Environment Committee on March 24th, 2026

[The Clerk of the Committee, Leif-Erik Aune]

Pursuant to Standing Order 106(3), as the clerk of the committee, I will preside over the election of the chair.

I must inform members that the clerk of the committee can only receive motions for the election of the chair. The clerk cannot receive other types of motions, cannot entertain points of order nor participate in debate.

We can now proceed to the election of the chair.

Pursuant to Standing Order 106(2), the chair must be a member of the governing party.

I am ready to receive motions for the chair.

Mr. Bonin, you have the floor.

[Patrick Bonin, Bloc, Repentigny, QC]

I nominate my colleague Ms. Miedema for the position of chair. She has demonstrated her knowledge and willingness to work with everyone. I think she would be the best choice.

[The Clerk]

Mr. Bonin moved that Ms. Shannon Miedema be elected chair of the committee.

Are there any further motions?

(Motion agreed to)

I declare the motion carried and Shannon Miedema duly elected chair of the committee.

Ms. Miedema, I invite you to take the chair.

[Some hon. members]

Hear, hear!

[The Chair, Liberal, Shannon Miedema]

Thank you very much to all of my fellow committee members for placing your trust in me as chair. It's an honour, and I am excited to take on this challenge.

Thank you very much, Mr. Bonin, for placing your trust in me.

Also I'd like to extend a very warm welcome to Will Greaves, who is now a member of this committee for the Liberal Party.

Thank you, Will, for joining us.

Also, welcome to our witnesses. We are starting our industrial carbon study today, which is very exciting, and we have witnesses both hours.

Welcome to Franco Terrazzano, federal director, and Nicolas Gagnon, Quebec director of the Canadian Taxpayers Federation. We have Tim Weis, senior director of industrial decarbonization of the Pembina Institute; and Margareta Dovgal, managing director of Resource Works Society.

Each witness organization will have five minutes to present their opening statements and, once that's complete, we'll have questions from committee members. I'll give you a one-minute warning as you approach the end of your five minutes and then, when your time is up, just complete your sentence after that.

We will begin with the Canadian Taxpayers Federation.

Mr. Terrazzano, the floor is yours.

[Franco Terrazzano, Federal Director, Canadian Taxpayers Federation]

Many Canadians are worried about paying their bills, buying groceries and still having money left over to save for a rainy day. The last thing they need is their government making it more expensive to put gas in their car or food in their fridge.

Many Canadians are feeling deep anxiety about losing their job. The last thing they need is their government pushing the company they work for to leave Canada for the United States.

My name is Franco Terrazzano. I'm the federal director of the Canadian Taxpayers Federation. I'm here on behalf of hundreds of thousands of taxpayers with a simple message: It doesn't matter what label you slap on a carbon tax. Carbon taxes make life in Canada more expensive. Carbon taxes chase away Canadian jobs, and carbon taxes don't work.

The government should end all carbon taxes for all of the reasons it ended the consumer carbon tax. For years, politicians told Canadians that the consumer carbon tax made them richer, but nobody believed that because it wasn't true. Stats Canada showed that inflation dropped after the government cancelled its consumer carbon tax. Government MPs even shot videos in front of gas stations, praising themselves after cutting a carbon tax that they had charged for years.

Leger polling shows that Canadians aren't buying that same government spin about the industrial carbon tax. About 70% of Canadians say businesses will pass on most or some of the costs of the industrial carbon tax to consumers through higher prices. Canadians understand the simple reality: Carbon taxes on refineries make it more expensive to drive. Carbon taxes on fertilizer plants make it more expensive to eat. Carbon taxes on electricity make it more expensive to live.

The consumer carbon tax didn't work, and a carbon tax on Canadian business won't either. Canadian governments impose carbon taxes on fertilizer, oil and gas, and steel. The U.S. government does not. If you chase a fertilizer plant out of Manitoba, that doesn't reduce emissions. It just means Canadian jobs go to North Dakota. If you chase an oil and gas project out of Alberta, that doesn't reduce emissions. It just means Canadian jobs go to Texas. If you chase a steel plant out of Ontario, that doesn't reduce emissions, either. It just means Canadian jobs go to Ohio.

Canadians are already 10 out of 10 worried about tariffs and losing their own jobs. The last thing they need to worry about is attacks from their own government that push the company they work for to move to the U.S.

A trade union has already warned that the industrial carbon tax will decimate Hamilton and move steel production, and all of the jobs that come with it, into the States.

There is no escaping the fatal flaw of carbon taxes, regardless of what you call that carbon tax. A carbon tax that makes life more expensive in Canada will not reduce emissions in places like China, India, Russia or the United States, so a Canadian carbon tax won't fix the issue of global emissions.

About 70% of countries do not impose national carbon taxes, according to the World Bank, but all Canadians really need to do to understand this fatal flaw of carbon taxes is look south to our biggest economic competitor. Regardless of who is in the White House, whether it's a Republican like Trump or Bush, or a Democrat like Biden or Obama, the White House is not imposing carbon taxes.

Getting rid of the consumer carbon tax was only half the job. The government needs to end its hidden carbon taxes, including the industrial carbon tax, for the same reasons it needed to end the consumer carbon tax.

Carbon taxes make life more expensive. Canadians didn't believe it when politicians told them carbon taxes make their lives more affordable, and they don't believe it now. Carbon taxes don't work. Pushing Canadian entrepreneurs to cut production here and set up shop south of the border doesn't cut emissions. It just cuts Canadian jobs.

The industrial carbon tax is the worst of all worlds. It's hidden. It makes life more expensive. It will cost Canadians their jobs. It needs to go.

Thank you.

[The Chair, Liberal, Shannon Miedema]

Thank you for your testimony.

We will now move on to Mr. Weis of the Pembina Institute for five minutes.

The floor is yours.

[Tim Weis, Senior Director, Industrial Decarbonization, Pembina Institute]

Thank you very much.

My name is Tim Weis. I'm the senior director for industrial decarbonization at the Pembina Institute. I'm also a professional engineer and have spent 20 years researching energy technology systems in Canada, including nearly a decade teaching undergraduate courses in thermodynamics and energy systems.

It's a pleasure to be here today to talk about industrial carbon pricing. This is the most important policy to reduce our emissions here in Canada.

I live in Alberta. I had the privilege of being part of the Alberta government and working on the Alberta carbon pricing system a decade ago. This carbon pricing system became the model for the federal one.

Alberta's framework has survived seven premiers and three political parties, but recent changes are undermining its effectiveness. Left unchecked, this threatens Canada's climate goals as well as Alberta's economic future. This matters, because industrial carbon pricing is Canada's most important climate policy. It has the potential to reduce emissions by 20% to 50% by 2030, but it's also one of the most important tools we have to drive private investment towards the industries of the future.

First off, I want to start by saying that it's important to remember that a carbon price is a market mechanism. It allows companies to choose how they want to reduce their emissions, rather than the government picking winners. Of course, costs are often discussed, but it's also important to remember that the point of pricing carbon pollution is to encourage companies to not pay that price. That is the point of the system. In fact, it even financially rewards companies to do better than their minimum requirements.

Industrial carbon pricing is fundamentally a correction of a market failure. Without it, polluters are free to emit, but it's costly for taxpayers who pick up the costs. Whether it's through damaged infrastructure or wildfire smoke, the burden lands on taxpayers, as opposed to emitters. Industrial carbon pricing ensures that major polluters either pay their fair share in a predictable, manageable way or, ideally, reduce their emissions and avoid the cost all together.

This is why, for close to two decades in Alberta, industrial carbon pricing has enjoyed support ranging from oil and gas executives to successive governments, economists and climate groups alike, while hardly being noticed by consumers at all.

Alberta has a high concentration of heavy, high-emitting industries, and while these industries remain important, they must adapt as the energy transition accelerates. Industrial carbon pricing has helped Alberta to do just that. Industrial carbon pricing was central in phasing out coal-fired electricity. It played a major role in quadrupling wind and solar in the past five years in the province, and it supported the economics of some of the world's first carbon capture and storage pilot projects. Notably, all of this occurred in Alberta, with oil production continuing to increase every single year since the carbon price was introduced.

In order to ensure Canada's economic resilience, it is more important than ever that Canada continue to push development of low-carbon industries and supply chains. The first step any government needs to be doing is building a climate-competitive economy, and that needs to start with the foundation of a strong industrial carbon-pricing framework.

I'd like to dispel two myths that often come up about carbon pricing.

One is that it undermines competitiveness. In fact, the opposite is true. Some pundits have recently claimed that a $130 effective carbon price, as agreed upon by Canada in the Canada-Alberta MOU, would cost about $20 per barrel of oil. That number fundamentally misunderstands the policy design.

In fact, most of the emissions are not priced at all in the way that the Canadian system works. The Climate Institute's latest analysis finds that a $130 effective carbon price translates on average to about 50¢, or roughly the cost of a Timbit per barrel. On the other hand, carbon pricing supports innovation, including some of the technologies I've mentioned and that we've seen developed in Alberta. It also helps to create market access by rewarding investments in new future-proofed industries, while preparing our industries for potential carbon border adjustments or, essentially, import tariffs.

The second myth I want to talk about is that carbon pricing drives up grocery prices. Once again, recent analysis from the Canadian Climate Institute estimates that industrial carbon pricing in Canada has resulted in about a 0.1% increase in food costs, the obvious reason being that the carbon price does not apply to farmers or their fuels.

On the other hand, we don't talk enough about some of the real drivers for grocery inflation—price shocks that come from volatile oil and gas markets and how climate change is making food more expensive—but that's a conversation for another day. For today, it's important that this committee is focused on industrial carbon pricing in Canada, because we're at a pivotal moment. Alberta's system needs fixing. Provincial changes have recently caused an oversupply in credits that have dramatically depressed the effective price, undermining investments, including the viability of carbon capture and storage in the oil sands.

Fortunately, Prime Minister Carney and Premier Smith agreed in last year's MOU to address this issue by achieving a minimum effective price of $130 per tonne. Doing this in short order will go a long way to giving investors the confidence to start deploying capital again. Moving forward, we also need Canada to move toward a 2050 schedule, ensuring we have a stable and predictable framework in order to catalyze the billons of dollars we need in energy investment in the decades to come.

[The Chair, Liberal, Shannon Miedema]

Thank you, Mr. Weis.

Last but not least, we have Ms. Dovgal.

The floor is yours for five minutes.

[Margareta Dovgal, Managing Director, Resource Works Society]

Thank you so much, Madam Chair. Congratulations on your appointment as chair of this committee.

Since I last appeared before this committee in October, the government has reiterated its commitment to making Canada an energy superpower. It signed a memorandum of understanding with Alberta, partially about securing access to tidewater for our product, and it has said that it will not implement the oil and gas emissions cap.

The Prime Minister has spoken of trade diversification, energy security and growth. These are the right instincts, but the policy architecture that governs how our industries operate has not caught up. The federal output-based pricing system, OBPS, remains the single most consequential mechanism shaping industrial carbon costs in this country, and it is still built on assumptions, models and design choices from a policy era whose effective goal was to constrain production, not enable it.

The OBPS does not merely set a carbon price. It serves as a federal backstop and, critically, as a reference against which every industrial carbon price by province is assessed. The federal benchmark uses the OBPS to define the minimum stringency the provincial systems must meet—the same coverage thresholds, marginal price signal and tightening trajectory. Provinces have design flexibility, but the OBPS sets the floor, and the composition of a province's economy determines the weight of that floor. In Alberta and Saskatchewan—where oil and gas extraction, conventional production, mining and upgrading comprise the overwhelming share of industrial emissions—meeting those minimum requirements translates into enormous coverage obligations, more than the price of a Timbit.

The mechanism by which these costs escalate is not the carbon price itself. It is stringency—the annual ratcheting down of benchmarks—that determines how much of a facility's emissions are subject to that price. Most sectors begin at 80% of their historical average intensity, declining by 2% per year. By 2030, that benchmark will reach 64%. The impacts of stringency are significant but not well understood. Stringency is a far more politically palatable way to burden our most productive industries than raising the carbon price itself—which, to be clear, is already also happening year by year. That is precisely because almost no one outside industry understands how it works.

This is all compounded by a deeply troubling feature of the OBPS: the way energy-intensive and trade-exposed, EITE, sectors are treated. Iron, steel, lime and cement all receive very high EITE status, so they are subject to a more favourable and slower tightening rate. Oil and gas extraction should qualify but does not. In fact, when you plot the thresholds that Environment and Climate Change Canada uses to determine very high status, the boundary is non-linear. It appears to zigzag specifically around conventional oil and gas production, excluding our largest and most trade-exposed sector from this favourable treatment.

Meanwhile, the models underlying these decisions are built on assumptions that are fundamentally disconnected from how the industry operates and makes investment decisions. ECCC uses equilibrium models that effectively assume that producers will continue investing in decarbonization past the point of profitability. That assumption may satisfy an academic framework, but it is a poor reflection of how capital allocation decisions are actually made. Companies do not invest to break even. They invest where they can earn competitive returns. If the policy environment makes those returns unachievable, capital moves elsewhere. It doesn't just absorb the cost.

This matters most for new facilities, not just existing ones. Most modelling only asks whether a carbon price will shut in current production. The far more consequential question is whether it prevents new production from being built—which, to be clear, we need to do if we want to expand our energy exports to the world, as the Prime Minister has said he wants to do. Smaller facilities below 100,000 tonnes of CO2 equivalent per year lack access, often, to abatement technologies like carbon capture or electrification, which are available to larger emitting facilities. For them, this is not an incentive to reduce emissions, as the policy promises. It is a flat tax levied in a volatile commodity market, punitive in downturns and still uncompetitive in good years. The policy framework for Canadian oil and gas needs to be competitive in order to attract the amount of capital into Canada needed to grow the economy.

The government says that it wants to be an energy superpower. You cannot get there by slightly dialing back the mechanisms designed to keep energy in the ground. The philosophy has to change, and those tools must change with it. The OBPS must be reformed so that the EITE risk assessment reflects the actual trade exposure of our energy sector. The large emitter threshold should be set at 100,000 tonnes, consistent with Alberta's tier system. Also, before any further tightening is imposed, a comprehensive, transparent review of competitiveness impacts should be conducted with provinces and industry at the table as partners, not as afterthoughts.

This country is extraordinarily resource- and energy-rich. We have the geology, the workforce and the regulatory maturity to serve global markets responsibly. What we lack today is a policy framework that recognizes these assets instead of taxing them into irrelevance. That is a gap this committee can address.

Thank you so much, Madam Chair.

I look forward to questions.

[The Chair, Liberal, Shannon Miedema]

Thank you very much for your testimony, Ms. Dovgal.

Now that we have heard from all three witness organizations, we will go to questions from members, beginning with Ms. Anstey for six minutes.

[Carol Anstey, Conservative, Long Range Mountains, NL]

Thank you.

Thank you to the witnesses. Thank you for your testimony.

I'd like to start with the Canadian Taxpayers Federation.

Mr. Terrazzano, you've brought forward an opinion that we get push-back on a lot of the time, and it's with respect to the industrial carbon price and its impact on food prices.

I just want to give you an opportunity to speak to that, if you could, because this is something that's important to everyday Canadians.

[Franco Terrazzano]

Thank you so much.

An industrial carbon tax really is the worst of all worlds. It's going to make life more expensive here in Canada. It's going to drive Canadian jobs south of the border, and it doesn't work.

For the better part of a decade, the government tried to convince Canadians that carbon taxes made them richer. Canadians didn't believe it then, and they still don't believe it now.

When you look at polling, it shows that about 70% of Canadians understand that businesses aren't just going to eat the extra costs. Most or some of the costs are going to be passed on to consumers through higher prices. It's very easy to understand. If you impose massive taxes on oil and gas refineries, that will make it more expensive to drive. If you impose taxes on fertilizer plants, that increases costs for farmers and makes it more expensive to eat. If you impose taxes on electricity, that makes it more expensive to live.

[Carol Anstey, Conservative, Long Range Mountains, NL]

Something else that we hear—and it's in relation to the same kind of spin that we heard on the consumer carbon tax—is that these revenues are being recycled back into the economy. In your opinion, do you think there's enough transparency around that?

[Franco Terrazzano]

Again, it's just like with the consumer carbon tax. The government tried to tell Canadians for the better part of a decade not to worry, that they were going to take $20 from them and give them $50 back. People didn't believe it then, and people don't believe that type of messaging now.

Yes, government transparency is always important, but even better would be if the government got rid of taxes that make life more expensive, that don't work and that could very well cost many Canadians their jobs.

[Carol Anstey, Conservative, Long Range Mountains, NL]

Thank you.

If the current approach to the industrial carbon tax doesn't change, what do you see as the long-term outcome and implications for Canadians?

[Franco Terrazzano]

I think life's going to get more expensive. I think Canadians who are already feeling deep anxiety about losing their jobs may see the plants that they work for get pushed to the United States.

Regardless of who is in the White House, whether it's a Republican or a Democrat, the White House is not imposing carbon taxes. The vast majority of countries don't impose national carbon taxes. A carbon tax in Canada doesn't work.

The government needs to end the industrial carbon tax for all the reasons that it ended the consumer carbon tax.

[Carol Anstey, Conservative, Long Range Mountains, NL]

Thank you so much.

I'd now like to direct my questions to Margareta.

With respect to the natural resources sector, one of the things that comes up a lot with respect to this policy is carbon leakage. I'm wondering if you could speak to that, please.

[Margareta Dovgal]

Yes, absolutely.

If you talk to oil and gas producers, you will hear that it's no longer a theoretical. They see these regulations. I've looked at them. We're doing some research that we plan to publish in mid-April, which we will submit to this committee as well.

When they do the math, it's pretty sobering. To put it in perspective, thermal producers that are using steam-assisted gravity drainage, SAGD—and that accounts for about 75% to 80% of in situ bitumen production in Canada.... I have heard from a number of them that, with the current schedule that's been published, at a certain point it becomes more economically rational for them to turn off the steam and pull as much oil out as they can, as fast as possible, while the reservoir is still hot. Then they will get out of Dodge and deploy that capital to a jurisdiction that doesn't have comparable carbon costs—which, for the record, is most jurisdictions.

Most jurisdictions don't do what Canada is doing, certainly not energy producers. The ones that I'm speaking of aren't marginal producers. These are, as we know, some of the lowest emissions intensity producers globally. Their liabilities are fully funded, so they can get out whenever they want. Then we lose those jobs, and we lose those opportunities. Most crucially, those emissions do not stop; they just go somewhere else.

[Carol Anstey, Conservative, Long Range Mountains, NL]

Thank you.

That leads into my next question with respect to investment and the implication on investment in Canada, which means Canadian jobs and growth in the natural resources sector.

Ultimately, what does this mean for investment as we're trying to attract it? Could you expand quickly on that?

[Margareta Dovgal]

Most countries are assessing their cumulative carbon costs on a facility-by-facility level first. They want to understand whatever framework they're operating in and what their costs are actually going to be. They're also looking at it on a portfolio basis. It's not just specific.... Let's say that there's a company that operates in both B.C. and Alberta; it has different calculations, different facilities and different sizes. So, it depends on the technology that the company is using.

Many companies in those cases are now actively identifying pathways, I've heard, to get out of Canada. We're not going to be able to produce the oil and natural gas at nearly the scale that we want. We're going to lose the tax revenues, the royalties, the direct and indirect jobs, and the supply chain opportunities for indigenous communities. All of these things are in jeopardy if we don't look seriously at what the OBPS is scheduled already to accomplish if it's not fixed.

[Carol Anstey, Conservative, Long Range Mountains, NL]

Do you think in your opinion, working in this sector, that the policy is proportionate to the environmental benefits that would be achieved through the government's plan?

[Margareta Dovgal]

I think it's disproportionate, predominantly because if your objective is to decarbonize by de-industrializing, sure, the policy is going to be a success, and we're just going to lose that industry and that investment, and those emissions are going to go somewhere else.

If your objective is to get the balance with the resources that we have, the assets that we have available to serve Canadians, then this policy is not actually accomplishing that.

[The Chair, Liberal, Shannon Miedema]

Thank you, Ms. Anstey.

Mr. St‑Pierre, you have the floor for six minutes.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Madam Chair, congratulations on the new role.

I'm quite excited to participate in this study. It's been about four months in the waiting, and I think this is arguably one of the most important climate policies this country faces, so I'm really glad that we're here.

I'm really excited to hear from the witnesses over the next four days.

Maybe I'll start with you, Dr. Weis.

I'm curious if you have any quick comments, within 30 seconds, with regard to the Taxpayers Federation's testimony and resource work.

[Tim Weis]

The only comment is that these are the arguments I've heard all before when I was working in the Alberta government. Industry claimed they were going to up and leave, and the opposite has really happened. When you start to see this type of framework put in place.... We've actually seen a bunch of clean technology. We've seen carbon capture and storage, we've seen coal phased out to...gas. Lots of these scare tactics just have not played out when you have a well-designed policy.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thanks for that.

Yes, scare tactics are often one of the strategies used.

Pembina put together a report called “The magic of $130 by 2030”. Can you provide a copy of this report to the committee and any other reports you have on industrial carbon pricing?

[Tim Weis]

Yes. I don't have it with me, but I'm happy to submit it.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thank you.

I'm curious as well about this. Because you've been in this sector for quite some time, can you speak about some of the industry players—some specific names and associations—that have been actually supportive of industrial carbon pricing? Do you have a list off the top of your head?

[Tim Weis]

The industrial carbon price goes back to 2007 in Alberta. It was actually a Conservative government that put it in place at the time, and it has stayed in place since then. It was designed with industry at the table. The choice—industry's choice—was a market mechanism so the government isn't picking the winners and losers, as I said earlier.

Some of the obvious examples of industries that have been supportive of it would be when the climate leadership plan was developed in Alberta in 2015. You had the CEOs of the five major oil sands companies on stage with the heads of five major environmental organizations, all saying this is a policy that can work.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Big oil companies were supportive of industrial carbon pricing.

[Tim Weis]

They have been in the past, yes.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

You mentioned earlier that you've been in the sector for quite some time, and you've heard it all. Can you speak a little bit about the misinformation and the disinformation you hear on industrial carbon pricing?

[Tim Weis]

I think probably the biggest misunderstanding is the way the OBPS itself works. It's very different from the consumer-facing carbon tax, which gives a flat tax across all emissions. Then, of course, the rebate followed.

The key difference in the industrial carbon price is that there is a free allocation of a significant amount of emissions, so we're only pricing the marginal emission. You're basically trying to get a competitor to be as good as their next competitor, so the price isn't on all emissions, but it's only on that marginal price.

When we hear that it's just going to continue to pass on costs, it's basically industry admitting that they can't get emissions down, so it's a bit of a challenge. You hear talk out of both sides of mouths that, yes, we're going to reduce emissions, but at the same time we can't.

The way that policy is designed is to encourage those incremental year-by-year emissions to ultimately be able to keep Canada competitive. This is not to reduce the oil and gas sector, but it's to protect it from things like carbon border adjustments that we're seeing in Europe or other jurisdictions. We want to make sure that Canada is going to be competitive into the future.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Can you unpack that a little bit more? You're talking about Canada being more competitive. You're talking about the carbon border adjustment mechanism, CBAM. Can you speak about why the industrial carbon price mechanism is actually smart economic policy?. Can you touch on job creation and how this builds wealth for Canada?

[Tim Weis]

Yes, there are a couple of different areas there. Obviously, it helps to drive new industries. We've seen that by way of example in Alberta, where carbon capture and storage is a technology that fundamentally wouldn't exist without a carbon price. You wouldn't do it without a carbon price. That technology has been largely developed in Canada with some of the first CCS projects in the entire world. We're seeing a carbon-removal industry starting up in Alberta as a result. That's also something that you wouldn't see without a carbon price.

There are new innovative technologies, and then obviously renewable energy and energy efficiency, and all those types of things also get driven by pricing emissions.

On the other hand, as you mentioned, we are seeing Europe looking at the carbon border adjustment, which means that if we don't have emissions down on our products, they're going to be taxed as they go into other jurisdictions, so we want to make sure that we're keeping those markets open for our oil and gas.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Can you speak about the importance of the federal backstop?

[Tim Weis]

Having a federal system is important so that we don't end up in situations like in Alberta right now, where the supply and demand of credits gets out of whack, shall we say. We can balance it and make sure we that can be making these investments in the long run with some investor confidence. You want to have that stability. Two levels of government give an investor the ability to go to the bank if you want to do something like invest in a carbon capture and storage facility.

The other thing that, ideally, we would like to see in the future—we don't have it right now—is starting to harmonize our systems across the country to create a larger market so that we can have more innovation and more companies trading with each other across the country, almost as a nation-building exercise on clean-tech technology.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thank you.

I have one last quick question for the Canadian Taxpayers Federation. What percentage of your funding sources comes from Canadian taxpayers?

[Franco Terrazzano]

We don't receive any funding from outside of Canada.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

My question was about Canadian taxpayers, so citizens contributing to the Canadian Taxpayers Federation. Can you provide funding sources for your organization?

[Franco Terrazzano]

Sure. I can give you some numbers.

[The Chair, Liberal, Shannon Miedema]

You have about 20 seconds.

[Franco Terrazzano]

As I mentioned, we don't receive any money from outside of Canada, so all of it is from Canadians. Last year, we received 76,000 donations. The average donation was $81.40 and 99% of our donations were under $1,000.

[The Chair, Liberal, Shannon Miedema]

Thank you, Mr. St‑Pierre.

Mr. Bonin, you have the floor for six minutes.

[Patrick Bonin, Bloc, Repentigny, QC]

Thank you, Madam Chair. Congratulations on your appointment.

I hope we will be able to expedite the committee's work on the climate crisis and biodiversity loss. I think you will make a great contribution to our work.

Mr. Weis, I have limited time. I'm going to ask a number of questions, but I would ask you to give short answers, if possible.

If the government reduces the carbon price during the review of the industrial carbon tax, could that jeopardize the attainment of greenhouse gas emissions reduction targets under the Paris Agreement?

[Tim Weis]

Can you repeat the question?

[Patrick Bonin, Bloc, Repentigny, QC]

Okay.

If the government reduces the carbon price during the review of the industrial carbon tax, could that jeopardize the attainment of greenhouse gas emissions reduction targets under the Paris Agreement?

[Tim Weis]

If I understand the question, it's very clear that industrial carbon pricing can have the effect of reducing emissions to help Canada meet its targets. The current trajectory we're on won't get us there, and we're going to have to improve that system if we're going to be able to attain our goals.

[Patrick Bonin, Bloc, Repentigny, QC]

You recommend that no public money be invested in a new pipeline or in expanding the capacity of a pipeline at this time.

Is that correct?

[Tim Weis]

There's the Canada-Alberta MOU, which looks at building a new pipeline to British Columbia if the market for oil exists. Private capital should be used, not Canadian taxpayer dollars.

[Patrick Bonin, Bloc, Repentigny, QC]

Do you think we need to improve the transparency of the carbon pricing system?

[Tim Weis]

There are definitely improvements that we could be making in the overall system to make it more transparent. Again, there are ways we could harmonize systems across Canada to encourage trade, encourage innovation and encourage investments across provinces.

[Patrick Bonin, Bloc, Repentigny, QC]

How was the application of minimum standards for the stringency of carbon pricing systems in Canada triggered as regards equivalency?

In your opinion, should there be a policy that sets out very clearly how and when the federal system should be implemented?

[Tim Weis]

Forgive me. I'm not 100% sure I understood the question, but yes, whether it's on the equivalency of methane, the equivalency of the OBPS or the equivalency of the Canadian electricity regulations, I agree it's very important that it's very clear that when a province goes out of compliance.... That is obviously making sure that the provincial regulations are meeting the same goals as the federal regulations.

It's pretty clear in the legislation that in a world where that is triggered and emissions are not being met by a province through its regulations, the federal backstop should come in for any type of equivalency agreement for any type of environmental legislation.

[Patrick Bonin, Bloc, Repentigny, QC]

Right now, it's not really being implemented. Not in Alberta, for example.

[Tim Weis]

Yes, Alberta has frozen its price, or has said it's going to freeze its price. Once those two prices are not concurrent anymore, then Alberta would be out of compliance, as would Saskatchewan, which I said is not implementing the federal—

[Patrick Bonin, Bloc, Repentigny, QC]

We need to clarify how the federal government should systematically intervene.

[Tim Weis]

I would agree that it should be clear when the federal government needs to recognize when one of the provinces is out of compliance and makes sure that that way, it's fair for all provinces across the country.

[Patrick Bonin, Bloc, Repentigny, QC]

In your opinion, should there be a very clear commitment from oil sands companies to allocate substantial funds to the Pathways carbon capture project?

[Tim Weis]

Could you repeat the question?

[Patrick Bonin, Bloc, Repentigny, QC]

Should oil sands companies make a very clear commitment to fund their project?

[Tim Weis]

Okay. We agree fully that the Pathways project is a very important carbon capture and storage project that we're supportive of, and it's important to reduce emissions in Alberta, but it shouldn't be linked to building a new pipeline. This is something that the industry has promised. It's received a fair bit of subsidies, both provincially and federally, and it really, again, needs to be industry-led.

[Patrick Bonin, Bloc, Repentigny, QC]

You did an analysis that I think will be tabled with the committee. According to that analysis, at $130 per tonne, the cost of producing a barrel of oil is equivalent to the cost of a Timbit.

Why does that data contradict claims that the industrial carbon tax makes petroleum products uncompetitive in Canada?

[Tim Weis]

That analysis was from the Canadian Climate Institute, but I think the key difference is, of course, that it's just in how the OBPS is designed, or TIER in Alberta, where emissions aren't fully priced or only, again, are pricing sort of the marginal emissions. Some of the simplistic analyses have applied the carbon price to an entire barrel of oil when that's simply not how the policy works.

[Patrick Bonin, Bloc, Repentigny, QC]

You also talked about the benefit of maintaining a carbon pricing policy that has been in place for 15 years.

Why is it important for businesses to have predictability and stability when it comes to their long-term investments, for example?

[The Chair, Liberal, Shannon Miedema]

Give a short answer, please.

[Tim Weis]

The short answer is we're making long-term infrastructure investments, and if you're putting millions of dollars decades into the future, you need to know what the price is going to be and the policy needs to be stable. Investor stability is, I think, something we can all agree on.

[The Chair, Liberal, Shannon Miedema]

Thank you, Mr. Bonin.

We will now move to Mr. Bexte.

The floor is yours for five minutes.

[David Bexte, Conservative, Bow River, AB]

Thank you, Madam Chair, for the first time. I appreciate your candour.

Thank you, witnesses, for being here today.

Mr. Weis, should projects using carbon capture and storage or implementing carbon capture and storage be charged the carbon tax on their operations? They're in the business of storing carbon, so is that kind of not...?

[Tim Weis]

That's fundamentally how the carbon system works. It's that when you reduce your emissions—

[David Bexte, Conservative, Bow River, AB]

No, I'm sorry, maybe I misread.

Pathways, for example, is in the business of storing carbon, so they're injecting carbon into the ground.

[Tim Weis]

Yes.

[David Bexte, Conservative, Bow River, AB]

Should they be charged the industrial carbon tax on their operations?

[Tim Weis]

Any carbon that is sequestered, you usually get a credit for. You can actually sell it.

[David Bexte, Conservative, Bow River, AB]

The credit side.... No, I mean the upstream operations. Sorry, I'm not clear about this.

[Tim Weis]

The system is equal for everybody, so if you're storing 10% of your emissions, then you would get relief for 10% of—

[David Bexte, Conservative, Bow River, AB]

You're talking about the credits exclusively. I'm talking about the emissions as a part of the operations.

[Tim Weis]

Sure. The emissions that aren't there being emitted, then they are not being stored. Then you would be priced on those, as long as that is over your OBPS threshold. If you're under it as a result of your carbon sequestration, you would be generating a credit, not paying.

[David Bexte, Conservative, Bow River, AB]

Thank you.

Ms. Dovgal, could you speak a little bit about the carbon border adjustment? It's been mentioned a few times. How much of our economy is exposed to that in reality? We are geographically attached to the United States. Forever it's going to be our largest market.

[Margareta Dovgal]

I think just high level, I'm not an expert in carbon border adjustments as an area, but what I understand and what experts I've consulted with and have spent time trying to understand their thinking on have told me there is no, at present, market pricing in carbon intensity. We're talking about policy tools on a national level for imports and exports, but at present, for any emissions reductions that Canada or any energy producer does, the cost of that is not carried on to the consumer of the product. It's a cost that the producer has to bear. I think that's important as a principle to keep in mind.

I think, generally, border carbon adjustments are a reality that Canadian exporters are ready for, and any policy mechanism, OBPS, in a good design does need to reflect that reality. We need to be compliant with future EU and U.K. standards.

[David Bexte, Conservative, Bow River, AB]

I'm getting at how much of our economy is going to be exposed to that versus how much of the economy is going to continue to be exposed to the United States, where there is no carbon border adjustment.

[Margareta Dovgal]

I honestly can't speak to that.

[David Bexte, Conservative, Bow River, AB]

Okay. Thank you.

[Margareta Dovgal]

I can look it into and send you some details.

[David Bexte, Conservative, Bow River, AB]

I appreciate that.

Mr. Terrazzano, the government continues to claim that carbon pricing doesn't affect consumers and that large companies pay for everybody, but a recent poll commissioned by your organization found that 70% of Canadians believe the costs are passed on to them.

How much money do you think actually gets pushed down as a cost to the consumer?

[Franco Terrazzano]

It's actually the worst of all worlds. Canadians understand that businesses aren't just going to eat all these costs. They essentially have two things that they can do. One is to raise prices, and Canadians understand that. The polling shows 70% of Canadians say businesses will pass on most or some of the cost of the industrial carbon tax to consumers through higher prices.

If these businesses aren't passing on these higher costs, there's another really bad thing that can happen. They could just cut production here in Canada and set up shop in the many countries that do not have national carbon taxes, including the United States. For example, fertilizer plants in Manitoba are being hit with carbon taxes. A fertilizer plant just south of the border in North Dakota has no carbon tax. The government is imposing carbon taxes on steel companies in Ontario versus the government in the U.S., in Ohio, where its not hitting its steel producers with carbon taxes.

It's not just higher prices; that's a part of it. It's actually the worst of all worlds, where there are higher prices and fewer jobs for Canadians.

[David Bexte, Conservative, Bow River, AB]

We've also seen some information recently that 40% of the top 1% of earners are leaving Canada for greener pastures.

How much of this phenomenon that we're discussing here do you think contributes to that?

[Franco Terrazzano]

Yes, you keep taxing investment and investment is going to leave. That is what happens.

We're talking about the industrial carbon tax. It is not the only hidden carbon tax this government is imposing. There's another tax through fuel regulations driving up the price of gasoline by about 7¢ per litre right now.

[David Bexte, Conservative, Bow River, AB]

I have a few seconds.

Do you have any data related to how the industrial carbon tax trickles down through the economy?

[Franco Terrazzano]

That's something that we've been asking the government to provide.

[David Bexte, Conservative, Bow River, AB]

Thank you very much. I appreciate it.

[The Chair, Liberal, Shannon Miedema]

Thank you.

We will now move to Mr. Fanjoy.

The floor is yours for five minutes.

[Bruce Fanjoy, Liberal, Carleton, ON]

Thank you very much, Chair. Congratulations.

My first question is for Dr. Weis.

The opponents of industrial carbon pricing think that it can be eliminated without any consequences to the broader economy or the broader ecology. It seems to me that we're going to pay a carbon price whether it's an orderly system that helps industry adjust to the economy of the future or the carbon price will be provided by the environment.

Could you please talk to some of the events we're seeing in our environment that make this policy necessary?

[Tim Weis]

I'd be happy to try to speak to a few, not the least of which is I think we're naive to believe, just because there's a race to the bottom south of the border right now, that the physics of climate change have changed fundamentally. We need to be preparing ourselves for where industry is going in the future and where the energy systems are going in the future. We need to be competing, whether with China or with Europe, which are accelerating in some of these technologies, so we want to make sure that our industry is ready for that.

There are obviously the risks of climate change itself and making sure that Canada is doing its fair share. There are the opportunities for clean technology and being able to compete with other parts of the world, as well as continue to export our fossil fuels, by making sure that they're going to be competitive with places that have carbon border adjustments.

Then, finally, the other thing I would like to very quickly mention is, in Alberta, when I was with the government and there was a change to the carbon pricing system, there was starting to be a backlog of people holding onto their credits, because they knew the market price was going up. There were whole industries that had been developed around clean technology and this type of investment and, suddenly, when the carbon market was changed, all of these companies that had made investments were banging on our door.

It's important to remember there is a whole clean-tech sector in Canada that is developing. We're becoming leaders in that area, and we're going to pull the market out from all that innovation that's going on in the country if we remove this policy.

[Bruce Fanjoy, Liberal, Carleton, ON]

Yes, and I'm glad you brought that point up. Mr. Terrazzano spoke earlier about Canadians facing affordability issues. That's been highlighted recently with the increase in the price of oil and gas as a result of yet another conflict halfway around the world, but those price increases haven't affected renewable energy. I think that this change is maybe where Canadians will start to see how, in terms of affordability and a cleaner environment, they will benefit from a proper industrial carbon pricing system.

Could you comment on renewable energy and its role?

[Tim Weis]

I've spent most of my career working on renewables, so I'd be more than happy to talk about that.

Obviously, I think what we're seeing in the last decade, which is very different from the decade prior, is that a lot of these technologies are now very cost competitive. Wind and solar are some of the lowest-cost electricity supplies, and there are things now like the advent of electric vehicles and low-temperature heat pumps. These types of technologies are not only going to be low cost; they also don't have the same price fluctuations that we see. Those are obviously some of the consumer options, but those are also industrial options that we want to be seeing to make sure that our industry is being futureproofed against some of the price volatility of fossil fuels.

[Bruce Fanjoy, Liberal, Carleton, ON]

Thank you.

Mr. Terrazzano, I've heard you mention industrial carbon pricing being “the worst of all worlds” on a number of occasions today. I wonder how you would compare the world experience of farmers in the Prairies who are dealing with drought. Lower Mainland B.C. is dealing with atmospheric rivers and, across Canada, wildfires are taking out entire towns.

[Franco Terrazzano]

Thank you so much for your question. I really appreciate it.

I mean, it's awful news. Making life more expensive in Canada with an industrial carbon tax that doesn't work doesn't help those farmers, right? When you increase costs for fertilizer plants, that drives up costs for farmers and makes food more expensive for families. Added on to that, it does nothing to reduce emissions.

[The Chair, Liberal, Shannon Miedema]

Thank you.

We will now go to Mr. Bonin for five minutes.

[Patrick Bonin, Bloc, Repentigny, QC]

Thank you, Madam Chair.

Mr. Weis—

[The Chair, Liberal, Shannon Miedema]

Excuse me, Mr. Bonin. You have the floor for two and a half minutes.

[Patrick Bonin, Bloc, Repentigny, QC]

Okay.

Mr. Weis, could you tell us about the carbon border adjustment mechanisms in effect in Europe?

Could you also tell us how it might be problematic if Canada doesn't have a carbon price and there are mechanisms like that in Europe?

[Tim Weis]

Europe is at the forefront of carbon border adjustments, and what that's going to mean is that they'll be basically applying an emissions intensity to products that they're importing.

I think we've found that the United States is not necessarily our most reliable trading partner. We want to be diversifying our markets, so we need to make sure that we're going to continue to have access to these jurisdictions. If there's a carbon border adjustment, and we're not compliant with it, ultimately there's going to be a tariff on the goods that we're trying to export to Europe. It's much better that we collect that money here and invest it in clean technology here than have it be taxed at someone else's border.

[Patrick Bonin, Bloc, Repentigny, QC]

The Environment Canada site refers to the social cost of carbon. It is higher than the current $170 or $130 per tonne.

Should we move towards pricing that represents that social cost for businesses, so that the cost isn't passed on to taxpayers? Companies should bear the cost of the pollution they produce.

[Tim Weis]

This is an excellent question, a really complex one. Obviously, climate change is a global problem, so it's important that Canada is not afraid to be a leader, not afraid to invest in clean technology and not afraid to move forward. At the same time, we need to make sure that we're not getting too far out of step with where the rest of the world is.

I think that it's a question for this committee and for the government to be able to figure out the trajectory that is appropriate to make sure that Canada is at the forefront of new technologies and keeping prices affordable but, at the same time, balancing that with where the rest of the world is going, making sure that we're part of that international conversation and making sure that the world is taking climate change seriously. It's a complex answer to a very good question.

[Patrick Bonin, Bloc, Repentigny, QC]

You agree though that, after 2030, the price should continue to rise.

Is that correct?

[Tim Weis]

It absolutely does, especially if Canada wants to meet its goals. We can't stop at the current trajectory if we want to meet our goals and invest in some of these new technologies that are going to be the future of the energy systems.

[The Chair, Liberal, Shannon Miedema]

Thank you, Mr. Weis.

Thank you, Mr. Bonin.

We will now go to Mr. Jackson for five minutes.

[Grant Jackson, Conservative, Brandon—Souris, MB]

Thank you, Chair.

Thank you to the witnesses for being here.

First of all, to the folks from the Taxpayers Federation, I've just noticed something very disturbing coming from the other side: There is some laughter happening on the other side while you're answering questions and providing testimony. As a new member of Parliament, this is the first time I've seen that. I find it incredibly disrespectful. Regardless of whether we agree or not with the testimony that Canadian citizens are providing, I don't think that's appropriate behaviour, so I apologize for that.

[The Chair, Liberal, Shannon Miedema]

Excuse me, Mr. Jackson, but we have a point of order from Mr. Fanjoy.

[Bruce Fanjoy, Liberal, Carleton, ON]

No one's been laughing. We're conducting questions and answers, so we don't require any fiction.

[Grant Jackson, Conservative, Brandon—Souris, MB]

Chair, I don't have anything further to say to that.

[The Chair, Liberal, Shannon Miedema]

Would you like to continue with your questions?

Go ahead.

[Grant Jackson, Conservative, Brandon—Souris, MB]

Thank you, Chair.

Mr. Terrazzano, is there any steel in a combine?

[Franco Terrazzano]

There's steel in a lot of stuff, yes, and it's increasing the cost of a lot of things that Canadians buy. It also has the potential to drive out a lot of production, as a trade union in Hamilton has already warned.

[Grant Jackson, Conservative, Brandon—Souris, MB]

I certainly agree with that, and I thank you for mentioning Manitoba. Too often our friendly province of Manitoba isn't mentioned in testimony from witnesses.

Fertilizer is a big source of employment in my constituency, so this is a great comparison. Koch Fertilizer resides in Brandon, and we have Deep Sky, which started in Alberta, proposing a direct air carbon capture facility in my constituency, which is technology that has not proven to create any results. It would offer about 40 potential long-term jobs versus 400 people who are and have regularly been employed for over 30 years at the Koch Fertilizer plant.

How do you expect me to go back and justify to my constituents the disparity between the numbers of jobs in my rural Manitoba community that can be created by these two different industries?

[Franco Terrazzano]

I know a lot of people right now have a ton of anxiety about losing their jobs, and the last thing they need is their own government imposing a tax and increasing a tax that encourages their manufacturing plant to leave Canada for the United States. One of the issues around the industrial carbon tax is that it doesn't work, simply because when you impose taxes on a fertilizer plant in Manitoba, for example, that doesn't cut emissions; it just pushes Canadian jobs out of Manitoba south of the border to North Dakota.

[Grant Jackson, Conservative, Brandon—Souris, MB]

Here is one last question from me, and then I'm going to cede my time to Mr. Groleau.

What are your thoughts on food prices in Canada right now? What would the impact be of an increasing industrial carbon tax on food prices?

[Franco Terrazzano]

I think it's going to make life more expensive. If you impose taxes on the fertilizer plant, that drives up costs for farmers and makes food more expensive. I know a lot of people right now are really worried about buying groceries, putting gas in their car and having enough money left over to save for a rainy day.

With these types of taxes, it's not just the industrial carbon tax. You have the hidden carbon tax through fuel regulations adding about seven cents per litre of gas, and you have the federal fuel tax, which is an extra 10 cents, and you even have tax on top of the tax.

[Grant Jackson, Conservative, Brandon—Souris, MB]

Thank you.

I cede the rest of my time to Mr. Groleau.

[Jason Groleau, Conservative, Beauce, QC]

Good morning.

Madam Chair, congratulations on your appointment to the committee.

Mr. Gagnon, the government says the carbon tax has nothing to do with inflation and the cost of living.

What is your position on the industrial carbon tax?

At the end of the day, is it because of this tax that things are costing Canadians more?

[Nicolas Gagnon, Quebec Director, Canadian Taxpayers Federation]

Thank you very much for your question.

Last week, the Government of Quebec tabled its 2025‑27 budget. The budget acknowledges that inflation in Quebec is the highest in the country. It also acknowledges that that is because the consumer carbon tax was removed as of April 1, 2025. However, we still have our own carbon pricing in Quebec, which amounts to about 9 cents or 10 cents per litre of gas.

That is recognized. The impact on people's wallets when they fill up their vehicles is recognized, as well as the impact on business productivity. The Canadian Federation of Independent Business conducted surveys recently that found that more than 80% of the federation's member companies recognize the impact on their productivity.

I rarely comment on leadership races, but we know that the Coalition Avenir Québec, or CAQ, is having a leadership race and that whoever wins will be the premier as of April 12. Both candidates have promised to reimburse Quebec farmers for the carbon tax, a tax that has cost farmers up to $550 million since 2015. So that acknowledges the impact of the carbon tax on the cost of food, a cost that is inevitably passed on to consumers and all Quebec taxpayers.

[Jason Groleau, Conservative, Beauce, QC]

What does that amount to per year for a consumer in Quebec?

[Nicolas Gagnon]

The cost varies, of course, depending on the number of vehicles the consumer owns. It also depends on the type of home heating used, whether it is gas or some other type. According to the Institut du Québec though, which published a report in November 2025, the cost is about $575 per household in Quebec. That is, of course, for a one-car household.

We also have to consider the impact of this tax on the cost of groceries. Even if you don't have a car, you do pay the cost of the carbon tax, unfortunately. So it's roughly $500 to $600 per household.

We must also remember that, according to projections from Quebec's environment department, the cost of the carbon tax is expected to double by 2030. Unfortunately, that cost will also increase for all Quebecers.

[Jason Groleau, Conservative, Beauce, QC]

Thank you very much, Mr. Gagnon.

[Nicolas Gagnon]

Thank you.

[The Chair, Liberal, Shannon Miedema]

Thank you very much, Mr. Groleau.

We are going to Mr. Grant for five minutes.

[Wade Grant, Liberal, Vancouver Quadra, BC]

Thank you, Madam Chair. I would also like to extend my congratulations on your being appointed our chair. I'm looking forward to working with you.

I'm going to share my time with my colleague, Mr. Greaves.

Before I start, I want to say that I spent a number of days with the gentleman from Brandon—Souris. He knows how much I love Manitoba. My kids' mother is from there, so I will put that on the record as well.

Mr. Weis, in your view, what role does policy certainty play in unlocking private sector investments in decarbonization? How does industrial carbon pricing contribute to that certainty?

[Tim Weis]

As I said a moment ago, when it comes to industry, we're talking about multidecade infrastructure investments in many cases. Knowing what the policy framework will be is pretty important. If a policy changes radically, it really affects those types of investments. In particular, we're thinking about things like long-term energy development, whether it's transmission infrastructure, electricity generation or carbon capture and storage.

You need to be able to make those investments while also understanding what the credits might be. If I'm generating savings or benefits from emissions reductions, how am I going to monetize those? You need to be able to take those to someone who's going to finance your project. Stability is pretty important when it comes to this policy, and I think that's where Alberta has been very successful. We've had an industrial carbon policy in place since 2007. It's made it financeable, which is why you're seeing some of these new clean technologies starting to develop in Alberta.

[Wade Grant, Liberal, Vancouver Quadra, BC]

How important is access to clean electricity in enabling industrial decarbonization, and how does that intersect with carbon pricing policy?

[Tim Weis]

Electricity is one of those sectors where we have very good technology today that can replace some of the emitting technologies. Alberta phased out its entire coal fleet within a few years, and now we're seeing a lot of renewable energy get developed.

If we can build clean electricity, we can start to build other technologies using that clean electricity. The electricity sector is able to not only benefit from reducing its emissions but also help other industries, through industrial electrification, reduce their emissions. Clean electricity and Canada's electricity system in general have a major advantage over many of our competitors around the world.

[Wade Grant, Liberal, Vancouver Quadra, BC]

I'll turn the rest of my time over to Mr. Greaves.

[Will Greaves, Liberal, Victoria, BC]

Thank you very much.

Congratulations, Madam Chair, on your election.

Thank you, colleagues, for having me today. It's a pleasure to join this committee.

Thank you to the witnesses for taking time to be with us today.

I'd like to start with Dr. Weis.

Thank you for your testimony today.

We've heard from some of the other witnesses a bit about public opinion on different aspects of policy related to climate change and the economy. I'm wondering if you're familiar with public opinion research conducted at Université de Montréal. It explored levels of public opinion in Canada at the federal riding level in terms of how many Canadians believe in the scientific basis of climate change and whether the Government of Canada should do anything about it.

Are you familiar with that polling data in general terms?

[Tim Weis]

I'm not familiar with that poll, but, in general, Canadians remain very concerned about taking action on climate change. Even as we're seeing some ebbs and flows in other parts of the world, and a race to the bottom south of the border, Canadians remain of the opinion that we need to be doing something.

[Will Greaves, Liberal, Victoria, BC]

Absolutely. The findings of Université de Montréal definitely support that. They showed that every single federal riding in Canada has a majority of adults who believe in the scientific basis of climate change.

Now, I think it's fair to note that there are differing levels of belief in climate science among different groups of Canadian voters. Certainly, partisan preference is one of the strongest indicators of belief in climate science. Given the emphasis on public opinion in today's testimony, it might not be a surprise that our colleagues opposite are emphasizing some of the doubt they'd like to cast on the Canadian commitment to address this problem. However, we can see, very robustly, how seriously Canadians take this issue across the country. We can see that it's something our colleagues in rural prairie ridings, downtown urban ridings and small coastal communities.... All of our constituents have a centre of gravity that understands that this issue is real.

Is it your view that, at the end of the day, Canadians expect their leaders to get on with the business of addressing this problem using the tools we have available?

[Tim Weis]

As an engineer and someone who's studied thermodynamics I certainly hope that's the case. I know that this problem is not going away. The science is what it is. The fundamental science hasn't changed. We are putting our planetary system at risk. We're putting our children's futures at risk if we don't do something serious about it now.

[Will Greaves, Liberal, Victoria, BC]

Thank you.

[The Chair, Liberal, Shannon Miedema]

Thank you very much, Mr. Weis, Mr. Greaves and Mr. Grant.

That concludes our first hour. Thank you very much to all the witnesses for your time and energy and for coming today. We all truly appreciate it.

We are going to suspend, so that we can switch to the witnesses for our second hour.

Thank you.

[The Chair, Liberal, Shannon Miedema]

We are going to begin our second hour of witness testimony for the industrial carbon pricing study.

I offer a very warm welcome to our witnesses.

Online, we have Charles Séguin, associate professor at Université du Québec à Montréal. Welcome, Charles.

From the Canadian Climate Institute, we have here in person Dale Beugin, the executive vice-president. Welcome.

From Clean Prosperity, we have here in person Etienne Rainville, vice-president, central Canada. Welcome back to this committee.

Each of you will have five minutes to present your opening statements, and then we will follow up with questions from the members.

We will begin online with Charles Séguin.

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

[Charles Séguin, Associate Professor, Université du Québec à Montréal, As an Individual]

Thank you, Madam Chair.

Thank you to the committee for allowing me to speak today.

As mentioned, I am a professor in the department of economics at the Université du Québec à Montréal, and my comments are based on my expertise as a researcher on carbon pricing issues. I'm also a member of the Quebec government's advisory committee on climate change, and although I don't speak here on behalf of that committee, my remarks are based in part on the work done by that committee.

The federal output-based pricing system includes the challenge of giving provinces the flexibility to come up with an approach tailored to their own situation, while requiring a minimum so that no province can shirk its obligations to reduce greenhouse gas, or GHG, emissions.

The federal government's removal of its fuel charge in April 2025, in which British Columbia followed suit, has dramatically changed carbon pricing in Canada. Quebec is now the only jurisdiction with this fuel charge for consumers and small emitters. The minimum federal standards for carbon pricing stringency will therefore have to take into account the growing divergence between Quebec's approach and that of the other provinces.

For one thing, Quebec's cap and trade system applies to more than 75% of GHG emissions, while the various output-based pricing systems elsewhere in Canada apply to between 25% and 60% of emissions, depending on the province. Moreover, the cap and trade system is partnered with the State of California, and will soon be with the State of Washington as well.

These two elements require that the federal model not apply minimum prices for systems that include transportation emissions and those with international partners, such as the one in Quebec. A lower price signal on a broader emissions basis can result in as much if not more emissions reductions. In addition, the distributional impacts of higher prices on consumers are harder to mitigate, since they do not benefit from free emissions as industrial emitters do. Third, an international partnership, especially with a larger emissions player such as California, which is the fourth-largest economy in the world, means that Canada, like Quebec, does not play a leading role in determining the market price of emissions.

Instead of focusing on price, the federal model must instead focus on covering and reducing emissions. With respect to coverage, it must be noted that the lack of a price on fuel makes it more important to include small emitters. There should be a threshold of 10,000 tonnes of CO2 equivalent per year. In terms of reductions, reductions from emissions trading between partners must be accounted for, as the Government of Quebec does in a triennial report on its exchanges with California.

With respect to compliance instruments, the science is evolving rapidly on the issue of ecosystem offsets, such as tree planting. As the advisory committee on climate change noted in its November 2025 opinion, storage in ecosystems leads to temporary carbon sequestration that should not be fungible with emissions from fossil combustion. Only those approaches that lead to permanent carbon sequestration, such as deep geological storage, seabed storage or inert solid materials should be used to offset fossil fuel emissions.

As to pricing revenues, the government must give the provinces some leeway. The proposed emissions reduction account is interesting, but it must be limited in order not to dilute the price signal. In Quebec, a similar system includes between 1% and 2% of the emissions cap. A complement to this approach could be to allocate revenues to corporate tax breaks.

Finally, with regard to the rigour of the system, the federal approach could be modelled on the European Union's automatic market stabilization system. When net demand is too low, there must be an automatic adjustment of certain elements. Moreover, the impact of the credits banked so far in the various systems could be considerably reduced if an extension of the system were announced quickly, as California has done by extending its system until 2045, and as Quebec is also expected to announce this summer.

There were a number of discussions at the beginning regarding inflation and the impact on various household budgets. It is worth noting, as reported the Quebec institute study, that the impact on food is very low. In the case of Quebec, the impact of the system is just 0.1% of expenditures, or about $15 a year. The main impacts are in the transportation and the home heating sectors, where alternatives can be offered to consumers.

Thank you for your attention. I will be pleased to answer your questions.

[The Chair, Liberal, Shannon Miedema]

Thank you very much, Mr. Séguin.

Now we turn to Mr. Beugin.

The floor is yours for five minutes.

[Dale Beugin, Executive Vice President, Canadian Climate Institute]

Thank you, Madam Chair.

Thank you, members of the panel, for the time and the opportunity to share the Climate Institute's research on industrial carbon pricing, which is also known as large emitter trading systems, in Canada. I have four main points today.

The first point is that industrial carbon pricing is Canada's most important climate and clean growth policy. When working to its full potential, it can deliver more emissions reductions by 2030 than any other policy that has been implemented. It creates market-based incentives for Canada's biggest emitters to invest in technologies and processes that reduce emissions. The revenue stream for projects it enables makes clean-growth projects, from the Dow Chemical's plant in Edmonton to the Pathways project for carbon capture and storage, investable. Our analysis a year ago found that 70 projects across the country, worth $57 billion, were tied to industrial carbon pricing systems.

The second main point is that industrial carbon pricing protects competitiveness and affordability. Industrial carbon pricing is specifically designed to protect firms' competitiveness. When it's working properly, it creates big incentives for emissions reductions but low overall costs for business. That's by design: The policy creates incentives for improving the emissions performance of Canadian industry, not incentives to shift investment production, and the emissions that come with it, to jurisdictions with weaker policy. That's because industries pay only for emissions that exceed given thresholds. For example, current costs to the oil sands from TIER, Alberta's industrial carbon pricing system, averages about nine cents per barrel of oil in the oil sands. Even if credit prices rose to $130 per tonne, as is being discussed in the memorandum of understanding, those costs would be around 50¢ per barrel. Accounting for inflation, that's around a Timbit per barrel. It's also an average: Some oil sands firms actually generate revenue under TIER.

Industrial carbon pricing also has negligible impacts on consumers. That's because, as I noted, the total costs on industry are small by design. However, industry mostly can't pass costs on to consumers because they're price-takers in global markets. Costs of food, fuel and other household goods aren't materially affected by industrial carbon pricing.

The third point is that modernizing industrial carbon pricing systems across Canada is hugely important. The markets created by industrial carbon pricing are currently not working to their full potential. In many markets, the supply of credits in the market is much greater than demand, leading to low credit prices well below the headline credit price, and to weak incentives for investment and emissions reductions. That's a function of how industrial carbon pricing policies in multiple provinces, including Alberta and B.C., have been designed.

Some of these systems aren't working well for other reasons. In Ontario, for example, firms receive all the money they pay for their emissions back if they commit to using it to reduce emissions. Those investments might have happened anyway. As a result, firms face diluted incentives to reduce emissions. There are the same issues in Alberta. Under a program called “direct investment”, again, you can generate additional credits that may or may not drive additional emissions reductions, further glutting credit markets.

All of this suggests that the federal benchmark, the minimum standard for provincial systems defined by the federal government, is extremely important, and it's not working the way it should. Environment Canada and Climate Change is consulting on this benchmark. The Climate Institute has suggested that significant changes should be imposed, requiring additional improvements to those provincial systems.

That takes me to my fourth and final point: A price floor can fix industrial carbon pricing. Policy design can address this critical problem in carbon markets by establishing a minimum effective credit price, as is proposed in the MOU. Specifically, the federal benchmark should be updated to require provinces to maintain a minimum effective price of $130 per tonne, by 2030, to be aligned with the federal-Alberta MOU. Provinces would have flexibility to deliver that outcome by using a range of choices and design options, from buying back credits to tightening performance standards. They can adjust their policies in response to that federal minimum standard.

Ensuring robust carbon markets and incentives across Canada would also be a first step toward harmonizing markets, allowing for linkage of provincial markets into a unified national market with fewer interprovincial trade barriers, more liquidity and more certainty. National approaches will soon be the price of admission for expanding Canada's trading partners, given new carbon border adjustment mechanisms being implemented in the EU and the U.K.

Thank you very much.

[The Chair, Liberal, Shannon Miedema]

Thank you, Mr. Beugin, for your great testimony.

Next up we have Mr. Rainville.

You have the floor for five minutes.

[Etienne Rainville, Vice President, Central Canada, Clean Prosperity]

Thank you, Madam Chair and members of the committee, for the invitation to appear today.

My name is Etienne Rainville. I am vice-president of central Canada for Clean Prosperity. Clean Prosperity is a non-partisan, not-for-profit, climate policy organization focused on market-driven solutions that reduce emissions and grow Canada’s low-carbon economy.

Industrial emissions account for approximately 42% of Canada’s total emissions. Industrial emissions pricing is expected to drive as much as 50% of Canada’s emissions reductions by 2030. Industrial pricing is the single most efficient tool in the tool box for reducing emissions because it achieves two seemingly contradictory things: It creates economically efficient incentives for large facilities to reduce their emissions and it keeps costs to Canadians low.

On the face of it, this seems too good to be true, so let me explain how this works, with the example of cement.

Portland cement is the basis for all modern construction. It is manufactured by heating limestone mixed with clay, shale or sand to approximately 1400°C in a large rotary kiln. This process, calcination, breaks down the limestone into lime and CO2 and releases about two-thirds of the emissions associated with cement production. Because these emissions come from a chemical reaction that is inherent to the production of Portland cement, cement is considered a hard-to-abate sector. Producing one tonne of cement generates around one tonne of CO2, potentially a little less.

A tonne of cement today costs around $100, and the industrial carbon price is set at $95. You would be forgiven for doing the napkin math and thinking that means either that a tonne of cement now costs at least $195 or that $95 in carbon costs are baked into that price of cement, but neither of these is true. This is the math that we often see in the media, but it misses three key things.

First, our industrial pricing system is not a carbon tax. I don’t say this to be a pedant, but rather because it's key to understanding how this actually works. With a carbon tax, every tonne of CO2 is taxed at the same rate, but with our industrial emissions pricing systems, the majority of emissions today are actually unpriced. Facilities only pay any kind of price on a share of their emissions, which is about 20% of their emissions.

Second, in order to avoid paying on that 20%, facilities can reduce their emissions. Facilities that reduce their emissions successfully lower their compliance costs. If they overperform their benchmark, they can generate credits and sell these to underperformers.

Lastly, when facilities do face a compliance obligation, they can often pay a significant share of that obligation with credits—credits that today trade below the headline price of $95 a tonne. For instance, in Alberta today, credits go for between $30 and $40. As of next week, they can be used to cover 90% of their compliance costs. The net result of these three factors is compliance costs for every sector that are a fraction of what many people assume.

When we ran these calculations in our 2025 report “Market Force”, we estimated the additional costs created for a number of industrial and household products in Alberta and Ontario and found that, at the consumer level, these costs are generally negligible.

Now, let's go back to that tonne of cement. We calculated that in both Alberta’s TIER system and Ontario’s EPS, a representative cement facility was likely in a credit position. That is, it could be generating as much as $10 per tonne of grey cement it produces.

If the costs are so low, how does industrial pricing incentivize emissions reductions? As I said earlier, facilities only face compliance costs on a fraction of their emissions. The system is designed to create a carbon cost on a small share of the total emissions, so facilities face a strong incentive to reduce tonnes at the margin. While less intuitive, this design helps to maximize emissions reductions while limiting the costs to industry.

Canada is far from unique in its approach to industrial emissions. Internationally, similar systems are the preferred tool for reducing emissions. They are operating in more than 38 jurisdictions globally, covering 23% of global emissions and, most importantly perhaps, 58% of global GDP.

None of this is to say that our systems are perfect. There remains significant work to be done to harmonize systems across Canada, remove the interprovincial trade barriers associated with them, make them more responsive to economic shocks and ensure that the incentives are working as intended. That’s important, because if we don't get this right we can't drive investment across Canada in low-carbon technology like carbon capture, blue hydrogen, electric arc furnaces and clean electricity.

Thank you. I look forward to your questions.

[The Chair, Liberal, Shannon Miedema]

Thank you very much, Mr. Rainville.

Thank you to the witnesses. We'll now move on to questions.

Mr. Bexte, the floor is yours for six minutes.

[David Bexte, Conservative, Bow River, AB]

Thank you, witnesses, for attending today. I really appreciate your presence and I hope we can glean something from your wisdom.

Professor Séguin, how do Canada's industrial carbon pricing policies compare to other G7 or OECD countries, in terms of both emissions outcome and economic impact, generally or specifically?

[Charles Séguin]

Most of the G7 countries have some form of carbon pricing. This is the case in all of Europe, in Japan and even in countries like China. The main outlier is the United States. Of course, that creates a particular situation for Canada, because the U.S. is our main trading partner.

In terms of economic impact, I'm not sure I can speak to that. I know that Europeans have been much better at reducing their emissions than Canada has, but of course the situation in terms of the importance of the oil and gas sector, for example, is very different. These things are hard to compare. Among G7 countries, we are in a situation where having some form of carbon pricing makes us like most other G7 countries.

[David Bexte, Conservative, Bow River, AB]

Does it make us like most other G7 countries in terms of emissions performance or emissions outcome?

[Charles Séguin]

It's not necessarily emissions performance; it's emissions pricing. With regard to emissions performance, we do relatively badly in terms of per capita emissions. We have very high per capita emissions. This is partly due to the structure of the economy and also the structure of Canada. We are a northern country that is sparsely populated, so we need to use more energy than some of these other countries, but we tend to do a little bit worse in terms of emissions per capita or dollar of GDP.

[David Bexte, Conservative, Bow River, AB]

I appreciate that distinction, Professor, that Canada is somewhat unique.

This leads me to a question for you, Mr. Rainville. You spoke to emissions thresholds and to some disparity there. We've heard about other places and what the emissions thresholds are in different industries. There are differences. I'd like you to comment on the equity from industry to industry on that, and on what is fair. Then, maybe more importantly, how do these thresholds move? Will they change over time?

[Etienne Rainville]

The short answer, of course, is that, as with any of these, it's complicated. Effectively, the way it works is that ECCC and the respective provinces make decisions on the emissions intensity and the trade exposure of given sectors. There are sectors that are seen as higher risk, so they receive a lower stringency rate than other sectors.

[David Bexte, Conservative, Bow River, AB]

Is it arbitrary by ECCC?

[Etienne Rainville]

No. They do economic analyses of the sector.

[David Bexte, Conservative, Bow River, AB]

But it's wholly decided within ECCC.

[Etienne Rainville]

Yes, for the federal benchmark it would be.

[David Bexte, Conservative, Bow River, AB]

Is it transparent, in your estimation?

[Etienne Rainville]

Reasonably so, I would say; there's always room for improvement.

[David Bexte, Conservative, Bow River, AB]

Okay. Thank you.

Could you comment on the equity across different industries?

[Etienne Rainville]

Broadly speaking, the intention is to develop a formula that allows every industry to pay its fair share relative to the burden it's able to take on without being adversely economically impacted. For instance, steel is one of the sectors with the lowest stringency thresholds at 1% federally, because the federal government recognizes that steel is so trade exposed.

[David Bexte, Conservative, Bow River, AB]

Oil is more trade exposed too.

[Etienne Rainville]

The difference with oil, generally speaking, is that there's more profit baked into the sale of a barrel of oil than there is in the sale of steel.

[David Bexte, Conservative, Bow River, AB]

Okay. Thank you very much.

I'll go back to you, Professor. You made a comment about accepting transportation emissions and that the transportation component should maybe be exempted. Why is that?

[Charles Séguin]

I didn't make the comment that it should be exempted. It was that there was a big difference, because these emissions are not covered in the industrial carbon pricing of the federal government or most of the provinces. They are covered in Quebec. In terms of the federal government establishing whether Quebec meets the criteria of the federal benchmark, they should take into account the fact that the system goes beyond industrial emissions and into transport emissions.

[David Bexte, Conservative, Bow River, AB]

I would argue that transportation-related cost increases more directly affect the taxpayer, or rather the consumer, because of the nature of the country.

[Charles Séguin]

Indeed.

[David Bexte, Conservative, Bow River, AB]

All right. Thank you.

Mr. Beugin, could you please comment on the funding sources for your organization?

[Dale Beugin]

We're funded by a range of sources. Some of our money comes from a contribution agreement with Environment and Climate Change Canada. Some comes from private philanthropy as well as some corporations.

[David Bexte, Conservative, Bow River, AB]

Could you provide the committee with the details?

[Dale Beugin]

Yes. It's all transparent on our website. I'm happy to—

[David Bexte, Conservative, Bow River, AB]

What proportion is funded by the Government of Canada?

[Dale Beugin]

It's about two-thirds of our overall budget.

[David Bexte, Conservative, Bow River, AB]

Okay. Is your reporting peer-reviewed?

[Dale Beugin]

It is.

[David Bexte, Conservative, Bow River, AB]

By whom, typically?

[Dale Beugin]

We try to identify top experts in the field. They're usually academics. We also run all of our research through expert panels that are made up of experts from across the country. Again, largely, they are academics. That is our way of ensuring we are providing the best available evidence and research, always grounded in facts and evidence.

[David Bexte, Conservative, Bow River, AB]

I appreciate your view on that.

That's it. I cede the balance of my time.

Thank you.

[The Chair, Liberal, Shannon Miedema]

Thank you, Mr. Bexte. You had only a few seconds.

Mr. St‑Pierre, you have the floor for six minutes.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thank you.

I'd like to thank my colleague from Bow River for his professional questions. I'd also like to echo his earlier thanks to the witnesses for spending the time with us and, for some of you, for travelling here today.

Mr. Beugin, you're a very well-known expert on carbon pricing, dating back to the Ecofiscal Commission. I have a lot of respect for the work you've done in the past and also for the work you're doing currently with the Canadian Climate Institute.

Recently, there was an analysis by the Canadian Climate Institute showing that the industrial carbon price on a barrel of oil was about the equivalent of a Timbit. I'm curious to know if you can provide to this committee a copy of that analysis or any related report.

[Dale Beugin]

Yes. We're happy to provide that report. It is drawn from a calculator estimating compliance costs for oil sands firms in particular and shows a range of compliance costs per barrel across those oil sands sectors. Some are generating revenue around $2 per barrel while others are facing costs averaging around nine cents per barrel.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

That's great. The Canadian Climate Institute does some excellent research, and it's peer-reviewed research. It's some of the best in the country.

I'm wondering if you could quickly comment on whether there are other reports from the Canadian Climate Institute on the topic of the industrial carbon price. If you can quickly comment on whether there are reports and, if so, you can kindly provide them to this committee, that would be greatly appreciated.

[Dale Beugin]

There's a range of research we've produced on our website, all publicly available. I'm happy to forward it to the committee for its records.

Maybe I'll also highlight the independent review of industrial carbon-pricing systems that we undertook. We engaged with provinces across the country to assess individual provincial systems, as well as the federal system. We took a look at how they were working and at how they can be improved over time as well. That's also an important publication. I'll add it to our list.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

That's great. I love the analogy with Timbits. I'm a big fan of double doubles. I'm curious. What is the cost of a Timbit? What is the cost of the industrial carbon price on a barrel of oil?

[Dale Beugin]

I think Timbits go for something like 30¢ to 50¢ right now.

To be more precise, our estimate is that current costs in Alberta from the industrial carbon price for the oil sands sector on average are around nine cents per barrel. If the credit price were to increase to $130 per tonne, as is being discussed, then we're talking about a cost per barrel of around 50¢ per barrel, on average.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Can you comment on that? Does that 50¢ a barrel apply to consumers or does that apply to producers?

[Dale Beugin]

That's going to apply to producers. Producers mostly are not able to pass on their costs to consumers through their supply chains because they are competing in international markets. They're price-takers, not price setters. That cost is nevertheless low for their bottom line—again, by design.

These systems are designed to protect profits and protect the profitability of producers so that they will maintain production but reduce emissions.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Does that cost of a Timbit per barrel seem significant to you? Is that more marginal?

[Dale Beugin]

I'm just here to put the numbers out there. We have tried to compare it to make it concrete, and whether it's big or small, I'll leave to you.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Okay.

Can you share why you think Conservatives should get really excited about industrial carbon price? I'm not necessarily hearing that excitement when I'm in the House of Commons.

[Dale Beugin]

Well, I'm not sure I can speak to Conservatives specifically, but in terms of the advantages of industrial carbon pricing in general, I think the case is fairly clear: strong incentives for emissions reductions when it's working; strong protection for competitiveness to make sure we're not offshoring production and driving investment away; and protection for consumers and market forces to minimize the cost of reducing emissions overall. All of that is a pretty strong value proposition for industrial carbon pricing.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

We're often hearing from industry that they want certainty. They want certainty so they're able to move on and they're able to predict what's going to be happening in the future.

Can you speak about industrial carbon pricing, why this is good policy and why this leads to certainty for industry?

[Dale Beugin]

It's not just the price of carbon today that is driving investment, but the expected price of carbon and the value of credits into the future. These are long-lived projects, and as a result, their costs or their revenues are going to extend across the life of the project, pending the existence of carbon pricing, pending the reliability and robustness of these credit markets that it creates. The uncertainty is hugely important for driving that investment and making those projects bankable. It depends on the existence of the policy, as well as the robustness of those credit markets.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thanks.

I think I have a minute left, so I'll go to Mr. Rainville.

Clean Prosperity mentioned that in budget 2025 it's right to focus on industrial carbon pricing for low-carbon growth. Clean Prosperity also said that industrial carbon pricing can drive tens of billions of dollars' worth of new investments, creating clean growth and jobs that Canada urgently needs.

Can you explain to us in the next few seconds how billions of dollars' worth of new investments could be created through industrial carbon pricing, and can you give us a couple of specific examples?

[Etienne Rainville]

Yes. The most obvious example that's top of mind is the Pathways project, which I believe has been mentioned a number of times today. That is a project that's made economical in large part because of carbon pricing. It's a project valued in the range of $16 billion to $20-odd billion. There's a number of other projects like that across Canada, and across Alberta in particular, in carbon capture and storage as just a single area where new investment can be driven by industrial carbon pricing.

[The Chair, Liberal, Shannon Miedema]

Thank you very much, Mr. St-Pierre.

Mr. Bonin, you have the floor for six minutes.

[Patrick Bonin, Bloc, Repentigny, QC]

Mr. Séguin, I'd like to hear your thoughts on that.

In your opinion, is it fair to Quebec if Canada enters into an agreement with Alberta to reduce carbon pricing to $130 a tonne?

[Charles Séguin]

It's pretty hard to compare prices across different jurisdictions. In my opinion, that puts Quebec at a disadvantage compared to the other provinces. The greatest inequality for Quebec is that consumer pricing no longer exists in Canada except in Quebec.

[Patrick Bonin, Bloc, Repentigny, QC]

So you're proposing that Canada go back to the former system, which was a form of carbon pricing for transportation and consumers, among other things.

Is that correct?

[Charles Séguin]

Obviously, that would no doubt help Canada meet its greenhouse gas emissions reduction targets and its commitments under the Paris Accord. It looks like it's going to be very difficult for Canada to meet its commitments. Having more instruments and covering a larger portion of emissions in the country would certainly make it easier to achieve those objectives.

If we don't do that, not having a price on large emitters would make it harder for us to meet those targets.

[Patrick Bonin, Bloc, Repentigny, QC]

In your opinion, should oil sands companies make clear commitments to allocate substantial funding to the famous Pathways project for carbon sequestration and capture, and should companies be made to pay rather than use taxpayers' money?

[Charles Séguin]

That's sort of the point of carbon pricing. The idea is to give companies incentives so they allocate resources to the development of new technologies. In any case, they are in the best position to do that.

It's often difficult for governments to pick winners and losers, to know which technologies to support and which not to support. So let's take advantage of the industry's expertise, give it the incentives in the form of credits it could generate in the system, and let it invest its own funds.

[Patrick Bonin, Bloc, Repentigny, QC]

Do you think the transparency of the current carbon pricing system should be improved?

[Charles Séguin]

Transparency could indeed be improved. There are a lot of challenges relating to the confidentiality of certain data concerning the various credits given by certain issuers.

I do understand though that it's a question of competitiveness. There are nonetheless ways to share this data confidentially so that independent researchers can look at the effectiveness of the system, for example through Statistics Canada and a pan-Canadian network of data research centres.

In my opinion, we could have higher accountability requirements for companies, which could provide that confidential data to the research community.

[Patrick Bonin, Bloc, Repentigny, QC]

Can you tell us about the effect of credits in the bank and tell us how positive or negative that can be, depending on the system in place?

[Charles Séguin]

When the system goes through periods of low rigour where companies can accumulate a lot of credits, those credits may be of questionable quality—for example, if they come from the tree-planting sector. That creates downward pressure on credit prices in the future.

There are ways to reduce the impact of this credit bank, and that is already being considered right now. However, I encourage the government to move forward on this issue. The idea is to implement a somewhat dynamic system that changes the performance points set in each industry or reduces the number of credits distributed in the system dynamically based on supply and demand in order to maintain a price.

There is another solution, which would be simpler, or at least could be complementary. It would be to clearly announce that the system will be extended beyond 2030. Extending the system encourages businesses to keep part of their credit bank for subsequent years. That way, the current bank of accumulated credits would not flood the market in 2030, since it would be gradually distributed over a longer time frame—for example, through 2045. The annual impact of the credit bank would therefore be much lower.

[Patrick Bonin, Bloc, Repentigny, QC]

Do you recommend that taxpayer money not be used to fund new oil or gas pipelines or to fund expansions of existing oil and gas pipelines?

[Charles Séguin]

Government money should be used where there are market failures. In the pipeline construction sector, what market failures are we trying to correct? It's not clear. If the market wants to finance pipelines, there's a regulatory process. We understand that the government is trying to streamline it.

Should money be invested, as has been done in the past, when companies are signalling that it's not a good investment? It's hard for the government to find reasons to justify such an investment from the standpoint of all taxpayers.

[Patrick Bonin, Bloc, Repentigny, QC]

Do you think a carbon border tax, like the one imposed in Europe, could be a good complement to the industrial carbon pricing?

[Charles Séguin]

That could be a good complement. It might create some problems in terms of fairness among the provinces. Indeed, it would have to be decided which price, among the various prices set in the provinces, would be used to measure the contribution paid for products entering Canada.

Careful thought should be given to this, however, because the six sectors where this has been implemented in the European Union are mainly sectors where the European Union is an importer, whereas in a number of these sectors, including the aluminum sector, Canada is an exporter. So things should be done a little differently from what is being done in the European Union.

[The Chair, Liberal, Shannon Miedema]

Thank you, Mr. Bonin.

I'm expecting the bells to ring any minute for our vote. I'd like to ask the members if we have unanimous consent to continue until 5:30 and then adjourn the meeting at 5:30 to go to the vote. Does it seem like a good idea? No. You do not want to.

Would you like to move adjournment?

[David Bexte, Conservative, Bow River, AB]

I move that we adjourn.

(Motion negatived)

[David Bexte, Conservative, Bow River, AB]

On a point of clarification, what is the procedure when the bells ring?

[The Clerk]

Would you like me to speak to that?

[The Chair, Liberal, Shannon Miedema]

Yes, please.

[The Clerk]

Pursuant to Standing Order 115, when bells ring to alert members that there's an upcoming vote in the chamber, the committee is required to suspend the meeting, unless there is unanimous consent to continue to sit.

However, historically, if members do not give their unanimous consent to continue to sit, a member will often propose adjournment of the committee if members do not intend to come back to the meeting.

In this case, the vote will conclude long after the scheduled hour of adjournment for this meeting.

Does that answer your question, sir?

[David Bexte, Conservative, Bow River, AB]

Yes, I appreciate that.

[The Clerk]

Thank you.

[The Chair, Liberal, Shannon Miedema]

Mr. Grant.

[Wade Grant, Liberal, Vancouver Quadra, BC]

For clarification, will we have services at the time we come back?

[The Clerk]

Ordinarily, services are available for two full hours of proceedings. That excludes suspension time and also includes a 15-minute grace period.

The committee was suspended for approximately 10 minutes, plus 15 minutes. The committee could proceed until approximately 5:25 p.m. without requesting additional services.

[Bruce Fanjoy, Liberal, Carleton, ON]

That buys us five minutes.

[The Clerk]

Well, it's 25 extra minutes, so that would take the committee to—I beg your pardon—5:55.

[Bruce Fanjoy, Liberal, Carleton, ON]

We won't be back.

If I may, I think we should be considerate of our witnesses' time as well.

[The Chair, Liberal, Shannon Miedema]

Mr. Bonin, you have the floor.

[Patrick Bonin, Bloc, Repentigny, QC]

As I understand it, when the bells ring, unanimous consent of the committee is required to continue the meeting, which doesn't seem to be the case. We should stick to the Standing Orders. I move to adjourn.

[The Chair, Liberal, Shannon Miedema]

Now that we've had clarification and our confusion is resolved, do I have unanimous consent to adjourn now, it being 5:22 and the bells are ringing?

[Some hon. members]

Agreed.

[The Chair, Liberal, Shannon Miedema]

Thank you. We are adjourned.