Evidence of meeting #34 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
Ellis Ross Conservative Skeena—Bulkley Valley, BC
We've heard reports of child labour in Africa, for instance. We've heard about the Uyghurs' treatment in China. This is relevant because the EV mandate has the Liberal government bringing in 49,000 electric vehicles from a country that's reported to have human rights issues. If we're going to have this thoughtful discussion on consequences and trade-offs, I think it has to include everything, including the supply chain.
Would you agree with that comment?
Professor, University of Calgary, As an Individual
I would say so, in part. For me, it depends on—forgive me for being a bit academic—the reference group you care about. If it's Canada, we would exclude other countries. If not, then yes, we'd include other human rights issues.
Liberal
The Chair Liberal Shannon Miedema
Thank you very much, Mr. Ross.
For the last set of questions, we'll go to Mr. Grant for five minutes.
Liberal
Wade Grant Liberal Vancouver Quadra, BC
Thank you to the witnesses.
I'll start with you, Dr. Winter.
I want to talk about this context: The EU's carbon border adjustment mechanism is now fully entering its definitive phase, where Canadian exporters in sectors like steel and aluminum face potential border carbon charges.
Is there a credible argument that having a robust, well-enforced OBPS actually protects those industries from double exposure, and is a strong domestic carbon price an asset rather than a liability in that trading environment?
Professor, University of Calgary, As an Individual
I'm not sure about double exposure.
I will comment that the border adjustment accounts for emissions pricing in other countries. Canadian firms would just pay the difference between the headline rate in Canada and the EU's headline carbon price. The OBPS provides what I'll call protection.
Alternatively, in a counterfactual world where Canada does not have industrial emissions pricing, Canadian firms would face the full brunt of the EU CBAM, and the revenues would also go to the EU rather than be used within Canada.
Liberal
Wade Grant Liberal Vancouver Quadra, BC
Thank you.
Mr. Auer, as I understand it, cement is a hard-to-abate sector. The chemistry of making the cement itself accounts for the majority of emissions, meaning efficiency improvements and fuel switching can only take you so far. There, CCUS is ultimately a valuable tool.
In that context, how essential is a stable, long-term carbon price trajectory paired with the existence of investment tax credits?
President and Chief Executive Officer, Cement Association of Canada
Thank you for the question.
Carbon capture and storage is the technology of last resort in some ways. There are companies—including the Canadian company Heidelberg and its facility in Edmonton—that are actively exploring full-scale carbon capture, so the technology is a real conversation in Canada. There are also active capture systems in cement facilities in other jurisdictions around the world.
The business case for carbon pricing is the farthest away, among any of the solutions in our sector, I would say. An ecosystem of pricing, credits and other forms of financing support such as contracts for difference are absolutely essential for getting those technologies off the ground.
Liberal
Wade Grant Liberal Vancouver Quadra, BC
To follow up, would uncertainty regarding carbon pricing—if industrial carbon pricing were not on the table—be a major barrier to the achievement of a net-zero cement sector?
President and Chief Executive Officer, Cement Association of Canada
From where we sit today, yes, it would be. The uncertainty we have experienced in the past number of years has already stalled projects.
Liberal
Wade Grant Liberal Vancouver Quadra, BC
I'll go back to you, Dr. Winter.
The Canadian Climate Institute found that approximately $4.3 billion in annual clean energy investment is linked directly to the existence of industrial carbon pricing systems.
Does your own research support the view that pricing certainty is what enables companies to make the business case for large clean-energy technology capital expenditures?
Professor, University of Calgary, As an Individual
I would say that this has two components.
One is pricing certainty so they have the time path of expected policy and expected revenue from, say, selling credits. The other part of this, which is also important, is price level, in that the incentive provided by $95 a tonne is very different from the incentive provided by a price of five dollars a tonne.
Liberal
Wade Grant Liberal Vancouver Quadra, BC
Conversely, what does the economic literature suggest happens to that investment if the price signal becomes uncertain or is removed?
Professor, University of Calgary, As an Individual
If the price signal is uncertain or removed, there is limited or no investment in low-carbon technologies or emissions reduction technologies, or investments at existing firms, because the impetus and the requirement have been eliminated.
Liberal
Wade Grant Liberal Vancouver Quadra, BC
Quickly, what sectors of the Canadian economy stand to benefit the most from a strong, stable industrial carbon price over the next decade?
Professor, University of Calgary, As an Individual
I would say any sector that is low-emission or a technology that relies on the existence of pricing for its revenue stream, such as carbon capture and storage or direct air capture.
Liberal
The Chair Liberal Shannon Miedema
Thank you.
I would like to thank all of the witnesses for taking the time to be with us today.
Our next meeting is scheduled for Thursday at 11, when we're going to do our final two hours of this study.
I wish a very happy Earth Day to all those who celebrate.
The meeting is adjourned.