Environment Committee on Sept. 23rd, 2024

[Richard Dias]

I think what will happen is that all of these western countries that ostensibly care about the environment will be left in the dust economically. It is very clear that the panel understands that fossil fuel consumption is rising, not falling.

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

Is this a duty that politicians are better placed with? You mentioned a back door to try to end our natural resource sector. Are we actually just pawning this off on the private sector, the financial sector, to do what is our dirty work if we choose to destroy Canada's natural-wealth economy?

[Richard Dias]

Yes, I do, but also, what cannot happen will not happen. If it were not for Canada's energy sector, our economy would basically collapse overnight, and our welfare state, as we understand it, would be unsustainable. We would have to have a massive internal devaluation in the form of massive consumption cuts of all kinds—all kinds of consumption—with an external one, which would mean our currency would decline because of our current account balance, our lack of productivity and our massive debt overhangs.

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

Yes. We need to understand the country that we are.

A recent article by Mintz and Tingle, in 2024, raised the point that ESG mandates make our “public markets less attractive to new entrants”. We've heard some differing views on that from other panellists. Do you agree with their statements that these directives are actually a long-term harm to our national economy?

[Richard Dias]

I think what people just don't understand is how financial markets work. Not to be glib, but what will happen is that these companies will just simply opt out. They will be privately financed, or as I demonstrated earlier, because green energy policy focuses on cutting supply and does nothing about global demand, these companies are minting money. They are making so much money, they do not need bank financing, government financing and the rest of it.

There is going to be consolidation in that sector, and it won't matter how much reporting you have if they don't need your cash. They're just going to do whatever they want. They'll just move to wherever they need to, specifically China, Indonesia and India. They have all made coal—forget natural gas—essential to their next hundred years of economic development.

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

Let's bring this back to the reality of the little guy. What is the impact of that money flowing out of our country due to this overabundance of ESG initiatives? What does that mean for the average person, for their wealth creation and for their pension?

[Richard Dias]

Canada is in a productivity crisis. Those aren't my words; those are the words of the deputy governor of the Bank of Canada, Carolyn Rogers. We have massive outflows of money. We have not increased our gross fixed capital formation, or capex, in 12 years, in real terms. We do not need more incentives to push capital away.

By the way, it's not foreign capital that's necessarily not coming. It's domestic capital that is leaving. Those pension fund managers you want to regulate just simply say, “We'll sign up for all the green initiatives you want, and we're going to go invest in the U.S.” Don't forget Europe, which is just a total joke.

[The Chair, Liberal, Francis Scarpaleggia]

The time is up.

We have to go to Mr. van Koeverden, please.

[Adam van Koeverden, Liberal, Milton, ON]

Thanks very much, Mr. Chair.

Ms. Segal, we have heard a lot about this kind of doomsday scenario from Canadian economists, who claim that oil sands production and the contributions to the economy are so vital to Canadian identity and to the Canadian economy, yet we know that oil sands are basically the only sector that is still increasing its emissions. It contributes a large, but less than 2%, quota to our annual GDP.

I don't want to take away from the importance of the energy sector in Canada. It certainly has driven our economy for many years.

Is it your perspective or opinion that without oil sands production in Canada our economy would flatline and stop growing, or would we hit a giant recession, as has been intimated by other witnesses?

[Julie Segal]

Thank you.

I don't have a personal opinion on this, but my understanding of the research is that the oil sands provide an increasingly small economic contribution to Canada. The oil and gas sector has been shedding job opportunities voluntarily for many years—actually before climate policy even really began at the federal or provincial level.

It has been shedding workers and communities who devoted their lives to the industry in efforts to perhaps consolidate operations. In essence, it has been making an increasingly small contribution to the real benefit of Canada's economy and workforce, etc.

The emissions from the oil and gas sector are obviously quite harmful. The environmental impacts from the oil and gas sector are obviously quite harmful if we consider the toxic waste-water leaks that have happened from large oil and gas companies, which were revealed earlier this year.

I would highlight all of those points and reiterate what I shared before about this sunk-cost fallacy. Yes, that has been part of the economy of Canada for many years, but in fact all of our competitors—many of whom other witnesses mentioned, including Asian economies—are actually moving much faster towards the climate transition. China is the fastest installer of renewable solar energy. It is the fastest innovator in green technologies—to the extent that Canada is already falling behind.

I very much encourage policies that ensure we create job opportunities and economic opportunities in the obvious contemporary green economy rather than the anachronistic one that no longer serves us.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

The time's up.

Ms. Pauzé, you have the floor for one minute.

[Monique Pauzé, Bloc, Repentigny, QC]

I only have a minute, so this will be fast.

Mr. Dias talks a lot about the economy, capital and cash flow, but I never hear him talk about health. We know that climate change has a major impact on health. That's another high cost. My data is several years old, so I'm not sure, but it looks to me like it was about 6% of GDP.

You touched on this a little bit earlier, but would you like to say anything else to Mr. Dias or approach the subject from another angle?

[Julie Segal]

Am I correct that this was being directed toward me, Madame Pauzé?

One thing that people don't quite understand is that the financial system is deliberately opaque and often made out to be much more complex than it is.

Financial policy is an opportunity, in fact, for government to take accountability for an important sector that is having an impact on the world that we're living in and on the effects of climate change. By not regulating the financial sector, it's missing a very important piece of Canadian climate policy, which needs to be made consistent with other pieces.

I would also highlight again the very significant cost of inaction here. This is relevant to people living across the country. This is relevant to businesses and investors. If we think about the drought in the Prairies in 2021, it cost and harmed farmers living there. The B.C. atmospheric river caused significant devastation and supply chain damages across the country.

Those really show the need for economic policy.

[The Chair, Liberal, Francis Scarpaleggia]

We'll go to Ms. Collins, please.

[Laurel Collins, NDP, Victoria, BC]

Maybe I will give you the opportunity to elaborate a little bit more on how failing in this respect and how falling behind our peers—not only in the past few years—not only impacts international competitiveness but also impacts Canadians.

[Julie Segal]

Thank you very much.

In addition to the economic impacts, which I've just highlighted, we also have to consider the risks to our economic and financial system overall. Over $100 billion of Canadians' assets are at risk of losing value from investors moving too slowly on the climate transition. Having policy in place to modernize our financial system and our financial regulations creates a natural direction for our financial system to be resilient to the damages from climate change, which affects the people who rely on that, as well as ensure that Canada has a chance of meeting our climate commitments to limit the environmental damages to people across the country.

[Laurel Collins, NDP, Victoria, BC]

I'll end with thanks to all of our witnesses. It's wonderful especially to have someone from the University of Victoria, and thank you to Ms. Segal from Environmental Defence. We really appreciate your work.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Mr. Leslie, you have three minutes.

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

Thank you, Mr. Chair.

Mr. Dias, it looked like you were ready to jump in at one of my colleagues' opportunities to clarify something, so feel free to jump in with what you were planning to say.

[Richard Dias]

The idea that there are no trade-offs is, to me, one of the major fallacies of this kind of analysis and work. What you're seeing in Germany is a perfect example of that. Germany's economy shut down nuclear power plants and is transitioning to renewable energies, and, as a function of that, their industrial production has collapsed and their unemployment rates are rising. Their economy was centred on turning cheap energy into products that we all wanted.

One person outlined that you don't care about people. I would tell you, as a person who grew up in a working-class neighbourhood with working-class parents, that employment and a growing economy are the best ways you can improve the lots in life of underprivileged people and people who don't have fancy degrees and are certainly not consultants.

I think this idea that there are no trade-offs to constraining and basically shuttering the single most important importer of hard currency to our economy in the form of fossil fuels is, to me, very naive and, I would argue, disassociated from the fact.

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

To expand on that, hopefully rather briefly, is there a scenario in which this intensive focus on ESG would not actually slow down growth but could actually induce real growth in our economy, or is it going to be more likely the latter outcome, which you just alluded to?

[Richard Dias]

Yes, I think so. It's the prisoner's dilemma. If every single country in the world, including China, Indonesia and India, who are expanding their coal...and to the lady who mentioned that they were increasing renewables, I would submit to you to please look up the actual numbers of new coal-fired power plants that they built in 2023, with 102 gigawatts. That's more than the entire world's coal expansion in one country.

If every single country were to do this at the exact same time, then maybe, I would argue, it would have some benign impact, but we know that's not happening, so as a function of that, capital will simply flow to countries that don't care about the environment.

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

Thank you. I'm going to cede the rest of my time to Mr. Mazier.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Mr. Chair, I'd like to speak to that. I'd like to present the following notice of motion. This is just the notice. It reads:

Given that between June 1, 2024, and September 12, 2024, Justin Trudeau:

a) logged over 92,000 kilometres of jet travel across 58 different trips;

b) was in the air at least once every two days on average;

c) travelled enough this summer to circle the globe twice over—

[Adam van Koeverden, Liberal, Milton, ON]

I have a point of order, Mr. Chair. I'm questioning the relevance to today's meeting of Mr. Mazier's motion. Are we discussing the Prime Minister at all today?