Environment Committee on May 5th, 2022

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

After your consultation, could you follow up? What kinds of conversations have you had so far, and could you provide that feedback from the provinces to the federal government?

[Miodrag Jovanovic]

On defining an efficient fossil fuel subsidy...?

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

On defining and eliminating fossil fuel subsidies.

[Miodrag Jovanovic]

As I said, on eliminating fossil fuel subsidies, that's done through the budget process. We advise the Minister of Finance, the government makes its decision and then it's announced through the budget process. What happens is that often it's not necessarily counted as an official consultation that is being made, but we are, within the tax policy branch, meeting and always ready to meet with stakeholders. That's part of the process. In addition to that, there's a release of the draft legislation in the summer, through which we collect information.

I'm not sure I'm going to be able to tease out specific information received from provinces across all of that process, so I cannot promise this committee to provide something specific on this.

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

An IISD report classified funding for a diesel-generating station in a northern Ontario first nation as a fossil fuel subsidy. Could the department provide the committee with information on how the federal government has financially supported diesel-generating stations in remote and indigenous communities since 2015?

[Hilary Geller]

Nada, do you want to take the "off diesel" question, perhaps?

[Nada Vrany]

Yes. What I would say on that is that the department definitely has a program and is working with communities. I can provide additional information. I just don't have it at hand, but I could definitely follow up in writing on that question.

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

That would be great. Thank you.

Can the department provide the committee with a list of all financial incentives, tax measures and loan programs the federal government offers businesses and organizations in Canada to reduce their greenhouse gas emissions?

[Hilary Geller]

We can provide a list of programs and investment opportunities that have been announced through the government's various climate plans that are available to the provinces and territories.

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

That's specifically to reduce greenhouse gas emissions, which is the objective of this reduction in taxes.

[Hilary Geller]

That's correct.

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

Thank you.

As you know, the United States included enhanced oil recovery in their tax credit for CCUS. Why did the government not include enhanced oil recovery in their CCUS tax credit?

[Miodrag Jovanovic]

The objective of the CCUS tax credit is to create a real incentive for large emitters to invest in that technology sooner than later, in order to advance potential emission reductions to reach objectives sooner.

The objective was to have an incremental effect of 15 megatonnes by 2030, so that is the primary objective. At the same time, there was a concern that providing the technology for enhanced oil recovery would also create incentives for incremental production of oil and gas.

[The Chair, Liberal, Francis Scarpaleggia]

Which makes it a fossil fuel subsidy....

[Miodrag Jovanovic]

Potentially it would have. It would potentially change the assessment.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Mr. Duguid, you are next.

[Terry Duguid, Liberal, Winnipeg South, MB]

Thank you, Mr. Chair.

Thanks to our witnesses and to colleagues for their great questions.

Mr. Chair, I'm going to refer to this excellent brief from the Library of Parliament. In it, I observed the various definitions of “subsidy”, from WTO, IMF, International Energy Agency and World Bank. Let me quote from the Canadian Climate Institute's 2022 report. I'd like a comment from Ms. Geller, or anyone else who would like to comment.

Rather than being caught up in definitional issues, the authors advise that, Canadians should focus on “whether existing and proposed government measures support or hinder the private investment needed to drive Canada's long-term success through the global low-carbon transition.”

Ms. Geller, does that statement resonate with you?

Isn't that what is really guiding our approach to the emissions reduction plan? I think you'd agree that we have to keep our eye on the ball. I don't think the atmosphere cares how we do it, just that we get those emissions down. Have we not in fact made a decision, particularly on carbon capture and underground storage, that it is not an inefficient subsidy, because we have endorsed that approach?

As a side comment to my prairie colleagues, the Government of Saskatchewan has been calling for support for CCUS for the better part of a decade now, going back to Premier Wall. That's one thing I do agree with Premier Wall on.

Ms. Geller, I wonder if you'd have a comment on that.

[Hilary Geller]

Thank you very much.

We read the institute's report with interest. It had a very helpful series of suggestions for how to think about where the government might want to continue spending in support of the transition to a net-zero economy by 2050 with a reliable, clean, safe energy supply for Canadians. By definition, what that means is that the government will decide that, at certain points in time, it will keep investing in the transition of the fossil fuel sector. The CCUS tax credit is one example of that, which the committee has heard a lot about.

We did note with interest that other countries that have gone before us in fulfilling their G20 commitments basically adopted a similar approach. They looked at the list of fossil fuel subsidies they may have, and then they pointed to the ones that they didn't feel fit anymore in the context of their national interest. I think what the committee has been hearing, at a high level, is that Canada should do the same.

[Terry Duguid, Liberal, Winnipeg South, MB]

Mr. Chair, my next question is to Ms. Vrany.

We've heard a lot about the 45Q tax incentive, a tax credit in the United States. While there are some differences in our approach, as has already been pointed out—and I may have to ask you to speculate here—would not having the tax incentive here in Canada put our energy sector at a competitive disadvantage?

Again, referring to the just transition and transitioning to that new future that I think many of us support, perhaps you could speculate on what would happen if we hadn't brought in the tax incentive. Would that investment go south and leave our industries at a competitive disadvantage?

[Nada Vrany]

I'm afraid I cannot speculate, but I can tell you that, in discussions with industry, with companies in the oil and gas sector, this tax credit was very important.

I'm sure that the committee is aware of the oil sands pathways initiative. They've outlined a plan to get to 2030 and to 2050. It's a big heavy lift to get to 2030, and this tax credit is really important—as they say to us—to get there.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

[Nada Vrany]

It's not my speculation. It's from them.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Before the next round, I'm going to ask if there is a desire to continue beyond one o'clock. I'll ask for a motion to adjourn and see where that goes. I don't sense a big desire to go beyond one o'clock, to be honest with you, but we'll see what happens at one o'clock.

So that I can gauge the time for the next round, is there a sense that we want to go beyond one o'clock? No. Okay.

On this round, then, we'll have to cut the time a bit, so I'm going to go three, three, two, two, three, three.

Mr. Carrie, you have three minutes. Go ahead, please.

[Colin Carrie, Conservative, Oshawa, ON]

Thanks, Mr. Chair.

I have another question along the same line as Ms. Collins's and Madame Pauzé's.

Ms. Geller, we know environment is the overreaching driver here, and you're in charge of the strategy. The Auditor General said that you don't really have a definition of what an inefficient fossil fuel subsidy is, and we've been trying to get a little bit of clarity on that. This is what this study is all about.

From a strategic standpoint, how can you eliminate a subsidy if you can't define it?

[Hilary Geller]

This was a point made by the Climate Institute in the report that was just referred to as well: that perhaps trying to define words is not getting us where we need to go. What we need to do is look at government spending in the fossil fuel sector and its role—