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.
Liberal
The Chair Liberal Shannon Miedema
Thank you very much, Mr. Greaves.
I will now turn over the floor to Mr. Bonin for two and a half minutes.
Bloc
Patrick Bonin Bloc Repentigny, QC
Thank you, Mr. Chair.
Ms. Brouillette, we've seen the government backtrack a number of times, at least 20 times in the past year, in terms of combatting climate change.
Do you think Canada is currently on the right track to meet its climate commitments?
Executive Director, Climate Action Network Canada
The data is clear. The national inventory report published last week by the United Nations Framework Convention on Climate Change shows that, right now, progress has stopped. That data was collected in 2024, before all the backtracking you mentioned. Because of that, unfortunately we clearly won't meet our 2030 target.
The question now is, do we need to accelerate to meet our 2035 targets and do we need to get on track to achieve net zero by 2050?
Bloc
Patrick Bonin Bloc Repentigny, QC
Would weakening industrial carbon pricing further jeopardize the achievement of these targets?
Executive Director, Climate Action Network Canada
Absolutely.
However, the government says that it's the main tool that will be deployed to reduce greenhouse gas emissions in Canada. We must therefore ensure that it will be done and updated robustly and credibly by 2030, 2035 and 2050.
Isn't that right?
Bloc
Patrick Bonin Bloc Repentigny, QC
This past fall in Alberta, we saw the price of carbon credits in the pricing system fall. They even went down to as low as $25 per tonne. However, the federal government did nothing. It didn't step in to ensure strong enough equivalency in Alberta.
Do you think that's acceptable?
Would you like the government to have a real carbon pricing policy to force recalcitrant provinces to put a fairly high minimum price on carbon?
Executive Director, Climate Action Network Canada
This is an important issue, especially when it comes to shared federal and provincial jurisdictions.
Right now, as I was saying earlier, the federal government is failing to ensure that the provinces put an effective price on carbon for industry.
In addition, we must ensure that the federal system is regulated. That's what some of our members, like Ecojustice and West Coast Environmental Law, are suggesting.
The provinces have to trust that the government is going to put in place a federal backstop if they don't meet the criteria. As you described in the case of Alberta, the federal government made no move whatsoever to step in. Federal policy is ineffective in such circumstances.
Liberal
Conservative
Ellis Ross Conservative Skeena—Bulkley Valley, BC
Thank you, Madam Chair.
Thank you, Mr. Keating, for coming here and being a witness.
We're in a different area here. We're at a crossroads. It's been quite a while since I've actually talked about this in terms of global trade, economics and geopolitics. Canada has the ambition of becoming an energy superpower, but not really mentioning how. Right now, we're celebrating the fact that there will be more oil being sent to the United States in a pipeline. We sell them the majority of our oil already.
Energy Newfoundland and Labrador said that the proposed oil and gas emissions cap would have a chilling effect on investment decisions. Could you elaborate on how industrial carbon pricing and measures like the emission caps are affecting the economic investment outlook and long-term viability of offshore energy production in Newfoundland and Labrador? Just for a little bit of context, I had the same issue in Kitimat, B.C., with a $40-billion LNG project, which is basically under the same umbrella and under the same conditions.
Chief Executive Officer, Oil and Gas Corporation of Newfoundland and Labrador
Certainly.
Again, I'm going to separate the two, although they are common in that they are climate-focused policies. The emissions cap is indeed the investment killer. I said this in a conference here last year. It's simply because, as was presented, when you model it, there is simply no room for any other project beyond the Bay du Nord project, which was just advanced by the provincial government and the energy companies a few months ago. It is a non-starter for the industry. We just manage the decline of the existing fields. That's not going to bring us to the realities of this current energy security-driven world by any stretch. It would certainly show that Canada is not investable by any means.
The price on carbon is something that can be meaningful and can motivate and can drive more efficient and better performance and behaviour amongst investors. My point in raising the Norwegian example is that right now in the upstream, maybe 98% of the world's production is not subject to a direct carbon tax as it is in Norway. That would include our humble offshore stuff, as well as what you see in the U.K. and Australia. That's a vast competitive gap. My concern, though, is that if you're going to install a policy like this, which is meant to stoke a behaviour in an investor and which I agree with fundamentally, you should also look at the front end and drive investment in those critical industries that the world is screaming out for. Otherwise, if we fail in that, the investment and its emissions will simply go elsewhere.
Conservative
Ellis Ross Conservative Skeena—Bulkley Valley, BC
Thank you. I agree. In fact, what's happening in B.C. right now with LNG Canada is that the lead proponent, Shell, is actually looking for a buyer for three-quarters of its stake in LNG Canada, which is a $40-billion investment, the largest private investment in Canadian history. Mitsubishi is actually looking for buyers for its 15% stake. Both companies are saying it's to rebalance their risk profile, meaning Canada is too risky.
There are a lot more jurisdictions that don't have these regulations and legislation in place, and they're going to do a lot better. I mean, look at Russia. They're selling more oil and more gas, as is Venezuela. It seems to me we're pricing ourselves out with these new geopolitics and new geo-energy politics that we're facing. In fact, phase two of LNG Canada is still up in the air. We're not sure if it's Canada or if it's B.C. actually holding back phase two in terms of emissions, or even carbon pricing for that matter.
In the midst of all this, I assume that you have some type of approval process in place, maybe a preferred one. Does the Major Projects Office have anything to do with the projects happening in Labrador and Newfoundland?
Chief Executive Officer, Oil and Gas Corporation of Newfoundland and Labrador
At this point, no, the Major Projects Office is not engaged in the Bay du Nord project. Will it be in the future? I don't know. It's a decision of the proponents.
What's clear about that particular project is that it will have an output of emissions between six to 10 kilograms per barrel—among the lowest in the world, inclusive of Norway. How can you deny these barrels and many more like it from Canada? Of course, natural gas from the west coast is transition fuel. Why would we seek to burden, obstruct, delay and obfuscate those great projects when as much as 20% or 25% of oil and gas is now being constrained in the Strait of Hormuz, for example? It makes no sense.
Liberal
The Chair Liberal Shannon Miedema
Thank you, Mr. Keating.
Thank you, Mr. Ross.
We're on the last round of questions.
Mr. St‑Pierre, you have the floor for five minutes.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
Thank you.
Mr. Keating, very quickly, did you say that the emissions cap was more harmful than the industrial carbon price?
Chief Executive Officer, Oil and Gas Corporation of Newfoundland and Labrador
Yes, by multiple orders of magnitude.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
Okay. Thank you.
Ms. Brouillette, thank you for being with us. I also commend you for getting involved. I think this is the second time we've seen you at this committee. Thank you for the work you're doing for Canadians and for all of your members.
I think Climate Action Network Canada has about 200 members, as you mentioned. You also represent a lot of Canadians.
What are you hearing about carbon pricing, not only from your members on the ground, but also from Canadians?
Executive Director, Climate Action Network Canada
Thank you.
Let me first clarify that the oil and gas emissions cap was never put in place. It's important to say that.
Our members tell us that many people are impatiently waiting for the review of the carbon pricing system for Canadian industry. We saw that this was really a central issue in the government's platform during the election.
There's been no progress for nearly a year now. The very powerful and rich lobbies in the oil and gas sector argue that any cost imposed on their sector is too much, even when oil and gas prices are high.
Right now, we need the government to be firm and update this system. Otherwise, we're going to be thrown off our climate trajectory.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
Thank you.
My colleague referred to a letter that was sent.
Are there any reports from Climate Action Network Canada or any of your 200 members that could be referred to the committee for our study?
Can you send us reports on industrial carbon pricing?
Executive Director, Climate Action Network Canada
I will make sure that letter is sent to you again. We also submitted it as a background document for the committee.
As I was saying earlier, in this letter, we present our five recommendations to ensure an effective review of industrial carbon pricing. It also provides long-term certainty, which is absolutely essential if we want to be on track to net zero.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
Climate Action Network Canada also has a strong international presence.
Can you tell us how many other countries have industrial carbon pricing systems in place?
Executive Director, Climate Action Network Canada
There are 14 or so, plus the entire European Union. They have set up trading systems that are comparable to industrial carbon pricing.
Many more countries have put a price on carbon for industry in a different way, including Germany, Austria, Montenegro, Australia and Kazakhstan.
It's important to mention that these countries are doing very well economically. In fact, most of the countries with the greatest economic growth have cap and trade systems, including Indonesia, China, Mexico and many others.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
Often, when we listen to the Conservatives, we get the impression that those economies are going to collapse.
Do you think those economies are thriving because of industrial carbon pricing?
Executive Director, Climate Action Network Canada
Generally speaking, there is tons of empirical evidence to show that policy, including carbon pricing, has a negligible impact on the economy.
Not only does policy not hinder growth, it spurs it on. We're seeing that in Europe in particular. In 2023, a major study was published in a prestigious U.S. journal in the macroeconomics sector. It said:
We find no evidence for a negative impact on employment or GDP growth but rather find a zero to modest positive impact.
Liberal
Eric St-Pierre Liberal Honoré-Mercier, QC
Almost every day in the House, we hear Conservatives say that industrial carbon pricing will drive up the cost of groceries.
Could you talk for 30 seconds about the impact of carbon pricing on the price of groceries and all essentials?
Executive Director, Climate Action Network Canada
As I said in my speech, a very small portion of the cost to industry is passed on to consumers. The Canadian Climate Institute has modelled the effect on Canadian households. It concluded that, on the current trajectory, which leads to a price of $170 per tonne in 2030, the effect on consumer prices would be equivalent to a 0.1% reduction in 2030. Obviously, that's an average.