Evidence of meeting #125 for Environment and Sustainable Development in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was change.
A recording is available from Parliament.
Mr. John Aldag (Cloverdale—Langley City, Lib.)
If we get around there before we're done, yes.
Kootenay—Columbia, NDP
Okay, I'll start the question now. You may have to answer later.
What can or should we be learning here in Canada from what you've seen in other parts of the world to be better prepared for climate change in terms of agriculture here in Canada?
Mr. John Aldag (Cloverdale—Langley City, Lib.)
We're going to move on to the next questioner. We may be able to get back to the answer on that one.
Mr. Amos, you have six minutes.
Liberal
William Amos Liberal Pontiac, QC
Thank you, Mr. Chair.
Thank you to our three witnesses today. It's very appreciated. You're bringing very different perspectives, certainly.
My first question is related to the carbon pollution pricing issue. I think this has definitely come to the fore. I'd love to hear a little more on the importance of this kind of fiscal mechanism internationally.
Why is it helpful internationally for Canada to adopt such a measure, setting aside the domestic benefits? Why is it an important signal internationally, and what will it help our businesses achieve in terms of growth opportunities?
Managing Partner, EcoAdvisors
I think there are a couple of facets here. One point I'd like to make is that carbon, unlike other commodities, is a fungible asset that is tradeable universally.
In terms of taking an international leadership position, it's not only that. It's that if there's no universal price on carbon around the world, you're going to have market failures in certain aspects. By taking a leadership position and having a price on pollution in Canada, we need to encourage that group of 45 national jurisdictions that already have a price on pollution to turn into a group of 150 or 187, however many are represented globally.
I think that's the first step: to signal that it is important enough for a major economy like Canada—and other major economies around the world—to drive all countries, because it needs to be a universal price, which Nordhaus recommends as well.
In terms of playing in the international marketplace, we're seeing more and more that countries that have a price on pollution are dictating that on a corporate level to companies. Several of them are either on the Toronto Stock Exchange or operate out of Canadian headquarters. It's driving their operations to change.
We saw this in our work in Australia, for example. Certain countries that had regulatory systems that were putting a price on carbon forced companies to change before the government changed.
That's a shift that's going to happen. If we take a front-leaning position on our policies as a country and on our footprint internationally for companies that operate in the international space, we'll be ahead of the game on the regulatory environment in countries where we operate. It gives us more access to markets and opportunities in emerging markets.
Liberal
William Amos Liberal Pontiac, QC
If I understand you correctly, the pricing of pollution domestically will have the effect of opening markets for Canadian companies and will have the effect of giving Canadian entrepreneurs the opportunity to get ahead of their international competitors so that we can both generate domestic economic opportunity and, at the same time, drive change internationally by putting downward pressure on emissions internationally.
I think we all accept that a tonne of emission in Canada is the same as a tonne emitted in any other country. We can achieve our international objectives while benefiting our own businesses. Is that what you're saying?
Managing Partner, EcoAdvisors
That's what I'm suggesting. I think it's a pathway. If you look at a private sector company and the pathway to get to a zero-emissions future, the first step is disclosure. That's why Mark Carney and Mike Bloomberg set up the task force on climate-related financial disclosure. Disclosure does nothing to affect the problem, though, so the next step is emission reductions and behaviour change in order to get to that zero-emission future.
What I'm saying is that, if policies in Canada compel Canadian companies to go down that pathway and change their corporate behaviour, they become better competitors in the international market space.
Liberal
William Amos Liberal Pontiac, QC
Could you provide some more detail on the nature of disclosures referenced by Carney and others that are most helpful as we look to develop Canada's international climate leadership, not just from a governmental perspective but from a corporate perspective, particularly those corporate entities that are listed on Canadian stock exchanges?
Managing Partner, EcoAdvisors
I don't have that at hand right here, but the recommendations in the TCFD initial report would have some of those. There will be follow-up recommendations through those reports.
What we are seeing is individual investors demanding things like CDP reporting from companies or removing their equity stakes. That's where we're getting companies approaching us and saying their investors are starting to ask questions, and the gold standard right now is through the CDP reporting framework, the carbon disclosure project.
Liberal
William Amos Liberal Pontiac, QC
Okay. Thank you for those comments.
I'll ask a very quick question to the other witnesses. Sometimes there are suggestions from the opposition benches, particularly the Conservative side, that Canadian government funds invested in development assistance ought to be directed towards Canadians and not the international community.
On the climate file particularly, and in relation to farmers who are struggling in developing countries, what is your attitude towards the importance of such funds more generally but also in relation to climate?
Policy Advisor, Canadian Foodgrains Bank
Our climate finance largely counts as our official development assistance, our aid. Aid is there to support developing countries and support the poorest and most vulnerable. The farmers who we talk to here in Canada who support us know that the most effective way to implement adaptation strategies is through local organizations that understand the context, understand the political situations, and understand the geography of these areas.
I think working through these local organizations, whether they be there or in Canada, that are supporting local organizations and working closely with them—and there are a number of them as well—is an important way of reaching those strategies.
Mr. John Aldag (Cloverdale—Langley City, Lib.)
We're out of time. Now we'll move over to M. Godin.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Thank you, Mr. Chair.
To begin, I want to tell my colleague Mr. Amos that I do not necessarily agree with what he said about the Conservative Party's vision of foreign investment. We need to be rigorous and manage our money well.
Thank you to our witnesses for taking part in this exercise.
Parliamentarians are not all experts on the environment. I do not claim to be one. That said, I a well aware that, as citizens of the planet, Canadians have to take concrete action.
The latest IPCC report, which was published recently, outlines the effects of global warming by more than 1.5 degrees Celsius over pre-industrial levels. It indicates that this increase in temperature will have multiple effects, including heat waves, extinction of species, destabilization of polar ice caps, and so forth. The scientists maintain that we must reduce CO2 emissions by 45 % by 2030 and achieve carbon neutrality in 2050. That is a summary of what the report says.
I simply want to find solutions to meet and even surpass these objectives. We are human beings and we have to protect ourselves.
My question is primarily for Mr. Balasubramanian.
The current government is strongly advocating a carbon tax, which it sees as the way to achieve these objectives. For my part, I have trouble understanding how this tax will solve the problem of the rise in temperature of 1.5 degrees Celsius.
Managing Partner, EcoAdvisors
That's a great question.
Why does a price on pollution necessarily get us to that pathway of 1.5 degrees by 2050?
One thing that I'm unclear about in this overall discussion is what the government is proposing today. I heard you say carbon tax several times. That's not what I hear. I might be mistaken, but I hear a price on pollution, which could be an ETS system or a carbon tax, and those are two fundamentally different ways to approach the problem. They're both pricing pollution. One is through a market mechanism and one is through a policy, non-market mechanism. Essentially, they both put a price on the same thing.
I would say that the way we get the pathway there is through a change in behaviour. A tax on carbon is a way to incentivize reductions in the industrial space—the highest-emitting sectors—but also to distribute the income generated from that to emission reduction strategies and low-emission technologies. We work on both sides of the problem, where you have incentive for behaviour change to reduce overall emissions on the one hand, and you produce technologies that rely on fewer emissions on the other hand. You get closer to net neutrality overall.
On an ETS scheme, the system is to incentivize behaviour change as well, with a trading scheme to set a cap at an appropriate level that dictates how we get to that point. Overall—and this is from a purely pragmatic perspective—the cap-and-trade system to date has been overly politicized, and the target hasn't been set appropriately to meet the temperature threshold.
We need to actually set the threshold in a way that makes sense, and then the price will fluctuate appropriately. We are going to see what the IPCC also recommended: that the price on pollution is going to increase from what we think today—which is another 30/90 scenario in Canada—to upwards of $130 to $5,500 dollars per tonne of carbon to meet the actual commitment.
That sounds scary and volatile, but to me it also sounds like a tremendous financial market opportunity to get us to that goal that you said we all need to strive towards. I don't think the system is agnostic, but the solution is a price on pollution.
I will point out that economists—and they're smarter than I am in this space—generally say the most efficient way to get there is through a universal tax mechanism. I trust that could be the case.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
That might be one solution, but I think we have to look at all the solutions.
I will go through my questions quickly.
You are in the business of funding sustainable development projects. For a number of years, there has been research and development for certain green technologies. I think many labs and industries are looking for new practices to reduce greenhouse gas emissions.
Instead of taxing businesses that pollute, don't you think we could create regulations? The carbon tax is not necessarily a bad idea, but people are asking questions. They don't know who will manage the money collected from the carbon tax. Nor do they know whether that will solve the problem at the source. That is the problem.
We are missing a step, administratively speaking. I don't think anyone is in bad faith. That said, imposing this tax will lead to an increase in prices. Consumers will have to pay more, but will that actually reduce greenhouse gas emissions?
Are there other green technologies whose implementation could be accelerated to meet the objective stated above?
Mr. John Aldag (Cloverdale—Langley City, Lib.)
Unfortunately, we're out of time. There may be an opportunity for one of your colleagues or someone else at the table to pick that up for a response.
In the interest of time, we'll now move over to Ms. Dzerowicz.
Julie Dzerowicz Davenport, Lib.
I didn't actually know I was on the list, but that's okay; I have questions.
Mr. John Aldag (Cloverdale—Langley City, Lib.)
Okay, perfect.
Away you go. You have six minutes.
Davenport, Lib.
Thank you.
My question is to you, Ms. Johnson.
You made a number of wonderful recommendations and I'd love to dig a little bit deeper into them. You mentioned that Canada should in its contribution internationally be helping people adapt. You were saying that right now most of our money, 80% of the money, is actually focused on mitigation.
Why do you think that is? Is it just because we're going through multilateral organizations that actually focus mostly on mitigation? Is it because we have an objective that our goal is to focus mostly on mitigation? Why is it that we're mostly directing the dollars to mitigation?
Policy Advisor, Canadian Foodgrains Bank
I think that a big part of that is that most of our funding is going through multilateral organizations, but specifically multilateral development banks as well as this blended finance. When you think about what a private company would want to invest in, it's more likely that it would invest in a, say, large hydroelectric project, which is a mitigation project and a company, versus helping a small-scale farmer try to grow their crops better.
I think a big part of the challenge is because our funding, as you suggest, is focused through multilateral channels rather than through bilateral channels, and specifically through CSOs, civil society organizations, which we know are more likely to spend money on adaptation.
Davenport, Lib.
I think the further point you made, just to continue along that line, is that it also gets to the poorest and it also gets to some of the target groups that you were talking about.
I'm assuming there's a particular reason why we focus on multilateral organizations but I'm not sure whether it's easier for us or whether the accountability's there.
If I went to our Minister of International Development and said let's give more of our funding over to civic society groups or to smaller organizations, what would be her response to me? Would it be that we have issues around accountability or it is more difficult to know if the dollars are actually going to go to where they're supposed to go?
Could you maybe let me know what some of the hurdles have been in the past and maybe how we can get around some of those hurdles so that we can move forward and maybe help redirect some of this funding more toward adaptation?
Policy Advisor, Canadian Foodgrains Bank
There are a number of reasons why multilateral organizations are funded.
We hear from this government regularly about the importance of leveraging money. We've made these huge commitments on climate finance, contributing towards $100 billion with donor countries by 2020. To reach those commitments, we need to leverage money through the private sector and through other ways.
Another big issue is the administrative logistics part of it. For one thing, it's much quicker for the government to disburse money through multilateral development banks. It can say, “okay, this money is out the door now”, versus having to do a bit of the homework about accountability that would come from going through CSOs.
We haven't heard anything about CSOs being less accountable. In fact, because some of us rely on government funding, there are very high transparency and accountability standards. I think in many ways it's more transparent than having money go through multilaterals, where we don't exactly know which countries and communities.... Is it the poorest and most vulnerable? What exactly is it going to, in which portions, and how is it split up? We don't have all of that information.
I think those are the main barriers there.
Davenport, Lib.
I recall that shortly after coming into office we gave $400 million towards.... I thought it was for poor countries to adapt, or for climate change mitigation.
Do you recall that? I thought there was a big announcement. I retweeted it. I was really excited about it.
I'm surprised to hear that we're ranked 16 out of 23 in terms of being supportive around this area.
Can you comment on that? I should know this, but do you happen to be familiar with it?
Policy Advisor, Canadian Foodgrains Bank
To be honest, I would have to check that as well. We have a big spreadsheet of the entire breakdown of the $2.65 billion. Certainly there have been some initiatives for adaptation.
I can tell you, though, that ranking 16th was in terms of our fair share of giving. In terms of adaptation, we're about 10th among 23 provider countries. I'll note that eight of those countries give more than 50% towards adaptation.
Again, that's how we're funding our money, through these different channels. That's where the challenge lies.
The United Nations Environment Programme has estimated that we'll need between $140 billion U.S. and $300 billion U.S. annually by 2030 for adaptation alone. When you think that collectively donor countries have agreed to give $100 billion by 2020, which includes mitigation financing, you can see this growing adaptation funding gap.