Environment Committee on April 23rd, 2026

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Perfect.

I know you’re from Quebec, but you can answer my next question in English. It concerns the cap-and-trade system, or SPEDE.

Are small and large businesses in Quebec in favour of SPEDE?

[Mark Purdon]

There have been two public opinion surveys that I know of. One was conducted in about 2017 with firms under the cap-and-trade system. There was no objection to participation. Prices were very low back then.

I had a master's student try to replicate that study a few years ago. In the smaller sample that we were able to do, there did not appear to be any resistance from Quebec firms to carbon pricing.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thank you.

[Mark Purdon]

It includes a lot of purchases from allowances imported from California, I would add.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Mr. Purdon, could you please send us these studies, reports, or any other documents that might be useful to the committee?

[Mark Purdon]

Yes. Will do.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Mr. Cosbey, we're very lucky to have you here. You're one of the world's leading experts on carbon border adjustment mechanisms, CBAM, in Europe, and on the industrial carbon price. You've led the Commission on Carbon Competitiveness. Your expertise is sought throughout the world.

Can you share with our committee any reports that you or IISD have produced that demonstrate why industrial carbon pricing is actually positive for Canada?

[Aaron Cosbey]

I'd be happy to share the three reports produced in 2004 and 2005 by the Commission on Carbon Competitiveness, which, as you noted, I led. The basic findings were that our energy-intensive trade-exposed sectors are vulnerable, but not economically vulnerable in a competitiveness sense, to carbon leakage or competitiveness impacts from carbon pricing.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Great. Thank you.

Last week our Prime Minister announced a September investment summit whereby the goal is to crowd in or draw in about $1 trillion in capital to Canada's economy. It's being led by major pension funds, PSP and Canada pension plan, really with the idea of attracting large institutional and pension fund capital. Additionally, Canada on a per capita basis is attracting more foreign investment than any other G7 country, roughly double that of our closest G7 partner. This is actually the highest level in the last 18 years. This just means more growth, more jobs and more opportunities. This is also being done in a context where we have an industrial carbon price.

Mr. Cosbey, I'm wondering if you could explain to our committee and our Conservative colleagues why industrial carbon pricing goes hand in hand with a resilient economy and actually helps attract capital.

[Aaron Cosbey]

I agree with Catherine Swift that we have a competitiveness crisis in Canada. I agree with the motivations that are bringing that investment into Canada as one way to solve it, but our future competitiveness depends on the degree to which we can decarbonize our exporting industries. Those exporters are going to face restrictions—are now facing restrictions—based on the carbon content of their exports.

[The Chair, Liberal, Shannon Miedema]

Thank you, Mr. St‑Pierre.

Mr. Bonin, you now have the floor for two and a half minutes.

[Patrick Bonin, Bloc, Repentigny, QC]

Thank you, Madam Chair.

Mr. Purdon, I would like you to tell us a little about carbon border adjustments in Europe. Could there be consequences for Canada if there were no equivalent carbon pricing system? Would this be something worth implementing in Canada?

[Mark Purdon]

I would really defer to Mr. Cosbey on this issue. As I understand it, the demonstration of Canadian conformity with the CBAM will be a bit complicated because of the accounting issues involved with demonstrating the impact of the output-based pricing system. Those are the complications we've discussed already. If Canada would also introduce something similar to that, I think the OBPS could also slow down the adoption or the general perceived legitimacy of that type of CBAM in Canada.

I would defer to other experts on this issue.

[Patrick Bonin, Bloc, Repentigny, QC]

Actually, Mr. Cosbey, I wanted to thank you for all your work.

Could there be consequences if Canada did not have sufficient carbon pricing for Quebec businesses, even though Quebec has a system in place that it would like to export to Europe? Could Quebec be at a disadvantage if Canada did not have a sufficiently robust and solid system?

[Aaron Cosbey]

No. Our exports to Europe are actually favourably impacted by the EU CBAM, especially in the context of steel and aluminum. In both sectors, we have a lower average GHG intensity than European producers. The CBAM actually gives us a price premium in the European domestic market. We are advantaged by having a carbon price, because that will be deducted from our CBAM fees, but as Dr. Purdon has noted, it's complex to figure out how much.

With respect to whether we need such a mechanism in Canada, at present our competitiveness issues are dealt with by the sectoral standards within OBPS and free allowances in Quebec, but as we get further toward net zero, we will have to start thinking about our own border carbon adjustment mechanisms.

[Patrick Bonin, Bloc, Repentigny, QC]

Thank you.

[The Chair, Liberal, Shannon Miedema]

Mr. Dalton, it's over to you for five minutes.

[Marc Dalton, Conservative, Pitt Meadows—Maple Ridge, BC]

Thank you.

Thank you to the witnesses for joining us today.

I had a conversation last week with somebody who had sent in an email. I gave him a call. He was very shaken. He was actually breaking down in the conversation. He was talking about the challenges that he and others are facing with the cost of living and other challenges. He was talking about the current government and how its policies are impacting everyday Canadians. He challenged me. He said, “Marc, you need to get your voice out there and speak to this, because it's hurting us. These policies are hurting us.”

We can live in our ivory towers, and we get our government paycheques, but everyday people who are relying on jobs, working hard and not just receiving from the government, are struggling.

I'd like to direct this question to Ms. Swift.

The industrial carbon tax is an extra cost. The Liberals have argued with us saying that the carbon tax, among many other things, but let's talk specifically about the industrial carbon tax, does not impact food costs, that it doesn't impact the cost of living. However, people in British Columbia, where I live and where things have been stagnating for the past decade under this Liberal government and under the NDP government, have been struggling. I see that.

Can you make some comments, please, just on this one issue of the industrial carbon tax and its impact on the cost of living and food? Then we can expand a little more.

[Catherine Swift]

Of course it affects the cost of living. Every tax affects the cost of living in one way or another. However, it is only one in a suite of taxes we have in Canada.

The original consumer carbon tax, if you remember, we were told, didn't affect inflation. Of course it did. Any economist worth their salt knows that, and any average person probably knows it too.

Some of the spin here is a problem. People have been lied to about the impacts of these taxes, and the industrial carbon tax is just one of many, that, of course, feed into the cost of living.

Also, because it falls so heavily on the energy sector and because it's a relatively high-emitting sector, transportation.... We import a lot into Canada and that has to be transported. Most of it is transported by truck. There you have a very direct relationship between the price of gas and how it feeds into prices for pretty much everything, consumer goods, food naturally, and so much else.

Again, we're a big importer. We're a big exporter too, but we are a big importer. That's one way it definitely impacts the price of pretty much everything.

[Marc Dalton, Conservative, Pitt Meadows—Maple Ridge, BC]

Thank you very much.

I visit businesses and industries across British Columbia, including on Vancouver Island. They are in forestry, fishing and manufacturing. We're seeing mills closing down. We're seeing thousands of people losing their jobs. We've seen that happen in my community of Maple Ridge. The largest mill, Hammond mill, closed down a number of years ago.

We're talking to these people, the owners who have moved their businesses elsewhere. As you mentioned, they'll keep a shell in British Columbia, or in Canada, but they're moving out because it's a much better investment.

Can you speak a bit more to how, among other things—I know you mentioned regulations—the industrial carbon tax is impacting our competitiveness and the job market?

[Catherine Swift]

Well, it's all part and parcel of the same thing. Everything in economics is interconnected, as we know. Again, you can talk all you want about Europe. Some 4% to 5% of our trade is with Europe, so it's not unimportant, but it certainly isn't the vital factor driving it. The U.S. by far is our major trading partner, and it doesn't have anywhere near the kinds of regulations and carbon-related things like the industrial carbon tax that we do. That's the major thing.

People aren't moving so they can go to France or Germany or wherever. They're moving to the U.S. By the way, they don't want to move. I can tell you as someone who speaks to these businesses all the time—and I think a lot of you politicians need to get out more, frankly—they don't want to move. Moving is expensive, and they have family and all the usual reasons. They do it because they have to, to stay in business.

[The Chair, Liberal, Shannon Miedema]

Thank you.

We will now turn to Mr. Fanjoy for five minutes.

[Bruce Fanjoy, Liberal, Carleton, ON]

Thank you.

First of all, Ms. Swift, in your earlier testimony, you mentioned that you don't believe that climate change is man-made. Is that the position of the Coalition of Concerned Manufacturers & Businesses of Canada?

[Catherine Swift]

Yes, it is.

[Bruce Fanjoy, Liberal, Carleton, ON]

Thank you.