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
David Bexte Conservative Bow River, AB
Thank you very much, Chair. I appreciate it.
What percentage of Canada's production, like the plant and infrastructure for a cement manufacturer, is at risk of obsolescence? How close is it to the end of its normal economic life?
President and Chief Executive Officer, Cement Association of Canada
I would not say that there are any plants that are in imminent danger of closure at this moment, but as I mentioned in my remarks, we are undergoing a global reconciliation. Essentially, the world has an oversupply of cement. Because decarbonization investments are productivity improvements, you'll see some plants that are able to produce more cement more efficiently. That is going to increase pressure.
Conservative
David Bexte Conservative Bow River, AB
I remember a couple of shocks, where a great deal of production from Russia and China, as the current crisis abates, will flood the markets. I see that as being a major risk of upheaval for the Canadian cement manufacturing industry. The carbon pricing is just going to make that worse.
I appreciate your comments. Thank you.
My time is up.
Liberal
The Chair Liberal Shannon Miedema
Next up, we have Mr. St-Pierre.
You have the floor for six minutes, not five.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
Thank you for giving me six minutes.
Mr. Green, thank you for speaking in French. I'm going to ask you a question in French, if I may.
Why is carbon pricing for large emitters considered a pillar of effective climate policy in Canada?
Why would it be seen as one of the most important climate policies?
Senior Manager, Climate Solutions, David Suzuki Foundation
Thank you for the question.
When it comes to the industrial carbon pricing system, first, it's important to understand that the industrial sector in Canada is significant. It is therefore responsible for a large proportion of emissions. The industrial carbon pricing system is a very effective tool because of how it’s designed. It's not just a price on emissions. Pricing doesn't apply to all emissions; it depends. It's performance-based pricing.
Some companies that have emissions below a certain threshold will even be able to make money by selling their credits to other, more polluting companies in the same industry.
The design is very well done to maintain industrial competition and avoid costs for consumers.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
Does the industrial carbon price target certain sectors that produce more emissions than others in the Canadian economy?
Senior Manager, Climate Solutions, David Suzuki Foundation
It depends on the systems in place in the various provinces, for example. In a sector like cement, which we were discussing earlier, a large portion of emissions isn't subject to pricing, so it depends. It varies by sector. In the oil and gas sector, it's very important to ensure that there's proper pricing, because it accounts for 30% of national emissions. In addition, it's a sector that hasn't made any progress at all so far.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
That's perfect. Thank you.
Dr. Winter, I might move on to you. I noticed your Clean50 award in your background. I'm also a Clean50 award recipient, so I want to do a secret handshake there. I'm also getting texts from my colleague Corey Hogan from Calgary Confederation, who is saying hello, but I digress.
Over the last few years, you've written many reports on industrial carbon pricing and its impact on the economy. There are two in particular. In 2021, I think, you wrote one called “Carbon Pricing Costs for Households and the Progressivity of Revenue Recycling Options in Canada”. In 2024, you wrote another report called “Does Emissions Pricing Hurt Affordability? Quantifying the Effects on Canadian Households”.
Can you provide copies of those two reports to the ENVI committee and any other reports that you might find pertinent? Can you very quickly summarize those findings in less than a minute?
Professor, University of Calgary, As an Individual
Yes, absolutely. The basic premise of the federal fuel charge, which was the carbon tax on households and small businesses, was to charge for emissions and then use the revenue through lump sum transfers in the tax system to reduce the overall effect. That substantially minimized the cost on households.
For many households, the revenue they received was greater than their expected carbon tax burden. That, combined with the OBPS, which, as I mentioned, also dampens the effects on households and businesses, means that the overall effect on prices, from food to other consumer goods, was less than 1%.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
That's great. Thank you.
Mr. Auer, would you say that the Cement Association of Canada fully supports the industrial carbon price?
President and Chief Executive Officer, Cement Association of Canada
With, I would say, a well-designed and well-calibrated carbon price...yes.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
Can you unpack why your association and many of your members support a well-designed industrial carbon pricing system?
President and Chief Executive Officer, Cement Association of Canada
The main driver is that we are a large emitter of emissions globally. That means there is some pressure on the sector, both from governments and from investors, to find solutions to that footprint. Obviously, we're an essential material, particularly in the conversation in Canada right now about building out big infrastructure, so we have a role to play in making sure that infrastructure is not only well built, durable and resilient to the climate, but also low-carbon.
I think the broader context is really about this global reconciliation piece that the modernization of our industry is effectively decarbonization. It's improving efficiency, improving competitiveness and investing in technologies that are overall good for the business but where the market signal is just not there yet.
It's these government interventions, like carbon pricing, that are making the difference in terms of decisions on where our capital is flowing for modernization. We see carbon pricing as one of the tools. There are other elements around that tool—revenue recycling, investment tax credits—that we can talk about, if you like, but it's one of the tools that ensures Canada remains a destination for that modernization capital.
Liberal
The Chair Liberal Shannon Miedema
Thank you very much, Mr. St-Pierre.
Mr. Bonin, you have the floor for six minutes.
Bloc
Patrick Bonin Bloc Repentigny, QC
Thank you, Madam Chair.
Thank you to the witnesses.
Mr. Green, do you have any other examples of countries that produce oil and gas and that have implemented an industrial carbon pricing system that could be described as ambitious and functional?
Senior Manager, Climate Solutions, David Suzuki Foundation
I think the best way to answer that question is to refer you to the World Bank's study on carbon pricing systems around the world. I would be very happy to provide a summary of the relevant information on that topic.
I'm very pleased to hear the representative of the cement industry acknowledge that carbon pricing can help decarbonize the industry. It's unfortunate that we don't see the same attitude in the oil and gas sector, which is now making excessive profits and continues to resist a tool that would help with decarbonization.
Bloc
Patrick Bonin Bloc Repentigny, QC
Mr. Auer, what does your association think about the carbon border adjustment, a mechanism that was proposed in the government's election platform?
Are you in favour of this kind of initiative, like the one Europe has put in place?
President and Chief Executive Officer, Cement Association of Canada
I apologize for not being able to answer completely in French.
We are one of the sectors that is subject to the carbon border adjustment in Europe. We have been offered qualified support for the introduction of that measure as a tool that Europe plans to use to reduce the amount of protection that currently exists under the trading system.
It's fair to say that we think it's a promising tool. Obviously, the geopolitics and economics in Canada are slightly different, given our deeply integrated economy with the United States, but in principle, we see it as a potentially valuable tool in providing carbon-leakage protections.
Bloc
Patrick Bonin Bloc Repentigny, QC
Thank you.
Mr. Green, thank you for your recommendations.
One of those recommendations addresses a post-2030 price and a pricing trajectory.
Could you tell us more about what you're proposing in relation to the social cost of carbon after 2030?
Senior Manager, Climate Solutions, David Suzuki Foundation
Sure. Thank you.
We see that climate change is already causing significant damage. I'm thinking of flooding, wildfires, all the health effects, and risks for the future.
As a result, the social cost of carbon is far higher than the current carbon price under the carbon pricing system. We'd like to see the two converge, with the carbon price increasing more quickly to align with that social cost. Every tonne emitted into the environment carries a social cost.
Bloc
Patrick Bonin Bloc Repentigny, QC
You also spoke about the need to have comparable rules of the game across the provinces and territories.
Is that currently the case? Let's compare, for example, Alberta, which has very low-cost credits, to a system like Quebec's. Are they equivalent? If not, how can they be made equivalent?