Environment Committee on Oct. 30th, 2018

[The Chair, Mr. John Aldag (Cloverdale—Langley City, Lib.)]

We'll get started. Sorry for the brief delay.

Welcome to our guests, today. We have the Centre for International Governance Innovation with Silvia Maciunas. Then we have, as individuals, Chris Turner and John Drexhage.

Peter Fonseca and François Choquette, welcome to the committee as well.

We have our three guests, who will each have 10 minutes for opening statements. As I mentioned when I introduced myself, when you get to nine minutes I'll give you the yellow card showing that you have one minute left, and then the red card means please wind it up. Then we'll get into our questions back and forth after that.

Who would like to go first?

Silvia, would you like to start us off with your opening comments?

[Silvia Maciunas, Deputy Director, International Environmental Law, Centre for International Governance Innovation]

I'd be happy to do that. Thank you.

Thank you for the opportunity to be here and to highlight some of the work we're doing in the area of trade and low-carbon economy.

My name is Silvia Maciunas. I'm the deputy director of the environmental program at CIGI, which is a think tank based in Waterloo, Ontario. It's an independent, non-partisan think tank. Our focus is on international governance. We work in three areas: one is international law, and the other two are global security and politics, and the global economy. Those areas often interrelate, as I'm sure we are all aware.

The law program, called the ILRP, international law research program, works in four areas: international economic law, international environmental law, international intellectual property law and international indigenous law.

I am the deputy director of the international environmental law section. In that area we have three areas of focus. I'll be finished my lists pretty soon. We work on climate, oceans, and emerging issues of global environmental governance.

On international climate law, we look at issues relating to the UNFCCC, the convention on climate change, and the Paris Agreement. We also look at linkages between the climate regime and other international instruments. The reason we look at that is that I don't think you can solve the climate problem solely within the UNFCCC or the Paris Agreement. You have to look at how other elements of the international legal framework fit into that.

There are many linkages between climate and trade. The UNFCCC remains the primary instrument to address climate. Of course, the WTO and its related agreements and the many regional and multilateral trade agreements are the instruments to deal with trade. We have to look at how those link together, because there is a fear in the environmental law community that some of the trade rules may in fact limit domestic responses on climate.

As you may know, the Paris Agreement has very general obligations with respect to climate measures. There is no standard set of measures that must be taken by parties. There is no one size fits all; therefore, it is a little bit difficult to assess what might work and what might not.

Canada has a history of regional and bilateral trade agreements that address the environment. You may already be familiar with many of these. They generally have a requirement for parties to strive to provide high levels of environmental protection and to avoid lowering standards to attract trade investment. They were originally housed in separate side agreements, and currently the model is to have an environmental chapter within the trade agreement.

Recent models, such as the TPP and the USMCA, have included more substantive provisions regarding the need to implement specific multilateral environmental agreements. They also include some innovative provisions about subsidies—for example, removing fishing subsidies for overfished stocks, as well as requiring conservation measures for flora and fauna. The trade agreements have gone a long way in accommodating some of the environmental concerns that are out there.

The TPP is unique in that it has a binding dispute resolution process. The CETA is very interesting because it has an innovative approach that requires a work program on trade rules and environmental regulation. It also commits Canada and the EU to facilitate and promote trade investment in environmental goods and services, which comes close to the area that this committee is concerned about: clean tech.

There are other provisions in bilateral trade agreements also of interest. There's one between Japan and the EU that requires both parties to effectively implement the UNFCCC and the Paris Agreement and includes an obligation to promote the contribution of trade to the transition to low greenhouse gas emissions and climate resilient development. That's an interesting model that Canada might think about when it's negotiating its regional and bilateral agreements.

An agreement between New Zealand and Taiwan commits to reducing tariffs on environmental goods to zero. Again, this is possibly a model for Canada's agreement to try to move along the agenda on environmental goods.

The recommendation would be that Canada continues to conclude innovative provisions in its regional and bilateral trade agreements, particularly in areas that might assist with the transition to a low-carbon economy and with trade of environmental goods and services.

The WTO has some provisions that allow for environmental agreements. It has an environmental exception that allows for certain measures if they are necessary to protect the human, animal and plant life and health, but that requires that an issue be brought to the trade dispute level. That is a lot of uncertainty, and one never knows until that trade dispute is completed whether the measure will survive.

The issue, then, is how we can move forward on some of the issues. Does the WTO have enough in it? Do the environmental agreements have enough in them? How do we manage some of the outstanding issues that might impede clean tech and the transition?

In the reading and the work that we've done, we've identified a number of issues. One is the issue of subsidies: how to address and encourage green subsidies while taking steps to step back from fossil fuel subsidies, how to take into account the carbon footprint of products, and how to increase trade in environmental goods. All of those, I think, would assist in developing clean tech for Canada.

Subsidies are important in the context of the development and diffusion of clean technologies. They are controlled by the Agreement on Subsidies and Countervailing Measures, one of the WTO agreements. Green subsidies fall under the category of actionable. If they are specific to an industry or a group of companies and they cause an adverse impact on trade, they can be challenged at the WTO.

In the case of the Canada-FIT case in Ontario, that case was taken up by the WTO. It was challenged. Eventually there was no finding that there was a subsidy. This was less because there was really not enough evidence of a subsidy and more because of some rather convoluted and highly criticized legal reasoning, which talked about the establishment of two separate markets. Many commentators in this area are not confident that, if there were a subsidy involved in supporting renewable energy or other clean tech, it would actually pass the test for the WTO. The law is still highly uncertain.

Subsidies have been shown to be an effective tool to encourage investment in clean energy and clean tech. FIT programs are used broadly. More than 60 countries have used them, and they have been found to be quite effective in increasing investment in renewable energies.

What we learned is that the WTO is blind to the public policy rationale for the subsidy and, therefore, subsidy regimes may be at risk from trade rules. The local content requirements of any subsidy program will certainly be struck down, but there might be ways for Canada to lead in this area. Like-minded countries could seek to negotiate a clean-tech agreement that would deal with subsidies. There is an agreement already on agriculture that provides special rules for agricultural subsidies, so it wouldn't be the first time that this would be approached.

Like-minded countries could also seek to negotiate a clean-tech agreement outside the WTO on a regional basis. Provisions on subsidies could be included in bilateral or regional agreements, and Canada could also propose an interpretation within the subsidies agreement to allow subsidies with a justifiable public purpose.

I am going to quickly go through some of the other areas, and then maybe we can elaborate during the questions.

The other side of the green subsidies is how to take steps to address fossil fuel subsidies, which tend to be a perverse incentive but are widely used by most developed and developing countries. In this area, Canada has committed to an international review of its fossil fuel subsidies. Transparency on this matter is important, and Canada should, in good faith, continue to seek to find ways to address fossil fuel subsidies.

Trade in environmental goods has been stalled at the international level. You may be familiar with the fact that there were negotiations going on with regard to environmental goods and services. The last session was in 2016, and nothing else has taken place. It's not impossible to have that kind of agreement. APEC, an agreement between 21 countries, has an environmental goods list on which tariffs were lowered. I think the solution here would be to try to restart negotiations on a bilateral or regional basis, and perhaps seek a way to define environmental goods and establish a process of experts to do that.

I have one more issue and one solution to discuss.

[The Chair]

Please do it really quickly. We're over time.

[Silvia Maciunas]

The other issue is the carbon footprint, how much carbon is used in production, and that's not recognized as differentiating between products. Canada could work to have an interpretation that would recognize that kind of process in the WTO.

Finally, one area that should be considered by Canada and where Canada could be a leader is in taking steps to develop a climate waiver. Waivers are a tool used under the WTO. They allow members to not comply with their obligations for exceptional circumstances. You don't need consensus. If you had a three-quarters vote, that would get a waiver through. It could be done with respect to climate measures. A group of like-minded countries is needed to pursue this.

Again, this is an area where Canada could take a role. Certainly after the IPCC, there are exceptional circumstances for climate change.

Thank you very much.

[The Chair]

Thank you for those opening comments.

Now we'll go to Mr. Turner for his comments.

[Chris Turner, As an Individual]

My name is Chris Turner. I'm an independent writer, journalist and communications consultant based in Calgary.

Thank you to the committee for this opportunity to address you, and for the opportunity to share a little bit of the knowledge that I've gathered over the last 15 years or so, where climate change solutions and the global energy transition have been my primary beat as a writer and journalist.

I wrote two bestselling books on that transition, on climate change solutions: The Geography of Hope in 2007 and The Leap in 2011. More recently, I wrote a book on the collusion between Alberta's oil sands and the climate change politics that's called The Patch. It is in stores now and it makes a lovely gift, I hear.

I've also given dozens of keynote and conference presentations and the like over the last few years to almost everyone under the political sun, so to speak. It's been everyone from environmental groups like Environmental Defence to organizations like the Canadian Association of Petroleum Producers, because the issue of climate change is so universal. There's a reason for just about everyone to hear where we're going on this.

I've also done work with a handful of NGOs, working primarily on energy more than the environmental climate side, with groups like Pembina Institute, Clean Energy Canada and the Smart Prosperity Institute. I was a writer on Natural Resources Canada's recent Generation Energy report. I got very close to the thinking of a very broad swath of business and public society here in Canada on the issue of outlining a vision for Canada's energy sector for the long term.

On the parts of the pan-Canadian framework that this committee, I understand, is working on, probably the one I'll be speaking to most directly will be positioning the country as a global leader on clean energy and innovation. That's really been a large focus of my work in the last few years. Hopefully, I can give you a little insight into that. I won't speak too long off the top. I'll allow you to feel free to ask me questions and I'll answer them if I can.

The first point that I'd like to make clear, which is hopefully a given now, is that there is a global energy transition under way. It is moving faster than ever. It is gaining more momentum than ever, as we move from fossil fuels as our primary energy sources to renewable fuels.

Mike Liebreich of the Bloomberg New Energy Finance group likes to say that the transition is now probably unstoppable. I would take the “probably” out of it. All I've seen over the last 15 years is a steady acceleration of the success of clean energy and technology, and the constant leaping over every single alleged limit or check on growth that was supposed to happen by now.

To use Bloomberg's numbers, it is believed a third of all the world's electricity will come from wind and solar by 2040, a third of all the vehicles on the road by 2040 will be electric, and most importantly, the best opportunities for economic growth between now and then will be in building out those sectors. The scale is already in the trillions of dollars and only getting bigger.

This transition represents both a major challenge to Canada's established resource sector, but also an extraordinary once-in-a-generation opportunity both for those traditional resource sectors to rethink some of the things they're doing, and obviously, for the economy as a whole to become a global player in this emerging market.

My colleagues at Smart Prosperity Institute like to quote Dominic Barton from McKinsey on this. He said:

Canada has an unparalleled mix of resources to deal with the implication of these global trends. We are a leader in natural resources and energy production. We have a skilled labour force.... We have a strong financial system that helped us survive the financial crisis remarkably well. Canada has never been in a better position to be a global leader.

How to take that lead should be a high priority as we discuss the implications of the pan-Canadian framework. In my opinion, it's an excellent platform to build on. It corrects the market failures that allowed the climate change problem to deepen as much as it has. I'm not an energy economist, but I know a few and they more or less universally agree that a price on carbon pollution is an absolutely essential piece of any serious long-term climate strategy. I agree with that assessment.

The second piece is the carrot, so to speak, along with the stick. That would create a robust clean-tech economy both here at home and with the ability to export solutions around the world. This is building cleaner and greener trade.

We need to find good policies at every level of government, not just the federal government, to encourage that growth. Everyone is sort of starting from scratch. This is all very new territory, although Canada is ahead of the curve in some important regards.

We begin from a very clean grid nationally, if we think about Canada as having a single electricity grid. More than three-quarters of it already comes from non-emitting sources. That's a massive asset. That would be the envy of most of the regimes working on this stuff around the world, to begin with the fact that you already have a very clean grid. Business opportunities are already opening up because of that, because companies around the world are looking to shrink their footprint. There is huge opportunity there.

We're already phasing out coal, which for most countries, is the lowest-hanging fruit in dealing with climate change, and we are already investing significantly in clean technology, including carbon capture and storage. All the serious modelling out to about 2050 sees a huge role for this and none of the technology is market-ready to date, so there is a pretty massive opportunity sitting there for the countries and companies that can figure out how to affordably and economically capture carbon and ideally turn it into something useful.

On this matter I would invite you to read the Smart Prosperity Institute's report “Accelerating Clean Innovation in Canada”. I contributed a little to this. It's one of the best, fast reads I know of on the subject of specifically what Canadian governments should be doing to create the kinds of policies that will encourage more growth. I'll give you the short version, which is that we are very good in Canada at early stage development of clean technology. We have very good research facilities, very good universities, smart people, strong institutions, all that stuff, but we are failing with troubling regularity to get these ideas from lab to marketplace. Our global share of the clean-tech market in recent years has declined, something in the order of 40% at last check, and in large part this is because the ideas are being turned into commercial properties outside of Canada.

What can government do? As I said, what it's begun to do with the pan-Canadian framework is an excellent start. It corrects market failures and has instruments in place to promote market growth here at home. The important thing to realize is that there are very serious structural barriers to entering the clean-tech marketplace that require government intervention on a number of levels.

Often what clean-tech solutions are correcting doesn't cost the polluting company anything, even with a carbon price in place, so they are undervalued in the marketplace. There are ways to correct for that. These new clean-tech innovations often face major risks and uncertainties. They are in new markets. They are blue sky technologies in some cases. We run into split incentives and insufficient infrastructure. Think of things like electric cars with nowhere to plug them in. Think of things like the fact that if you want to make a building more efficient, it's the building manager or owner who has to pay for that and its the tenants who have to pay the energy bills. You often have very different incentives when a clean-tech solution is being brought into place and there are things that governments can do to correct for those.

You can address these obviously with regulations, certain kinds of funding, some of which is beginning to emerge, but also through procurement by becoming an early adopter, an early customer for Canada's clean-tech solutions before they move out and ideally begin to become a part of a global solution to climate change. We're already seeing that kind of innovation in many sectors. Name one and there's often a Canadian company or two doing good work in it, from energy storage to carbon capture. Batteries for electric ferries is something that Canada's already doing well, cutting emissions in the production of concrete, on and on, but this stuff does need sustained focused support to get from where it is right now, often in the very early stage of development, to the marketplace.

One way to put it, there is a company I know fairly well called Carbon Engineering, based in B.C. now. Their research emerged out of the interest in Calgary and Harvard. A guy named David Keith was the primary guy working on it. This is technology to capture carbon dioxide directly out of the air, very revolutionary stuff. It could be a decade or more before there is anything like a marketplace for this, but as the guys working on it would tell you, when that marketplace emerges, it will be massive. One of the founders told my colleagues at Smart Prosperity, “Make no mistake, this is a race. The expertise around this topic is going to coalesce somewhere. We want it to be in Canada.”

That is what we hear from clean-tech innovators as a rallying cry: “We know we can get there but we know we need support to do so.” That is the place of government, to step in when they can.

The core lesson I learned working for the last six months on the Generation Energy Council at NRCan was that the difficult thing with climate change solutions is that they take a very long time to come into effect, the rewards are far down the road, certainly past the next election cycle, and it's very easy to get into terrain that makes everyone in the room uncomfortable.

That discomfort is part of the nature of the change and the shift that we need to be driving, so I would invite you to get comfortable with that discomfort and understand that these solutions are absolutely the most important thing that Canada can be working on right now. Our children and their children will thank us if we get this right and will hold us to task for it if we get it wrong.

There is nothing more important than developing these solutions. There is no higher priority than solving this problem. It's existential and it will last well past my lifetime, so I urge you to continue to drive Canada forward as a leader in this regard.

Thanks.

[The Chair]

That was perfect timing.

Now, Mr. Drexhage, over to you for your 10 minutes of opening remarks.

[John Drexhage, Consultant, Drexhage Consulting, As an Individual]

Thank you very much, Mr. Chairman.

I think it's entirely appropriate that we follow the order that we did.

I originally hail from Edmonton, Alberta. I worked on issues relating to climate change and sustainable natural resource development for over 25 years with a wide range of interests. To mention a few, I worked with the Government of Canada, the International Institute for Sustainable Development and the International Council on Mining and Metals. I currently work with the World Bank and the Canadian Council on Renewable Electricity.

I consider myself a progressive pragmatist who has been characterized by environmentalists as crossing the aisle and suspected by many parties in the extractives industry of concealed intentions. So be it.

In this intervention, I will focus on the issue of internationally transferred mitigation outcomes, ITMOs, and Canada’s implementation of this key provision in the Paris Agreement. In that capacity, I represent no one but the person who sits before you here.

“ITMOs” represents the latest buzz phrase for internationally based carbon market mechanisms, the idea being that entities, whether they are governments, business or civil society, have the option to meet greenhouse gas emission targets, and by the way also help to promote clean technologies, by investing in reductions overseas.

One would think that Canada would have taken advantage of such an option, given the nature of its resource-based economy and the challenges therein to meet our climate commitments, but such is not the case.

Why? In my view, the most significant barrier is conceptual and/or cognitive. There is a history of misperceptions around the issue of international emissions trading in Canada, and this has been the case for over 20 years. Many in the environmental constituency perceive international purchases as lacking in environmental integrity and as burdening entities outside of Canada with emission reductions when the onus should lie on the large polluters at home.

On the industry side, there are concerns that public funds will go towards purchasing so-called emission credits to meet international commitments rather than use those funds towards supporting greenhouse gas reduction technologies and practices at home. This is also a concern shared by many provincial governments that ITMOs should not represent the competitor or drawer on funds that might otherwise support domestic actions and policies to address climate change. What is lost in these objections is that this flexibility will always be key for Canada to be able to meet whatever greenhouse gas reduction targets it may take on.

Norway is instructive in that regard. Its economy is even more reliant on fossil fuel exports than Canada's, yet it takes on and implements much stronger climate actions and targets both at home and abroad. A key part of that is their willingness to invest in strong, credible greenhouse gas reduction and sequestration projects beyond its national borders, helping them to reach their targets and to share expertise and know-how abroad, thereby helping their burgeoning clean energy industry and building capacity in other countries to do so.

Simply put, ITMOs can be developed and implemented in such a way that they work to support and complement the domestic development of green technologies, policies and practices in becoming a central feature of Canada’s economic and development future.

Specific criteria to develop an ITMOs regime in Canada would include the following. It clearly avoids any potential for double counting of greenhouse gas reduction credits or allowances. It promotes Canadian expertise and technologies in the green export market. At the very least, it effectively addresses any potential conflicts with UN sustainable development goals, and preferably, demonstrates ways in which it promotes sustainable development goals in host countries. It should be developed in close collaboration with the provinces. The decision in that respect of the CCME and the pan-Canadian framework to address article 6 together, not as a federal initiative but clearly and truly as a federal-provincial initiative, is a very positive step in that regard.

Implementing ITMOs at home would provide tangible benefits. It provides Canada a means to ensure that it meets this country’s Paris commitment. This is a critical issue, as Canada has not met its international climate change commitments on four previous occasions, and I hasten to add that those targets were established under both Conservative and Liberal governments. Even more importantly, it provides an opportunity for the export of relevant Canadian technologies, practices and expertise that will further strengthen the development of a green economy model throughout Canada and globally.

I already spoke to you about Norway. I would like to bring in another example. One need only look to Japan and the model they have developed under the joint crediting mechanism. Working closely with industry, they have successfully invested in greenhouse gas reduction opportunities that also work to promote real economic opportunities.

There are some who argue that ITMOs be applied in future years of the pan-Canadian framework and that its first focus should be towards greenhouse gas emission reductions within Canada. Yes, that may be one option, but in my view it smacks of desperation, and as such would almost certainly become politically contentious: We've tried everything else, so let's try this one last saver called ITMOs. Much more preferable is an approach as laid out above—a strategic investment that is developed in support of and complementary to domestic actions, which will also help the federal government to close its emissions gap.

Finally, it should be noted that Canada has been a leader in the negotiations around article 6 of the Paris Agreement and ITMOs. In that respect, once a comprehensive elaboration has been agreed to internationally—hopefully at the next upcoming talk in Poland—it is incumbent that credible and robust systems are put in place. Canada has a unique opportunity to show leadership in this area by demonstrating that international actions to address climate change that also work to help countries meet their emission commitments are a critical way forward, as countries look for ways to accelerate commitments to reduce greenhouse gas emissions globally. When it come to domestic actions and international credits, it is not one or the other. It is one and the other.

I also have thoughts around what a Canadian ITMOs architecture might look like, and if the committee is interested, I could send those in a separate submission.

Chair, thank you for your time.

[The Chair]

Excellent, and that's ahead of schedule. Thank you for your comments.

I should have mentioned at the beginning as well that we may be having a vote this afternoon. We're just waiting on word to see if that's still in place. We may be winding up as early as 5 p.m. I'll just play it by ear. I'll let the witnesses know that we may not be here for the full duration because of that. That will evolve as we go through the next hour and a bit.

Now we'll get into the questions and answers. First up is Ms. Dzerowicz.

[Julie Dzerowicz, Davenport, Lib.]

Thanks so much.

We've had three completely separate presentations, with a lot of information. I'm a new committee member, so this is all good. I have a big interest in this area, so I'm very excited to be here. I really thank you all for your presentations.

I'm just going to start with you, Mr. Turner. I was taking down my little library in my house and I actually have your The Geography of Hope book. Thank you very much for your pitch for your Christmas book recommendations. I remember reading it when it first came out. One of the things I loved about it was that it actually went around the world and talked about how countries were moving towards a low-carbon economy, and you focused on some of the innovations, the best of what was happening around the world.

As you know, we have our pan-Canadian framework and we've just announced our price on pollution. I would love to hear from you how it is that we can do better in terms of bringing our population onside. In terms of educating the population, we talked a little about ITMOs as part of our conversation, but that's not really part of our lexicon here. We're just trying to talk about a price on pollution or carbon pricing.

What is it that you might be able to add as part of the discussion in terms of recommendations for us?

[Chris Turner]

I would say, first of all, that it's one of the most difficult aspects of the entire complex nature of dealing with climate change. It's something where people have different understandings of what exactly it means. Are we talking about weather? Are we talking about long-term changes? There's a lot of spotty or incomplete information in the general public to begin with.

One thing we've discovered since I wrote that book in 2007 is that there's a feedback mechanism. An example I've used recently is this. You think about how easy it was and how quickly we convinced people that plastic straws represent, to some degree, some sort of public risk or negative aspect in public. People understood viscerally that this stuff winding up in the oceans and causing harm to marine environments is inherently bad. If I don't use the straw, the problem begins to go away and I've improved it.

Climate change, because it's so diffuse over time and space, doesn't offer those kinds of immediate feedback mechanisms. If I stop driving my car and start to take the LRT to work, nothing immediately changes in my environment except that I'm getting to work a different way.

Engaging the broad public in it has proven extraordinarily difficult. People don't rally in the streets in favour of a price on carbon. These are not things that make it really easy to score a political win. Certainly one of the things we tried to do on the Generation Energy Council was to think about it in terms of what the Canadian home looks like if it's closer to zero emissions, and talk in very specific ways about your daily life and the changes, which are largely positive, that would come from that.

I think that part of the conversation gets left out when we're talking about cutting emissions and putting prices on them. We never get to the part where, actually, some of this stuff is really great. The idea that you have a car that doesn't need to be fuelled for $60 a tank at the gas pump is a net positive if it's presented as such. A house that uses way less energy yet is actually more sophisticated in terms of using the energy that it does, that is a net positive if we can talk about it that way. Those two things don't get matched up as much as they need to.

[Julie Dzerowicz]

Is there any country that...? I think one of the examples you might have talked about was Germany. It seems like it was really a 30-year process that got them from starting a national conversation, people writing about it, to actually moving their population to where it needed to go.

Were there any sorts of nuggets or tips that you might be able to draw in from other countries in terms of shifting over the conversation, or is it just really having that conversation and the conversations that you're suggesting right now?

[Chris Turner]

There doesn't seem to be a quick shortcut in any case. For northern Europe, the European Union generally I would say, this was not as difficult a conversation to have because energy prices were already very high relative to Canada, where we have some of the cheapest electricity on earth. It's very hard to convince people it needs to change when that's the case.

If you look at the specific case of Germany.... One of the things I would hasten to mention is that nobody is doing this perfectly. Even in the German example, which I've written about very positively, for domestic political reasons they've chosen to maintain their fleet of coal-fired power plants, which has not been good for their emissions profile, mainly because nuclear power is that much of a political third rail in Germany. Even in the German example, probably the strongest difference between where that conversation began in Germany or where it got to very quickly, and where it hasn't yet gone here, is that it was immediately seen as an opportunity to create new jobs, to build a new industry. Even when government changed and Angela Merkel's conservative government first came into power, they were not big fans of the energy transition but quickly realized there were just too many Germans benefiting from it for them to not support it on some level.

I think there's presenting it as an opportunity for industrial growth and economic growth as well as a way to tackle a major environmental problem.

[Julie Dzerowicz]

I have another question and I'd like to move to Mr. Drexhage.

Mr. Drexhage, you had offered that you might be able to send us some information about how we can actually get to that framework around ITMOs. I'd be very curious to see that. Thank you for that.

[The Chair]

I should mention to all our guests today that if you would like to submit anything in follow-up to the questions today that you may not have been able to state, we take briefs. They can go to the clerk. We try to encourage nothing longer than 10 pages. That can be sent in after and still be considered for the report we're working on.

Next up we have Mr. Fast for six minutes.

[Ed Fast, Abbotsford, CPC]

Thanks to all of you for appearing.

At our last meeting we were getting into a discussion on ITMOs and then the bells went and we all had to leave, so we never really got to the nub of the issue.

I agree with you, Mr. Drexhage, that ITMOs probably represent one of the most significant things Canada can do, especially given how well developed our technology is and the capacity we have to develop new technology, transfer technology.

Where do you sense are the best opportunities for Canada to take advantage of internationally transferred mitigation outcomes?

[John Drexhage]

That's a very interesting question.

[Ed Fast]

Could you respond per industry, and then drill down to maybe some of the big ones that pop out?

[John Drexhage]

One of the areas that I think has always been massively overlooked is in the petroleum industry, the gas flaring that goes on continuously in many of the industrializing countries. I still remember flying once from Amsterdam to Japan and it was in the middle of the night, two in the morning, and the entire sky was emblazoned like it was sunlight in Siberia because of all the flaring that was going on.

The natural gas leakage that goes on throughout eastern Europe is massive. When you're looking to try to reduce natural gas leakage in Alberta by thousandths or hundredths of 1% versus the 5% to 10% leakage that's going on in some of the countries, it just makes so much more common sense.

CCS, carbon capture and storage, is another area. It has had its issues in terms of implementation over the years.

[Ed Fast]

It's very expensive.

[John Drexhage]

But we have the Shell experience in Athabasca, which I witnessed first-hand. Those opportunities do exist.

The other thing that I find overall in terms of the broader sustainable development agenda is that it's not just hard technologies. It's the services and the expertise that we can bring as well. I think that's where particularly Canada from the solar side and from the wind side, the renewable side, small hydro.... My God, the expertise that we've had on hydro over the years with Hydro Quebec, Manitoba, BC Hydro, etc., is enormous.

There's too parochial a vison of this whole renewable grid that we have and we haven't really thought about how we translate that into international opportunities. That's another area I would identify.

[Ed Fast]

To get to the political element of this, I believe it's much easier to sell Canadians on the idea of Canada doing its part internationally by transferring its best expertise abroad and getting a bigger bang for the buck than we would in Canada. It's a much easier sell to Canadians than a carbon tax, which we know has to be in the hundreds, if not thousands, to actually be effective.

That takes political will, and I'm not sure you'll get the political will to do that kind of taxation.

Ms. Maciunas, thanks for talking about trade. That's an area that I lived for four and a half years.

I want to talk to you about the environmental goods agreement that was negotiated some time ago. It started in 2014 and sort of petered out in 2016. It includes China, which effectively has a veto power, because it is all about consensus.

To what do you attribute the current malaise, or perhaps even failure of that agreement?

[Silvia Maciunas]

It's hard to say in today's environment, where a lot of trade discussions have stalled given the current political positioning of the U.S. I have heard from folks who are closer to the negotiations than us that when the administration changed in the U.S., there was less of an interest in pursuing it because there was a perception that it would not go far.

I've also heard that the mechanism they used to identify environmental goods was one of the problems, as it allowed it to become a negotiation on each item. The thought was that if there was a different approach to identifying an environmental good...because I understand there was no definition either for an environmental good.

If you either had a definition that you could assess against or you had a process where you could have a group of engineers and scientists who would identify what an environmental good was and then put that recommendation to a negotiating group, then you would have something that maybe is a little less of a negotiation between parties who are trying to simply seek trade advantages. I think there are ways to improve the process.

Of course, one of the techniques one can use in international diplomacy is that if you can't get a broad group of folks to agree to something, then you can make your group smaller. You will find your environmental like-minded groups who want to talk about clean tech and environmental groups, and try to establish some sort of agreement with that group as a start, hopefully, and then you can expand it either to WTO or others.

[Ed Fast]

That, by the way, happened with the international services agreement. They explicitly excluded certain countries, which shall remain nameless, because they used consensus as a veto tool and were able to move forward significantly.

You may be familiar with those negotiations as well.

[The Chair]

That's it, Mr. Fast. We're out of time.