Mr. Chairman, members of the committee, good morning.
My name is Pierre Boucher and I am the president of the Cement Association of Canada. I am accompanied today by Bob Masterson, who is our policy director.
I thank the members of the committee for giving us this opportunity to present the viewpoint of the cement industry on Bill C-311.
The Canadian cement industry has been very engaged in productive consultations with the Canadian government on its environmental agenda. We fully support the efforts of the government to address global climate change.
As you may know, cement is a fine grey powder that is mixed with water, crushed stone, and sand to make concrete. Cement is the glue that holds the concrete together. Cement is a strategic commodity and vital to Canada's infrastructure. Cement is the key ingredient in concrete. Little is built without concrete.
Globally, 2.5 billion tonnes of cement are produced annually. Global cement production is expected to double to five billion tonnes by 2050. In Canada, 14 million tonnes of cement are produced annually, 10 million tonnes are consumed in Canada, and four million tonnes are exported to the U.S.
Every year Canadians on the average use 30 million cubic metres of cement, that is, one cubic metre for each Canadian man and woman.
Cement is an energy-intensive industry. When considering cement emissions reductions, it is important to take into account that 60% of the total emissions associated with cement production are fixed process emissions. These fixed process emissions are a direct consequence of the chemical reaction resulting from heating limestone, the raw material required to make cement. These process emissions cannot be reduced.
The remaining 40% are combustion emissions associated with the use of coal or petroleum coke, our primary energy sources. This 60-40 split is important to fully understand where emission reductions can take place. The good news is that the cement industry can reduce its combustion emissions.
The Canadian and global cement industry is moving forward to implement its plan to reduce combustion emissions. These are: continual improvements in energy efficiency; increasing the use of blended cement and cement substitutes; substituting coal and petroleum coke with low- and zero-carbon energy sources; and research on manufacturing processes and materials.
Regrettably, a number of policy and regulatory barriers at all levels of government impede or squarely prevent the implementation of the cement industry's plan on climate change. Key barriers include: fractured and non-integrated approaches to policy making and the uncertainty in the adoption of harmonized environmental and energy policies to address the specific challenges facing the cement industry; lack of government policy support for fossil fuel substitution with low- or zero-carbon energy sources; a costly, lengthy, and incoherent permitting process; and a slow building code and standards developing process.
Paradoxically, European governments recognize and facilitate the implementation of the cement climate change plan. As an example, in Europe the fossil fuel substitution rate is as high as 80%, but averaging approximately 40%, while the Canadian average is a mere 7%. Quebec, however, is a real leader in this field, and this year we will replace fossil fuels at a level of over 25%.
In order to mitigate investment and emissions leakages, the cement industry calls on the government to address the following issues while developing its climate change regulations.
The Government of Canada must take a coordinated and harmonized national and continental approach to climate change. Cement is an energy-intensive, trade-exposed industry and a price taker. Therefore, we cannot sustain multiple price signals and multiple regulatory regimes within Canada or the U.S., our largest trading partner. The Canadian cement industry must remain globally competitive.
As we speak, British Columbia and Quebec apply a carbon tax on cement production. As a consequence, cement imports, mainly from Asia to Canada, are increasing because cement imports do not have to pay these carbon taxes. The end result is the following: (1) a net increase in global emissions from cement production in countries that oftentimes have less stringent environmental regulations; (2) a net increase in global emissions resulting from the transportation of cement from Asia to Canada; and (3) the creation of an uneven competitive playing field.
The Canadian cement industry cannot be subjected to both a cap-and-trade regime and carbon taxes. All this simply leads to investment and emissions leakages.
In addition, a one-size-fits-all recipe for climate change does not work. The cement industry has been calling for a sector-based approach, since it is essential to take into account the specific characteristics of the cement sector when designing a climate change regulatory regime. The cement industry has developed its globally applied greenhouse gas reporting protocol that will facilitate benchmarking of the North American cement industry.
In the study of Bill C-311, we encourage the committee to take into consideration the following.
First, the Canadian cement industry operates in a global market and faces competition from around the world. These forces are magnified in the Canada-U.S. context. The U.S. is the Canadian cement industry's single export market and of course Canada's most important trade partner. In designing greenhouse gas regulations, the government must align Canada's trade and climate change efforts to those of the U.S. on such issues as price signals and on mid- and long-term climate objectives to avoid disruption of cross-border trade due to differences in the approaches to greenhouse gas mitigation.
Thirdly, the Canadian cement industry cannot have divergent environmental policies imposing unnecessary regulatory frictions or allowing uncertainty when it comes to decisions of where to invest and create jobs.
To conclude, we firmly believe that the cement sector approach based on harmonization and alignment with the U.S. will result in real emissions reduction and sustain the domestic and continental competitive position of the cement industry. Again, this is dependent on getting climate change regulations right.
In addition, all levels of government must also introduce and/or modernize complementary regulatory regimes, fiscal policies, and programs that support the implementation of our climate change plan. The government must now decide on emissions reduction targets for the cement sector and continue to develop a plan with Canadian stakeholders and the U.S. government.
Close cooperation between the cement industry and the government is necessary if we are to implement our common plans and strategies to reduce greenhouse gases.
I thank you for your interest and your attention.