Environment Committee on Oct. 18th, 2018

[The Chair]

You're down to 10 seconds.

[Julie Dzerowicz]

Thank you so much. That was excellent.

[The Chair]

Monsieur Godin, we'll go back to you.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Chair.

My question is for Mr. Balasubramanian, who is joining us by video conference from Halifax.

I will continue with my question about green technologies.

The public believes that industry is very advanced, but is slow in implementing the technologies. It is the same as for any other consumer product being put to market. We are familiar with the product and the advances in technology, but we are still studying business opportunities.

Do you know of any green technologies that are just starting to be implemented, but which could be deployed more quickly in order to reduce greenhouse gas emissions and achieve our objectives?

[Hari Balasubramanian]

I'll try to summarize a couple of thoughts around the comments from Mr. Godin.

One, a carbon tax is not a silver bullet. We're at a point where we need all hands on deck, and all solutions we can come up with to get to the solution that you talked about, a 1.5-degree future by 2050.

I also think that it's a mischaracterization of the IPCC special report and the science around climate change that emission reductions are going to get us to that target. IPCC, in its special report, actually said that one of the astounding factors is that in any scenario to get to 1.5 degrees, we have to reduce to a zero-emission future, and come up with carbon dioxide reduction strategies, which essentially means to suck carbon out of the atmosphere.

The only large-scale carbon dioxide reduction strategy in the world, as we know it, is nature. Natural climate solutions can make up to 30% of the solution to suck carbon out of the atmosphere and get us to that future.

There is advancement in the private sector companies that we work with on lowering their emissions in technology, but that's not going to get us to the solution. Lower emissions and fossil fuel extraction are not going to get us to our goals. We need investment in technology that gets us to zero, and net positive emissions in order to meet the goals that we've set for ourselves and to hit the targets.

I'll lean a little bit into some of the conversation from the other interviewer. Canada is well positioned, in both the private space and the public space, to invest in those natural climate solutions. That's going to be a great way for us to come up with some of the technological capacity and technical solutions in order to get to the goal.

There is no way that by 2030 we're going to come up with large-scale carbon capture and storage technology, from an industrial perspective, even though all the fossil fuel companies in the world that I know of are working hard on that. We're going to get there by investing in reforestation, protecting forests, helping indigenous people in the Amazon, and protecting the largest carbon sinks we have on our planet.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

In short, a number of tools have to be implemented to achieve our objectives.

Thank you very much.

I will give the rest of my time to my honourable colleague Mr. Blaney, the member for Bellechasse—Les Etchemins—Lévis.

[Steven Blaney, Bellechasse—Les Etchemins—Lévis, CPC]

Thank you very much.

Thank you for welcoming me to the committee.

My question is also for Mr. Balasubramanian.

In terms of climate change, people always say that we need to think globally, but act locally. You are an ecoadvisor. When you advise businesses, do you recommend that they invest to improve electricity distribution networks in the country, for instance, to avoid construction in flood zones or to prevent natural disasters?

We agree that we need to reduce greenhouse gases and transition to green energies, but we also need to prevent natural disasters. In that sense, this is also an economic opportunity to invest in infrastructure.

Is that something you explore as an ecoadvisor?

[Hari Balasubramanian]

We definitely are. There are a couple of things there.

One, I disagree with the notion that we need to think globally and act locally. We need to think everywhere and act everywhere, because we're getting to the point that it's a critical issue.

I do agree that we need to think about our electricity distribution and the emission factors of the energy we're using at a local level. There are good examples of how that has fluctuated in other jurisdictions. We work a lot in Chile. The connection of the northern and southern grids has changed the emission factor of the industrial and mining operations in the north. However, combined with that, a mass investment in solar infrastructure in the driest, brightest desert in the world has also contributed to that reduction in emissions. Entering new renewable sources of energy into the grid is also reducing the emission factor drastically.

In terms of the investment side in technologies, I definitely agree. BlackRock estimated last year that global infrastructure investment by 2030 is going to be up to $96 trillion. We have a very strong position that a large portion of that has to be for green infrastructure.

I heard from my colleague who was talking about the scale of investment potentially in adaptation versus mitigation, and that's very true. Historically, we've invested more in mitigation, because we thought we could address the problem head-on. The reality is that we're going to need to adapt regardless. There's going to be a huge global spend with large dollar values and project finance on coastal infrastructure, and green infrastructure development. I think countries, companies and individuals that get ahead of the game are going to be in a future-positive climate position but also in a well-placed economic position.

[The Chair]

We'll need to leave it at that point.

We'll go over to Mr. Bossio.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Thank you, Chair, for this opportunity.

There are a couple things I want to speak to.

Mr. Warawa alluded that for B.C. there was no difference, essentially, in putting a price on pollution.

Mr. Balasubramanian, we just recently heard from a Nobel laureate in economics who referred specifically to British Columbia's price on pollution as a great example of effective climate policy. British Columbia's direct price on carbon pollution has been in place since 2008. Analysis suggested the policy reduced emissions anywhere from 5% to 15%. Meanwhile, provincial real GDP in B.C. grew by more than 17% from 2007 to 2015, outpacing the rest of Canada. Per capita gasoline demand dropped by 15% between 2007 and 2014.

Does that sound to you as though it's made no difference? Would you agree that this Nobel laureate in economics has something right in those comments?

[Hari Balasubramanian]

Is that to me or the representatives?

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

It's for you, Mr. Balasubramanian.

[Hari Balasubramanian]

I think I agree. I don't have the details behind it. I haven't done the research myself, but from a quick look on Google, I found the same sort of information, and I saw the Nobel laureate's position on B.C. as having a prime policy move in this direction. From the information I have, I would agree with you.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

It's also been said here today that a price on pollution isn't a silver bullet. It isn't the answer. No, but it's one piece of the puzzle. The investments that Canada is making in transit, in innovation, in green infrastructure, in water and wastewater systems, in lowering emissions, in wetland development, and with $1.3 billion in protected spaces are, together, going to act to get us to where we need to be, and actually, as you just mentioned a minute ago, the more we can do on protected spaces, as well, the more that is going to act as that carbon sink to reduce carbon in the atmosphere.

Would you agree with that?

[Hari Balasubramanian]

I fully agree with that. I think this argument that the price of pollution is going to increase prices and we don't know where that money is going to get spent is the wrong side of the argument to be on. I think the real discussion is about how we make sure the money we generate is spent on that low carbon future. That's about protecting spaces as natural carbon sinks. That's about natural climate solutions across the board. That's also about investing in all the things that you said in terms of a zero- or net-positive carbon future. To me the argument that the price isn't going to make the change is a fallacy, because it's where the money goes and how we direct it, and we should spend more time thinking about that.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

That leads me exactly to the next point, that this price on pollution will actually act as a catalyst to investing in those carbon reduction technologies. We see, actually, a perfect case in point. There's a fantastic project going on in B.C. right now that is taking carbon from the atmosphere and turning it into gasoline that can actually be used in any vehicle, plane, or whatever the case might be that burns gasoline. It's a very highly refined gasoline, so it actually becomes a carbon-neutral product. Is that not an example? Do you have other examples out there that you're seeing through your own investment portfolio of companies that are moving in the same direction? Do you see that this is acting as a catalyst?

[Hari Balasubramanian]

Every time you see the marginal value decrease, that's a prime space for innovation. I think it will pressure companies to innovate more in spaces of a low-carbon future. One of our clients, again, was driven through a carbon corporate policy that we developed for them back in the early part of this decade, and they were very interested to look at how they could address mitigation and adaptation through their corporate philanthropy. Through their corporate operational program, we were able to convince them that operationally they needed to switch part of their business to do R and D on climate change mitigation and adaptation, which resulted in a large investment in carbon capture and storage and natural climate solutions for mitigation through their operational—

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

That leads me to the next point, that working through this raises a price on pollution. You've shown with the BHP investment that industry follows very quickly behind when these price mechanisms are put in place and they see clarity around that mechanism. Do you have other examples of that?

[Hari Balasubramanian]

I would say that sometimes industry and investors drive the agenda as well. We have examples—which I can't name—of our clients encouraging the studies that have been put forward to develop a tax in a country, because they see an economic opportunity for those companies that are high emitters and that are going to have to pay the price, but they see other market opportunities for them to make more money as businesses.

I think who drives the ship doesn't really matter, and sometimes it's the private sector that actually drives the policy.

We should encourage—

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

How quickly is that innovation happening, immediately, to reduce their emissions to realize the profit value in that mechanism?

[Hari Balasubramanian]

They do it in two ways.

They realize the profit value by reducing their own emissions, but they also capitalize, if it's an emission trading scheme, for example, to create a trading scheme in which they are primary actors and they can trade the credits as well.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

They're realizing operational and.... I lost my train of thought.

[The Chair]

You're out of time.

[Mike Bossio, Liberal, Hastings—Lennox and Addington, ON]

Sorry. That's good.

Thank you very much.

[The Chair]

It's a good place to stop