Environment Committee on Oct. 6th, 2025

[The Chair, Liberal, Angelo Iacono]

I call the meeting to order.

Good morning, colleagues. I hope you all had a nice weekend, and I hope you all didn't miss me much. I'm back to make life more difficult for all of you.

Good morning to our witnesses.

Thank you for being here this morning.

Today is meeting number six of the Standing Committee on Environment and Sustainable Development. This meeting is taking place in a hybrid format and is in public. At 12:00, we are scheduled to proceed in camera to discuss committee business.

For those attending in person, please follow the health and safety guidelines for using earpieces, written on the cards that are found on the table.

The committee is resuming its study on the effectiveness, potential improvements and capability of Canada's 2030 emissions reduction plan.

Today, we welcome Mr. David Sawyer, principal economist at the Canadian Climate Institute.

We also welcome Ms. Heather Exner‑Pirot, director, energy, natural resources and environment. She is joining us today by Zoom.

Finally, we welcome Mr. Moe Kabbara, president of The Transition Accelerator.

Witnesses will have five minutes each for their opening statement.

We will start with Dave Sawyer.

You have five minutes, sir.

[Dave Sawyer, Principal Economist, Canadian Climate Institute]

Thank you, Chair and members of the committee.

Today I want to speak to you about Canada's state of play in climate policy. It's a story of fragile progress, rising risk and what it takes to stay on track. It really comes down to three messages that I want you to remember and think about.

First, the federation's climate progress is real but fragile. We've grown the economy while cutting emissions, but progress has stalled with emissions flatlined in 2024 at 2023 levels. The system that built this momentum for over two decades, shared co-operation between the provinces, the federal government and the territories, is losing traction.

Second, momentum is going the wrong way. Policy rollbacks and record oil and gas output continue to erase gains. Current policies won't meet the 2030 target, and the drift is becoming structural. We found some technical indicators to point that momentum is pushing the wrong way.

Third, Canada can stay on the rails. The architecture exists. The tools are proven. What it needs now is focused coordination and goodwill, perhaps, across all orders of government.

That's the story: fragile progress, wrong momentum and a path to stay on track.

Our estimates of 2024 emissions show that emissions flatlined in 2024 at 694 megatonnes—well off the 2030 target—just over eight per cent below 2005 levels. This stall comes as wildfires highlight the rising cost of inaction, and, of course, the economy slows under U.S. tariffs. Competitiveness and affordability risks mount.

For nearly 20 years, we decoupled growth from emissions, but again, that decoupling weakened last year, and we can see emissions continuing to rise as the economy grows. We can't fight against those rising emissions with falling policy.

Policies matter to success, as do technologies that are showing up in the country and being driven by Canadian innovation, and policy and technology drivers have been pushing down emissions in time. Electricity is a big success story. Decades of federal and provincial action have worked together to drive down emissions to 60% below 2005 levels. Nationally, we're at eight per cent. This has really come based on co-operation, federal backstop policies, provincial will to drive forward, and cheap renewables coming on to the grid, basically making life easier.

In terms of momentum going the wrong way, emissions in oil and gas, in particular from the oil sands, are up 150% since 2005. The sector now produces a third of national emissions—very important economically, of course—and had record highs of production last year. Records and our analysis show that the sector alone contributed about three megatonnes of emissions last year, in 2024. All other sectors were down in the economy or flat, so really, gains were wiped out by the one sector. Conventional oil and gas is doing a good job with methane regulations, and emissions are coming down in time.

The bottom line is that other sectors are bending the curve and our biggest emitter is really going in the wrong direction, pulling our national emissions away from that target.

Where are we compared to 2030? A year ago, our independent assessment of the emissions reduction plan—your study—found us roughly to be three-quarters of the way to our 2030 target, about a 35% reduction on a 40% target. Today, our latest estimates show about a 20% to 25% reduction against the 2005 baseline in 2030.

What's explaining this? Why? It's federal and provincial policy rollbacks and delays, new high-emitting LNG projects coming on that are already slated for construction, and large lumpy emission increases. In particular, the provincial large-emitter programs are being weakened as we speak, and this really puts a hole in future emissions. Of course, we also have the rollback in the federal carbon charge and B.C.'s carbon charge, and then a whole bunch of delay on key policies like the EV availabilities standard.

I'm sort of saying, and I'd like to say now, that we're having these policy bonfires in wildfire season, and there are the twin ideas of rolling back policy while we see record fires and we're all living with smoke on a monthly basis through the summer.

Where to now? Every tonne matters. Climate policy isn't a pass or fail test against the targets. Every tonne matters, and every tonne that is avoided avoids damages in Canada and globally, so it's not really about targets—they're a North Star to guide policy—it's really about driving emissions down in time. Climate change isn't really tomorrow's problem. We're seeing all of these climate realities hitting us, so smart, steady policy matters now more than ever.

How do we do this? We do it with shared responsibility and proven tools across the jurisdictions.

[The Chair, Liberal, Angelo Iacono]

Thank you. Your time is up.

Next, I'll go to Ms. Heather Exner-Pirot.

[Dr. Heather Exner-Pirot, Director, Energy, Natural Resources and Environment, Macdonald-Laurier Institute]

Thank you, Chair.

Thank you, committee members, for the opportunity to speak to you today.

The Government of Canada once described its 2030 emissions reduction plan as presenting “an ambitious and achievable roadmap”. It was half right. The plan was ambitious, but it will not be achieved. It is hampering the Canadian economy just the same.

The previous Liberal government made achieving climate targets the centrepiece of its policy agenda. The economy and national security took a back seat. That policy preference has had far-reaching implications, and Canada has gotten poorer and weaker.

The government has now committed to meeting higher NATO spending targets, becoming an energy superpower and becoming the fastest-growing economy in the G7. None of these goals are compatible with the 2030 emissions reduction plan.

In polling from Abacus this past weekend, when asked what the top issues facing Canada are, climate change and the environment had fallen to ninth. The cost of living, the economy, housing affordability and unemployment preoccupy Canadians' thoughts.

I still want to believe a clean environment and strong economy can go hand in hand, but I'm certain a strong economy and the emissions reduction plan cannot. Rather, the emissions reduction plan has unleashed what I call the four horsemen of the Canadian economy.

First, the clean electricity regulations have driven up electricity costs to record levels. They have also made it harder to build adequate power generation in Canada at a time when AI demand is skyrocketing. Not only are we missing out on a generational outlay of private capital in the hundreds of billions of dollars, but we are rendering ourselves more and more dependent on the United States for what is clearly a strategic capability.

Second, the EV mandate is pushing against the tide of consumer preference and is totally detached from market realities. Even before the auto industry faced uncertainty and disruption from American tariffs, the EV mandate was adding pressure and costs and impeding its competitiveness. Now, with the tariffs in place, the mandate is an existential threat.

Third, the emissions cap, while still in draft form, has added tremendous uncertainty to the Canadian oil and gas sector and impeded the attraction of capital. Industry has repeatedly said that it cannot meet the cap without shutting in production. Our LNG and oil will not be globally competitive with the cap in place, and capital will flow to places with lower environmental and ethical standards.

Finally, while the government suspended the consumer carbon tax in the spring due to its unpopularity, there seems to be an idea that the industrial carbon tax will pick up the slack in Canada's emissions targets. The carbon market works only if heavy emitters are willing to purchase credits. The higher the industrial carbon price goes, the less viable Canadian operations are. At some point, that capital simply leaves for carbon-agnostic jurisdictions. At a certain price, the industrial carbon tax will mostly be effective at pushing heavy industry to places with lower environmental and ethical standards. Global emissions will not be affected.

I believe that GHG emissions drive climate change, and I think it is in our interest to come up with strategies to address it. I don't think it's enough to just point out where the current plan has failed. We should all seek to offer alternative policies in good faith, but those policies must aim to make Canada's energy-intensive and heavy-emitting sectors better, not smaller. It is woefully obvious that the 2030 emissions reduction plan has had a devastating impact on the Canadian economy.

In general, climate policies adopted by western nations since the Paris Agreement have shifted industrial production to less environmentally friendly jurisdictions, made our economies less competitive and made our industrial supply chains dependent on our adversaries. As a consequence, we are seeing retreats from climate ideology across Europe and the United States.

Canada must not be left behind. Economic decline will not lead us to the innovation, investments and infrastructure needed for a better future.

To finish, I would like to quote Enbridge CEO Greg Ebel, who remarked in a speech last week that we are in this situation due to “a decade where political vanity ran roughshod over economic utility.”

Canadians want, more than anything else, a strong economy and a sense of hope for their future. The emissions reduction plan stands in the way. Please don't allow political vanity to prevent us from finding a way to build and grow again.

Thank you for your attention, and I look forward to questions.

[The Chair, Liberal, Angelo Iacono]

Thank you, Ms. Exner-Pirot.

Mr. Kabbara, you have the floor for five minutes.

[Moe Kabbara, President, The Transition Accelerator]

Thank you, Mr. Chair and members of the committee.

Today I want to discuss how we can strengthen the 2030 emissions reduction plan through what I would call a competitiveness imperative that ensures our climate policies while simultaneously strengthening our economy and driving the transformation needed towards a low-carbon future.

As mentioned, effective climate policy really needs to balance between ambition and achievability. When targets feel disconnected from practical pathways, we risk paralyzing action rather than mobilizing it. The key is focusing on where transformation is both technically feasible but also economically advantageous. We need to feel the urgency, yes, but we also need to tackle problems that are truly solvable. That's where we can mobilize action.

Let's talk about emissions. Oil and gas production represents roughly 30% of Canada's emissions. It's the largest single contributor, but that still means that there is 70% coming from everything else, such as electricity, transportation, buildings and industries like cement, steel, etc. Here's the thing. These sectors are where I would argue the greatest opportunities lie.

Look at what China did with EVs, batteries, solar panels and critical minerals. They didn't dominate these markets because they cared so much about climate change. They saw something early on, which is that tomorrow's economy would be built on technologies that are simply better. They're more efficient, they're higher performance, and they have more flexibility in terms of energy systems. They move fast, and they dominated those markets.

When we're evaluating Canada's 2030 plan, we need to ask ourselves if we are positioning ourselves to compete in these sectors. Are we building an industrial capacity that's going to drive prosperity for the next few decades?

I want to talk about the strategic opportunities we should be prioritizing.

First is abundant, reliable, affordable electricity. Grid expansion isn't really just about emissions; it's about attracting the industries we want, for example, data centres, advanced manufacturing and green steel and aluminum, and we're already seeing this work.

[Patrick Bonin, Bloc, Repentigny, QC]

Pardon me, Mr. Chair.

I can no longer hear the interpretation.

[The Chair, Liberal, Angelo Iacono]

It's working now.

Go ahead, Mr. Kabbara.

[Moe Kabbara]

We have manufacturers here in Canada making transformers, like Hammond Power. We've seen those sectors grow in terms of exports by 200% between 2022 and 2024.

Second, we also have an opportunity when it comes to electric vehicle manufacturing. The long-term reality is pretty clear. The better technology will win. EVs are simply more efficient. They perform better, and they cost less to operate. We may see ups and downs, but the path is clear in terms of where investments are headed in terms of the billions of dollars that have been spent on the sector. We can capture that entire value chain right here in Canada. We should be increasing made-in-Canada content requirements and making sure our automotive chains are resilient. This is the kind of transformation that will set us up for the future.

Third, I'm going to talk about critical minerals processing. We have a significant opportunity here, with reserves of lithium, cobalt, nickel, graphite and rare earths. Where we can create the real value is by processing raw ore into value-added materials. For example, if you go from lithium to lithium hydroxide, you increase the value by four to five times. These materials also go into other supply chains, like defence systems and precision-guided missiles. All of that is going to be essential to our sovereignty and our security.

Fourth is mass timber for housing. We can build housing faster with mass timber. We can also reduce carbon while doing so. The global market for mass timber is projected to grow by 150% by 2030. How do we add value to our forest products as we export them?

Last, I'm going to say, on the defence side, that building the defensive industrial base can actually piggyback or leverage the fact that we're building electricity systems, grid expansion and critical minerals.

Ultimately, when we're refocusing the 2030 plan, I would argue that every action should answer three questions. Does this strengthen Canada's competitive position? Does this create long-term economic value? Does this drive the structural transformation we need towards a low-carbon future?

It's really not necessarily about pursuing the lowest cost or the easiest emission reduction in the near term; it's about really transforming the economy so that we can build the structure required that would be part of our low-carbon future.

Thank you.

[The Chair, Liberal, Angelo Iacono]

Thank you, Mr. Kabbara, for your remarks.

We will now begin the question and answer portion. The Conservative Party will go first.

Mr. Leslie, you have the floor for six minutes.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Thank you, Mr. Chair. Welcome back.

Dr. Exner-Pirot, in your paper, “High costs, low returns”, you argue that Canada has the potential to become a global energy superpower.

Can you expand on how the Liberal production cap completely undermines that goal, particularly in terms of our international competitiveness?

[Dr. Heather Exner-Pirot]

First of all, most of the oil sands companies, which are the higher emitters, are publicly traded. They are competing for capital in global markets. People can choose not only other oil and gas producers but any other commodity or any other sector, so they have to find a really good return on investment to get that money.

Obviously, that's been very difficult in the last few years with the policies we've had. Having an emissions cap on top of that tells investors, “I don't know if I can grow. I don't know if I can produce more in the future. With this policy, I can't; I know that for sure.”

No one wants to invest in capital-intensive operations without the promise of future growth. Even though the cap has not yet been implemented, it has really been a downer on the ability to track investment. Even with LNG—and everyone seems to like LNG nowadays—that still increases the emissions, as was mentioned already this morning.

When you're trying to go to Asia and commit buyers to offtake agreements and to spending billions of dollars, they do ask these questions: How does the emissions cap play into this? Will you be able to produce that LNG that I'm now committing billions of dollars to? Can I get that offtake? Will it be producing in 15 years?

There is no good answer to that question with the emissions cap in place. For the purposes of this committee, I want to point out that in the paper.... I went through it with some economists. Canadian heavy oil is higher emitting. It is on average, however, now only 1% to 3% higher emitting than the global average in archetype oil. It is not exceptionally higher emitting anymore. I think that's a bit of a misconception from 10 years ago.

The important thing for you to note is that it is less high emitting than other heavy oils. You can't easily displace heavy oil with light oil. We aren't getting cleaner Permian or Saudi to displace Canadian heavy oil; we'd be getting more Venezuelan and more Iraqi, which have higher emissions.

On a global level, you will not reduce emissions by displacing Canadian heavy oil. You will be trading a larger market for Venezuelan, Iraqi and Colombian in particular.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Thank you. The offset from those countries, to me, is a worrying proposition.

The PBO estimated that the cap would cost the Canadian economy $20.5 billion by 2032, with an implied domestic carbon tax of $2,887 per tonne.

Can you point to any other country that's inflicting this sort of economic pain on itself?

[Dr. Heather Exner-Pirot]

In the paper, we just looked at exactly what the PBO said it would cost. You divide that by how many tonnes the PBO estimates that you save and you come up with the cost for displacing every tonne of carbon in Canada, which is $2,887. That's obviously far higher than the consumer carbon tax, which we kiboshed at $80 because we thought it was too high. It seems like a gross use of climate policy when there is so much lower-hanging fruit and there are so many cheaper ways to do it.

Norway's EV subsidies are extremely high. The Inflation Reduction Act has some very high values. The German move to wind and solar was extremely expensive. There are a few comparators, but I didn't find that any were as high as the emissions cap.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Thank you, Doctor.

As clearly as you can, if Prime Minister Carney moves ahead with this emissions cap, is there any chance that we can become an energy superpower, in your view?

[Dr. Heather Exner-Pirot]

There is zero chance. In fact, we will see more economic decline, absolutely.

All those LNG terminals that just got approved on B.C.'s west coast will probably not get a final investment decision and will not move to construction.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

In the event that we could somehow actually find new ways to get our product to market without repealing Bill C-48, could we become an energy superpower?

[Dr. Heather Exner-Pirot]

For a democracy.... Saudi Arabia has good reserves. Iran does, and so does Venezuela. We are the only democracy with those exquisite resources of well over 100.

There is a sense that we are moving away from fossil fuels. It hasn't happened yet. I hope we do move away from it, but you have to appreciate.... We are at about 105 million barrels a day today, but even when we get to 80, 70 or 60, we don't want all of that being provided by OPEC. We would want some democracies providing some proportion of that oil as well.

It will be Canada. The United States is obviously peaking at shale. Norway will probably have peak oil and gas production this year. The only big democracy provider that is going to be left standing will be Canada, because we have those enormous oil sands reserves and we also have tremendous natural gas reserves.

We won't run out here at home, but it's going to be very important for our allies that we're able to provide them with that secure supply.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Thank you.

Obviously, Prime Minister Carney has set up the Major Projects Office, and we're seeing, I assume, a bunch of lobbying behind closed doors to get special projects selected. From a free market perspective, wouldn't it have made more sense to simply fix the environmental assessment process that was broken by Bill C-69 and allow the private sector to do what it does best, rather than politicizing this whole process?

[Dr. Heather Exner-Pirot]

Everyone is very pleased that at least there's been a focus on major projects and on building, so that rhetoric is welcome. Dawn Ferrell is welcome, but I would say yes: From the private sector perspective, it wasn't another layer of government bureaucracy that they were looking to. It was to rationalize all of the environmental legislation that Bill C-5 tried to work around. The joke is that the workaround works only when you're around, but we could unleash, you know, dozens or hundreds of projects instead of just the five and 10 kind of sprinkled in here and there.

[The Chair, Liberal, Angelo Iacono]

Thank you.

We go now to Ms. Miedema for six minutes.

[Shannon Miedema, Liberal, Halifax, NS]

Thank you very much, and thanks to all the witnesses for your time today.

I'll start with a question for Mr. Sawyer. The Conservatives like to interchange the words “production cap” and “emissions cap” in conversation, and we just heard some of that today. Can you please define for us the difference between a production cap and an emissions cap, and the role of policy in all of this, as we all agree we're striving towards actually driving emissions down?

I'll leave it there for my first question, thank you.

[Dave Sawyer]

The emissions cap really places scarcity on emissions and allows firms.... There's flexibility in the proposed regulations to allow firms to trade and get compliance options like exporting fuel and LNG offshore and getting units to bring home. That is indicated as a compliance option that can be looked at under the regulations.

There's compliance flexibility around trading, and firms can do what they want to basically meet that objective, that cap. The proposed regulation asks for about a three megatonne reduction in time. Compare that to Pathways' CCS proposal, which is around 10 to 12 megatonnes of reduction. That puts it into scale.

One of the challenges with the studies around the impact of the proposed emissions cap is that they assume that the only way to reduce emissions—forget trading; forget getting offtakes from Asia—is to reduce or curtail production. When you curtail production, as was just pointed out, it's really expensive. It's like $800 per tonne. There are other cheaper options to comply.

If firms want to reduce production, that's a choice, but there's a lot of compliance flexibility in there to keep costs down.

[Shannon Miedema, Liberal, Halifax, NS]

Thank you. I used to work for the City of Halifax and was the director of environment and climate change there, and I really relied on federal policy to set the stage for what provincial governments and then local governments as well as other players and sectors could do to drive forward the transformational change that we need in Canada and around the world. So many of the barriers that we would face on the implementation side were around the coordination of acting all together.

Mr. Kabbara or Mr. Sawyer, or maybe both of you, I'm wondering if you could speak to that. You can have fabulous federal policy, and without the goodwill of everyone, you can still largely fail.

Are there things that we could work towards as a federal government to improve our implementation of this urgent and transformational change in terms of policy or otherwise?

Thank you.

[Moe Kabbara]

Sure. I'll just answer very quickly here.

I think it ultimately requires alignment, right? I think we can find that alignment in this kind of Venn diagram, where there is going to be an intersection between what's economically advantageous and what's going to be good for the climate. That Venn diagram or that intersection could be different depending on the jurisdiction. I would argue that, in Alberta, it's going to be different from in Nova Scotia and Quebec, and I think we need to recognize that in terms of the type of alignment that the federal government can have with the provinces.

For example, if you have an oil furnace in your home in Nova Scotia, as you well know, if you put in a heat pump, it's a slam dunk; you're going to save money tomorrow. It might not be the same situation if you're heating with natural gas right now in Edmonton. I think we need to recognize that if we're truly going to find these paths that are going to be practical and address the affordability issue. Ultimately, I think that coordination just needs to start with alignment, and then maybe asymmetrical policies in terms of how the federal government interacts with the provinces.