Natural Resources Committee on June 22nd, 2006

[Jim Farrell]

I have to speculate here, but my sense is probably not, in that Europe already has a very active carbon trading scheme in place. The U.S. has also, under various other environmental regulation cap and trade schemes—not necessarily under carbon dioxide, but certainly under air and water emissions on a regional basis. So it is an accepted market-based mechanism to provide incentives and allow some market flexibility in terms of reaching environmental targets.

In terms of your questions about a report, and it's been mentioned a couple of times, the NRTEE report's forecast for sequestration and some of the work we've done over the last three and a half years seem to suggest that the numbers are a bit different.

I haven't had a chance to thoroughly review the NRTEE report, but on a quick review, my sense is that it's a temporal issue. The work that we've done was specifically around Kyoto and the commitment period of 2008 to 2012. When it takes somewhere from 40 to 60 to 70 years to grow trees, as we said, it's not surprising that the early commitment period doesn't allow us to at least position trees and forest management as a very attractive option in that first commitment period.

If one were to look at a climate change plan that perhaps wasn't nearly as focused on that first commitment period, one would have to think that the whole notion of trees, and the role of forests more generally, might take on a substantially different dimension. To clarify, the work we've done would seem to suggest that in the first commitment period—and again, what we're trying to do is forecast the future—that future is going to be very much dependent upon what happens in terms of the major determinants, which are fire and insects. We've got a huge outbreak of mountain pine beetle in the interior of British Columbia. We have a forecast of spruce budworm outbreaks, certainly in Quebec and in parts of Ontario and the Maritimes. And we have a fire regime that suggests continuing larger and hotter fires, in terms of more fuel on the ground.

Our forecasts are based on a series of risk analyses and runs that seem to suggest there's a stronger likelihood of Canada's forests generally being a source more than a sink in the first commitment period. Again, these are based on what I would say are as rigorous forecasts as we can get. We've worked very closely with provinces, with their data, to do these analyses. If one were to look at a plan that wasn't as focused on that early commitment period, clearly forests could play a fundamentally different role in the broader policy objective.

[The Chair, Conservative, Lee Richardson]

Mr. MacDonald, please make your comment really short, since we're going to wrap it up.

[Christopher MacDonald]

I think it's an important fact to mention. From our perspective, the data we've looked at and the data we've done—we've drilled it down very far onto our own land and to our crown land.... As Mr. Farrell suggests, there are certain factors that go into that equation. We found that our data are much more detailed than what the province has been giving the CFS. When you drill it down, our numbers are very good at the end of the day. We think we've got to be careful about that. I recognize what he's saying; it's the first commitment period. Our numbers certainly show a significant benefit today. I think that has to be kept in mind.

[Marta Morgan]

I would add one thing, which is that I think it's also important to look at the issue of renewable energy policy across the industry as a whole. There are issues around forest carbon sequestration where we fully support what Mr. MacDonald and Mr. Bettle have been saying. There are also issues on the plant, on the manufacturing side--better incentives for capital investment, better incentives for power generation through renewable energy, renewable portfolios, standards that allow companies to actually contribute to the grid. There's a whole range of things that Canada could be doing to have a made-in-Canada solution that would really help accelerate what's already going on in terms of that conversion to renewable energy sources.

[Alan Tonks, Liberal, York South—Weston, ON]

I don't know whether the committee agrees, but it shouldn't be lost that there was a sidebar to the answer Mr. Farrell gave, which was that in the United States there are cap and trade systems in place. These are accelerators to capital creation that are being invested in the new technologies, and so on. It seems to me that if that exists, then it plays at a disadvantage for a very important part of the equivalent sector in Canada. That's just an observation, correct or not.

I would put it out that there seems to be a sense of urgency there. To test your premises, I think the committee should be kept abreast of that issue, because it seems to me that a made-in-Canada approach needs to have the kinds of tools that come out of Kyoto. The emissions trading system is not just hot air. There are aspects of it that could be very helpful to our industry. We're at a disadvantage if those tools are being used in the United States.

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Tonks.

Thank you very much to our witnesses today for their presentations. They've been very useful to the committee, and I hope you've found them to be useful as well. Thank you for your attendance.

To the committee members, over the course of the summer we will work with our clerk and research assistant to put together the information we have gathered. I'll prepare a synopsis for the fall. We're not sure yet as to the makeup of the committee. That may change over the summer. We will have to regroup in the fall to re-elect officers of this committee, so I won't be presumptuous any further than that.

Unless there is some emergency that causes us to convene over the summer, I'll adjourn to the call of the chair.