Evidence of meeting #41 for Environment and Sustainable Development in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was sector.
A recording is available from Parliament.
President, Canadian Petroleum Products Institute
In product sales or emissions?
NDP
Dennis Bevington NDP Western Arctic, NT
In product sales. How much petroleum are we producing today compared with three years ago?
President, Canadian Petroleum Products Institute
Our petroleum production today is relatively equivalent to what it was three years ago. We've seen some ups and downs over the last couple of years, particularly as the economic circumstances in the country have changed and with some changes in the overall product mix. Diesel is down now because of reduced demand under the current economic circumstances. Overall, we've probably seen over the last three years a 4% or 5% drop in demand. It's different in the United States, where demand has gone down significantly as a result of reduced economic activity.
NDP
Dennis Bevington NDP Western Arctic, NT
So if trends continue, your ability to match up to absolute carbon reductions is not going to be that difficult. If you see an increase in your product volume, then you're going to have difficulty. Expansion in your industry is the question. Is your industry going to expand in the next 20 years, or are you going to decline?
President, Canadian Petroleum Products Institute
That's a good question.
Do you want to add to that?
Tony Macerollo Vice-President, Public Policy and Communications, Canadian Petroleum Products Institute
It's a function of demand, simply put. It's a function of demand from your constituents. It's a function of demand from many of the other industry sectors that use our products.
I really want to come back to the issue of Bill C-311, to very specific points of disagreement.
One, we're not talking Kyoto anymore; we're talking Copenhagen.
Two, the rules are going to change. The rules have changed since Kyoto. The U.S. pulled out.
Three, you've given a phenomenal amount of regulation-making power to the government with no accountability or parliamentary oversight. Regulation-making power is done by cabinet. The only mechanism you have is the Standing Joint Committee on Scrutiny of Regulations. We have specific examples of how that produces unintended consequences in other areas of fuel combination.
Finally, Canada is one economy. To say that you can apportion it from province to province fundamentally defies what we have been doing since Confederation, whether it be forms of equalization, whether it be specialized programs--
Vice-President, Public Policy and Communications, Canadian Petroleum Products Institute
Money went to Quebec from the federal government for--
NDP
Dennis Bevington NDP Western Arctic, NT
Thank you for your answer. I appreciate it.
I want to move on, Mr. Chair, if I have time.
NDP
Dennis Bevington NDP Western Arctic, NT
I'll turn to the steel industry.
My question to you as well is with regard to your main competitor, which is China. Are we exporting any steel to China?
NDP
Dennis Bevington NDP Western Arctic, NT
So basically, if we're having trouble....
Do we have any trade agreements with China that would stop us from putting a carbon tariff on their products coming into this country?
President, Canadian Steel Producers Association
The issue of carbon tariffs goes to what is and is not possible within the WTO. I mean, China's essential trade obligations are its WTO obligations--which it sometimes doesn't always respect; nonetheless, that is the trading framework.
With respect to the issue of carbon taxes, for example, certainly the starting framework would be the WTO. That would apply, presumably, to measures that other countries would take as well.
Conservative
The Chair Conservative James Bezan
Mr. Bevington, your time has expired.
We'll wrap up our seven-minute round.
Mr. Warawa, you're batting cleanup.
Conservative
Mark Warawa Conservative Langley, BC
Thank you, Chair.
Thank you, witnesses.
I have a lot of questions, but Mr. Macerollo, you were cut off by the NDP. I'm going to give you a couple of minutes to summarize what you were hoping to say.
Vice-President, Public Policy and Communications, Canadian Petroleum Products Institute
I've actually made most of my key points.
Vice-President, Public Policy and Communications, Canadian Petroleum Products Institute
There is one other point that I think needs to be made, however, with respect to transportation fuels.
Transportation moves people, goods, and services. It's the lifeblood of our economy. We are an export-oriented country, and we are not the United States. We don't have Thanksgiving Day weekends where families, if they haven't been laid off, are congregating all across the country to go to denuclearized families, in essence, because we live in individual communities across a very large land mass.
I will say that what has been most disappointing over the last, frankly, 20 years of discussion on climate change is that you have subjected industry--collectively, all of you--to about four or five different plans, with no ability for businesses to do the planning that is required to make the investments that are necessary. If there have been improvements, they've been a function of cost-effectiveness. It makes sense if you can lower your energy costs.
What we've seen, quite frankly, in the last four years, at least, if not longer, is a lot of bickering on who has a better plan. There's not one opinion poll out there that says that any of you got it right. You would have thought that a minority Parliament would have been the perfect opportunity for a multi-partisan approach to this. And that's been very unfortunate.
Conservative
Mark Warawa Conservative Langley, BC
Thank you for that challenge. I appreciate that.
What we've heard from every witness, even those who support Bill C-311.... Some of the environmental groups said they acknowledge that a harmonized approach with the United States, because it's our number one trading partner, would be the preferred way to go.
There was a logic in Europe for why 27 European countries, all with different abilities and some uniqueness, came together with a European target and a European commitment. Canada and the United States together have a harmonized approach and a continental target. We came up with our target of 20% absolute reduction two years ago. The United States has adopted a very similar target, which President Obama will be taking to Copenhagen.
The question I would like to ask--and what makes the hairs go up on the back of my neck--is about what the cost of energy will be for Canadians if we adopt Bill C-311. We heard from the witnesses an encouragement that we have to adopt energy prices similar to Europe's. If we're accepting European targets, we'd be looking at $2.50 a litre for gasoline. We heard that the electricity prices in Denmark were six times what we pay. There would be a massive loss of jobs. We heard that it would be a major burden on industry and therefore there would be a loss of jobs. There's a lot of concern.
Is there any truth to that? If Canada were to adopt the European targets, move away from a harmonized approach, and have massive increases in energy prices, what effect would that have on industry, all your industries?
Mr. Lloyd.
Vice-President, Technical Affairs, Canadian Chemical Producers' Association
Well, that would be very negative. In fact, I think the attachment to the CCPA brief, which is based on Environment Canada's work, shows that it would be even worse than you portray, because in Canada, because of the costs, it's more expensive than it is in Europe to achieve the same reduction targets. It would be even more problematic than it is in Europe. That is something that....
We do not want to move to targets we can't afford. That's why we've emphasized these approaches: let's use the technology fund; let's use accelerated capital cost allowance; and let's get the investment in the companies so that they will achieve what we achieved back in the 1990s.
That's the approach to take. Adopting the European style of targets is not something we can afford right now, and it will be even more expensive for us than it is for them.
President, Canadian Petroleum Products Institute
As we put a price on carbon, I don't think there's any doubt that in the end energy prices will go up. How much will they go up? That's a matter of speculation.
I'll refer specifically to the fuel that most of you are familiar with, and that's gasoline. It's impossible to predict what the pump price of gasoline will do. The variety of factors and variables at play, and ultimately the competitive markets, determine what the price at the pump is.
But what I can say is that when you combust a litre of gasoline, you emit two and a half kilograms of carbon dioxide, so when we look at the prices of carbon in terms of the input cost to the process--not the price at the pump, but the input price to the cost of the process. I mean, it's two and a half kilograms per litre.... Whether the carbon price is $30 a tonne, $50 a tonne, $100 a tonne, or $300 a tonne, you can do the math as well as I can in terms of what the potential input cost to the production process may or may not be.
President, Canadian Steel Producers Association
To come back to what I was mentioning earlier, energy is a key input cost for steel producing, whichever method we use, so to the extent that you have much higher energy costs in Canada compared to the U.S., say, or compared to China, for example, that would clearly have a direct competitive impact. In some respects, it's sort of less, the difference between Europe and Canada, because the steel trade is much less there than with those other two jurisdictions, for example.