Environment Committee on Nov. 19th, 2009

[His Excellency Anthony Joyce Cary]

I think the whole basis for the European Union is that we have tried, as a collection of countries, to identify our common interests and to develop policy together to meet our common interests. Just as within a country you may have one region that is very well able to meet the target and another region that won't, but as a country you're able to meet the target because you can balance those against each other, so within the European Union we have some still developing countries that are still growing parts of their economy that are going to be very carbon-intensive, and we have others that are in a different position, so we can balance out. As a union, we can deliver certain targets that we can agree on between ourselves, and we can then, through an internal negotiation, work out how we are going to divvy that up. I think it's much more effective if we can act together for that reason.

[His Excellency Matthias Brinkmann]

I think the basic rule of why we are doing all this is because we have an internal market. The European Union is like one country. It could be Canada with its provinces, and we can compare it like that. We have one market, and we need to have a level playing field. That's why we join sovereignty and decide collectively on overall goals and legislation in general. That's the reason.

[Mark Warawa, Conservative, Langley, BC]

I think it's important, because there's a principle I'd like to share. Your economies are linked. You even have a common currency. You're intricately linked, except the U.K., of course, which has its own currency. But Europe as a whole is very much linked.

I'm sure you're aware of our number one trading partner, and that's our neighbour to the south, the United States. Our economies are linked. As of last year, we have a new President in the United States, President Obama. Since his election, there has been ongoing work on climate change. A clean energy dialogue has been ongoing. Canada's position now is that we have a continental approach to climate change, as Europe has a continental approach, because our economies are linked. We have an ongoing commitment to a more efficient electricity grid, so that all the renewable types of energy used can be connected, and to a continental cap and trade system. Negotiations are ongoing.

Europe has its target. And different countries, as you've shared, have different challenges. Not all countries are able to meet these targets, but collectively they are. Also, as we approach the new international agreement, it has to be fair and practical. It is a very important issue that as a world, a global agreement, a framework, is achieved so we can all tackle the issue of climate change.

Canada's position is that we do it continentally, as Europe is doing it continentally. And the targets have to be fair.

I'd like to ask you where the developing countries play into this new international agreement. Again, in the spirit of fairness, it's not possible.... We've been discussing the issue of climate change in committee, in the House, for a number of years, and we realize that it is a very important and critical issue that has to be dealt with properly. Without all the major emitters participating, we cannot reduce greenhouse gas emissions globally. We've heard that from the scientists. So all the major emitters have to be participating in some way.

The EU is asking developing countries to limit their emission growth to about 15% to 30% below business-as-usual levels by 2020. Do you have views on how developing countries should share that responsibility to meet that aggregate target?

[His Excellency Anthony Joyce Cary]

That's a matter for negotiation. You would have to look at different countries and what they're able to contribute and what would be reasonable as an equivalent effort.

Without commenting at all on Canadian policy, I would just say that I think that Europe at Kyoto was prepared to proceed with the commitments it had made, despite the fact that the U.S., in the end, was unable to ratify the agreement and that China and others were not a part of it. There were some who said that this would be a ruinous thing to do and that we would be fools to follow through on our Kyoto commitments. But we believe it was a necessary thing for the world and that somebody had to start this process. We couldn't all wait until everybody moved together, because it wasn't going to happen. Somebody had to create the momentum and get the thing going.

I think that although we do act as a single union and move together and have a single target as a union, the individual countries still have national plans and are driving them, because they believe it to be necessary, not simply because they're going to wait for the rest of the European Union and move only when the rest move.

[His Excellency Matthias Brinkmann]

If I may also agree with Anthony, in my country, Germany, we also are very ambitious and see this not as a burden but rather as an opportunity. The business community fully subscribes to the policies of the government, and they see a chance to prepare for markets of green technology, green energy production, and so on. There's vibrant and vivid technology research being done in Germany. Individual member states can very well go further and announce further targets that are more ambitious than what has been collectively agreed to.

[The Chair, Conservative, James Bezan]

Your time has expired. Thank you very much.

We're going to go into our five-minute round. I'm going to keep you right on five minutes, because we don't have a lot of extra time and we want to make sure everybody gets a chance to ask their questions.

Mr. Scarpaleggia, perhaps you could start.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you very much, and welcome.

I'm just trying to wrap my mind around your process. So you have a target going into the negotiations. It's a binding target. Correct?

[A witness]

Yes.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

The individual country targets will be developed later on through negotiation within the EU. Is that correct?

[Witnesses]

Yes.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

So then the naive question is, who does your EU-wide target bind? It's binding on whom? In other words, if the 27 countries haven't agreed to individual country targets, who is the EU's target binding on?

My second question is kind of a related question: When you say it's binding, does that mean there's no negotiation, that you will not be negotiating your binding EU target whatsoever in response to what other countries might come up with?

[His Excellency Anthony Joyce Cary]

Perhaps I could answer first.

We've already agreed that we will offer 20% by 2020 in the context of an international agreement. If there can be an ambitious agreement in Copenhagen, then we've said that we will want to increase that to 30%. So we will be affected by the ambition of the outcome from Copenhagen.

On the question of who it binds, it binds the European Union. Within the next two weeks, the Treaty of Lisbon is going to come into force and the European Union will have a legal personality. But we are taking on a commitment as a union, and then through our national policies we will aim to deliver on that together. If the European Union finds that the overall target is not being achieved, then the heads of government will meet and will have to decide on who will have to make a bigger national effort.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

That sounds like a very complicated negotiating process.

[A witness]

That's how we live.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Again, a naive question: how do you know that 27 entities will come to an agreement on individual targets? That's one question.

The other question is, will there be cross-subsidization from one country to another? For example, if there's a country that's weaker or less able to achieve an ambitious target, would there be some kind of fiscal cross-border assistance from one country to another?

In Canada, when we talk about reaching the 2020 target of a 25% reduction below 1990 levels, there's always the caveat that there would have to be redistribution of income. For example, a certain percentage of moneys raised from the oil sands would remain in Alberta. So you'd have subsidies to one part of the country that wouldn't apply across the country in order to achieve this idea of keeping a certain amount of money in a certain region. Is that the kind of model you'll be dealing with, or is just going to be emissions credit trading and that's it?

[His Excellency Anthony Joyce Cary]

We have within the European Union a regional fund that isn't specific to climate change or to the carbon market but seeks, through having a central part, sort of an equalization mechanism and distributes money to those in need of additional federal funds to manage their development. No doubt there may be a chapter opened within the regional fund that would be specific to the undertakings that the union is making on carbon, but that hasn't yet happened and we'll have to see how that develops.

[His Excellency Matthias Brinkmann]

We not only have the regional fund, we also have the cohesion fund and other funds. So there is a certain kind of redistribution. We have net contributors and net receivers in the European Union, and that is a continuous process.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

You negotiate those--

[The Chair, Conservative, James Bezan]

Your time has expired, unfortunately, Mr. Scarpaleggia.

Mr. Woodworth, five minutes or less.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you very much, Mr. Chair.

Thank you, Your Excellencies, for attending here today. I know that the world of diplomacy is a delicate place to be, and I commend you on the manner in which you presented yourselves.

I'd like to begin by picking up on a statement that you made, Mr. Brinkmann, that the EU is one market and therefore you need a level playing field. I'm old enough to remember when the EU was the European Common Market. So when you say that, I think in terms of an economic market. Is that what you meant when you said it was one market, an economic market, and therefore you need a level playing field?

[His Excellency Matthias Brinkmann]

Yes, of course. It all started out by economics. Now we also have a political community. So we have one economic market, certainly, but that's only part of what the European Union is.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Understood. But that common economic market means the fluidity of movement of employers and employees across borders. So when you said that it was one market and therefore a level playing field was needed, I was thinking of the issue of leakage, if I can use that term. That is, if the price for emissions is greater in Germany than it is in France, there might be a danger that German employers will move to France in order to take advantage of lower emission rates. Is that the kind of level playing field that we're talking about, where every sector, every employer, has the same rules to play by so there's no advantage in going to one country or another?

[His Excellency Matthias Brinkmann]

First, as to the internal market, we have what we call the four freedoms: freedom of movement of people, goods, services, and capital. Concerning the carbon market, the price of carbon is established by the system, so there is auctioning going on. I understand the market forces see to it that it's the same price, but I'm not a specialist.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

I want to understand the logic that, if you did have different prices in different countries, that would create a potential economic problem for countries. Do you agree with that, Mr. Brinkmann?

[His Excellency Matthias Brinkmann]

Yes, of course. It's a huge market of 500 million people, so I don't know if there are differences in carbon prices, but in consumer goods prices and so on there are market forces at play.