Environment Committee on Dec. 11th, 2018

[Doug Hooper]

I understand, thank you.

Biofuels used in transportation and some of the heating uses like heating oil, etc., are the single-largest plank of the climate action strategy. The clean fuel standard is, I think, the most significant measure under development right now under the pan-Canadian framework. Under the CleanBC plan announced last week, the low-carbon fuel standard was the single-greatest measure towards the 18.9 million tonnes of reductions there.

After we eliminate coal-fired power from the electricity grid, the emissions we have to tackle are those related to gasoline, diesel and natural gas.

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

Thank you.

Why is there still some reluctance? Why isn't the biofuel industry more ahead? You said earlier that you are world leaders, but you don't have much of a presence. What is blocking your industry's development?

[Doug Hooper]

I don't know if there's reluctance, sir. I think there's great desire.

The challenge has been that the tools and instruments that were deployed in Canada were not as competitive as they are in other markets. The United States has a national renewable fuel standard with credits that are fungible and tradeable.

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

This will be my last question.

Is Canada successful in attracting foreign investment for biofuels?

[Doug Hooper]

Yes. As I described in my comments, we have over $6 billion of capital projects within our membership. That interest has been growing over the last number of years. It's primarily because of the clean fuel standard. How we price carbon, whether we price it that way or that way, is going to make a difference, but the key thing is the clean fuel standard and the compliance credit market.

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

Thank you. I will yield the floor to my colleague. We can continue this discussion later.

[Mark Warawa]

Thank you.

I started asking questions about the canola growers. That association has far exceeded the Paris targets of 30%—a 50% reduction from 2005 levels. They would like to be exempt.

Both associations, all the witnesses, indicated that they support a carbon tax. I don't think it's unconditional, but my question is that the canola growers are saying the tax is making them uncompetitive, and they are considering relocating. Do you not support their being exempt, both the canola growers and the aviation industry. Is that right? You support the carbon tax being charged on them.

[Doug Hooper]

No. To clarify, on industrial facilities, so this would be canola crushers and rendering plants, and it also includes biofuel production facilities, we support measures, whatever the pricing system is, whether it's a performance-based standard like the former SGER program in Alberta or output-based systems or cap-and-trade systems.

We need to be very careful, for our energy-intense and trade-exposed industries, including ours, that we don't make it uncompetitive to conduct this industrial activity in Canada.

[Mark Warawa]

I'm sorry, my time is clicking.

Do you support an exemption or not?

[Doug Hooper]

Yes. We support an exemption and an appropriate design structure for industrial facilities to maintain competitiveness.

[Mark Warawa]

Chair, I just have a moment left. I really feel it's important that we have the minister here.

I'd like to give a notice of motion. I request that the Minister of Environment and Climate Change appear before this committee to discuss the funds that the Parliament approved in December 2018 as part of the supplementary estimates, and that she appear, with her deputy minister, for no less than one hour, as soon as possible.

Because it's a notice of motion, there's a 48-hour requirement, but I would seek unanimous consent to deal with that now.

[The Chair]

Does the member have unanimous consent?

[Some hon. members]

No.

[Mark Warawa]

Thank you.

[The Chair]

With that, we're out of time on that one.

We go over to Mr. Amos. We have five minutes.

[William Amos, Liberal, Pontiac, QC]

Thank you, Chair, and thank you to all of our witnesses.

I want to focus my questions to you mainly, Mr. Hooper, because I'm interested in getting your assessment of how the process of getting to a clean fuel standard has unfolded so far. As someone who is not an expert in the different fuels and the different competitions between fuel types, I think it's really hard for the average politician and the average Canadian to understand the public policy merits and the different choices that are involved in developing this.

Obviously you represent a particular institution, but if you are able to unpack that for us, I think it would be helpful as we look at that issue and potentially make recommendations in the course of this study.

[Doug Hooper]

I'll give a brief overview of the process to here. The clean fuel standard was announced by the government just in front of the pan-Canadian framework announcement in November of 2016. We're just over two years in. It took a while for the process to be established in terms of the stakeholder engagement, but we're now well into it.

Environment and Climate Change Canada has been conducting a detailed examination of design options and issues with stakeholders across all sectors. They're liquid, gaseous and solid fuels, but the sectors impacted are transportation, industry and buildings, so there are quite a number of folks represented in technical working groups when we're going through that process.

On the opportunity side, I think the constituents are always frustrated by the pace. We would like it to go faster, but I think the department staff at Climate Change Canada are doing a good job in going through the process development.

To the previous conversation in terms of the opportunity and the timelines, Canada, through the clean fuel standard, will have the regulatory platform on which to have competitive markets. That's why capital is interested in investing in assets in Canada. It is largely dependent on the design of the clean fuel standard. We need to get that right. That then will give us a market-based system that allows competitors to select low-carbon options. It will also give us a performance-based system that is measuring life-cycle carbon intensity of product A versus product B.

The good news about the sustainable forestry and agricultural products in Canada is that they're very low-carbon products and they're renewable, and we can certify them to meet globally accepted standards. We can meet our own needs and we can develop an export market opportunity as well. We can expand the value-added activity here in Canada.

[William Amos, Liberal, Pontiac, QC]

What would you say are the thorniest two or three issues in the context of finalizing those discussions in the technical groups?

[Doug Hooper]

Right within the meat of the regulation it's really a debate between what is the role of liquid fuels compared to gaseous and solids, so the allocation of the 30 million tonnes is a key issue.

There are quite a number of design features, but outside of the regulation itself, I think, this issue of carbon pricing is one that I really encourage the parties in the governments of Canada and the provinces to wrestle to the ground. The political risk that is associated with policy reversal, policy delay or policy implementation cannot be underestimated. It is negatively impacting the deployment of capital to build clean fuel assets and to lower the carbon emissions from existing assets, so it is one that—

[William Amos, Liberal, Pontiac, QC]

Just to clarify, then, are you saying that the suggestion across the board by Her Majesty's loyal opposition that pollution pricing is a job-killing tax on everything and the threat of a reversal in the future is actually doing the Canadian economy harm?

[Doug Hooper]

Yes. The debate over a carbon tax on both sides is stalling investment decisions, because capital projects are hundreds of millions of dollars and you can't deploy capital in a dynamic risk environment. It needs to be resolved.

[William Amos, Liberal, Pontiac, QC]

I'd like to ask Ms. Baldwin one question, very quickly.

We rural members of Parliament often advocate for more significant investments in broadband Internet infrastructure. I'm going to do this day in and day out as an MP. What kind of impact do you think that even more investments in rural Internet could have on the issue of addressing our climate change challenges?

[Kristin Baldwin]

Considering that the use of broadband opens up a significant breadth of agricultural technology, it's almost exponential. If you have broadband, it allows farmers to use significantly more environmentally friendly technologies. It's just a matter of getting the rubber to hit the road a little bit.

I don't want the giant cane to come get me so that's it.

[The Chair]

We are at five o'clock and I know that is how long we had asked our witnesses to stay. We have one three-minute round of questions left with Mr. Stetski, so if the witnesses are willing to give three additional minutes, I would like Mr. Stetski to get his final round, and then we will go into our closed session after. I've spoken with the analysts and the clerk and we believe that we can do what we need to do with committee business in the time we'll still have left.

Mr. Stetski, I'll turn it over to you for your three minutes.

[Wayne Stetski]

Thank you, Chair. I really appreciate that.

A few years ago, I was mayor of Cranbrook. We had a friendly city relationship with Wonju, a city in South Korea. We went over for a visit and I was amazed at what they're doing with agriculture. The ditches alongside the roads were full of crops. Every vacant lot in a city of 300,000 people was covered in vegetable gardens, and there was an experimental farm right outside there where they looked at what crops would grow, etc.

I was really excited but really depressed when I came back to Canada because of what I saw as the lack of real support from government for agriculture in Canada. We had been closing the research farms, etc.

I want to ask you, Ms. Baldwin, what are some of the things that the federal government should be doing to really help agriculture move forward and ultimately to reduce GHGs as a result?