Government Operations Committee on Oct. 8th, 2024

[Jerry V. DeMarco]

That's a big question.

There's a saying about not being able to see the forest for the trees. That's why, in 2021, we published a report entitled “Lessons Learned from Canada's Climate Change Performance”. We had sought to understand, in a comprehensive way, the problem of repeated failure to meet greenhouse gas emission reduction targets.

Our first lesson was the need for better leadership and coordination. So I agree with you that we need to look at the whole package. There are over 100 measures dealing with climate change, as well as others dealing with biodiversity and sustainable development. We need to see the interaction between these measures. In the context of sustainable development, we also need to see the interaction between measures relating to the environment and measures relating to economic and social aspects, as I said.

So I agree. This system where departments work in silos is an obstacle that prevents the government from having a global vision.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much.

In your audit report, you talk about the process—

[The Chair, Conservative, Kelly McCauley]

That's your time.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

She can have 20 of my seconds.

[The Chair, Conservative, Kelly McCauley]

Okay, I was just testing.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Bachrach.

Mr. DeMarco, in your audit report, you say that the contribution application process takes an average of 407 hours, which corresponds to more than 10 weeks full-time. Small and medium-sized companies, no matter how creative, can't pay a full-time person for 10 weeks to fill out an application.

Are these programs made primarily for big companies with very strong backs, yes or no?

[Jerry V. DeMarco]

Maybe. I can't answer yes or no, but I can tell you that there are also a lot of big companies, big emitters of greenhouse gases, that haven't applied to the program. So there are problems there too.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

All right.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Mr. Bachrach.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Thank you, Mr. DeMarco, for, I was going to say “being back”, but I'm not sure you've been to OGGO for a while. At least I haven't seen you here in my time.

[Jerry V. DeMarco]

This is my first appearance at OGGO.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

It's your first appearance—there you go—but of course, I think we've all had the pleasure of hearing your reports at other committees.

This issue of grants and contributions is an interesting one. I'm trying to think of questions that relate specifically to your area of responsibility.

You have a broad view of the government's emissions reduction plans, and you've reported on that in the past. It seems to me, unless I'm missing something, that they kind of fall into two buckets. There's the regulatory piece, the rules and regulations and laws that constrain different sectors from emitting. Then there's the carrots piece, which is the grants and contributions the government's giving out as incentives to reduce emissions.

I'm wondering if it's too much to ask you to broadly comment on these sticks and carrots buckets. Which of them has proven the most effective or made the biggest contribution to emissions reductions over the years that you've been in your role?

[Jerry V. DeMarco]

In exhibit 4.1 of the net-zero accelerator report from last year, we try to simplify that as well. We are able to simplify it only into four categories. You've managed to put it into two, but we have carbon pricing regulations; financial support including grants and contributions, which we're talking about today; and others, such as education and government procurement, and the greening of government strategy. We've used that taxonomy, but at one trophic level higher, you could call them just carrots and sticks, if you'd like. There's nothing wrong with that.

We haven't audited the contributions of each one of those buckets to say for sure how much is expected to result in the 36% reduction in greenhouse gas emissions that Environment and Climate Change Canada is currently on track for, according to its own calculations. At other committee hearings, which some of you have been present for, the government itself has said it expects to get about a third, I believe, from carbon pricing. The other big chunk is regulations. Financial support and other, such as procurement, would be the remainder. Certainly, carbon pricing and regulations are the two big-ticket items.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Okay.

It seems to me that one of the risks involved with grants and contributions is this sort of shoehorning effect, whereby the government allocates an envelope of money for certain kinds of contributions, and then all of these instances pop up where they have potential recipients that they want to get money to somehow and they go looking around for envelopes of money that could be applied in that way. For example, the net-zero accelerator fund has a number of different criteria, not just emissions reductions.

Is there a risk of government using these kinds of funds as a bit of a catch-all for projects that don't necessarily emphasize emissions reductions but might hit on some of the other criteria, such that the net effect at the end of the day is that projects get funded, but the primary objective of reducing emissions actually gets de-emphasized in the outcomes you're seeing?

[Jerry V. DeMarco]

That is definitely a risk.

In this instance, most of the fund actually has been committed to already in terms of the $8 billion, yet in terms of bankable reductions, it's nowhere near the 19 megatonnes to 20 megatonnes that Environment Canada was hoping to see out of this program by ISED. Whether the relatively modest amount of reduction, which I believe in this case was from five of the 17 projects, is from shoehorning or from other causes, I can't say for sure, but the main message is that this is a large sum of money without a lot of bankable emissions reductions associated with it.

Also, in terms of value for money, there is a lack of demonstration by the department that this fund is going to truly accelerate towards net zero—which is the name of the fund—in a significant way. That's the main problem with this fund.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I didn't do the calculation, but it would be interesting to know the cost per tonne of those emissions, those modest emissions, from the net-zero accelerator fund. Maybe I can do the math between rounds.

[Jerry V. DeMarco]

No, we've done the math.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Oh, you have done it? Okay.

[Jerry V. DeMarco]

It's in the report.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Okay. It's exhibit 1.4 at pages 4 and 5. Thank you for the data.

[The Chair, Conservative, Kelly McCauley]

Thanks.

We will now go to the final round.

Next is Mr. Mazier for five minutes, please.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Thank you, Chair.

Commissioner, the government launched an $8-billion taxpayer-funded program called the “net zero accelerator”. The government claimed that they could reduce emissions by giving away $8 billion to megacorporations through this program.

According to your report on the net-zero accelerator project—I have to double-check this because I can't believe what I'm actually going to say here—these funds “can be fast-tracked with a letter to the Prime Minister.” That's at the bottom of page 8 of your report and, like I say, I hesitated, because I wanted to make sure I had that quote correct.

I find this quite alarming and scandalous, to say the least. Does this not concern you? When you reported this and when you saw this, did it not concern you that the world's largest companies can write a letter to the Prime Minister and say, “Here, we need some funding to reduce...we might reduce some emissions?”

[Jerry V. DeMarco]

I'll start by saying that this exhibit 4.2, if I recall correctly, describes the process that is available. I do not believe that we found in any of the 17 files a letter such as that.

This describes the process that can be followed, but I don't recall there being anywhere a letter to fast-track. That's an option that's available, but you would have to confirm for sure from the department whether they've actually used that. I don't recall. I haven't seen it being used—

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Why was it there?

[Jerry V. DeMarco]

Pardon me?