Environment Committee on May 21st, 2024

[Adam van Koeverden, Liberal, Milton, ON]

Thank you, Mr. Chair.

I appreciate the officials' being here with us today.

Mr. Moffet, I think the committee would benefit from clarification on one issue. We would like to know whether that 3% reduction referenced in an earlier answer was.... Did it take into consideration the hypothetical alternative to the curve that we saw? Prior to 2015, we were on an accelerating upward trajectory with respect to our emissions. Since then, that has been turned around.

The 3% reduction in emissions that was referenced and then characterized as a 1% allocation from carbon pricing seemed to be a bit misleading from my perspective, although I recognize that there was a lot of back-and-forth throughout that question. Could that be clarified, please?

[John Moffet]

I'll start and then turn to Derek.

The number that was discussed, the 3%, I assume is with reference to a statement about Canada's absolute emissions relative to a previous year. Of course, that doesn't take into account avoided emissions—in other words, what the emissions would have been.

Emissions, as we know, have grown steadily and increasingly for decades, until the introduction of carbon pricing and complementary measures. For a fair kind of attribution of the impact of carbon pricing, one needs to account for not just where we are today but all of the emissions that have been avoided as a result of those measures.

Thanks for the question.

[Adam van Koeverden, Liberal, Milton, ON]

What was the population of Canada, approximately, in the year that we're attributing this 3% reduction to? Actually, what was the year, and I can just look it up? I think it's relevant.

You know, when I look at the curve and the change in trajectory that we've seen in the past six to eight years with respect to our emissions profile, notwithstanding the fact that Canada's population has grown quite significantly since the mid-1990s....

There are two things that I meant to ask in my question, prior to being a little bit thrown off by the previous answer. First, it seems as though this committee has been hung up on two things with respect to carbon pricing. There's the effectiveness of carbon pricing to lower emissions, and there's the ability of the Canada carbon rebate to make eight out of 10 families whole or more than whole with respect to the cost of the carbon price.

There are 300 economists—more than that now, actually—who have signed on to a letter referencing five or six key points that have been, frankly, misleading Canadians over the past couple of months in the Conservatives' campaign against carbon pricing. I'm curious to know if you're aware of any economists out there in the ecosystem who have signed a joint letter to the contrary. Quite frankly, I've looked for them. I've looked for evidence to the contrary, and it doesn't seem like there's a consortium or even a small group of economists who are suggesting that Canada's carbon pricing doesn't work. In fact, the guy who won a Nobel Prize says we're getting it right.

[John Moffet]

There are a lot of questions there.

I'll start with the first point that you made. I talked about avoided emissions in looking at the impact of various measures, including carbon pricing on avoided emissions. Yes, it's also essential to account for increased population and increased economic output—all of which has occurred over the past 10 years. At the same time, absolute emissions have been reduced. Emissions per unit of economic production and emissions per capita have declined significantly.

[Adam van Koeverden, Liberal, Milton, ON]

Is it fair to say that it's by a lot more than 3%?

[John Moffet]

Yes. Thank you again for that clarification.

On your last point, I think I'd echo what the minister said: that the government has taken an approach that involves the use of a wide range of measures. It is not saying that the sole way to reduce emissions is to impose a carbon price. It is saying that there needs to be a foundation. Indeed, that is an economic consensus, that there is no more efficient way. In other words, there is no cheaper way per tonne to reduce emissions and drive innovation, which is essential to enabling increased economic output at the same time.

[Adam van Koeverden, Liberal, Milton, ON]

Thank you.

I don't want to take William Nordhaus's opinion at face value, given that he's a world-leading economist. However, would you say that, on the world stage, there are more countries like Canada—in our sort of category of countries—that are joining this trend of pricing pollution and finding economic mechanisms and monetary-based instruments to lower emissions?

Every time I open The Guardian or international news, it seems as though other countries are lowering their emissions. It also seems like some of our best trading partners are insisting that their trading partners do the same thing. Is that an accurate representation?

[John Moffet]

That's absolutely an accurate representation. As you know, Canada has been at the forefront of the global carbon pricing challenge. That's an initiative that we're leading to share information with other countries to enable them to implement carbon policy.

[The Chair, Liberal, Francis Scarpaleggia]

We'll have to leave it at that.

[John Moffet]

The interest, globally, has been overwhelming in the last couple of years.

[The Chair, Liberal, Francis Scarpaleggia]

Mr. Trudel, you have the floor.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Thank you, Mr. Chair.

It's too bad I wasn't able to ask the minister my question earlier. The government talks a lot about solutions. It talks about carbon pricing. Like the authors of the articles I quoted earlier, we realized that Canada was not managing to reduce its emissions. The government thinks that they will be reduced in the future with the measures it is putting in place, but for the moment, the results are not there. Not only are there no results, but also we continue to produce more and more oil. I would have really liked to put my question to the minister about the Bay du Nord project.

Canada is one of the few G20 countries that have not managed to reduce their greenhouse gas emissions since 1990. How, then, can we go ahead with a project like Trans Mountain? It already emits greenhouse gases and could potentially cause spills that are very damaging to the environment. How can this country launch a project like Bay du Nord, which could generate 116 million tonnes of greenhouse gases?

I don't know what you officials think about that. This progressive government says it wants to take action on climate change and develops an ambitious carbon pricing plan. It raises the price to try to get results, but at the same time, it continues to encourage the oil industry. We are talking about 116 million tonnes of greenhouse gases that will have to be eliminated, because they are going to be produced. On the one hand, the government is introducing measures and investing a lot of money to try to reduce greenhouse gases, and on the other hand, it is continuing to encourage the industry that produces those same greenhouse gases.

Were you part of the discussions that took place on whether to green-light the Bay du Nord project?

[Lawrence Hanson]

I'll note a few things in response.

As the minister indicated, in terms of support for the oil and gas sector, the government is moving forward ahead of the pack in terms of the elimination of inefficient fossil fuel subsidies on a go-forward basis.

If you layer on top of that the cap on oil and gas emissions, these are clearly efforts to ensure that oil and gas does not pose an existential threat to the ability to achieve our climate change targets.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

That's a short answer.

The goal is net zero by 2050. Were the potential 116 million tonnes of greenhouse gases from the Bay du Nord project taken into account in that projection?

[Lawrence Hanson]

As the minister said, we're still only at the regulatory framework stage of that. However, the oil and gas cap was designed to take into consideration the expected emissions with the sector. It is designed very much to be an impediment to actual greenhouse gas emissions as opposed to production levels.

John, if you want to add anything on the cap, please go ahead.

[John Moffet]

The key point around the cap is that it is a cap on emissions. In the framework document that the government put out, it acknowledged that there will continue to be, for some time, a global demand for oil and gas. The role of climate policy is to ensure that any such production that we can control—in other words, production in Canada—is done in a way that yields increasingly lower emissions over time, leading to net zero by 2050. That's what the cap will be designed to do.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

However, that is not the case at the moment. Earlier, I quoted an article showing that the oil and gas sector's share of emissions had increased from 28% to 31% in recent years. Clearly, we are not there yet, and still we're launching projects that will produce more oil. We haven't been able to keep a tight rein on the oil industry in its management of greenhouse gases, and here we are embarking on projects that will create even more.

How do we get to net zero by 2050?

[John Moffet]

Again, I think the answer is that it's through the mix of measures that the government already has in place and is putting in place.

The carbon pricing is already driving investments in the oil and gas sector to reduce the carbon intensity of production. The various incentive programs, including the net-zero accelerator that the minister spoke about earlier, are providing financial support for major decarbonization projects. The forthcoming oil and gas cap will ensure that absolute emissions from the sector are reduced over time in a predictable manner.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

That leads me to my next question. The projections you have made in terms of reducing greenhouse gases over the next few years are, in my opinion, quite ambitious compared with those of the past.

Are those predictions based on technologies subsidized through investment tax credits? Carbon capture and storage, for example, is unproven and is being questioned by—

[The Chair, Liberal, Francis Scarpaleggia]

Mr. Trudel, unfortunately I have to interrupt you. You had six minutes, but you're well over.

Ms. Collins, you now have six minutes.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

I wanted to ask a bit again about the environment commissioner's audit in 2022. He recommended:

To improve the effectiveness of carbon pricing and the stringency of provincial or territorial large-emitter programs, Environment and Climate Change Canada should assess, on the basis of federal modelling, whether each provincial or territorial system is sufficiently stringent in that it would be expected to lead to reductions that correspond, at a minimum, to the projected emission reductions that would result from the application of the federal backstop system, and report publicly on the results of their analysis.

Has this happened?

[John Moffet]

Yes, it has.

[Laurel Collins, NDP, Victoria, BC]

What was the outcome?

Are all of the provincial and territorial large-emitter systems equal to the federal backstop?

[John Moffet]

Two things happened. The first thing we did was that we assessed the systems as they were in place in 2021-22. Second, we changed the standard.

Third, we ensured that provinces changed their systems. Every province has changed its system since the commissioner's report.

[Laurel Collins, NDP, Victoria, BC]

They've changed their systems, but the question was really whether each provincial and territorial system is sufficiently stringent that it would be expected to lead to reductions that correspond, at a minimum, to the federal backstop.

Is that the case for every single province and territory?