Environment Committee on April 21st, 2026

[Thomas Green]

Right now, the federal government isn't taking action when the provinces eliminate or weaken their systems. For example, Saskatchewan decided to stop industrial carbon pricing, and Alberta froze it at $95 a tonne. Then it made changes so that the credits would be so inflated that the price collapsed.

The federal government isn't doing enough, and it's not good for competitiveness and it's not good for investment. There's also a question of the fairness and effectiveness of the output-based pricing system.

[Patrick Bonin, Bloc, Repentigny, QC]

So there is a risk that, if there is no carbon price in other provinces, or even if it is lower, a province like Quebec will be at a disadvantage.

Is that correct?

[Thomas Green]

I wouldn't say it's at a disadvantage. In fact, we're currently seeing, in the context of the ongoing crisis in the Persian Gulf, that decarbonization helps companies in the long term. That's because it leads to less carbon waste and less energy waste. Through electrification and related measures, polluting technologies are being replaced with cleaner, more efficient ones. As a result, this is economically advantageous.

[Patrick Bonin, Bloc, Repentigny, QC]

You're also saying that there should be no offsets, or there should be very few.

Can you tell us more about that?

[Thomas Green]

We're afraid that these offset credits don't really represent reductions in emissions and are instead credits created on paper. They're not valid, and they're going to lower the price of carbon. It undermines decarbonization. So we are afraid that these offsets will weaken the system.

[Patrick Bonin, Bloc, Repentigny, QC]

The regulations—

[The Chair, Liberal, Shannon Miedema]

Thank you, Mr. Bonin.

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

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Thank you, Madam Chair.

I'll start with Mr. Auer.

A couple of times, you used the phrase “thoughtfully designed” when trying to describe what would be an effective industrial carbon tax. Is this one thoughtfully or well designed?

[Adam Auer]

We believe that the original design of the federal backstop and the output pricing system was well calibrated to address carbon leakage and competitiveness concerns.

Now we exist in a world where there are significant differences in the equivalency of systems that the provinces have adopted, which is creating some lack of fairness across the different systems and a lack of flexibility, with lost opportunities for the kind of integration that would provide the predictability and stability that is core to the function of these markets in the long term.

When the backstop was initially implemented, I think there was a sense of confidence and visibility in terms of where it was going in the longer term, and I can't say that's currently the case.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

You wrote a letter alongside a number of fuel associations, gas associations, propane associations, steel producers and the chemistry, fertilizer, forestry and mining industries—a pretty big range of associations. It was a gently worded letter, but combined with what you just described, is it fair to assume that as a sector, or multiple sectors, you don't feel like the necessary consultations are happening right now to make the adjustments that will be adequate to protect that competitiveness and prevent that carbon leakage?

[Adam Auer]

The main point of that letter was to respond to a consultation on benchmarks and stringency going forward. It was the collective consensus of the industries involved in that letter that it was not the right place to start a conversation about the evolution of the system and that there were more fundamental issues with the system that should be addressed first. It's not that the system itself was opposed by the sector, but the starting point for our conversation on where the system was going.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

In that letter, you talked about how the world has changed and investment decisions are changing with it.

What is it that the Liberals are not understanding and that should be addressed, as you just outlined, before any changes are made to enhance and strengthen the system, or make it more expensive?

[Adam Auer]

When the initial output-based pricing system was crafted, there was a fairly significant competitiveness risk analysis process that every sector underwent. Sectors were ranked by their level of exposure and then, as was mentioned in other remarks, the percentage of emissions that were subject to the carbon price were then calibrated based on the level of risk.

We believe that before we get into a conversation about changing benchmarks and other stringency measures, another competitiveness review should be completed.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

The idea being floated here is that those companies that are under 25,000 tonnes are not currently impacted, but they're over 10,000 so they may soon be impacted. They're dealing with high prices for everything, just like every other Canadian—higher payrolls, higher costs for equipment and compliance.

What happens when that threshold gets lowered and a whole bunch of them get grouped into this? What is that going to do for those specific smaller companies? What impact is that going to have on the price of all the products that, ultimately, we use in our municipal infrastructure, housing and everything else?

[Adam Auer]

I can only speak for the cement sector. I can't really speak for other sectors on what the impacts might be for those industries.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

You're a smaller cement producer. You're not subject to it because the threshold is above what your emissions are. If they lower that stringency, you're going to enter that space. It's going to have an impact on—

[Adam Auer]

You're talking about the benchmark, not the threshold for being captured by the system. Is that correct?

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Yes.

[Adam Auer]

That's what the competitiveness analysis is meant to determine: What is the appropriate benchmark for each sector covered under the system to ensure that those price impacts are not acute?

[Branden Leslie, Conservative, Portage—Lisgar, MB]

You also mentioned the flexibility to be maintained for provinces. It seems as though that is being further restricted. What flexibility is still left to be maintained, in your view?

[Adam Auer]

That is to be determined, I think. At the moment, the provinces have all developed their own systems calibrated to the particular sectors they find in their jurisdictions.

The evolution of the next system will determine how much of that flexibility will be preserved. We believe there should be some flexibility preserved.

[The Chair, Liberal, Shannon Miedema]

Thank you very much, Mr. Leslie.

We'll now turn to Mr. Fanjoy for five minutes.

[Bruce Fanjoy, Liberal, Carleton, ON]

Thank you.

I'd like to note, as this is the environment and sustainable development committee, that tomorrow is Earth Day, and Canadians are counting on us to do good work here.

I'd also like to point out that all across the country, nature is applying its own carbon price right now. There is sandbagging happening in my riding. As I look around at my colleagues here, I can think of incidents in most, if not all, of our ridings, where we have seen nature's carbon price wreak havoc on our communities.

What we're talking about with an industrial carbon price is a thoughtful approach to address the problem of rising emissions that are wreaking havoc on our climate. I appreciate every member here who doesn't take that responsibility lightly.

My colleague Mr. Bexte spoke about regular repeating patterns of geopolitical upheavals, and he's quite right that these happen with great regularity.

My question is for you, Dr. Winter.

Do these geopolitical upheavals impact clean and renewable energy?

[Jennifer Winter]

Absolutely. I think any global disturbance will impact renewables, say, through supply chains and the demand for these renewables, and it will also affect your more traditional energy sectors, like oil and gas and nuclear.

It's beyond my expertise to quantify that for you, but the extent to which these upheavals affect these sectors will really depend on how tied they are into the global economy.

[Bruce Fanjoy, Liberal, Carleton, ON]

I know that electricity, particularly from solar, wind and hydro, is not being held up in the Strait of Hormuz.

Perhaps I'll address this question to Mr. Green. What is it going to take for more Canadians to take advantage of the solutions available to help them deal with the affordability crisis that geopolitical upheavals cause?

Thank you.