Environment Committee on May 21st, 2024

[The Chair, Liberal, Francis Scarpaleggia]

That takes us to the end of that segment, Ms. Collins.

Mr. Leslie, I believe you're going to be splitting your time with Mr. Kram. Is that correct?

[Branden Leslie, Conservative, Portage—Lisgar, MB]

How long do I have? Is it six minutes?

[The Chair, Liberal, Francis Scarpaleggia]

It's five minutes.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Okay. Thank you, Mr. Chair.

Thank you, Minister.

I just want to go back to some of those numbers you gave earlier. I'm trying to understand how accurate some of the numbers are that are, in theory, firm in the national inventory report that we're submitting with our international colleagues.

It is all based on a projection. Is that correct?

When we say that 30% of emission reductions by 2030 will be done via the carbon tax, that is a projection. Not even in years past.... Since it's been in place, we don't actually know how much it has reduced emissions.

Is that correct?

[Steven Guilbeault, Liberal, Laurier—Sainte-Marie, QC]

That's not correct.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

How do you attribute the information then? How do you know with certainty what percentage of the NIR you are offering is due to the carbon tax?

[Steven Guilbeault, Liberal, Laurier—Sainte-Marie, QC]

There are two things here.

The national inventory report is an annual exercise whereby we measure the emissions reductions from different sectors of the economy and different provinces. That's measurement. There's some modelling, but largely, it's based on hard data.

We have, for example, fugitive emissions in the oil and gas sector, which are harder to measure because they are fugitive emissions by definition. We started using aerial measurements to complement some of the work we've been doing on the inventory. That's one thing.

To answer your question on what the role of carbon pricing is, it's not related to the national inventory report. It's based on analysis looking at different measures and how much they contribute to emissions reductions in Canada.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

I appreciate that. That's the reason we're here today. We invited you to the committee to discuss exactly that.

You've seen, obviously, the three motions this committee has passed, with varying degrees of simplicity, just looking for the variables, the assumptions and the data included, as well as specific language regarding EC-PRO. If you were a member of this committee, not the minister sitting there, would you feel confident and comfortable with the responses your department has given this committee on the production of records we were asking for?

When I see a document that has a website link, or when I see a document that was written by four people who don't even work for ECCC, which has “Draft” on it, and it says it is not representative of ECCC or the Government of Canada.... Thirdly, when I see a three-pager with an attachment of a so-called independent think tank, which, it turns out, is funded by ECCC....

Honestly, do you think that is sufficient in terms of what we are looking for?

All of these questions could be answered if you just handed over the modelling, as requested by this committee, so that we could better understand how you are coming to these conclusions. Is that not a reasonable request, Minister?

[Steven Guilbeault, Liberal, Laurier—Sainte-Marie, QC]

I'm quite clearly not a climate modeller, although I have in my life worked on a number of occasions with climate modellers. It's a very complex exercise. It's not magic. It's mathematics. We use modelling in all sectors of our society. We use it in the economy. We use it in health. We use it in employment sectors. We use it in the climate change sector as well.

We have provided information, and you have our chief modeller—I don't know if it's your title, Derek, but let's call you that for the sake of argument—here with us today, so he can answer your questions.

I'll be the first one to recognize that it is complex, and you want simple answers. I'm sorry. There's no simple answer when it comes to climate change or modelling.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

I appreciate that, Minister. Listen. I'm not a climate modeller either. I'm not saying I'm going to be the one who is going to understand, as I believe it was, the 280,000 formulas and data points that were included in the model. My point is that people in this country can't, outside of ECCC.

My question has two parts.

Why are you so hesitant to just hand over that data? If you won't hand it over to us, who else has seen or used EC-PRO?

I noticed that the third response said Navius consulting used CGE models, but I'm curious. Have the data inputs that your modelling is using in EC-PRO been peer reviewed by anybody else? You've talked about 300 economists talking about how great the carbon tax is. Have they looked at this analysis?

Who has seen this outside of ECCC? Why are you so unwilling to give it over to this committee and let Canadians have a look at the data you're using to make the assumption that you are, which is that the carbon tax is actually working?

[Steven Guilbeault, Liberal, Laurier—Sainte-Marie, QC]

The way the modelling community tends to work is.... Obviously, there are different models out there. Let's talk specifically about climate change.

What the modelling community is trying to do is work together to ensure that, despite the fact we are using different models—I mean, there aren't 15 of them out there, but there are some—we understand what the underlying elements are of each of those models so that, when different people use different models, we can at least agree on what goes into the models.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Why can't it be open, though? Why wouldn't you want everybody to see it? Wouldn't it be fairer if everybody who can understand this stuff were able to see it?

[The Chair, Liberal, Francis Scarpaleggia]

We're out of time, unfortunately. Mr. Kram didn't get a question.

I'm sorry about that, Mr. Kram. That was out of my control. However, as you know, the officials are with us for another hour. These are questions that can be asked of Mr. Hermanutz.

Go ahead, Mr. Longfield.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Mr. Chair.

Thank you to the minister for being here.

I'm thinking of project-based modelling, which could have been used by the environment commissioner—I don't think he used it—for some of the investments in clean technology happening as a result of the pricing formulas we've put out into the market. We've sent a signal. Carbon pricing is going to be a long-term solution we're using to drive down emissions and create a strong market signal to attract investments. Look at the clean technology investments that Rio Tinto, ArcelorMittal and Alcoa are doing in the production of green steel and green aluminum, creating thousands of good-paying jobs and reducing emissions. The reductions we're going to see from that weren't included, as far as I know, in the environment commissioner's report we saw a few weeks ago.

Can you comment on the importance of attracting clean technology investments and what that means to decarbonization in Canada?

[Steven Guilbeault, Liberal, Laurier—Sainte-Marie, QC]

Thank you very much, Mr. Longfield. This is a very interesting question and one thing that doesn't get talked about enough, in my humble opinion.

On that, it seems I agree with the new head of an Alberta oil sands group who, in a CBC article, “wants clarity from Poilievre on industrial carbon pricing”—that's the title of the article.

I'll read you the first paragraph of that article:

Conservative [Party] Leader Pierre Poilievre needs to clarify where he stands on industrial carbon pricing, says the new head of a major oilsands group that aims to bring the industry's emissions to net-zero largely through the potential construction of a massive carbon-capture project that relies on carbon credits [derived from carbon pricing].

In fact, we can point to a number of very large projects that have taken place in Canada. This is according to the companies themselves. You don't have to take my word for it. There's an $11.5-billion investment by Dow Chemical in Fort Saskatchewan, where part of the funding is based on carbon pricing; Port of Argentia's $4 billion in Newfoundland; Dofasco Steel, which is closer to your neck of the woods, with $1.8 billion in Hamilton; and $74 million for SMR development in Saskatchewan. All of these projects are partly being funded through carbon pricing. If we get rid of this, it is estimated that taxpayers would be on the hook—if we wanted to fund those projects directly—for $20 billion to $48 billion.

The Conservatives say they're in favour of technology. These are all technological projects taking place in different sectors: steel, SMR, energy savings and the chemical sector. Are they telling us that their technical strategy is to put Canadian taxpayers on the hook for an extra $20 billion to $48 billion? We can do that at no extra fee to Canadians by using carbon pricing.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Mr. Minister.

In terms of dollars and cents, it makes sense to do what we're doing. However, in terms of timing, some of these projects won't be coming on until 2028, so they're not showing up in the current figures coming from the environment commissioner. When these projects come on, they're also phased in over some years.

Are we going to be including those in our models, going forward, or are we already including them in some of the projections you're giving us?

[Steven Guilbeault, Liberal, Laurier—Sainte-Marie, QC]

I'll turn to Derek, our expert on modelling, for that.

[Derek Hermanutz, Director General, Economic Analysis Directorate, Department of the Environment]

Yes. I think the minister explained that there's historical data. That's in the national inventory report, published with a two-year lag. Then we have projections that go forward out to the future.

[Steven Guilbeault, Liberal, Laurier—Sainte-Marie, QC]

In terms of projects that are coming down the road, say in 2027 or 2028, when do we include them in the modelling?

[Derek Hermanutz]

When we have a program that's funding projects, we put a proxy into the model to try to estimate how many megatonnes might come from the overall spending program. Once we get the details of the specific projects, like the two steel projects, we can then build that exact detail into the model.

[Lloyd Longfield, Liberal, Guelph, ON]

Also, in Ontario, we have the rural top-up. We're just passing legislation this afternoon on the report stage of the fall economic statement. The rural top-up is an important signal and support for rural communities.

[Steven Guilbeault, Liberal, Laurier—Sainte-Marie, QC]

Yes, and I would urge the Conservative members of this committee to talk to the rest of their party to support doubling the rural top-up for Canadians. We think that it would be a very meaningful measure to help support millions of Canadians across the country.

[The Chair, Liberal, Francis Scarpaleggia]

We're done for this round.

We thank you for being here, Minister.

We're going to continue with the departmental representatives. I think we're seeing you again next Tuesday, if I'm not mistaken, on the 28th. Is that correct? We look forward to seeing you again. We really appreciate all the time that you spend with us at committee. It's all very interesting, so thanks again for today.

We will continue now.

Basically, we're starting a second panel, so we'll do a six-minute round and then a five-minute round. We'll begin the six-minute round with Mr. Kram.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you very much, Mr. Chair.

Thank you to all the witnesses for joining us today.

I listened quite attentively to some of the numbers that were cited in the first hour of this meeting, and I just want to make sure that I have the math correct. In 2022, emissions were at 708 megatonnes, and the carbon tax was responsible for reducing 19 megatonnes in 2022. By my math, that works out to a 3% reduction.

Am I to understand that the debate about the carbon tax and the need to keep the carbon tax in place on Canadians and the rise in the cost of living caused by the carbon tax is for only 3% of our total reductions. Is that correct?

[Lawrence Hanson]

I'll perhaps start, and then I'll turn to Derek to add some additional information. It's the distinction between how much of the carbon price might have affected emissions in one year versus how much by mid-2030. When you've heard us talking about one-third...responsible for one-third of reductions, we are talking about the 2030 number. By 2030, our modelling suggests that the carbon price will have resulted in 78 megatonnes of reductions.

Derek, maybe you could talk to the year-over-year issue.