Evidence of meeting #163 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 households.
A video is available from Parliament.
June 12th, 2019 / 4:10 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
The fourth is $305.
4:10 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's in the first year.
4:10 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Is there a difference between what they pay in rural and urban areas?
4:10 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
The cost is indeed different, and that's a question that we've received quite a lot, but we didn't distinguish between rural and urban. We distinguished just by province and by income quintile, because there would be additional complexities in trying to determine what's rural and what's urban. In the two extremes it's fairly easy—downtown Toronto or rural Ontario, let's say—but what about the suburbs and semi-rural areas? It gets a bit more complex, and we didn't go to that level of refinement in our study.
4:10 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
When we're looking at what an Ontarian would pay—again, I'm in a downtown west Toronto riding, so I'm focused on Ontario—are you able to break down what they are paying for fuel or food or gas? Do you have main categories, and would you say that 20% will be an increase in food, or 30% will be additional fuel costs? Are you able to break it down in general?
4:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Do you know?
4:15 p.m.
Senior Director, Costing and Budgetary Analysis, Office of the Parliamentary Budget Officer
We do. As part of the model, we did have that information.
As Mr. Giroux mentioned, we used Statistics Canada's input-output tables, as well as their surveys of household consumption. They allow us to see what households are consuming and see the implicit fuel embedded in each of those items that they're consuming, and then, in turn, to add on the additional carbon levy on top of that.
It's not something that we published in the report, but to the extent that there is additional interest, we can certainly take a look at reformatting some data tables and sharing those with the committee.
4:15 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
I would love to get an idea, more or less, about whether it's going to be an increase in food prices, fuel prices or heating costs. That just gives me a really good idea about how to even prepare the people in my riding. That would be helpful to me, and if you'd be able to submit that to the chair and to this committee, I would be grateful.
The second part is that your report talks about large emitters and an output-based pricing system. One of the key things I hear, which I know is misinformation in my community, is that large companies or large emitters don't pay. Is that the case, or are large emitters paying through this output-based pricing system?
4:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's an interesting question that I asked myself when we first started looking at that issue, and it's a common comment that I've heard.
Under the OBPS, as I prefer to call it to avoid mumbling the words, the large emitters will have a baseline, so those that are more efficient than the average will have credits. Those that are less efficient and emit more will have to pay or buy the credits from those that are more efficient.
Smaller emitters that are not required to operate under the output-based system will be able to participate if they want, and in the event that they are more efficient, they'll be able to sell their credits to large emitters that are not as efficient.
4:15 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Just for the general public's information, the large emitters are given a baseline for their emissions. If they produce fewer emissions than that baseline, they have some credits, and if they produce more, then they have to pay more. That is the output-based pricing system.
What is the reason we have this system for our large-emitter companies or that big companies around the world or within countries all have this system? Is it because it's a way for them to stay competitive? Why is there this particular type of system for large emitters?
4:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's a question that would be best answered by the Minister herself and probably the government in general. My understanding is that it's to avoid negatively affecting the competitiveness of big emitters.
To go back to your initial question, it is true that those who are at that baseline have a permit to emit at no cost. Those that are above the threshold will have to pay.
4:15 p.m.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Thank you, Mr. Chair.
In fact, Mr. Giroux, I will come back to what I mentioned earlier. I can understand that there may be some confusion between today's report and tomorrow's, but you can see that we are very interested and that we will read tomorrow's report carefully.
In the study you conducted, did you measure the effect of the measures on greenhouse gas reduction in those four provinces? I think that was one of the objectives.
4:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Thank you for asking me this question again and allowing me to come back to it.
In this report, we measured the greenhouse gas reductions that would result from the price on carbon in those four provinces for the 2019-24 period. That reduction would range from 4% in Ontario to 15% in Saskatchewan.
4:15 p.m.
Conservative
4:15 p.m.
Conservative
4:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Of course.
It is on page 7 of the English version of the report, and on page 8 in the French version.
4:15 p.m.
Conservative
4:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Of course.
Figure 2-1 shows that both tax revenues and the price of carbon will increase significantly between 2019 and 2024. However, the price of carbon will increase by 150%, at a higher rate than revenues. This means that carbon intensity will decrease.
The percentages shown—-15%, -7%, -4%, -6%, -6% and -6%—are those of the greenhouse gas reductions to be expected in each province. The most significant decline is in Saskatchewan because that province relies heavily on fossil fuels for its electricity. That dependence is lower in Ontario.
4:20 p.m.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Could we safely say that this program will allow an average reduction of 4% to 5% in greenhouse gases in the four provinces between 2019 and 2024?
We understand that Ontario has a larger demographic weight. The projected 4% reduction in this province may be larger in absolute terms than the 15% reduction in Saskatchewan.
4:20 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
In fact, this average reduction will probably be closer to 6% or 7%. The population differences between those two provinces are significant, but those in greenhouse gas emissions are less so. For example, a 15% reduction in greenhouse gases in Saskatchewan is still significant in absolute terms because the province emits more GHGs per capita than Ontario.
That said, the exact percentage remains to be determined.
4:20 p.m.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Will we have it in tomorrow's report?
I'm joking.
