Thank you, Mr. Chair.
At the outset, please allow me to express my solidarity with the people of Fort McMurray in this time of crisis.
In the few minutes available to me, I would like to make four points. I am going to take, perhaps, a slightly more abstract approach to this and focus on the nature or characteristics of a policy framework that I think might be promising as we think of the future, and maybe highlight a few things we might have learned from the past.
First, from my perspective, the sustainability of Canada's conventional energy industries depends on our ability to reconcile their continued operations with Canada's climate policy objectives. Both of the previous speakers made the same type of point. That is going to be a critical determinant of how sustainable the operation of Canada's conventional energy industries is going to be over the next decades. If they can't adjust to the new realities, this will create issues for their survival.
The second point I would like to make is that within that context, the overall policy approaches adopted in the past were, effectively, anchored in the view that individuals, firms, and other collective actors should behave as if greenhouse gas emissions were costly to those generating the emissions, when in fact they were costless, or at best almost costless. There was this idea that by telling people these were nasty things or not necessarily desirable policy directions, but not giving any further signal, we would exhort them to say, “Well, it is as if this was an expensive thing to do”, when in fact it wasn't.
We can't be surprised, when were there no formal signals to be given, that this has not proven to be a particularly successful way of approaching policy. This has been true in Canada and in other industrialized nations as well. This notion that exhortation alone would be appropriate has been shown time and again not to be effective.
If change is to occur, then a clear economic signal, such as a price on carbon emissions, would need to be given as a matter of policy. Again, both previous speakers have made the point that government intervention in one form or another would be needed to give the right sort of environment for these types of issues to be addressed by the private actors. I would agree with that point.
The third point I would like to develop is that innovation activity, at least in part, will depend on sustained and successful research and development activity. There is a clear economic case to be made, as Prof. Elgie has done, for government support in this area. Such support could take all kinds of forms: subsidies for private sector activities and investments; government-sponsored research; or research activities undertaken directly by the government, either on its own or in partnership with other economic actors.
The issue here is going to be one of choice. There are all kinds of different activities, including investment opportunities in public sector R and D, that can be done to support energy industries down the road. There will never be enough public funds to pursue all of these activities. What kind of approach, then, would start to make some kind of sense?
I would argue that it is in Canada's self-interest that our first look be at trying to address issues and problems that other countries or actors outside of Canada will simply not address. A simple example is the oil sands. The characteristics of the oil sands deposits in Canada are very particular in the types of technologies that are used. They are particular, therefore, in the types of approaches to dealing with the environmental issues associated with the production of oil from Canada's oil sands. Since the deposits are almost unique internationally, nobody is going to try to fix these problems for us or address those environmental issues for us. That's the kind of place that should be particularly attractive for both the federal and provincial governments.
The next stage is to highlight what kind of international partnerships we can have to develop a broader set of collaborations than we normally think of. Professor Moore has made that point with national labs in the U.S. looking for collaboration opportunities. That's true across the world these days, and we should therefore try to find the right kinds of partnerships to help all of us address those issues. All of us will benefit from those types of things. Canada will not address nor solve all these problems by itself.
Finally, as the structure of economic incentives change in Canada and other countries, different economic opportunities will emerge. Firms in the sectors under consideration will react and decide which of these opportunities to pursue. In that context, it's best for government to allow industry to play that role, and not to be too directive in picking specific areas of winning technologies or aspects.
The key role for government has been highlighted before and the two points that I made earlier are to set a policy environment that provides clear signals across all sectors of the economy, that reduces uncertainty; provides clear incentives for the broad directions we want to work; and lets the people who have a lot of information and who will ultimately be making key investments in this area to choose the tracks they want to pursue. The role of the government or the state is to provide a much broader framework within which the industry would then take a leadership role in developing the next phases of the industry.
Thank you very much.