Good morning.
My name is Peter Boag, and I am president of the Canadian Petroleum Products Institute. With me this morning is my colleague, Tony Macerollo, our vice-president of policy and communications.
We certainly appreciate the opportunity to appear before you today and to highlight key elements of the written brief we submitted to the committee in August, and of course to answer any questions you may have.
CPPI members operate 16 refineries across Canada, supply some 13,000 retail fuel outlets, and provide nearly 85% of Canadians' petroleum product needs. They deliver highly reliable, high-quality transportation fuel choices to Canadians, with a responsible approach to their environmental footprint. They are proud of their contribution to helping make the Canadian economy competitive.
I don't intend to take you through the details of our members' production and performance figures this morning, but those are certainly included in our brief. What I would like to do is highlight two points: one, our position on subsidies as they pertain to alternative transportation fuels; and two, the risk that all of the efforts and investment—the massive stimulus investment that my colleague, Mr. Lazar, just referred to—could be undone. The impact of those could be undone by the unintended consequences of a poorly designed and fragmented execution of a climate change GHG emissions reduction policy.
On the issue of subsidies, while we recognize that facilitating the development and deployment of alternative fuels, renewable fuels, is a priority for the government, we are concerned about the degree to which a permanent subsidy support system may be emerging for these alternative transportation fuels. Our position on subsidies is clear: we as an organization and our members do not in principle support the use of ongoing subsidies, while acknowledging that there is a place for them, in particular with respect to levelling the playing field with competitors in the United States, for example, and that some situations may indeed require subsidies. And we accept that, as in other sectors of the economy, new plant construction is sometimes backed by one-time government subsidies and/or loan guarantees or other mechanisms.
In specific reference to renewable fuels, we believe that renewable fuel users should have fair access to domestic and foreign sources of renewable fuels, and that both imports and domestic sources from every province should be treated fairly in terms of subsidies. Renewable fuel imports can be a substantial source of supply, and fair treatment will help ensure a reliable supply and strong competition to the benefit of consumers. Subsidies distort markets and can create unlevel playing fields, with detrimental impacts to market dynamics that in the end can mean higher costs to businesses and consumers.
So for these reasons, CPPI urges the finance committee to reaffirm support for the sunsetting of subsidy programs that no longer meet the tests of effectiveness and efficiency in meeting government goals. We would also urge the committee to ensure that adequate resources are allocated to scientific research that will provide a greater level of assurance that the use of renewable fuels is, on a full life-cycle basis, indeed contributing to the achievement of Canada's GHG emissions reduction goals.
With respect to the risks of a poorly designed and fragmented execution of a climate change/GHG emissions reduction policy, Canadian industry competitiveness--the overall health of our economy--will be severely impacted by GHG emissions reduction cost burdens that are not borne by market participants in other jurisdictions. Petroleum refining, like much of Canada's economy, is an energy-intensive, trade-exposed sector, and as such is vulnerable to an asymmetric approach where our competitors don't face the same GHG emissions reduction cost burden. In addition to a strong north-south trade flow in petroleum products, product imports from Europe have a strong influence on the Canadian supply.
We need a sustainable approach to energy and climate change that reduces our carbon footprint while maintaining our economic strength and social well-being. Reduction targets must be in line with other jurisdictions with which we compete, be consistent with realistic and achievable compliance pathways, and be accompanied by a carbon pricing approach offering maximum flexibility and transparency, so that the overall GHG objective can be achieved at the lowest possible cost to society. Of course, inherent in this is national coherence within Canada. A fragmented approach will unnecessarily increase the costs of addressing what is a global problem, with negative consequences to our economy.
Indeed, only this past year the National Round Table on the Environment and the Economy issued a study that suggested that the cost to Canadian society could be reduced by as much as 50% under a unified approach.
Let's be clear: whether the carbon price is $25 a tonne, $50 a tonne, $100 a tonne, or more, significant additional costs will be imposed on Canadians, Canadian businesses, and the economy in general. So CPPI members look to governments to place a high priority on avoiding costly duplication of efforts across jurisdictions.
Thank you. I look forward to your questions.