Environment Committee on Nov. 26th, 2009

[Jeff Watson, Conservative, Essex, ON]

Okay.

We heard from both the Pew Centre on Climate Change and Environment Northeast yesterday. In talking about the establishment of a North American cap and trade, they talked about the necessity of having comparable rigour in the system. I did ask the question on whether targets that are not closely or reasonably comparably aligned would create a situation where we don't have the comparable rigour. They said yes, and then they went on to suggest that there would be some problems. So looking at this 2020 situation here, not aligned, we would be in a position, I think, if I understood the Pew Centre's analysis correctly, of being a net buyer of credits until such time as that would drive the price of carbon up in the United States. Would you agree with that testimony?

[Prof. Yazid Dissou]

No, I would not agree. The similarity I want to bring in the debate here is if we have different targets in the different provinces of Canada, is this something that is not good at all? So if we have different targets in the provinces of Canada, this is something that is workable and we can achieve something. Saying that having different targets between Canada and the U.S. is something that is not doable, I don't necessarily buy that argument.

[Jeff Watson, Conservative, Essex, ON]

So you're suggesting that something that's minus 9% or 10% below 1990 versus if we adopted minus 25% below 1990 by 2020 wouldn't be a problem? Is that what you're suggesting?

[Prof. Yazid Dissou]

Okay, the program—

[Jeff Watson, Conservative, Essex, ON]

You wouldn't drive different rigour within a cap and trade system. Is that—

[Prof. Yazid Dissou]

Rigour—what do you mean by “rigour” here?

[Jeff Watson, Conservative, Essex, ON]

Our system would have to be more rigorous. The price of carbon would be different. The cost of credits would be different within—

[Prof. Yazid Dissou]

Yes, definitely. The target that we will be aiming at here will be more important than the one the U.S. will have, and in that respect the relative costs that we're going to bear will probably be higher. But as I said, as long as we have two or three markets that are linked together, this is something that will tend to equalize our climate costs. At the end of the day, we might be a net buyer of credits from the U.S. because we have more stringent targets.

[The Chair, Conservative, James Bezan]

Thank you.

Now to finish us off on the second round, Mr. Braid.

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

Thank you very much, Mr. Chair, and thank you to both of our witnesses for being here this afternoon. It's a very helpful and insightful presentation and testimony.

Professor Plourde, if I could, I'll start with you, please, sir. You indicated that of course as a percentage of total global greenhouse gas emissions, Canada represents about 2%. As a result, we need to, if I understand this correctly, participate in a larger market or jurisdiction to have an impact in terms of reducing greenhouse gas emissions and participating in a cap-and-trade system. Am I characterizing that properly?

[Prof. André Plourde]

I think what needs to happen is...Canada cannot act on its own. Major emitters must act. Whatever mechanism you want to put in place, whatever policy instruments you want to use, bringing down emissions is a different story than the mechanisms you're going to use to do it. The key thing is a lot of countries have to act, or the big emitters anyway.

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

That's understood.

Is the North American jurisdiction a large enough jurisdiction within which to operate?

[Prof. André Plourde]

In terms of having an effect on climate change or in terms of having a policy environment that kind of addresses some issues?

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

Both, but primarily the latter, the policy environment.

[Prof. André Plourde]

China is now the largest emitting country in the world, so we need to think of this from the perspective of the first question.

The second question is that, again, a broader space in the North American space would seem to me to be broad enough to have all kinds of different heterogeneity across the emitting firms so that we can take advantage of low-cost opportunities, as Professor Dissou has mentioned earlier, much more than just by acting in Canada alone.

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

Great, and you indicated in answer to a previous question that depending on the arrangement we have in place, the nature of a cap-and-trade system, Canada would either be a net buyer or net seller of credits.

What are the factors involved in whether we're a net buyer or a net seller, and how do we become a net seller?

[Prof. André Plourde]

It depends on who else is in the game with us, in some sense. If you think of this as a Canada-U.S. issue, whether we are net buyers of permits from the U.S. or we sell them, then it depends on the relative strength of the targets that are being met through the permits. So in some sense it depends on the number of permits that we emit relative to the number of permits the U.S. emits. The more permits we emit, the more likely it is we're going to be a net seller, depending on any given level of target. Similarly, the more permits the U.S. emits, the more likely it is that we're going to be buying from them.

As Professor Dissou has mentioned, if you have a North American trading platform, what essentially happens is you have one price of emissions through the permit mechanism. Now, it may be that we'll need additional measures to meet our targets that are emissions-specific, as opposed to just a permit system. That's a different story.

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

In your presentation you certainly either clearly suggested or implied that the target in Bill C-311, which is to reduce greenhouse gas emissions by 25% over 1990 as a base year, is not credible. Our government's goal is to reduce greenhouse gas emissions by 20% by 2020, using 2006 as the base year. Is that a credible goal?

[Prof. André Plourde]

Right now, I would say that Canada does not have a credible track record with any goals. We've said three times internationally that we would reduce greenhouse gas emissions. We've missed the targets every time.

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

Is our current goal a credible goal, as stated--20% by 2020, over 2006 as a base year?

[Prof. André Plourde]

I would argue that there are no policy measures that have been proposed by the Government of Canada that would clearly show a path to those reductions.

[An hon. member]

Hear, hear!

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

That's coming.

[Voices]

Oh, oh!

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

Professor Dissou, as I'm the member of Parliament for Kitchener—Waterloo, this is a very important area for me. You indicated that technological progress will be an important aspect of reducing greenhouse gas emissions. Can you describe that to us, paint a picture of what that looks like, and how we help foster it?