Environment Committee on April 26th, 2022

[Colin Carrie, Conservative, Oshawa, ON]

Can I ask you to comment as well on the competitive side of things? You mentioned Canada and the U.S., and I think you had a good example on fertilizer.

The U.S. used to be our best customer for energy, and now they're a competitor, though they are moving back to customer status. The Americans have different ways of subsidizing and supporting their industry. You mentioned the carbon tax. In Canada we have one, but the Americans don't.

Can you comment on the importance of certainty one way or another? The Americans seem to be eating our lunch internationally on a lot of these contracts and investments. What are they doing that perhaps we could be doing as well to help our competitiveness, especially in North America?

[The Chair, Liberal, Francis Scarpaleggia]

Unfortunately, we're out of time.

We'll have to go to Mr. Longfield for five minutes. Mr. Longfield is the last questioner before we adjourn.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Mr. Chair.

Would you like to answer the last question from Mr. Carrie? Mr. Carrie and I seem to be sharing brainwaves today, and that's a scary thought.

This is to Mr. Golinowski.

[Craig Golinowski]

I spent a year living in California, and I was able to attend a variety of seminars and conferences at Stanford on carbon capture and storage, and there are two observations I made while being there. One was that the capital market, the financial system, has to be the funders of climate solutions generally, so the project finance principles, the fiduciary duty principles of investors, are well known in law. The first point is that the United States is trying to create a market mechanism for capital formation to manage carbon emissions.

Point two is that the United States doesn't hate industry. They want industry to be productive, and what we saw, in particular at the state level—states like North Dakota, Wyoming, Illinois, Louisiana, the industrial states that have sequestration opportunities—want those industries to stay in business; they don't want those industries to be phased out. At the state level, they try to support carbon capture as a means of keeping those jobs and industries alive and those facilities continuing to operate for the long term.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

Talking about market mechanisms, this morning we had some reports come from the commissioner of the environment and sustainable development from the Auditor General's office saying that our carbon pricing mechanisms we've put in place are not achieving some of the results on the high emitters. I haven't gone through all of the details, but in the summary report, I think it was pointing the finger at Alberta, saying that we need to have a higher price on carbon in Alberta in order to have a more equitable policy so that the higher emitters will be paying more for the carbon that they're producing.

How would our having to look at that report and move forward on changing pricing mechanisms...? You talked about price stability and investment potential if we're changing the field of play. My initial reaction would be that this would be good for your business around carbon capture and storage if the price went up, but it could be bad for the oil industry if we don't have some kind of relief for them through carbon capture and storage.

[Craig Golinowski]

The price of carbon emissions does need to go up for carbon capture and storage to make sense. It probably needs to be somewhere in the order of $100 a tonne because of the costs of doing carbon capture. For the industries, for example, the power industry in Alberta, the consumer in Alberta will end up paying for the carbon capture and storage because the cost of electricity will be higher, and the extent to which the price of electricity is higher is partially related to the investment tax credit. If the investment tax credit was lower, the price of electricity just needs to go up further in order to justify the carbon capture and storage. The calculation on how to figure out the rate of return on the invested capital is not a very complex calculation.

I want to emphasize the point that many of these projects require billions of dollars of capital, so investors are rightly asking how durable the carbon tax is.

[Lloyd Longfield, Liberal, Guelph, ON]

Right. I think the indication from the Auditor General's office is that it should be durable. In fact, it should be progressing faster than what we're putting out into the market right now.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

We'll stop there.

I'd like to thank the witnesses and the committee members for this stimulating in‑depth discussion.

I remind committee members that we will be welcoming the Commissioner of the Environment and Sustainable Development on Thursday.

Is it the pleasure of the committee to adjourn the meeting? It appears that it is.

The meeting is adjourned.