition for emission reduction commitments, including Japan, Norway, and Australia. However, the collective developed pledges for the time being only amount, as a maximum, to a 17% reduction compared to 1990 levels. This, of course, falls a long way below the 25% to 40% reductions that the scientific evidence requires. We therefore call on other developed countries to increase their efforts.

However, efforts by developed countries only, without additional action from developing countries, would not be enough to avoid dangerous climate changes. Therefore, it would be important that developing countries, as a group, also make an effort to limit the growth of their emissions by 15% to 30% below business as usual by 2020. Low carbon growth plans, LCGP, are an effective way for all countries to integrate climate concerns into their policies. The European Union, in fact, proposes that all countries, except the least developed countries, draw up such plans by 2011. They should include nationally appropriate mitigation actions, so-called NAMAs, which provide the information for identifying the needs for financial, capacity-building, and technology support to be provided to these developing countries. All plans should include credible mid-term and long-term objectives and be based on annual greenhouse gas inventories.

In the development of low carbon growth plans, developing countries should identify the actions they would like to undertake and lay out how these actions would be funded, either using the country's own resources or through the carbon market or supported by capacity building, financing, or technology support. Mitigation by all countries should be subject to measuring, reporting, and verification in order to ensure transparency, accountability, and enhanced public and private confidence for the achievement of global and national objectives.

As to the financing, that will be a central part of an agreement in Copenhagen. A significant but gradual increase in additional public and private financial flows is needed to help developing countries implement ambitious mitigation and adaptation strategies. The European Union estimates that the total additional cost of mitigation and adaptation in developing countries could amount to around €100 billion annually by 2020. That's $150 billion to $160 billion Canadian. This should be made through a combination of developing countries' own efforts, the international carbon market, and international public finance.

The EU is ready to take its fair share of the global effort by setting an ambitious mitigation target that would generate greater financial flows to developing countries through the carbon market and provide its fair share of public support. In addition, private financing will be stimulated by developing a broad and liquid carbon market based on robust cap and trade systems in developed countries and sector accrediting and trading mechanisms for action in developing countries. The overall level of the international public support required is estimated to lie in the range of €22 billion to €50 billion per year by 2020.

All countries, except the least developed, should contribute to financing on the basis of their ability to pay and their level of emissions. A global distribution key based on emission levels and on GDP should therefore be agreed to with a considerable rate placed on emission levels. The rate on emissions should increase over time to allow for adjustments of economies. This means that developing countries will be net recipients while developed countries will be net payers. This approach takes into account the changing status and capacities of all countries. As far as financial sources are concerned, the European Union sees the money flowing from a number of different channels and believes that there's no need to create one single fund centralizing all financial support.

Financing for mitigation should be demand-driven on the basis of mitigation actions and low carbon-growth plans. A similar bottom-up approach should also be taken for funding for adaptation, which calls for the gradual integration of adaptation of international development strategies and poverty eradication plans, regular coordination of support in country, regular reporting via national communications, and exchange of good practice.

Moreover, the European Union stresses that fast-start international public support, up to 2013, is important in the context of a comprehensive, balanced, and ambitious agreement. The purpose should be to prepare for effective and efficient action in the medium and longer term and avoid delaying ambitious action. The estimate put forward by the European Commission identifies a global figure in the range of $5 billion to $7 billion per year. The European Union's contribution will be conditional on other key players making comparable efforts.

I thank you.

[The Chair, Conservative, James Bezan]

Thank you, Ambassador. We very much appreciate those opening comments.

Your Excellency Cary, you have the floor.

[His Excellency Anthony Joyce Cary]

Thank you very much for this invitation.

I think I can be briefer than Matthias, because he has set out the European Union's position, which is the United Kingdom's position because we are a member of the European Union, and this is a joint position of the whole of Europe. But what I thought might be helpful for the committee is if I just tried to give you a sense of what the context is in Britain for this whole debate.

Until perhaps four or five years ago, the issue of climate change was seen as an environmental one and a soft issue, almost an esthetic issue. In the last few years we now see it as a hard international security issue, and I have circulated a paper to the committee that explains that climate change is now at the centre of our national security strategy. The national security strategy indeed says that, and I quote: “Climate change is potentially the greatest challenge to global stability and security, and therefore to national security.”

So this is an issue that's at the centre of our national policy and at the centre of foreign policy, so that I, for example, at the British High Commission in Ottawa have three members of staff working almost full time on the issue of climate change, and I have one in Vancouver, and that was a decision made by my foreign secretary, that he would reduce my resources in some areas but insisted that because this was the top priority for the foreign office, I should have the resources to be able to conduct effective policy in this country on that subject.

Because of this reframing of the issue as a national security issue, we have now created a department of government for energy and climate change to try to integrate policies that were previously conducted separately—and often there were conflicts between policies being driven on the environmental side and on the energy side, for example. So we have tried to integrate that, and the effort has been very much driven first by Tony Blair and more recently by my Prime Minister, Gordon Brown, who see this as a central issue for national policy.

So it's at the top of the agenda of the foreign service. It's at the top of the agenda of the Treasury, because of the financing implications and the economic implications. It's at the top of the agenda of the Ministry of Defence because of the security implications. It's at the top of the agenda of the Ministry of Transport, the Ministry of Health—really, across government, and as I say, we now have a department of government dealing with it.

The other piece of context I wanted to explain to the committee is that this is an issue that has cross-party support in Britain, so that the Conservative Party is very strongly in favour of this agenda and is driving it in Britain as hard as the government is. Indeed, when we had a climate change act, which again is set out briefly in the paper that I've circulated to you, but which was a very ambitious piece of legislation with huge economic implications, you might have expected a bill of that ambition to be very highly contested in Parliament, but that actually passed in Parliament almost without opposition. So there's a very wide political consensus.

And that consensus is also shared by our business community. This is, I think, something of interest because in the early 1990s there was a famous headline in The Economist that said “Bye bye greens — See you in the next boom”, the assumption being that—in those days it wasn't so much climate change as the issue of the ozone layer and so on and the beginnings of the discussion of sustainable development—all of that would collapse with the economic recession because it was a sort of luxury. It was something for the good times that we could afford to put aside.

This time, despite what have been very difficult economic circumstances in Britain as a result of the market crash, the consensus has remained extremely strong, including in the business community, that this is not an agenda they can afford to abandon. Indeed, they see huge economic opportunity in trying to be ahead of the curve and trying to drive the agenda rather than be pulled along by it.

So we've had the Confederation of British Industry, which is our main business lobbying group, if anything, urging the government to be more ambitious. And the business community is very strongly behind the transition that we believe needs to be made in our economy to convert to a low-carbon economy.

I know you only want me to speak for six minutes, so I will stop there.

All I want to say for Copenhagen is that we share entirely the positions that have just been set out by Matthias Brinkmann, but I would list them under three headings.

We want an outcome that is ambitious, which means not only that the world signs up to the two degree Celsius goal but has the ambition to drive short- to medium-term targets that will actually get us there. That means peaking our greenhouse gas emissions by 2020 through a combination of developed and developing country action. It will mean including aviation and shipping and deforestation within the agreement, so it has to be ambitious.

It has to be effective. If it's to be effective, then it must be universal. We would like to have a single legally binding agreement, which I realize won't be negotiated at Copenhagen, but that we hope can follow political undertakings made at Copenhagen. It must have adequate monitoring, reporting, and verification so the undertakings people make can be properly tabulated. And I think we need to develop a global carbon market if we're to have an effective agreement.

So it must be ambitious, it must be effective, and finally it must be fair. If it's to be fair, that means we have to take on common but differentiated responsibilities. My Prime Minister has set out a view that we need annual financing flows of about $100 billion by 2020. We've subsequently agreed in the European context that should be €100 billion. That would include a contribution from developing countries, because we think all but the very poorest should also be contributing to the financing flows that are needed. To be fair, we have to take account of the capacity of different countries to pay and to contribute, and the net flows will naturally be toward developing countries, which will need help in managing the transition.

Thank you very much.

[The Chair, Conservative, James Bezan]

Thank you, High Commissioner.

We appreciate those opening comments from both Your Excellencies.

As requested by Ambassador Brinkmann, and I know in a previous conversation I had with High Commissioner Cary, they aren't going to be answering any questions that involve our internal politics and policies or be speaking specifically to Bill C-311. I do ask and encourage all members of the committee to take that into consideration since we are definitely privileged to have such distinguished gentlemen at our table.

With that, we'll go with the seven-minute round and we turn it over to you, Mr. McGuinty.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks, Mr. Chair.

I want to thank our two guests for coming, Mr. Chair. I don't want to ask them about anything specific to Canada's internal political debate about the climate change crisis and what the state of the situation is domestically. But I think we have a responsibility to ask these gentlemen, Mr. Chair, in their positions representing either one nation-state or in the case of the European Union—you'll forgive me, Ambassador--how many states are there now in the EU?

[His Excellency Matthias Brinkmann]

Twenty-seven.

[David McGuinty, Liberal, Ottawa South, ON]

Twenty-seven and growing, I'm assuming.

Can you briefly give Canadians and this committee a sense of how extensive the preparations were in the plan that has been delivered to the EU and the U.K.? How large is this plan? How comprehensive is this plan as you continue with the Copenhagen round of negotiations?

[His Excellency Matthias Brinkmann]

It is a plan that covers the areas I've mentioned. It has been discussed for years in the European Union, in the instances decided by counsel at the highest level, and binding all 27 member states. As Anthony said, we have global targets for the European Union as such. Within the union, some countries may exceed these targets, others may not able to meet them, so we level this out. But collectively we are subscribing to these targets now.

We have extensive documentation on that. Everything is on paper. Everything is agreed. So it is comprehensive and it is fully agreed among member states.

[His Excellency Anthony Joyce Cary]

Yes, I agree. It has been a central issue for European policy. It's probably been the top agenda item on the meetings of heads of state and government for the last few years.

Their last meeting was particularly focused on this because we needed to prepare a joint position for Copenhagen. It was a very difficult meeting. There was a lot of very hard discussion, because for some countries within the European Union, the implications of our policy will be very difficult. I think of countries like Poland, which is still heavily dependent on coal, for example, and a country like Spain, which is having great difficulty in meeting the Kyoto targets and which indeed has been increasing its emissions. But as Matthias explained, there are other countries, such as the United Kingdom and Germany, which are well ahead of their targets and which can even this up in the union as a whole.

But the position has been fully negotiated and fully thought through. I would just add, because I didn't say it in my opening statement, that speaking for the United Kingdom, we took on a target of 12.5% improvement on 1990 by 2012. We're at the moment on target to deliver probably exactly double that by 2012. I think we'll be 25% below 1990. We've committed to 34% by 2020 or 43% in the context of an international agreement if there can be an international agreement at Copenhagen.

[David McGuinty, Liberal, Ottawa South, ON]

So any European Union citizen can get online and, the last time I checked, check over 1,000 pages of analysis, documentation, targets, plans, calculations, and modelling, all of which has been delivered up well in advance of the Copenhagen round of negotiations. That's my recollection, having looked at the EU site not too long ago, Ambassador, so I'm assuming that's what you are implying by having a plan, having that plan delivered up to 27 nation-states under the rubric of the EU, and having all of that fulsomely done in advance of the Copenhagen round.

Can I go to a second theme for your advice? There's a lot of talk from some quarters in this country and elsewhere. The most prominent spokespersons who put forward a view that I'm going to repeat are very hard-right Republican senators in the United States Senate, but there is a position out there that it is impossible to have a true and verifiable international credit system. Both of you have spoken to it in your remarks about the verifiability, the measurability, and even the sincerity of those credits.

In this nation, not to get into detailed debate, it is the view of one party that international credits shall not form a part of our plan and shall not be even considered in the context of Copenhagen negotiations. Is it your experience that this view is a mature view and lines up with the preponderance of international practice and opinion?

[His Excellency Anthony Joyce Cary]

The position of the British government is that in order to drive the transition that we believe is needed nationally, one way or another we have to price carbon into the national economy and into the international economy. We believe that carbon trading is one important tool for that purpose, but not the only one. We think it probably needs to be balanced also with levies of different kinds, and we have a climate change levy and other regulation to drive change.

But we think the price instrument is one important mechanism for driving the change, and we certainly believe that carbon trading is a useful mechanism. We already have a European trading scheme, which is trading more than $100 billion now, so it's a big market.

What I would also say is that up to now it has not been a very successful market. I think critics are right to say that the early experience of the European trading scheme has been mixed at best, if not bad. In the early stages, far too many permits were issued, so there was a collapse of the market. The Russian economy didn't develop as they had hoped, so they found themselves with a lot of sovereign credits that got dumped into the market.

We launched the second iteration two years ago. That created a much firmer price. We reduced the number of permits in the market, but that too.... The price has now gone down to roughly $20 a tonne as a result of a lot of people needing to get cash because of their cash positions being weak in the recession. They dumped a lot of credits into the market, and the price has fallen to $20. I think we're probably going to have to prop up the price through levies and other mechanisms.

But we're hoping that in the third iteration of the scheme we can have a fully auctioned system that will harden up the price. We certainly think the price at the moment is not high enough in itself to drive the transition that's needed; nevertheless, carbon trading is an important tool.

[The Chair, Conservative, James Bezan]

Thank you. Time has expired.

Mr. Brinkmann, if you can, just give a very brief reply. We are on a tight time schedule, because this room is spoken for at one o'clock. If we want to get around and have everybody have fair comment, please be very brief.

[His Excellency Matthias Brinkmann]

Okay, very briefly, just to make clear what our position on this carbon market is, we think we should develop an OECD-wide carbon market based on an internationally linked cap and trade system by 2015 and then expand to economically more advanced developing countries by 2020.

[The Chair, Conservative, James Bezan]

Mr. Bigras, for seven minutes.

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

Thank you very much, Mr. Chair.

I would like to thank our witnesses who introduced us this morning to what I would qualify as a refreshing view. Furthemore this view comes in addition to the Chinese and American statements calling for a comprehensive and immediate agreement. It shows, I think, that Copenhagen cannot fail if the industrialized countries decide to seat around a table. And Canada is one of these countries.

I have a simple question: what do you expect from Canada at the next UN Conference of the Parties to the Climate Change Convention?

[The Chair, Conservative, James Bezan]

Gentlemen, you can answer that the way you feel comfortable.

[His Excellency Anthony Joyce Cary]

I didn't intend to comment on Canadian policy, but I would say that at the G8, Canada already agreed that the world should strive to keep temperature increases in industrialized countries to two degrees. And that certainly implies very radical policies.

[His Excellency Matthias Brinkmann]

I have already explained what we expect from the industrialized and OECD countries, and Canada is obviously a member of these two groups.

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

From what I gather, it means that the industrialized countries, including Canada, would have to aim at a 25% reduction target by 2020 based on the 1990 levels.

I have a second question. Would you say that 1990, taken as the base year—and I know that all kinds of base years have been tossed around, like 2005 and 2006—is fundamental for the European Union and if so can you tell us why?

[His Excellency Anthony Joyce Cary]

Well, the Kyoto Convention was based on 1990 as the base year. For the sake of consistency, those who wish to see the next stage of the international framework being built on Kyoto, being an extension of Kyoto, would, for consistency's sake, like to keep 1990. For our part, the U.K. is continuing to use 1990 as the base year from which it calculates the contributions it's making.

[His Excellency Matthias Brinkmann]

As I have explained, that's for us, for developed countries, but for developing countries it is as compared to business as usual. So it's no different.

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

As to the carbon market, the doomsayers would be tempted to say that the European experience proves that such a market does not work. You were one of the groups that developed this market which is much to your credit.

The problem in this case is not necessarily with the system per say but rather with the way allocations were managed over the past few years. What have you done so far? What do you intent to do so that, through these allocations, we can get a fairer price and have an efficient tool to meet the greenhouse gas emissions reduction targets? Could you give us an example that we could apply to the development of an efficient North American market?

[His Excellency Anthony Joyce Cary]

As I said, in the third iteration of the European scheme, we hope to have a fully auctioned system, and I think that is the best way of managing the allocation, because then the market can determine how that allocation should be made. It depends on how much people are willing to pay for the permits. In that way, the allocation is driven by market expectations, and that would be the best way of doing it.

As I said in the early stages, we had too much permit put into the market, which meant that we had weakness in the market, but we have a second problem, I would say, in Europe. There is some uncertainty about the right of the European Commission to limit the allocations given to member states, and we have two member states that have brought a case against the European Commission, saying it has been too aggressive in reducing their allocations. That case is still being heard in the European Court of Justice. The first judgment was against the commission, and if the commission loses that case, that could be very damaging to the market if countries are able to increase their allocations.

I won't go on much longer, but one other point I would make is that there are undoubtedly problems with carbon markets. You get people who are looking to “game” the system and are going into this as a profit-making opportunity by acting as brokers and middlemen and so on--I wouldn't say manipulating the market, but at least trying to find a rent-taking position within the market. I think we should be honest about that. That is a problem with carbon markets and something we have to be very careful about. I would also say there's been a problem in the early rounds with the auditing of things like the clean development mechanism, which we need again in the next stages of developing an international framework. We need much better monitoring, verification, and reporting so that we can be more confident about the basis for the market.

[The Chair, Conservative, James Bezan]

Okay.