Evidence of meeting #30 for Environment and Sustainable Development in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was price.
A recording is available from Parliament.
Conservative
David Bexte Conservative Bow River, AB
The credit side.... No, I mean the upstream operations. Sorry, I'm not clear about this.
Senior Director, Industrial Decarbonization, Pembina Institute
The system is equal for everybody, so if you're storing 10% of your emissions, then you would get relief for 10% of—
Conservative
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.
Senior Director, Industrial Decarbonization, Pembina Institute
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.
Conservative
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.
Managing Director, Resource Works Society
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.
Conservative
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.
Managing Director, Resource Works Society
I honestly can't speak to that.
Managing Director, Resource Works Society
I can look it into and send you some details.
Conservative
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?
Federal Director, Canadian Taxpayers Federation
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.
Conservative
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?
Federal Director, Canadian Taxpayers Federation
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.
Conservative
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?
Federal Director, Canadian Taxpayers Federation
That's something that we've been asking the government to provide.
Liberal
The Chair Liberal Shannon Miedema
Thank you.
We will now move to Mr. Fanjoy.
The floor is yours for five minutes.
Liberal
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?
Senior Director, Industrial Decarbonization, Pembina Institute
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.
Liberal
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?
Senior Director, Industrial Decarbonization, Pembina Institute
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.
Liberal
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.
Federal Director, Canadian Taxpayers Federation
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.
Liberal