Good morning, and thank you, Mr. Chairman.
Thank you for the opportunity to present our views and answer your questions.
The Canadian Petroleum Products Institute, the CPPI, strongly supports a national policy on renewable fuels. Our primary mission is to represent the refining and marketing industry in Canada, but it must be noted that two of our members, Husky and Suncor, are our major producers and marketers of ethanol, and have been for many years. Two other members, Petro-Canada and Shell, have been, for quite some time, major shareholders in Iogen, which we believe is the Canadian and world leader in developing ethanol from biomass technology, which could be commercialized pretty soon. So we have been involved in ethanol for a while.
We also indicated our support for a national policy on December 16, I think, during the election. We issued a press release before any of the parties, particularly the Liberals and the Conservatives, issued their own statements on renewable fuels. Since then, we have been very active at the federal and provincial level in the process that is under way under the auspices of the Council of Energy Ministers in preparation for a white paper in August and then the rest of the process to build the policy.
We are also attempting to build an alliance that would involve ethanol producers, our friends from the Canadian Renewable Fuels Association, blenders, and marketers. We will try to approach consumer and environmental groups and to form an alliance that will be able to present views on this issue that cover all the aspects of what we believe should be a national policy on renewable fuels. It's a very complex subject.
Some of the issues that we believe the Canadian government needs to address are how to build in Canada a world-class competitive renewable fuels industry that will be able to compete successfully with the U.S. industry and other industries around the world; and how to create a policy framework that is respectful of existing national and international trade agreements, such as the interprovincial agreement on trade--the AIT--and NAFTA. The key reason behind our desire to see a national involvement on renewable fuels is because current provincial policies, whether in Quebec, Manitoba, or Saskatchewan, are in contravention of these treaties. You cannot blend or produce ethanol in Ontario and sell it in Saskatchewan without a huge financial handicap. So we hope those kinds of things will be part of a national policy.
The third question is how to harmonize Canadian policy with the U.S. policy in order to maintain a free flow of goods, whether it's ethanol, gasoline, or blends of ethanol and gasoline, across the border. So we maintain the North American fuels market, which has been essential, we believe, to the prosperity of the industry, but certainly for the benefit of consumers in delivering market price, low consumer prices, which is a subject we have tackled many times.
This question of harmonizing with the U.S. is going to be very difficult for the Canadian government. The U.S. started a long time ago, and even though they are supposed to be the world leaders in free markets, they have established a system where, at every level--farm subsidies, producer subsidies, blender subsidies--they have created a cascade of subsidies that are there and will not change. Harmonizing is going to be difficult, but that's more your business than mine. But if it's not harmonized, segments of the Canadian industry will be at a severe disadvantage versus those opposite. So it's something to keep in mind.
Finally, how do we develop and enforce quality standards for all renewable fuels, ensuring that once they're introduced they'll be accepted because they are safe and will get wide consumer acceptance?
I mentioned earlier that we want to fully cooperate with government and key stakeholders. Our policy proposals are already largely in line with the Canadian Renewable Fuels Association. They reflect the principles of harmonization, competitiveness, consumer acceptance, and support for promising technologies.
Our position has been outlined in two letters, which we attached to our brief, that were sent to Minister Strahl, then to Minister Lunn, with copies to their colleagues.
I'm going to switch to French, if you don't mind.
It's not easy to develop a national policy in the proposed timeframe, i.e. 2006, and we understand that.
Renewable fuels could help Canada to meet the demand over the next few years if this policy is developed at the same time as an effective conservation policy. These two policies could help reverse the present trend and lead to a decrease in the consumption of oil products, which we've been waiting for for a long time. However, important political issues could lead to unfortunate decisions if they are not taken into account.
The first one is that provincial governments will have very difficult choices to make. Will they give up some powers to Ottawa? Will they rather agree to harmonize their regulations with the national policy?
Finally, as far as the federal government is concerned, there is the fact that we are expected to solve all of the problems relating to renewable fuels in a few months only. Adding 5% ethanol to gasoline by 2010 would be relatively easy to do. It's a known product that works well in all vehicles and would not jeopardise their warranties. However, we believe that the federal government should resist any temptation to act precipitously about other renewable fuels, especially biodiesel. We have to be careful because there are no standards. We have to take account of the cold climate of Canada and of the facts that future consumers, especially truck drivers, do not yet accept this product.
We are convinced that those products have a future but there is still a lot to do before being able to establish some regulations.
In conclusion, may we remind you that renewable fuels will be blended and sold by us. We believe that our know-how is essential to develop a national policy. Our support is real but our concerns are just as real. We will not spare any efforts to make policy-makers aware of the challenges and opportunities of this industry.
Thank you.