Finance Committee on May 8th, 2018

[The Chair, Liberal, Wayne Easter]

I'm going to interrupt you for a second, Mr. Kmiec. I'm starting to worry about the time.

We're going to have to make some decisions. We will take a moment here. I know there are a lot of officials here for other parts of the bill. That's not a criticism of committee members; you have the right to exhaust each section.

This afternoon we are currently scheduled to meet from 3:30 to 5:30 when there are general witnesses. Tomorrow, from 3:30 to 5:30—and there are votes and a number of things tomorrow evening, I gather—we have further witnesses, including some of the people who are now at the back of the room. We had suggested cancelling the Thursday morning meeting. We don't absolutely have to do this. I want to go to the funeral of Gord Brown. We have then transferred that meeting to the afternoon, from 3:30 to 5:30, which would be the officials on the remaining parts.

The deadline for proposed amendments is Tuesday, May 15, because on May 22 we go to clause-by-clause.

How do we get through this? Do you want to extend the meeting tonight? After 5:30 there are votes. We could return as a committee and meet until, I don't care, midnight. It doesn't matter to me.

People really need to get through the various divisions in fairness to committee members so they can get the proposed amendments in place should they wish to do so.

I'm asking the committee how we should manage this and not affect our witnesses' time too much, having them sitting around in the room. I expect they are all learning something from this discussion, as I am, because I think the discussion has been very good.

Mr. Fergus.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Mr. Chair, without having consulted my colleagues, I would go along with your proposal. I'm a local MP, but I know that it would be best for us to meet as long as we can today because we have members here from the west or the north. We have an exceptional situation on Thursday morning, and I know that the folks from the west or the north can't be here too late on Thursday evening, and we have a hard stop for the 15th, so I'm favourably inclined to your suggestion.

[The Chair, Liberal, Wayne Easter]

What do you think? Go tonight for a while?

Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I think we can go until 1:30 p.m.

[The Chair, Liberal, Wayne Easter]

I'm okay with that. We can till 1:30 p.m. I know people have things, and there's question period, but are people okay till 1:30 p.m. today?

Sorry, Dan, I can't hear you.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Today, we're doing it today?

[The Chair, Liberal, Wayne Easter]

Yes, we'll go till 1:30 p.m. now, and then we can make a decision this afternoon if we want to extend it into the evening.

Okay, then, we'll continue. We have agreement to go till 1:30 p.m., for now.

Mr. Kmiec, the floor is yours.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

On the offset credit system, does it allow the minister to also set the price or the value of the offset credit?

[John Moffet]

My apologies, but—

[Tom Kmiec, Conservative, Calgary Shepard, AB]

No, that's okay.

[John Moffet]

—I'm going to cancel a meeting.

[The Chair, Liberal, Wayne Easter]

Sorry, Mr. Moffet.

[John Moffet]

No, the offsets won't be priced by government. The price of an offset will be set in the marketplace. Facing an obligation to reduce my emissions, hypothetically speaking, I have a choice: I know I can pay $20 a tonne, or I can buy surplus credit from the business down the road. How much is he willing to sell it for? Maybe it's $18 a tonne. Or I can buy an offset. I'll probably be willing to offer $17.90 for an offset. You're an unregulated party. You have the potential to develop an offset. You have to decide if can you reduce a tonne of emissions for $17.90. If you can, then you probably will, and you'll sell your credit to me. If you can't, you won't, and I won't have an offset to buy.

It will be set by the market, not by government. Provincial governments already set criteria for what a good offset has to be. So we know there are actual reductions, but then they are offered up into the marketplace, and the price is set by the market. It's a typical supply-and-demand arrangement.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Why would I pay more than $20? If it's a true market system, there is a willing seller and a willing buyer. But the federal government has set a price, so why would I pay more than $20? That means everybody selling an offset credit in this proposed system would have to underbid the federal government's price, because that would be the only way you could get someone to buy it. Am I wrong?

[John Moffet]

That seems like straightforward economics, yes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

So there's basically a cap on the price, because no willing party would pay more than what you would have in a regular system. Would you be able to move it between provinces, this federal offset?

[John Moffet]

Yes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

It says, “respecting the registration and monitoring of the projects”, but it doesn't have information about the monitoring of who has the credits.

[John Moffet]

I'll ask my colleague to point to the provision, but there's a provision in the law that requires us to establish a registry, and then there's regulatory authority that gives us the authority to provide some rules around the registry. The point of the registry is to track all of the credits so we know the offset credits and surplus credits. Everybody who's in the output-based pricing system will have to register, and if you want to be selling offsets, you'll also have to register. So we and the public will be able to track the sales.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

This will be a public registry.

[John Moffet]

Yes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Would you be able to see—

[John Moffet]

Yes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

—that company X sold to company Y x amount of credits at such and such a price?

[John Moffet]

Yes.