Evidence of meeting #139 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 pricing.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Chair  Mr. John Aldag (Cloverdale—Langley City, Lib.)
Andrew Leach  Associate Professor, Alberta School of Business, University of Alberta, As an Individual
Nicholas Rivers  Associate Professor, University of Ottawa, As an Individual
Dale Beugin  Executive Director, Canada's Ecofiscal Commission
Mark Cameron  Executive Director, Clean Prosperity
David Sawyer  Senior Fellow, Smart Prosperity Institute
Mark Warawa  Langley—Aldergrove, CPC
Wayne Stetski  Kootenay—Columbia, NDP
Bev Shipley  Lambton—Kent—Middlesex, CPC
Julie Dzerowicz  Davenport, Lib.

5:05 p.m.

Executive Director, Canada's Ecofiscal Commission

Dale Beugin

It does. It addresses competitiveness concerns through the output-based carbon pricing system, and it addresses fairness for low-income households through those rebates to households.

5:05 p.m.

Davenport, Lib.

Julie Dzerowicz

Professor Leach, you mentioned another thing that I also hear, whether or not big emitters will be exempt. You directly addressed this. Could you address it one more time in terms of why big emitters are not going to be exempt under our plan?

5:05 p.m.

Associate Professor, Alberta School of Business, University of Alberta, As an Individual

Dr. Andrew Leach

I think it's important to draw a line between whether some of their emissions are off the books or exempt from coverage versus whether they receive some emissions credits for free. The important difference between those two is that, in the system proposed federally, in the system implemented in Alberta, and even in the system that was largely in place in Ontario and Quebec before the changes, the full value of any emissions reduction is still preserved by that system.

If you reduce your emissions by 10%, that just puts either more money into your pocket in terms of the value of the credit or less overall carbon tax bill, whereas if 80% of your emissions were exempt from the carbon price, then you would only capture 20% of the value of your emissions reductions. It's important that it gets preserved while reducing the average cost to companies.

5:05 p.m.

Davenport, Lib.

Julie Dzerowicz

You also talked—all of you, to a certain extent—about this in terms of the price on pollution and having a negative impact on economic growth. I think I heard very clearly that it should have a positive impact on economic growth.

Who would like to address that for a minute?

5:05 p.m.

Associate Professor, Alberta School of Business, University of Alberta, As an Individual

Dr. Andrew Leach

I'll start, and then others with more models can....

I don't think that was the message. I think the message was that the impacts would be fairly small. Most economic modelling shows, in some cases, small negative impacts on trend but not at the scale that we've heard talked about this week of recession or causing economic growth to disappear. You are taking about something that was previously a cost imposed globally on others, and you are bringing some of those costs here. You have to take that with a grain of salt.

5:10 p.m.

Executive Director, Canada's Ecofiscal Commission

Dale Beugin

I'll echo Andrew. Our models show growth remaining positive even under large carbon prices, albeit slightly less strong than it would be in the absence of any policy. Growth is very, very slightly, very modestly slower with carbon pricing.

5:10 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

I think the one other thing to point out is that, if we're going to hit our emission reduction targets, the cheapest way to do so, the way that will impose the smallest impacts on growth, is through the carbon pricing approach. A regulatory approach would impose a bigger cost on growth than would a carbon pricing approach.

5:10 p.m.

Associate Professor, Alberta School of Business, University of Alberta, As an Individual

Dr. Andrew Leach

Maybe I will swing back in on that.

I think one of the things that we've certainly felt in Alberta is the cost and impacts on growth of non-carbon pricing policy. We saw Keystone XL as a prime example of that. The policies imposed on us externally have way higher cost.

To Nick's point, you have to be really careful not to assume that there is some world where Canada can just go on emitting whatever it wants, whenever it wants, with no external consequences. That world doesn't exist. If we imagine that Canada is going to take action and needs to take action, then the carbon price is the best way to do that.

5:10 p.m.

Davenport, Lib.

Julie Dzerowicz

As I think you know, Mr. Shipley was mentioning earlier how we tend to talk about the costs versus the actual emissions and what the reduction in emissions will be. Carbon pricing isn't going to reduce the emissions to where we need them to be for us to meet our Paris accord targets, although we have a number of initiatives under the pan-Canadian framework that, added up, should get us to our Paris accord targets. We're not quite there yet. I think we still had 66 megatonnes to go before Ontario pulled out of the cap and trade. I think we still have some work to do there. That is the understanding. I don't think anybody believed that carbon pricing is going to get us to reducing emissions to the extent that we need to in order to achieve our Paris accord targets.

It really is a combination of a number of things. Isn't that true?

5:10 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

I guess I would just point out that I wouldn't talk of carbon pricing as a discrete thing, like a yes or no. It's not like a light switch. If it is a light switch, it's like a dimmer. There are lot of different levels of carbon pricing. You could have a very strong carbon price that would get us to our target, or a smaller carbon price that wouldn't get us to our target.

5:10 p.m.

Davenport, Lib.

Julie Dzerowicz

Yes, to the point that Mr. Beugin mentioned, the higher it is, the faster people may change behaviour.

5:10 p.m.

Associate Professor, University of Ottawa, As an Individual

5:10 p.m.

Mr. John Aldag (Cloverdale—Langley City, Lib.)

The Chair

You're out of time.

Now our last one for this round goes to Mr. Stetski.

I believe you're going to share or give your time to Ms. May.

5:10 p.m.

Kootenay—Columbia, NDP

Wayne Stetski

Yes, with the consent of my colleagues, I'd like to give the opportunity to our Green Party leader to have a question or two.

5:10 p.m.

Mr. John Aldag (Cloverdale—Langley City, Lib.)

The Chair

Ms. May, you have three minutes.

5:10 p.m.

Green

Elizabeth May Green Saanich—Gulf Islands, BC

Thank you.

I'm so grateful to you, Wayne. Thank you.

First of all, thank you. What a stellar panel of the thought leaders in Canada and the researchers on carbon pricing. On this conversation we're having, bearing in mind that you're not climate scientists and you handled some of those questions that weren't in your area, I'm very grateful to you for being here.

Some of the back and forth reminded me of a comment by a climate scientist, Dr. Katharine Hayhoe, who said recently—and I'm paraphrasing—that it's so strange that some people seem more afraid of taking action on climate change and are fearful of what that will cost them than they are of the failure to take action and the loss of human civilization. We have rather large risks that we're dealing with, and we're not dealing with them quite adequately.

I will parenthetically note to this committee, because I'm not a member of it, that maybe in camera you could consider linking by video conference with who I think is right now the leader globally in calling for climate action: 16-year-old Greta Thunberg from Sweden. Perhaps you can bring her in by video link.

I want to take the time I have, which I'm rapidly losing, to focus on what we can do beyond carbon pricing. Just to be really clear so you all know, I was the only opposition member of Parliament who voted for the whole budget in order to vote for carbon pricing, because it's that important. But it's way less than what's enough, because we now know that the Paris target, as we refer to it, of 30% below 2005 levels by 2030, is wholly inadequate to hold us to 1.5°C, which we must do.

I want to direct this to you, David Sawyer, because I know you were the lead on a really big project called “Deep Decarbonization”, pathways to deep decarbonization, and did the Canadian piece. I wonder if you would share with us what your main findings were on the steps that Canada needs to take to really move to deep decarbonization.

5:15 p.m.

Senior Fellow, Smart Prosperity Institute

David Sawyer

Yes, sure.

Canada has a leading policy architecture that is the envy of the world and that people are looking towards. I was just at the OECD, and people are like, “What's going on in Canada?” This combination of carbon pricing, regulations, innovation subsidy programs, methane controls and the ability to tune those to deeper decarbonization is really what people are looking at globally.

The climate leadership policy package in Alberta looks a lot like that. The current federal policy program looks a lot like that. Again, we've tumbled the numbers, and those policy packages are really scalable to deep decarbonization. We see that the vehicle regulations that Prime Minister Harper put in are actually on a trajectory towards deep decarbonization if you take the current annual reductions. We're banning coal, which, again, was an objective and policy of Prime Minister Harper. That is ahead of almost every other country.

5:15 p.m.

Green

Elizabeth May Green Saanich—Gulf Islands, BC

Can I ask quickly where you would put efficiencies in the east-west electricity grid to deliver renewables?

5:15 p.m.

Senior Fellow, Smart Prosperity Institute

David Sawyer

Sure. Decarbonized electricity—more loading electricity and more end uses in electricity—is absolutely essential to deeper decarbonization. I don't know what else to say there. Yes, it's a priority.

5:15 p.m.

Mr. John Aldag (Cloverdale—Langley City, Lib.)

The Chair

Colleagues, we have a few minutes left before our scheduled end time. What I'm going to suggest is that each side take four minutes. I'm going to hold you to that because otherwise we will run out of time.

I'll go over to that side first. Would somebody like to go for four minutes?

5:15 p.m.

Liberal

William Amos Liberal Pontiac, QC

Thank you, Chair.

There have been a number of comments made by provincial politicians about the idea of a price on pollution, particularly carbon pollution, potentially causing a recession in Canada this year. Is there any air of reality to a statement like that?

I'd ask Mr. Rivers to comment first.

January 28th, 2019 / 5:15 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

There's certainly no basis for claiming that a carbon price of the magnitude talked about or being proposed and being implemented will have any likelihood of causing a recession. I think we know this intuitively. The price on carbon is equivalent to a couple of cents on gasoline and a small amount on natural gas.

These are the kinds of fluctuations we experience routinely, and they don't cause recessions. We don't have to just trust our intuition. There are reams of studies. The Canadian government has done a lot of them. Academics have done a lot of them. There's no evidence that this will have any large impact on the economy. It will be a small amount of noise. We don't really know if it's going to be slightly positive or slightly negative, but we do know that it's going to be very slight.

5:15 p.m.

Liberal

William Amos Liberal Pontiac, QC

Mr. Cameron, would you agree that there's no reality to what Premier Ford has suggested?

5:15 p.m.

Executive Director, Clean Prosperity

Mark Cameron

Yes, I would agree. In addition to the fact that it's four and a half cents a litre on gasoline—we see fluctuations at that level every month, if not every week—all the money is going back to Ontarians; 90% of it is going back directly to households as rebate cheques, and 10% will be redistributed in other ways. If there's a slight increase in gas prices and all the money comes back to Ontarians, it's hard to see any economic impact at all. You might be looking at a 0.001% impact.

5:15 p.m.

Liberal

William Amos Liberal Pontiac, QC

Are there other comments on that?