Evidence of meeting #136 for Environment and Sustainable Development in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tax.
A recording is available from Parliament.
Liberal
The Chair Liberal Francis Scarpaleggia
Thank you, Mr. Drover.
Ms. Levin, you five minutes maximum, please.
Julia Levin Associate Director, National Climate, Environmental Defence Canada
Thank you for the invitation to appear before you today.
Although Canada has begun to bend the curve on emissions, we know we're not achieving the pace and the scale needed to hit our current targets, which are themselves insufficient and which do not represent Canada's global fair share of efforts.
One of the main reasons for this lack of progress is pressure from oil and gas executives. While other sectors, especially electricity, have been able to reduce their pollution levels, oil and gas emissions keep rising. In fact, the sector now represents nearly a third of our domestic emissions, despite making up only 3% of Canada's GDP, 0.7% of jobs and 0.7% of national revenue.
These executives spend a considerable amount of time and energy attacking climate progress. In 2023, the industry lobbyists registered 1,255 meetings with the federal government, averaging out to five times per work day, and that's only what's in the federal lobby registry. That's why new rules to cap carbon dioxide and methane emissions from the oil and gas industry are so crucial.
However, the current design of the proposed draft regulations will not drive the necessary emissions cuts. Essentially, the rules only ask companies to do what they've publicly said they can. Although it's essential to have that backstop because industry has never lived up to any of its voluntary commitments, we know that deeper cuts are necessary.
The government's emission reduction plan indicated that in order to reach Canada's target, emissions from the oil and gas industry would need to fall to 42% below 2019 levels. The proposed regulations, when you discount the compliance flexibility and the loopholes, would only drive down emissions by less than 30%, and far less if the assumed emission reductions between now and 2026 don't materialize. In fact, ECCC estimates only a 13.4-megatonne reduction from these rules, from a sector producing over 200 megatonnes yearly, so stronger rules are needed, and more importantly, they must be implemented urgently.
We know that tackling the climate crisis requires replacing fossil fuels with renewable energy. Though this is no small task, the good news is that renewable energy trumps fossil fuels on every level: price, reliability, ease of deployment and job growth opportunities. Renewable energy with battery storage is now a cheaper way to produce electricity than fossil fuels. That's why global renewable energy installations grew by 50% around the world last year alone.
Despite these advantages, Canada is falling behind the rest of the G20 in terms of deploying renewable energy and batteries. That's why the proposed clean electricity regulations are crucial, but the final rules must actually displace fossil gas from the grid.
The clean electricity regulations will provide system operators, power producers and investors with the certainty that Canada wants in on when it comes to the clean energy transformation. In addition to these regulations, the federal government has a role to play in facilitating the build-out of a clean energy grid by investing in transmission infrastructure.
In addition to electrification, an expanded focus on energy efficiency is required. The federal government has a role to play in making our lives, our homes and our industries more energy efficient. Energy retrofits have the additional benefits of lowering household bills and of making our homes more comfortable.
The science is clear. Existing levels of oil and gas production will lead us to a catastrophic future. This is the reason that at COP28 last year, all of the world's countries agreed to transition away from coal, oil and gas. At the very minimum, governments must stop facilitating the expansion of the industry. For the Government of Canada, that includes finally ending the provision of subsidies and public financing to oil and gas companies. Though Canada has taken some steps on this, the action to date has not translated into significantly lower levels of financial support, which surpassed $18 billion last year.
The government is currently developing new rules to address public financing from Crown corporations, but there is concern that these might be too full of loopholes to actually turn off the taps. We also must ensure that we are being vigilant against the dangerous distractions that will do nothing to reduce emissions but will make it easier for oil and gas production to expand, especially carbon capture in the oil and gas sector, and blue hydrogen.
As a climate advocate, obviously my focus is on tackling the climate crisis, but transitioning off of fossil fuels is just as much about affordability. Climate solutions like electrified public transit, heat pumps and energy retrofits mean cheaper bills for Canadians. They have saved Canadian families thousands of dollars. Of course, government funding is a necessary enabler for families to access those savings. It's also about ensuring Canada's competitiveness.
When we hear arguments on the need to be the country that sells the last barrel of oil, that's like arguing to be the last Blockbuster to rent videos. Why are we so resistant to building an economy that can thrive in the future?
Regardless of what we do in Canada, demand for oil and gas is going to peak before 2030 and decline significantly thereafter—
Liberal
The Chair Liberal Francis Scarpaleggia
Unfortunately, Ms. Levin, we've run out of time.
We're going to go to the first round of questions. I'm going to make it a four-minute round, and the second round will be a three-minute round so that we can finish on time.
Go ahead, Mr. Kram.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Thank you very much, Mr. Chair.
Thank you to all the witnesses for being here today.
I would like to start with Mr. Drover from the Canadian Taxpayers Federation.
Mr. Drover, from what I understand of your organization, you are not necessarily opposed to all taxes at all times, but you tend to focus on getting good value for tax dollars so that Canadians can get good value for their money. Is that correct?
Atlantic Director and General Counsel, Canadian Taxpayers Federation
Thank you for the question.
Our mandate is finding ways to reduce all taxes in Canada to make sure that the government is held accountable, so I wouldn't characterize it quite like that, but it is to make sure that we're cutting taxes and putting as much money as possible back in the pockets of taxpayers.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Okay. Very good.
In that context, last Thursday in question period, environment minister Steven Guilbeault stated that the carbon tax in Canada is “generating 25 billion dollars' worth of investment every year in our economy. It is putting more money in the pockets of eight out of 10 Canadians”.
Mr. Drover, does that statement match the observations of your members and your observations of Canadians in general?
Atlantic Director and General Counsel, Canadian Taxpayers Federation
Absolutely not.
First, if we want to talk about the macroeconomic impact of the carbon tax, the government's own data show it's costing Canadians $11.9 billion this year. That's $295 going out of the economy for every Canadian.
If you look at every individual who is forced to pay this carbon tax on everything they purchase, I certainly think it's not good for Canadians as a whole. I think about my mother-in-law, who lives in a small community in rural Newfoundland. She has to commute 43 kilometres a day each way for work. She has no public transit. There's no electric public transit available. There are no electric charging stations. She has no other choice but to incur the carbon tax day in and day out just to get to work.
I absolutely disagree that it's providing benefit for Canadian taxpayers.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Okay.
Earlier in this committee meeting, we heard from Canada's climate change ambassador. She was asked if she would characterize our efforts to address climate change as a huge economic advantage in Canada, and her answer was “Absolutely.”
When you consider climate policies in Canada such as the carbon tax, would you characterize them as a huge economic advantage for Canada?
Atlantic Director and General Counsel, Canadian Taxpayers Federation
Absolutely not.
In your questioning, you mentioned the PBO report. If you look at not only at the direct costs but also the economic impact in the PBO report, it's wrong to classify all Canadians, or the average Canadian household, as being better off. In fact, the average Canadian household will be paying more in carbon tax than they get back in the rebates once you factor in the negative impact the carbon tax is having on things like employment in this country.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Many Canadians, I think, would probably be surprised to learn that Canada has a climate change ambassador. She and her office are based in Switzerland, and part of her job includes promoting the global carbon pricing challenge, which is basically to promote the carbon tax to foreign countries.
Would the Canadian Taxpayers Federation consider this sort of activity a good use or a not so good use of Canadian tax dollars?
Atlantic Director and General Counsel, Canadian Taxpayers Federation
It should be no surprise to any attendee here today that we think it's an absolute waste of money. When Canadians are struggling to get by and people are living paycheque to paycheque, we absolutely shouldn't be funding global ambassadors to spend our tax money travelling around to lavish parties and talking about how great our Canadian carbon tax is when the carbon tax is hurting Canadians.
Liberal
Liberal
Leah Taylor Roy Liberal Aurora—Oak Ridges—Richmond Hill, ON
Thank you, Mr. Chair.
I want to start by correcting the record on a few fronts, because there's been a lot of misinformation again at this meeting.
When it comes to Bill C-234, first of all, the assertion was made in testimony that farmers are paying tax on everything. We know that over 90% of the fuels farmers use are already exempt from the carbon levy. The ones that were being discussed in Bill C-234 were two that were left for heating barns and drying grain. The bill had come to a point where it was going to exempt the grain drying because there weren't alternatives, and it's already—
Conservative
Conservative
Dan Mazier Conservative Dauphin—Swan River—Neepawa, MB
That's inaccurate. You're actually spreading more misinformation.
Farmers pay a carbon tax, and if—
Liberal
The Chair Liberal Francis Scarpaleggia
This is for everybody.
Mr. Mazier, challenging what everyone says could be an interminable game.
Ms. Taylor Roy has the floor. Some of the things that have been said on the Conservative side have been challenged, so, as I say, this could go on forever.
If Mr. Drover disagrees, he can answer in such a way to Ms. Taylor Roy.
Ms. Taylor Roy, continue, please.
Liberal
Leah Taylor Roy Liberal Aurora—Oak Ridges—Richmond Hill, ON
Thank you.
I think people and farmers know that farm fuels are exempt from the carbon tax, so I would just say that we can verify that by looking at the actual bill, if you'd like.
The other thing is that the bill has been reported back to the House. It's not moving forward because every time it comes up, the Conservative Party decides to trade a bill to put in front of it or debates it and has not allowed it to go to a vote. I'm just wondering.... The idea that somehow we're not allowing this to go forward is incorrect. I just want to correct that.
The other thing I'd like to correct is something in one of Mr. Leslie's questions, when he again stated that the carbon levy was increasing the price of everything and causing an affordability crisis. Just for the record, I'd like to state, and make sure that people are aware, that there is a Canada carbon rebate, which is more than people are paying out of their pockets.
Mr. Drover, when you say that people are paying more, an impact to the economy does not make them pay more and it is not divided across all Canadians in a consistent way. In fact, the PBO report you're referring to was a projection out to 2030 that showed that the difference in the GDP would be $2.66 trillion versus $2.68 trillion—less than a 0.5% reduction—and it doesn't in any way take into account the cost of climate events. I think we have to show things in relation and be sure that we have the facts right.
That's where I wanted to start, but I'd like to direct my next question to Mr. Beugin.
This morning, there was a Canadian Press article about the clean electricity regulations and their marginal costs in the context of Ontario's electricity grid.
Can you share what you believe will be the actual pocketbook impacts of expanding and decarbonizing our electricity grid at the same time, and why that is going to be positive?
Executive Vice President, Canadian Climate Institute
I don't have an estimate of dollars for you. We have done work showing that making a bigger, cleaner and more flexible electricity system is essential to delivering on net-zero objectives, is also going to lead to a decrease in energy costs for Canadians over time and will allow us to have energy while at work.
The electricity grid council just recently released new work showing the same finding—that the costs over time of decarbonizing will lead to lower energy costs, and that includes operating costs and capital costs—and baking those in.
Liberal
Leah Taylor Roy Liberal Aurora—Oak Ridges—Richmond Hill, ON
I've also seen and heard that a lot of industries coming into Ontario are coming here because of our clean electricity grid and that this clean grid will attract further investment into Ontario. Is that correct?
Executive Vice President, Canadian Climate Institute
I think that is correct. We're seeing over and over again that clean, affordable and reliable power as one of the biggest determinants for where firms are investing and where they are siting new projects. I think that's reflected in the fact that we're now seeing private firms procuring clean electricity as part of their business plans.
Liberal
Liberal
Bloc
Monique Pauzé Bloc Repentigny, QC
Thank you, Mr. Chair.
Thank you to all the witnesses for being here with us.
Mr. Mousseau, you talked about jurisdictions, which will help me get you started on that subject.
Last week, when we heard from the Minister of Environment and Climate Change, I asked him a question. He answered that, as members of the Bloc Québécois, we should know that natural resources are a provincial responsibility, not a federal one. There are two areas of federal jurisdiction: pipelines—and I'm referring to the Trans Mountain pipeline system—and offshore oil and gas. The minister knew very well that I was talking about them, which are managed jointly by the federal government and the Atlantic provinces. So the federal government has a responsibility in that regard.
A note from the Library of Parliament states that the issue of jurisdiction over natural resources off the Atlantic coast has been resolved. In 1984, the Supreme Court of Canada finally ruled as follows: “Canada has legislative jurisdiction over the right to explore and exploit the continental shelf off Newfoundland under its residual power over peace, order and good government.”
We were talking about reducing greenhouse gases and biodiversity, which, as we know, are closely linked.
Mr. Mousseau, tell me who is telling the truth: is it the Library of Parliament, the Supreme Court, the laws or the offshore boards? Is it me? Is it the minister? Could you sort that out, please?
Professor, Institut de l'énergie Trottier, Université de Montréal, As an Individual
I admit that I'm not a lawyer or a legal expert. However, as I understand it, the natural resources on the continental shelf do fall under federal jurisdiction. In fact, last year, we saw a bill to create a new structure by the provinces and the federal government to manage the installation of wind turbines on the high seas, for example.