Environment Committee on April 23rd, 2026

[Catherine Swift]

It feeds into inflation, of course, just like the carbon tax itself. We were told for years that the carbon tax didn't feed into inflation until the Liberals got rid of it. Then, suddenly, inflation went down. What a miracle. The same goes for the industrial carbon tax and, frankly, any other tax. The notion that businesses will not pass it on just illustrates lack of knowledge about how businesses operate. Of course they must. They all exist in a pretty competitive environment. There are some exceptions, but most operate in a very competitive environment. They have to be competitive. When they're faced with a heavy tax load, that gets passed down, as does the complexity aspect. Again, that increases business cost, too, and we don't measure that properly.

At a time when we're already facing major cost of living problems and major inflation, the international situation doesn't help with the Iran war and all that, which has driven up prices for everybody, the last thing we need is our government imposing even more punitive policies on every Canadian, which is exactly what it does.

[David Bexte, Conservative, Bow River, AB]

Some recent reporting has shown that maybe 50,000 jobs are at risk if the carbon price goes up to $170 a tonne. What does your membership say about their exposure to that, and is that accelerating their exodus from Canada?

[Catherine Swift]

Yes, it is. They see the plan to continue to increase the industrial carbon tax. They're looking at that and going, “Oh, it's pretty bad right now, and getting even worse.”

Our economy, generally, isn't in good shape. You can get away with these things much more easily when the economy is in good shape. I think you're citing the Fraser Institute data on how many jobs would be lost.

Of course, like any economic situation, many factors play into it. Tax is one, but it also depends on the general state of the economy and what's happening with oil prices internationally. You could mention many factors that play into it.

[David Bexte, Conservative, Bow River, AB]

You're alluding to a compounding effect from all these stacked issues. I would argue that we'll get to a critical tipping point, where things are going to collapse. I would suggest that we're probably close to that right now.

I wonder if you can expand on what you see as the single biggest risk to Canada's manufacturing sector, if these policies continue.

[Catherine Swift]

They're fleeing Canada. We've already seen the data that prove they're leaving the country.

Manufacturing is hugely important—I hope I made this point in my remarks—to any economy. The small and medium-sized business sector is also hugely important. If we lose that combination, it's very hard to get back. It's not just that it adds to the GDP, which, of course, it does. It's also the innovation side, the productivity side and the stuff we lack in Canada right now. It will get even worse, indeed, if we lose so much of our manufacturing sector.

[David Bexte, Conservative, Bow River, AB]

Our brightest investors are leaving.

[The Chair, Liberal, Shannon Miedema]

Thank you.

We will now turn to Mr. Greaves for six minutes.

[Will Greaves, Liberal, Victoria, BC]

Thank you, Madam Chair.

Good morning to the witnesses—although it's a challenging morning at committee when we hear witnesses offering testimony that, unfortunately, seems deeply at odds with the facts. I would suggest that it is highly misleading, as well, as we move forward with our work and try to prepare a fact-based and evidence-based analysis of the incredibly important issue of industrial carbon pricing in this country.

I know some of our colleagues opposite are concerned about the pending changes to the composition of our committees, with more government members likely to be added. I'm glad you have some witnesses here who can effectively serve as additional CPC members, in terms of the quality and tenor of their testimony this morning.

I would like to ask our witnesses from the International Institute for Sustainable Development whether or not they could speak to the claims that have been made regarding the impacts of the industrial carbon price in Canada on small businesses and on Canada's international competitiveness.

Mr. Cosbey or Mr. Haig, would either of you be able to take a crack at that question?

[Aaron Cosbey]

I can take a crack at it.

The testimony you've had to date has been pretty definitive in suggesting that the way the large-emitter trading systems in Canada work, including the OBPS, effectively shields businesses from competitiveness impacts and the risk of carbon leakage. I'm repeating what's already been told to you in committee. Firms only pay above the sectoral standard that's been set for them. Below that, there are no emissions. In fact, firms that beat the average sectoral emissions make money off it. There is incentive to improve, and there are sticks for those that don't.

Come on. Let's be real and fact-based. The average cost of carbon is quite low for these firms. That's deliberate. It's a mechanism for protecting these firms from competitiveness impacts.

[Will Greaves, Liberal, Victoria, BC]

Thank you for that response.

Maybe I'll start with you, Mr. Cosbey, as I continue into my second question.

Can you situate Canada and our carbon-pricing regime for us, relative to other comparable industrialized economies?

[Aaron Cosbey]

Sure.

To start, carbon pricing is ubiquitous throughout the world. There are over 50 economies with national-based carbon-pricing regimes, and over 20% of the world's GHG emissions are covered by those pricing regimes. Ours is not more ambitious than the EU's, for example—which has talked about full carbon pricing—or Sweden's. It falls somewhere in the middle. It is a normal industrial carbon pricing regime. It contains the normal mechanisms for protection against competitiveness and leakage. All are different, but ours is not an outlier.

[Will Greaves, Liberal, Victoria, BC]

Thank you for that.

I'll turn to Dr. Purdon this morning.

Good morning. Thank you for joining us.

Could I start with the same question for you, sir? Can you situate Canada's industrial carbon price in the context of comparable industrial economies?

[Mark Purdon]

I might differ from the previous response a bit.

I find that the output-based pricing system is different from what we see in most of the other jurisdictions with carbon pricing, where they have absolute cap-and-trade systems that have been introduced. There are lots of complications. There are some elements...things like the output-based pricing scheme in some of these other climate emissions trading systems, but the output-based pricing system in Canada is significantly different.

I'll give you the numbers in my head after looking at some of these reports. The vast majority of carbon pricing is now in these emerging cap-and-trade systems. A lot of them tend to be sectoral. Indonesia's cap-and-trade system is focusing on the industrial sector. It's not as widespread as what we have in Quebec, which is a bit different. It's the same in the European Union, where it's mostly in industry and power generation. Now the European Union is developing a second emissions trading system for the transport and building sectors, which will be separate systems. However, as I understand it, it's an absolute cap-and-trade system, which is different from what we have with our output-based pricing system, currently.

[Will Greaves, Liberal, Victoria, BC]

Thank you for that, Dr. Purdon.

Mr. Cosbey and Mr. Haig, could you speak, please, to what you see as the risks to Canada's international competitiveness of removing or further diluting our current policies to reduce emissions and address climate change? How would that affect Canada strategically, in comparison to our trading partners and allies?

[Aaron Cosbey]

We know that the future of global commerce is one that cares about the embodied carbon in traded goods. We know that the most efficient way to decarbonize our exporting industries is with a carbon tax or some sort of carbon pricing regime.

If you water down that regime, you put at peril future markets that, as I said, do care about embodied carbon in traded goods. We have the CBAM in the EU. The U.K. has indicated that it will have a CBAM. Norway has similarly indicated. Thailand and Taiwan have one in place. Australia is exploring one. Then you have private sector demands going back up the value chain.

There are over 100 steel standards testifying to green steel in process or in place; most are private sector-driven. Two-thirds of the Montney gas production is certified. Why?

[The Chair, Liberal, Shannon Miedema]

Thank you very much.

Mr. Bonin, you now have the floor for six minutes.

[Patrick Bonin, Bloc, Repentigny, QC]

Thank you, Madam Chair.

I thank the witnesses for joining us.

Ms. Swift, I would like you to answer my question with a yes or no.

In your opinion, is there global warming caused by humans and the burning of fossil fuels?

[Catherine Swift]

I find there's a lot of mixed evidence. It's interesting how the science is moving away from man-made—

[Patrick Bonin, Bloc, Repentigny, QC]

I’m sorry to interrupt you, Ms. Swift, but I have limited speaking time.

My question is simple, and I would like you to answer it simply with a yes or no.

Is there climate change caused by humans and fossil fuels?

[Catherine Swift]

No.

[Patrick Bonin, Bloc, Repentigny, QC]

Could you repeat your answer, please?

[Catherine Swift]

No.

[Patrick Bonin, Bloc, Repentigny, QC]

Fine.

Thank you, Ms. Swift.

Mr. Purdon, you mentioned the advantages of a cap-and-trade system compared to a pricing system. Could you give us a little more detail on that? What are the advantages?

[Mark Purdon]

I think the advantage of the allowance-based system is that it's a more credible measure, and there are more transparency issues with regard to the effectiveness; this is currently being discussed. It's more easily observed in emissions trading systems with absolute emissions counting.

There are a number of issues with transparency and accountability that are embedded in that versus the output-based pricing system. We have much more transparency on what the costs are and the regulatory burden associated with that. I think we have to be sensitive to those issues, as Ms. Swift was raising.

[Patrick Bonin, Bloc, Repentigny, QC]

I see.

By the way, thank you for your well-documented, scientific and rigorous work.

These systems are very complex. Would it be possible for you to provide us with documentation to give us more details on the issue of transparency, among other things, that you just raised?

Generally speaking, do you think it would be beneficial to replicate a system like the Western Climate Initiative across Canada?