Natural Resources Committee on March 31st, 2009

[Dr. Christopher Bataille]

It can be done either way. That's a policy choice.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

So you're saying they're equivalent?

[Dr. Christopher Bataille]

There are wrinkles to it, but functionally on a graph scale they're equivalent. It depends on what happens with the permits with the cap and trade system, if you fully auction versus grandfathering versus allocation and what have you. But in terms of sending the price signal out into the economy, they're mostly functionally equivalent.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Have you done any research into the impact that having a $200-per-tonne carbon tax would have on the average family?

[Dr. Christopher Bataille]

It depends on how you recycle the revenue.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

What financial cost would it be to the average family that spends $1,500 a year on gas? That's not including what they spend on heating and electricity.

[Dr. Christopher Bataille]

My understanding was--and I'd have to sit here for five minutes to calculate it exactly--that the U.K. compared to Canada, in terms of the average person's petrol prices, was something on the order of a $170 tonne carbon tax already. The difference they pay at the pump versus what we pay at the pump is already $170 a tonne. But again, that's subject to check.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

When they're paying the equivalent of about $4.50 a litre and we're paying $1 a litre, you're saying that's kind of the impact of a $170-per-tonne carbon tax?

[Dr. Christopher Bataille]

Roughly speaking, but again that's subject to check.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Okay.

I appreciated your comments about not wanting to work in silos. I was wondering what research you have done in cooperation with the social sciences about the impact of densifying populations to the degree you're suggesting. What came to mind was, at what point does density cause more problems than it solves? And of course I'm thinking of places like row housing in Scotland where the life expectancy is 63 years of age. We can all think of urban examples that we don't want to replicate.

What evidence from social sciences do you have that suggests that putting people in that kind of compact space will be good for community? In particular, you commented that we choose between sprawl or dense, walkable, and safe cities. I think I envisioned that such dense population is not necessarily safe.

[Dr. Christopher Bataille]

I'm not a social.... I'm an economist. I'm an energy economist by trade. That's what I'm trained to do. But I just look at the examples. Depending on how you build your city, you can have New York, you can have Geneva, or you can have São Paulo. It depends on how you govern your city and how you govern your society.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

So perhaps bringing in some of these other social scientists outside of their silos into the discussion would be worthwhile.

How much time do we have left, Mr. Chair?

[The Chair, Conservative, Leon Benoit]

You have three and a half minutes.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Okay.

I have just one brief question to Mr. Lee-Gosselin.

The sixth point you made in your presentation was, “We should be in the incubation business.” Who's the “we”?

[Dr. Martin Lee-Gosselin]

I think I would be so brave as to say that there would be some common interest between the federal government, to whom we are speaking today, and the other interested parties, including the NGOs and the other levels of government. I think it's a very, very broad “we”. I just think the society would be well-served if we could learn much more about how to do this integrated energy, to grow different integrated energy futures.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Okay. I'll pass the balance of my time to my colleagues.

[The Chair, Conservative, Leon Benoit]

Mr. Anderson, you have about three minutes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, gentlemen, for being here. I don't think I have time to cover all that I want to.

I've had an interest, actually, in rural communities, and a lot of my riding is small communities of 300 to 1,000 people, 10 miles apart from each other. I'm just wondering if what you're suggesting has any relevance for those small communities. Maybe you could talk about that after.

First, I want to come back to the question of some of the costs here. Mr. Bataille talked about the importance of full coverage of carbon pricing. I just want to talk about the implications on housing, if there are any, because many people in cities live on the edge with regard to affordable housing--young families that are working, and that kind of thing. What we've heard here—more than one group has come in and told us—is that these projects have a $150,000 premium per unit in order to build them, so the communities that have been built have that kind of a premium on the units.

In order to make these work, it seems to me, you have to raise the cost of the normal housing we have now to the level where these projects are economical or else try to bring their price down. That $100 to $200 a tonne actually drives up the cost of living and the cost of housing for everyone in order to make these projects more economical, right? I'm wondering if you have done any work on the social impact for those hundreds of thousands of people who are living on the edge of that envelope who may be driven right out of the housing market by the cost of the entire project.

[The Chair, Conservative, Leon Benoit]

Mr. Bataille, go ahead.

[Dr. Christopher Bataille]

There are two elements there too. In some of the modelling we've done, when we talk about $200 a tonne, you often see sometimes complete electrification or drastically reduced emissions. You may not be paying a carbon tax at all, simply because your building is not powered with something that directly burns fossil fuels. So that's one element.

With the modelling we have done--that's simulations, as who knows how the future could go--in these integrated communities you could have virtually no fossil fuel emissions and therefore you are paying no carbon price.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

We've been told that the premium on the units is about $150,000. That has to be made up somewhere in the market. Either you don't have a market, people aren't interested in buying, or you have to drive some other prices up or these down to make it so that people are interested.

[Dr. Christopher Bataille]

Again, a lot of these are leading-edge communities. These are prototypes. I agree, the first time you build something it's fairly common that you get those kinds of cost increases.

Just consider this. What if the new standard for building were this new way of doing things? It became a standard, you had efficiencies of scale, and all builders and contractors built according to those standards. The cost per unit would come down a lot. But I do agree. Those kinds of numbers do make sense in the initial runs.

[Robert Joshi]

I'd like to add that most of my reading suggests a 3% to 5% or 2% to 5% cost per unit. There may be some specific communities that are very advanced--solar photovoltaics all over the place. That could get expensive, but the majority of the gains from building efficiency and connecting a community entry can be done for much less, based on my reading.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

If you're talking about a 40% reduction in GHGs, it has to be more than 2% or 3%. From what I understand, you can make changes of 2% or 3% in savings, but to make the kinds of savings in GHGs you're talking about, it has to be a massive change in the way people live and in the housing units they live in. That's not achievable, is it?

[Robert Joshi]

Not necessarily, but part of the work is to explore that better. Our policy tools, in my opinion, aren't quite there yet and we need to improve them.