Evidence of meeting #140 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 fuel.
A recording is available from Parliament.
Kootenay—Columbia, NDP
I've also heard over and over from many people testifying that by putting a price on pollution you encourage innovation and encourage companies to do better. Do you not think that would be true in the airline industry?
President and Chief Executive Officer, National Airlines Council of Canada
There is a price on carbon. We're already dealing with a price on carbon. It's 30% of our operating costs. That's our reality. What we're saying is.... You can call a tax a carbon tax. We deal with the cost impact of the new passenger rights regulations in the same way that we will deal with another tax. Provincial aviation fuel tax, changes with respect to CATSA funding—all of these things—affect our bottom line, our ability to compete, and we have to squeeze savings where we can.
The largest single variable cost we have is fuel, and that's what people like Geoff are absolutely laser-focused on. That makes us absolutely unique.
We don't want a free ride—
Mr. John Aldag (Cloverdale—Langley City, Lib.)
Thank you. There may be a chance to come back to that line of questioning.
Next we have Ms. Dzerowicz and Mr. Fisher, who are splitting their time.
I'll turn it over to you.
Davenport, Lib.
Thank you so much for your great presentations.
I'll continue on the line that Mr. Stetski was starting. We hear so much, so we're testing some of the things we are hearing at committee.
My first question will be for you, Mr. Boag.
We've heard very much that carbon pricing isn't the only way to reduce emissions. If you look at our pan-Canadian framework, there are a number of initiatives under there that will hopefully lead us eventually to meeting our Paris accord targets.
We've also heard quite a bit that we have to act quickly. It's very similar to what Ms. Kyriazis was mentioning: We have to act now and quickly.
I hear what you're saying in that it's very challenging for industry to meet the 80% benchmarks set by the federal legislation. I suspect all nations with refining resources are facing the same challenges.
It's not going to get less expensive as we move along. If the climate is changing, and that's accelerating, why wouldn't we want to face the challenge now and make the investment that needs to be made right now as opposed to waiting?
President and Chief Executive Officer, Canadian Fuels Association
First of all, let me just say that, in many of the countries, there are refiners we compete with in our markets in other jurisdictions—and the U.S. is the best example—who don't face those carbon costs. That is a huge competitive disadvantage for Canadian refineries, the additional costs they will pay through this carbon pricing system where they're trade exposed. They don't have the ability to pass that cost on. It's just not another cost that gets passed on to consumers, because they have competitors who don't have those costs and who are going to undercut them in price.
By moving too far too fast, we'll just close the refining sector in Canada, shift those emissions to some other jurisdiction, put ourselves at the end of long supply lines, potentially jeopardize security of supply and bring our fuels in from somewhere else.
Mr. Fisher would probably have some direct experience with that, coming from a riding where an uncompetitive refinery closed, and the province of Nova Scotia has seen some security supply issues in the last couple of years.
Davenport, Lib.
It is my understanding that most of the U.S. is going to move towards a similar type of legislation. I think we heard about a dividend-and-fee type of legislation. While it might not be in place now, there is expectation that most of the states will have something in place. I think the world is understanding that climate change is happening and that we all have to take some fairly urgent steps.
I'm at my three minutes, so I'm going to pass the baton over to Mr. Fisher.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
Thank you very much, Mr. Chair.
Thank you, Julie, for sharing your time.
Thank you, folks, for being here. It's a fascinating topic.
I want to just go to Joanna, and I only have a short period of time. I hope you're okay if I call you Joanna. I see you cringe every time someone says your surname.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
You mentioned the cost of inaction. Because of the cost of inaction and, perhaps, an amazing opportunity and also, perhaps, government plans, we're seeing a huge boom in Atlantic Canada for green energy and clean technology.
You talked about your list of 100 companies. If you had more time, you would probably have mentioned CarbonCure in Dartmouth-Cole Harbour and the amazing things they do trapping GHGs during the production of concrete. We're seeing that in Dartmouth-Cole Harbour. We're seeing that innovation.
In the short time we have, I'm wondering if you could connect the dots or draw a line between pricing pollution and spurring innovation. I would also be interested in your thoughts on whether innovation is coming because of this great opportunity. How much of this spurred innovation is better behaviour versus opportunity of extra profits? “Profits”, of course, is not a bad word.
Senior Policy Advisor, Clean Energy Canada
The private sector often goes where the potential profits are. The behaviour of consumers is also driven by price signals. As I'm listening to some of the other witnesses, perhaps we can get consumers to change their behaviour based on more education and information about what are the most environmentally friendly options. Unfortunately, that's not going to lead to a change in behaviour as effectively as the price signal.
In terms of how carbon pricing can spur innovation, carbon pricing sends a market signal and makes higher emitting materials and activities more expensive. This means that individuals and businesses are going to be looking for lower carbon options, whether it's technology or materials. This will increase the demand for these new options and technologies. The market is going to move in and try to take advantage of these opportunities, like the carbon cures that take carbon dioxide and use it to create more concrete, thereby lowering the footprint in building projects.
Another example is the ecobee smart thermostat technology. As the market demand increases and more technologies enter the market and start competing, we're going to see more options. We're also going to see these options become more accessible and less expensive.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Thank you, Mr. Chair.
My thanks to the witnesses for participating in our exercise.
I believe that we have an objective, but we must be realistic. There is a change in the warming climate, and it is global. It is not Canada's responsibility. Naturally, the earth is warming up. It may be accelerating because of industrialization, but we all agree that we have to act by taking measures to protect our environment. We agree on that.
Ms. Kyriazis, in your presentation, you stated that the carbon tax is working well. That is the case in British Columbia, where results can be seen. You also talked about an emergency.
On the National Energy Board website, I see that, since 2008, greenhouse gas emissions have not decreased. How can you state that the carbon tax is the key solution in achieving our common goal, which is exactly to reduce greenhouse gas emissions?
Senior Policy Advisor, Clean Energy Canada
In the British Columbia example, there was a carbon tax in place since 2007. A 2015 study showed that emissions were reduced by 5% to 15%. It is true in the last few years that emissions have risen. However, B.C. has seen huge economic growth and population growth, so overall emissions were more. That being said, there's overwhelming evidence that having a carbon tax in place significantly bent the curve downwards and led to less emissions than would have been produced had there not been a carbon tax in place.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
You tell me that the carbon tax is the solution to reducing greenhouse gas emissions. You tell me that the increase of emissions in British Columbia is explained by their economic prosperity. The two are directly linked. So do we have to stop economic development? Do we simply have to reduce greenhouse gas emissions and therefore reduce the quality of life for Canadians? Is that what will happen?
The carbon tax is the means that the current government has found to reduce emissions but I am not sure that it is the best solution. Canada has a unique reality because we are the second biggest country in the world. Was that reality considered when the carbon tax was imposed? In European countries with a greater population density than Canada, the effect is different. How can you convince me that the carbon tax is the measure that will reduce emissions quickly?
You mentioned earlier that we have to act now. But the carbon tax that the government is proposing will have no immediate effect. It will be $20, $30, $40, $50. According to the experts, if you want a quick result, you would have to raise that to $300. Are we also measuring the impact of the tax on people's daily lives?
Someone mentioned earlier that two-thirds of greenhouse gas emissions can be attributed to ordinary people. We are chasing our tails, there are no immediate results. You have insisted on urgent action. A number of people in the environmental field tell me that we have to calm the situation down, because being alarmist does not benefit the environment. Yes, we have to act, but we have to take the time to find the best solutions.
You have not convinced me of the benefits of a carbon tax. Do you want to add anything?
Senior Policy Advisor, Clean Energy Canada
First off, evidence from not just B.C. but other jurisdictions around the world—the U.K., California, Quebec—have all shown that carbon pricing works, both in terms of reducing emissions and supporting strong economic growth. We do not need to sacrifice economic growth and quality of life.
Second, in terms of individual habits and whether a carbon price can impact those, I'll go back to the example of B.C., where a study found that B.C.'s carbon tax decreased residential natural gas consumption by 7% to 10%. It also decreased gasoline consumption. Per capita demand for gasoline would have been between 7% to 17% higher, and it increased the use of fuel efficiency. It did lead to a change in behaviour, again without sacrificing quality of life or economic growth.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Excuse me, I have to stop you because, unfortunately, time flies.
You also said that we have to send a clear signal to companies and to Canadians. Do you not think that subsidies, awareness campaigns, innovation and regulation would produce results more quickly?
Senior Policy Advisor, Clean Energy Canada
Carbon pricing is not the only solution, but we hear widely from economists that it's the most cost-effective solution. It will reduce emissions at the lowest cost to our economy.
Liberal
William Amos Liberal Pontiac, QC
Thank you, Mr. Chair, and thank you to all of our witnesses. It's greatly appreciated.
My first question goes to Mr. Boag from the Canadian Fuels Association.
I understand from your presentation that the CFA's position is that the output-based pricing system does come with costs. Is that correct?
Liberal
William Amos Liberal Pontiac, QC
It will impose costs and likely some form of behavioural change within the refining industry. Is that a fair assessment?
President and Chief Executive Officer, Canadian Fuels Association
Our issue is that the level it is set at in terms of the expectations will actually allow very little behavioural change. With regard to many of the Canadian refineries, because the gap will be so large, the only option they will have to comply will be to pay the tax on excess emissions.