Environment Committee on Dec. 9th, 2024

[Laurel Collins, NDP, Victoria, BC]

Maybe I'll pick up where Mr. Fortin ended and talk a little more about these underutilized strategies that could help us reduce our emissions faster, but also the stringency of the regulations and policies that we have now. Can you talk about which policies need to be more stringent?

From my perspective, one big reason the stringency hasn't been as strong as it needs to be is the influence of oil and gas. Can you speak at all to the political and lobbying influence of that sector and how it has an impact on these policies?

[Jerry V. DeMarco]

In order to bridge the gap between Environment and Climate Change Canada's current estimation of 36% reductions from existing measures and 40%, which is the minimum, they could add measures, and as I indicated earlier, strengthen measures or do a combination of both. However, certainly, the bankable measures that are in place now are not sufficient. I should add, as I did in an earlier appearance before this committee, that the 36% estimation is from Environment and Climate Change Canada. We believe a truer number would be lower than that because of some overly optimistic assumptions that are brought into that 36%.

Regardless of whether it's 36%—

[Laurel Collins, NDP, Victoria, BC]

Mr. DeMarco, could you remind the committee what your estimation is, that lower estimation?

[Jerry V. DeMarco]

We haven't done a competing number. We just indicated qualitatively that we believe it is something lower than 36% because of the various overestimations and double counting that we uncovered. We haven't gone through all of the 140-plus measures. We've only gone through about 40, so we haven't been able to give a competing number to the 36%, but it is something lower than 36%. That's the best I can do.

[Laurel Collins, NDP, Victoria, BC]

Are there any plans to go through all of those policies and provide that number in the future?

[Jerry V. DeMarco]

It's something under consideration. As I indicated before, I'd be more inclined to consider that if they had a plan that on paper added up to what is necessary to meet the target and that would lend itself to an analysis to see whether that actually does add up when you peel back the layers and so on. Until such time as they actually have a plan that meets 40% to 45%, it's not necessarily a great use of resources to indicate that it's an exact number below 36%, because we still just need the gap to be filled first. It's something I'll consider. I had hoped to be in a position to do that earlier, because it was in 2021 that our report said they were at 36% and needed to get to 40%, but here we are, three years later, and we have almost the same sentence in our report.

[Laurel Collins, NDP, Victoria, BC]

We haven't bridged the gap.

When it comes to increasing the stringency on some of these key policies, we've been pushing for increased stringency on the emissions cap and the output-based pricing system. Can you name a few that you think need to be strengthened and that stringency needs to be enhanced? Then, if possible, could you touch on that piece around the influence of the oil and gas sector on these policies and their lack of stringency?

[Jerry V. DeMarco]

One example would be from our report on carbon pricing, in which we identified some weaknesses in, essentially, the fairness between the industrial price and the retail or consumer price, especially as regards small businesses and indigenous peoples. Those are the examples we gave there. An increased stringency on the industrial side of the carbon pricing may have an important impact. That's one example but, again, it's a choice for government to make as to whether they want to increase the stringency.

Of course, regulations are another example of where stringency can be increased and, essentially, ambition be ratcheted up, as experience is gained with the application of regulations. Both carbon pricing and regulations are areas where stringency could be included, if that's the will of the government.

[Laurel Collins, NDP, Victoria, BC]

Wonderful.

When the big oil and gas CEOs came to our committee to testify last spring, they told the members here and Canadians that the emissions cap wasn't necessary because they already had set their own emissions reduction targets. I will note that those targets are not legally binding.

In your mind, is there any evidence that these big companies, such as Suncor, Imperial Oil, Shell Canada and others, will reduce their emissions without stringent regulations like the emissions cap?

[Jerry V. DeMarco]

It's technically possible for that to happen through voluntary measures, but the track record.... I'm looking down at the graph of greenhouse gas emissions by sector from 1990 to now, which I can provide to the committee after this hearing. The experience to date has been that, even when the oil and gas sector increases the efficiency with which it pollutes, essentially, emissions intensity improvements, those benefits have been outweighed by larger increases in production.

Something is going to be needed to change that curve to better mirror, perhaps, the electricity curve, or some of the other curves that are flat, at least, if not decreasing. Something is needed to get a handle on oil and gas.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Mr. Deltell, you have the floor for five minutes.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

I'd like to welcome the witnesses, as well as Mr. Fortin, who is joining us for the first time. He's doing that very well, as always.

Commissioner, it's always nice to see you.

We all recognize the need to reduce greenhouse gas emissions, the need to reduce pollution. There are tools to do that. We invest a lot of taxpayers' money in it, but we still have to get results.

I want to talk to you about the Net-Zero Accelerator initiative. It's clear that taxpayers' money is being put into this fund to speed up the process. We need to know what we're talking about and what the targets are. We're mainly talking about $8 billion which comes from taxpayers. This money doesn't come from the tax; we know that the GST is only used to pay interest on the debt. That money comes from Canadian taxpayers and put directly into this $8 billion fund.

We talked about this last week in committee. What are your thoughts on effectiveness in meeting the targets? What are your thoughts on this $8 billion fund that comes from taxpayers?

[Jerry V. DeMarco]

As I said last week, we have a number of concerns about the Net-Zero Accelerator initiative, including a lack of transparency in value for money. In addition, only five agreements have been signed with companies that received funding to reduce their greenhouse gas emissions. We're also concerned about the lack of horizontal policy in this sector of the industry. I'm concerned about this kind of subsidy in a number of ways.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

To take the most impressive example, which has had a lot of publicity, of course, the government gave $700 million to a foreign firm to set up a plant in Ontario. What is very surprising is that, in the reports to which the committee has had access, some of which are public, we learned that $700 million in taxpayers' money was used to accelerate zero emissions by 2050. It's $700 million, but zero targets. How do you explain that?

[Jerry V. DeMarco]

It's up to the department, not me, to explain to Canadian taxpayers and to parliamentarians and demonstrate value for money. In our report, we expressed the same concerns you raised. There's a lack of transparency in the results that the government is trying to achieve with these very important grants. This isn't a trivial program, it's $8 billion.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

In your opinion, how can we convince people of the importance of a project when we aren't even able to be transparent and, above all, to set a target to reduce greenhouse gas emissions? How do we convince people through that approach?

[Jerry V. DeMarco]

I talked about that two years ago. If transparency were improved, it would be good for officers of Parliament, like me, and for the committee, because we focus on transparency. It would also be good for Canadians who would know that their money is being used effectively. If they see results, they'll think it's worth fighting climate change. They'll have confidence. That's one of the great benefits of transparency. We can then tell taxpayers that their money is being used effectively and that it's producing results.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

As you know, we had access to some documents, but 360 pages were literally blacked out. There was absolutely nothing that wasn't known. Let's be clear: we understand that we want to protect technological and corporate secrets. However, 360 pages were blacked out even though we didn't meet the government's emission reduction targets, although taxpayers' money was spent.

You've had access to those documents. In your opinion, is there any information in there that doesn't compromise the companies' privileged information, but that could be important for taxpayers to better understand the situation?

[The Chair, Liberal, Francis Scarpaleggia]

We're going to have to limit ourselves to a yes or no answer because it's Ms. Chatel's turn.

Mr. DeMarco, you can also choose not to answer at this time and provide a more detailed answer later.

[Jerry V. DeMarco]

We don't have the version that the committee received, so I haven't compared the two versions.

[The Chair, Liberal, Francis Scarpaleggia]

Go ahead, Madam Chatel.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Mr. Chair.

I want to welcome our witnesses once again. We are always happy to see them.

A recent analysis by the Canadian Climate Institute concluded that carbon pricing for industries is the main driver of greenhouse gas emission reductions in Canada. Three hundred economists really supported this measure, which they recognized as one of the most effective and least invasive. The Conservative members from Quebec are naturally speaking for their leader by demanding that carbon pricing be abolished.

If carbon pricing were abolished at the federal level, what would the impact be on reduction efforts in Quebec, which has set up a very effective carbon market with California?

Would this unfairly penalize Quebec by leaving it to bear the burden of Canada's climate efforts alone?

[Jerry V. DeMarco]

We don't know which measure would replace the fee structure. It's difficult to have a concrete conclusion because we don't know all the assumptions and variables. I don't know whether that can have a negative effect on Quebec, British Columbia and California, for example, which have their carbon markets, as does Quebec.

However, what I said was that there already is an emissions reduction of between 36% and 40%. If we eliminate the measure that, according to the department's estimate, allows about 30% of the reduction, something as significant or even more restrictive will have to be implemented to make up for this loss.

[Sophie Chatel, Liberal, Pontiac, QC]

I agree with you.

Our Conservative colleagues want to abolish the federal carbon tax, which doesn't apply to Quebec. That would leave Quebec almost alone in the fight against climate change. We have no other plans to propose. What 300 Canadian economists have said loud and clear is that carbon pricing is the best way to reduce emissions.

To your knowledge, are there other ways that would be as effective, without creating huge deficits in our public finances?

[Jerry V. DeMarco]

The tools available are pricing, regulations, subsidies and other measures such as education, as well as initiatives related to federal procurement. Most of the reductions in the plan come from regulations and fees. It's possible, if we take away a measure like pricing and add another that's also effective, such as a regulation.

However, we can't just change direction and maintain progress. We'll have to create a new regime, a new system. That will force us to start from scratch again. So you can't just change direction.