Environment Committee on April 28th, 2022

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

It speaks to the European Union, New Zealand and Scotland. Obviously, places like Australia aren't there, as they have made some changes. In the same way, we don't have our actual partners of the U.S. and Mexico in that analysis.

[Jerry V. DeMarco]

This report is confined to the just transition for workers when there is a disruption, something like the coal phase-out. It's not about carbon pricing, which is covered in report number five.

I do want to say that on your point at the beginning about looking at the full life cycle, I agree 100%, because every source of energy has some sort of impact, whether it's visible out of a stack or whether it's more upstream in terms of the production of the materials. That was in another context.

That need for a full cost accounting or a net look at things was a critical component of our emissions reduction fund analysis. It was to look at the big picture and compare. For a global issue like climate change, that also can mean what the emissions are once the material is shipped and combusted elsewhere, and so on. On a full life cycle, full-cost accounting, I agree 100%.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you. I appreciate that.

The other aspect of it, of course, is that we see what is happening in China and India with the coal that is being used and the issues that are taking place in eastern Europe now as they are transitioning back to coal. How is that reality of what is happening in the world going to affect the targets? Are we going to then be expected to do even more than we are now because the rest of the world has decided that they have to look at their realities?

[Jerry V. DeMarco]

It's hard to predict. If you factor in not only the lack of progress on emissions reductions but also bring in the geopolitical elements and all of that—you mentioned Nostradamus—I can't give you a prediction on how that will go. The general trend—and this is well recognized by the parties to the Paris Agreement and by the International Energy Agency—is towards more renewables and, obviously, fewer emissions. The pathways that will go there, country by country, I can't predict.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

I have just one last point while I have 20 seconds left.

Alberta's technology innovation and emissions reduction program, which people don't quite realize has been there for 20 years and is taking from high-emissions businesses and so on, has done some amazing work in innovation that could be sold around the world. Did you do any analysis of that when you were talking about, for example, your hydrogen plan?

[The Chair, Liberal, Francis Scarpaleggia]

Give a yes or no, please, Commissioner, because we're at the five-minute mark.

[Jerry V. DeMarco]

We don't audit provincial programs. That would be something to raise with the Office of the Auditor General of Alberta. I'll leave it there.

[The Chair, Liberal, Francis Scarpaleggia]

Thanks.

Next is Ms. Taylor Roy.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you very much, Mr. Chairman, and thank you to all the witnesses for being here today and for the work you've done on these reports. It's very important to track how we're actually doing.

One of the things about being near the end is that so much has been said that I now want to follow up on, and it's kind of hard, but I did want to first go back to Mr. Mazier's comments about your findings on the disproportionate impact of the carbon price on pollution.

What I heard you say was that the segments or the sectors you have identified as disproportionally impacted were the small and medium-sized enterprises and the indigenous groups, especially those who did not submit tax returns. Is that correct?

[Jerry V. DeMarco]

Yes, that's correct. That's in paragraph 5.70 and onwards.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Mr. Mazier said a couple of times that it was “rural and remote” areas that were affected disproportionately. Was that one of your findings, that it was all rural and remote areas?

[Jerry V. DeMarco]

I think in my answer I was saying that within the category of small and medium-sized enterprises, some of those will be in rural and remote areas.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

But some will also be—

[Jerry V. DeMarco]

We didn't categorize it in the same way that he did in his question.

I'd just direct you to the wording of the report in terms of what we did and didn't look at. It doesn't stop Environment Canada from subcategorizing that when it's assessing the disproportionate burden in its response to our recommendation. They could drill down into some of the categories, such as rural agricultural. That may be very helpful.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

I understand. Your report doesn't say that it disproportionately affects rural and remote areas; it says that it disproportionately affects indigenous people, especially those lower-income people who don't file tax returns, and small and medium-sized enterprises, which could be across the country and urban, etc.

[Jerry V. DeMarco]

Ms. Leach has something to add.

[Kimberley Leach]

Paragraph 5.66 in our chapter talks about the fact that the federal government has made efforts to address the burden of carbon pricing in rural and remote communities. They provided some exemptions to the federal fuel charge for aviation fuels in the territories, in the north, for example. They also provided an additional 10% payment to the baseline climate action incentive payment, and that is mentioned in paragraph 5.69. There is a bit of a—

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

It's quite contrary to saying that it's disproportionately affecting rural and remote areas. In fact, it's saying that they have addressed that issue in some of the measures. I also saw that the indigenous governments right now are working with indigenous partners to come up with other ways to address this.

There are two things happening. When I look from a data perspective, if small and medium-sized enterprises are being disproportionately affected, I'm thinking that's because the large emitters aren't paying their fair share. Would that be a correct conclusion?

[Jerry V. DeMarco]

That's one of the conclusions that you could reach. There are also some issues about whether the climate action incentive fund money is getting out the door, and so on. However, yes, that relative burden between large emitters and everybody else is a key point.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

If the provinces strengthen the programs to apply this price on pollution to large emitters, that would help to equalize the burden between small and medium-sized enterprises and large emitters.

[Jerry V. DeMarco]

Yes, it has that beneficial effect, and it's also more consistent with the “polluter pays” principle, which is one of the tenets of the Canadian Environmental Protection Act, which gives rise to the methane regulations and so on. It has a number of benefits, including fairness and consistency with policy—what we call “policy coherence” in our fall report. There are a lot of benefits to updating it to make it more effective and fairer.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

If certain provinces are worried about their rural or remote communities, they could address the disparity by increasing the price on pollution on the large emitters. That would help with the subsegments of those small and medium-sized enterprises or the indigenous people that might be in their province.

[Jerry V. DeMarco]

We looked at Environment Canada's assessment of the provincial programs and whether they should be recommended to the government for approval. The provinces that wish to have their own large emitter programs, which many do, can propose something that is fairer. Because we're the federal Auditor General's office, we're looking at what Environment Canada did as its part of the equation, but the provinces that have their own large emitter programs can address these. Hopefully, they'll be reading this report as well, because they're the ones that are putting forward proposals for approval or disapproval by the federal government as part of the backstop or benchmarking process.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you. Your speaking time is up.

Ms. Pauzé, you have the floor for two and a half minutes.