Evidence of meeting #35 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 tax.
A recording is available from Parliament.
Bloc
Patrick Bonin Bloc Repentigny, QC
Okay.
The government says it will continue to increase the carbon price after 2030. Can you explain to us how important it is for this amount to continue to increase after 2030? Do you have a recommendation regarding the order of magnitude?
Vice-President, New Economy Canada
I wouldn't have recommendations in terms of the price that it should be set at, but we would see it as prudent if it is going to be extended beyond 2030, and I think that would enable us as we track towards a net-zero economy. We should be quite clear and transparent about it, and that should be set on a longer-term basis, yes.
Liberal
The Chair Liberal Shannon Miedema
Thank you, Mr. Bonin.
We'll now turn to Mr. Leslie for five minutes.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Thank you, Madam Chair.
I'd like to start with you, Professor McKitrick.
You mentioned that, in theory, the carbon tax could be the most efficient mechanism to reduce emissions, but you also mentioned that the command-and-control policies, I believe, being stacked upon that policy make that no longer the case. In a Canadian context, can you outline what those specific policies are that are reducing the efficiency?
Professor of Economics, University of Guelph, As an Individual
It would be policies like the emissions cap on the oil and gas sector, the EV mandate, renewable energy mandates, the sector-specific policies, the methane rule and also the clean fuel standard.
The emissions reduction plan, remember, had about 200 policy measures in it, and the carbon tax was one. Our policy mix in Canada tends to be much more heavily focused on sector-specific measures. Once those are in place, we lose all the advantages of carbon pricing.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Thank you.
You mentioned the study that you worked on. Thank you for that. If you could send it in to make sure the analysts include it in our report, it would be appreciated.
I'd like to move over to fertilizer. My understanding is that there has not been a new nitrogen plant in this country in nearly 30 years. You outlined your concern as competitiveness, as a real threat within the Canadian context. The reality is that if we hadn't had the Haber-Bosch process discovered, the population would be nowhere near what it is today.
You mentioned fertilizers being involved in feeding half of the world's population. I have no interest in being the decider of which 20% less or which half of the world is going to go hungry if we're going to go down a path of removing the use of fertilizer across the world here.
You mentioned carbon leakage and the fact that, depending on the specific type of fertilizer produced, we have 30% to 50% less emissions intensity in the production. In reality, what does that mean for global emissions if we make it so uncompetitive for our producers of fertilizers in this country to set up shop that they end up moving to another country? What does that do to global emissions?
President and Chief Executive Officer, Fertilizer Canada
It depends on what the emissions profile is of whatever plant is built and where that's built. Currently in the nitrogen world, there are a lot of plants being built in the United States. They are benefiting from the accelerated capital cost allowance there, where it's a 100% writeoff in a year. That was in the big, beautiful bill, as well as tax credits, but they're also building these plants to be competitive on a carbon basis, and they will be able to access those markets that do have strict carbon measures.
That's an example of where it will be state of the art, but on the other hand, if you look at something like the potash competition, where we are a significant producer, our competition includes Russia, Belarus and China. In particular, Russia and Belarus do not, by the way, have tariffs going into the United States and do not produce with any regard for emissions reduction. This is where we talk about leakage. Any additional costs that are imposed on our industry risk that kind of leakage in the face of that competition.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Can I get you to expand on the need for domestic production? We're obviously seeing cost fluctuations due to the situation in Iran, but in purely logical terms, from a food sovereignty perspective, there's the value of keeping fertilizer production in our country, as opposed to policies implemented in the EU, which has seen closures there, with high energy prices.
We have abundant natural gas and we have all of the essential elements to ensure we have sovereign food production. Can you speak to the importance of that in the Canadian context?
President and Chief Executive Officer, Fertilizer Canada
Well, I don't think we should be protectionist, because we are both importers and exporters of fertilizer. We import all of our phosphate-based fertilizers, and we export potash and some nitrogen-based fertilizers. In Europe, as you mentioned, they became uncompetitive and had to shut down a number of nitrogen plants, which is a shame, since they invented it.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Thank you.
Dr. Exner-Pirot, is this tax cutting emissions, or is it making it more expensive to build things in Canada?
Director, Energy, Natural Resources and Environment, Macdonald-Laurier Institute
At some level, it might promote some innovation. We have seen that the oil and gas sector has cut emissions. The concern is that increasing it to $130 on an effective tonne will do very little to cut emissions, certainly in oil and gas, and in electricity in particular. It will just get passed on to the consumers, or it will be lost production. Again, the carbon leakage will happen somewhere else.
For electricity, there was a carbon price in Alberta. I interviewed them and wrote a paper. Any additional industrial carbon price they expect on electricity in Alberta, for example, will be completely passed on to the consumer. It would have to be $170 or $200 per tonne to stimulate new investment, for example, in a different technology.
Liberal
The Chair Liberal Shannon Miedema
Thank you very much.
We will now turn to Mr. Greaves for five minutes.
Liberal
Will Greaves Liberal Victoria, BC
Thank you, Madam Chair.
Good afternoon to our witnesses. Thank you for joining us today.
I would like to direct my first questions to Professor McKitrick.
Professor, you identified yourself as having a Ph.D. in economics from the University of British Columbia. Could you please clarify if any of your academic training at either the graduate or the undergraduate level was in a field outside of economics?
Professor of Economics, University of Guelph, As an Individual
I have an undergraduate degree in economics from Queen's University, and I have a master's degree and a Ph.D. in economics from UBC.
Liberal
Will Greaves Liberal Victoria, BC
You're certainly a well-qualified, formally trained economist. You are perhaps well known in certain circles for your views that are outside the realm of economics and in the realm of climate science. Could you clarify, for the committee, your training in the physical or natural sciences that informs our understanding of human impacts on the global biosphere and climate system?
Professor of Economics, University of Guelph, As an Individual
I have extensive training in the field called econometrics, which is applied statistics for things like time series analysis. I've been involved in projects that have led to publications in peer-reviewed science journals and that have contributed to the statistical analysis of climate data.
The field of climate econometrics is quite a large field now. My colleagues and I publish a lot in physical science journals because the tools we have in econometrics are directly applicable in climate datasets as well.
Liberal
Will Greaves Liberal Victoria, BC
Thank you for that clarification.
One of your well-known, recent outputs was the review of climate policy in the United States, which was conducted for the U.S. Department of Energy. Could you elaborate on some of the criticisms of that study? Are you aware of concerns with the report's findings, which have been provided publicly or released in various forms by other climate and natural scientists?
Professor of Economics, University of Guelph, As an Individual
I'm very familiar with them. That was a draft report put out for public comment. Unfortunately, there was a lawsuit filed against the Department of Energy because of some technical, procedural errors in the setting up of our group. As a result, our work was suspended on September 3. The group has gone through all these criticisms and has prepared response materials, but we are forbidden by court order from publishing them.
Yes, I am familiar with the criticisms. There are some legitimate errors in the report, which we want to correct, but there are also many aspects of the report that will be strengthened when we are able to publish the revised version.
Liberal
Will Greaves Liberal Victoria, BC
Thank you for that clarification. It's good to hear that the authors are prepared to address at least some of the 114 public criticisms of the scientific content of that report.
Professor McKitrick, you testified before this committee, 21 years ago this month, on a loosely related topic—climate change policy. In that testimony, you stated that climate change has “positive...impacts” for Canada, particularly with respect to the forestry and agricultural sectors. I'm wondering if the experience and evidence of the last 21 years have changed your views on either of those sectors and how they've been impacted by climate change.
Professor of Economics, University of Guelph, As an Individual
I haven't done original work in forestry and climate impacts, but I'm familiar with the work of others. In general, northern latitude countries, like Canada and Russia, are still expected to be net beneficiaries for agriculture and forestry as a result of climate change.
The fifth assessment report of the IPCC made this particularly clear for forestry. Recent studies that I have seen, including in Nature magazine, continue to say that Canada, overall for agriculture, will experience net benefits from a longer growing season, warmer conditions and generally favourable conditions for crop types that aren't necessarily sustainable in our climate now.
Liberal
Will Greaves Liberal Victoria, BC
There are competing perspectives of the impacts of climate change on agriculture production, and many of those perspectives are borne out by evidence we have of sustained drought conditions in this country. As of the fall of 2025, in fact, 85% of Canada's agricultural lands were under drought conditions. I think that suggests there may be a more focused lens that we might bring to the question of how agriculture will be negatively impacted by the aggregate impacts of climate change, not just by the increases in the average global temperature.
With respect to the questions around the impacts of climate change on the forestry sector.... This has had great impacts and been of concern in my home province. In five to 10 seconds, would you be able to comment on how you see the forestry sector benefiting from increased global temperatures?
Professor of Economics, University of Guelph, As an Individual
It's partly from temperatures, but it's also from the increased CO2 concentration in the air, which is a direct benefit to forest growth.
Liberal
The Chair Liberal Shannon Miedema
Thank you very much.
Mr. Bonin, you have the floor for two and a half minutes.
Bloc
Patrick Bonin Bloc Repentigny, QC
Thank you, Madam Chair.
Mr. Clark, do you believe that fossil fuel subsidies undermine the effectiveness of industrial carbon pricing? Do they hinder the deployment of clean energy technologies and infrastructure?
Vice-President, New Economy Canada
Thank you for the question. However, our organization and our alliance don't focus on the oil and gas sector. I wouldn't be able to comment on that. I think there are others who are better placed.