Environment Committee on June 10th, 2014

[Mark Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

Thank you very much, to all of the witnesses. I'm a visitor on this committee.

Ms. McClenaghan, you did pique my interest when you talked about incineration.

I am from Chilliwack, British Columbia, in the Fraser Valley, and there is a proposed incinerator in metro Vancouver. I'm not sure if you've been made aware of that project, but certainly the people in my area, and the municipal politicians, are very opposed to that project. I think it's because of a lot of the unknowns about the technology, and concerns with additional air pollution in an already stressed airshed, the toxic fly ash, etc.

The proponents of the incinerator in metro Vancouver say that this is all fearmongering and that the science is on their side. Could you maybe explain in a little further detail why incineration in certain situations is a bad idea?

[Theresa McClenaghan]

When we have a case like this, we typically retain expert witnesses who are toxicologists to look at the particular facility, its proposed emissions, how those will relate to the community around it, and how they'll meet the relevant provincial standards or other applicable standards.

We're certainly not the engineering and the toxicology experts. However, those are the kinds of things we examine. We then take those to whatever tribunal or decision-maker is looking at whether that facility should be licensed.

In some proposals the argument is made that it's a greener solution because of greenhouse gas reduction impacts, or other solutions, like alleviating landfill. We talk about the fact that you need to look at the whole picture. If you're trading off for emissions that have health impacts, that might not be a good trade, especially, as you say, if it's an area that already has a lot of other emissions happening in the mix.

It's a technology-specific analysis that needs expertise applied to it.

[Mark Strahl, Conservative, Chilliwack—Fraser Canyon, BC]

Okay.

The proposal for the Fraser Valley Regional District and its member municipalities has been to move towards a zero waste approach as a goal, to get 90% of the solid waste diverted from landfills.

I note that you've done work on zero waste, or you are familiar with that proposal. I think they're saying that 49% of solid waste is currently going into municipal landfills. Are you aware of the zero waste goals, and of mixed waste recovery facilities? That is something they've proposed to recover valuable materials and to get the recycling and composted materials that people are still throwing into their black garbage bags out of the stream.

Are you aware of any jurisdictions where that has been implemented, and could you point us to some successes there?

[Theresa McClenaghan]

Again, when it comes to site specific, we're more familiar with the Ontario situations. Toronto has a big green bin program—they take materials to big composting facilities—so they're trying to keep all of that kind of biological degradable waste out of their landfill.

Guelph was a pioneer in terms of mixed waste recovery and separation, and it's still headed in that direction.

Ontario ran a whole consultation on the concept of zero waste about four or five years ago, which we did support. It's a devil-in-the-details kind of thing.

When we spoke earlier about not having landfill and emissions—and we know we're a very long way from that—in an ideal world, you would see all of the components that are going into our waste stream being recovered and put back into some sort of productive use and never landfilling again. That would be the ideal. But we certainly don't want to trade that off by saying let's burn it all and have energy recovery, if it means that the emissions have health consequences. That's where we need to do that analysis, case by case.

[The Chair, Conservative, Harold Albrecht]

We'll move ahead to Mr. Woodworth, and Mr. Toet if there's time.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you very much, Mr. Chair.

I'll just pick up where I left off with apologies to Ms. de Leon. I didn't mean to get too far down into the weeds about your recommendations to the Ontario government, but I just wanted to get a sense of whether or not we're moving in the right direction.

I notice from the Canada-wide action plan on extended producer responsibility that the first phase, that six-year phase, also requires the adoption of measures in relation to mercury-containing lamps, other mercury-containing products, household hazardous and special waste, and automotive products.

I want to get a sense from you whether or not that initiative is heading in the right direction. The idea is to end up with consistent and harmonized methods with maximum impact across the national marketplace to shift the responsibility for end-of-life management of products to manufacturers or importers.

Are the Minister of the Environment for Canada and the other ministers heading in the right direction with this?

[Theresa McClenaghan]

Yes. We support extended producer responsibility. We have the paper in front of us. It is the right direction, and of course the thing that then happens is that when each jurisdiction starts to move ahead to put it in place and design it, it becomes “how well is it working, are there unintended consequences?”

Unfortunately we saw that in spades in Ontario with the way some of the stewardship programs were working in the eco-feeds and this kind of thing. Ontario, for example, has been engaged in a process of trying to reintroduce and reshape its waste legislation, which just died on the order paper here with our provincial election.

It's generally the right direction, but it's a matter of “is it getting done?”, and “is it getting done in a way that's avoiding unintended consequences and wrong incentives while they design the programs?”

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

But at this point you haven't done a review of what progress has been made under that Canada-wide action plan?

[Theresa McClenaghan]

No.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you. Taking into account that provinces have concurrent jurisdiction in these areas, do you agree generally with the approach the Government of Canada is taking through the Council of Ministers of the Environment to lead everybody together to try to harmonize their efforts in a way that will have maximum impact across the country? Is that the right way to go?

[Theresa McClenaghan]

We always hope the Canadian Council of Ministers of the Environment will take strong leadership in all their initiatives and lead to the best possible practices. At the same time if one of the jurisdictions is ahead and is willing to go further from the point of view of environmental sustainability, we're all for that too. We wouldn't ask that jurisdiction to wait for everyone to catch up.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you. I'm going to turn over any time I have left to Mr. Toet.

[The Chair, Conservative, Harold Albrecht]

Mr. Toet, you have a minute and a half.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Thank you, Mr. Chair.

I wanted to quickly address the investments. Ms. Labrie, you mentioned you had brought in $240 million of private investment to your facility. Obviously that was brought in before your request for this removal of the excise tax. You wouldn't have brought on investors based on getting rid of this particular thing because you don't know what's going to happen.

What's the ROI for your investors, and what's the timeframe they are looking at for a return on this, and what affect does the excise tax exemption have on that ROI? I'm looking at it from an investor's standpoint who wouldn't have invested in you if they didn't believe in what you're doing without this.

I'm trying to wrap my head around what the big need is on the excise tax.

[Marie-Hélène Labrie]

As we explained, it's not as much on the profitability side. What is key here is that when investors decided to invest in our company, there was an operating incentive available to us, the eco-energy for biofuels initiative, but we ended up not having access to it because of the timing of our first full-scale facility coming online. So intrinsically there was this incentive that all of a sudden ended up not being accessible to us. If you look at it on a level playing field with conventional biofuels, this is something we don't have access to.

As a breakthrough technology, it has more risk, and from a capital investment perspective it is a bit more capital intensive. From a profitability perspective, the returns are there, but in the first years of operation, you have your ramp-up. This is a totally new technology, so this really helps from an operational perspective in the first years of operation. That really has an impact on the investors. They are expecting that, because when they invested, there was an operating incentive.

Since we discovered we had no access to that operating incentive, we've been trying to work with the federal government to find a solution to that. So there is this expectation from the investors that have invested in us.

Secondly, I would like to add that from an industry perspective, we believe we need to stimulate investment in the second-generation biofuels sector as we did for conventional biofuels. We need to have incentives to really support and stimulate private investment, because it's not only for one facility.

Also, we need to retain the biofuels here. Right now we have offtakers, companies interested in buying our fuel to export it to the U.S. If it is exported there, then all the greenhouse gas emissions reductions will not occur here. So if we want to invest, we should also be able to use that domestically and locally. We invested in this so we could sell it locally and not have to transport it with the additional costs involved in selling it in the U.S. They also have those incentives, and they recognize the additional benefits of second-generation biofuels.

So there are a series of elements that are very important for this ask.

[The Chair, Conservative, Harold Albrecht]

Thank you. We need to move forward.

We'll hear from Mr. McKay for the last question in this round, and then we have two questions following that. I'm going to take the chairman's prerogative of asking one quick question prior to that last round.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I'd like to direct to Ms. McClenaghan a question related to what Mr. Thurlow said with respect to the feedstock for cellulose.

I take it you wouldn't be quite as enthusiastic about using corn and other kinds of that feedstock for the production of ethanol.

[Theresa McClenaghan]

Well, the issue with using corn and soybeans for that purpose is the possible impact on food and food prices. There were good environmental and operational reasons for having ethanol as a component of fuel, just from the point of view of how well the machinery worked. When we started to see a lot of programs encouraging higher amounts of ethanol, at the same time we saw a lot of disruption in grain prices worldwide. So that's a concern.

I don't have an analysis about that, but it is an important thing to keep in mind. If we have vast tracts of our food-producing territory producing fuel, are we making sure we are also meeting the food needs of our communities globally?

[John McKay, Liberal, Scarborough—Guildwood, ON]

I'm sure Mr. Thurlow wants to get back in on that one, but before I let him do that, there's something I don't understand. In your testimony you said 65% of the auto wreckers aren't certified to depollute a vehicle. I find that astounding. How can this be in the year of our Lord 2014?

[Theresa McClenaghan]

It is kind of astounding, but I can confirm that when that particular sector was examined provincially, it was found that a huge amount of education was needed in terms of them knowing what their requirements were for removing liquids and hazardous materials like the mercury switches. So there was an effort to do a lot more education, and I think the numbers of those who do comply are up a lot compared with where they were seven or eight years ago. But not all of them have moved up to the level where they are certified.

Then the question is, if another review of the whole sector were done, would they meet the standards even if they were not certified? When they are not certified, it's hard to know. So that's the difference.

[John McKay, Liberal, Scarborough—Guildwood, ON]

So those standards keep on moving. That was astounding to my mind. I would just assume that people were meeting standards.

Mr. Thurlow, I hate to give you the opportunity to respond to that. Before I do, I want to expand with Ms. Labrie.

What is your CCA ask? Are you trying to make your writeoff equivalent to other fuel industries?

[Marie-Hélène Labrie]

The ask is that we include also equipment, renewable energy equipment, for biofuels. Currently, when we look at the list of eligible equipment, there is biogas included, waste to gas, but there is no waste to biofuels. We believe that we should also have access to this incentive as well.

[John McKay, Liberal, Scarborough—Guildwood, ON]

The writeoff is slower than it should be. Is that your argument?

[Marie-Hélène Labrie]

Exactly. It's accelerated depreciation.

Also, at one point in this there's a flow-through share. This is, I think, 43.2. The ask is really to be included in the eligible renewable energy equipment.

[John McKay, Liberal, Scarborough—Guildwood, ON]

In the 15 seconds I have left, Mr. Thurlow wants to peel himself off the ceiling.