Thank you, Mr. Chair.
Good afternoon, members of the committee. Thank you for the invitation to speak today.
My name is Bora Plumptre. I'm a senior analyst at The Pembina Institute in the federal policy program, and I'm really excited to take this opportunity to speak about the need and the opportunity to facilitate greater supplies and consumption of low-carbon and renewable fuels in Canada.
I'd also like to acknowledge that I'm speaking to you from the traditional unceded territory of the Algonquin Anishinaabeg Nation, whose presence here in what is also known as Ottawa reaches far back in time.
I will focus my comments on two areas: first on the urgent necessity of accelerating a shift toward low-carbon and renewable fuels, particularly for transportation; and second on the regulatory powers of the federal government and the contribution that the judicious exercise of those powers could make toward the objective that, I would submit, unites the whole committee in conducting the present study, which is to say a vision of a net-zero society in which affordable clean fuels proliferate throughout our country's energy systems and beyond to our partners in international trade.
To me, this is a praiseworthy vision that would see us shift our energy economy into areas where investors are already going, positioning us to compete in the rapidly growing global market for clean energy and enabling us to finally meet our responsibility to eventually eliminate our ongoing contribution to the worsening effects of climate change.
Canada can and must do much more to decarbonize its transportation sector, which remains heavily reliant on petroleum-based fuels. Our emissions of greenhouse gases from mobile combustion sources remain stubbornly high, having grown 54% since 1990 and 16% since 2005, which is our base year for climate target setting.
Today, transportation is our second-highest-emitting economic sector, responsible for one quarter of our national GHG emissions. In most provinces and in all territories, it is the highest emitting sector. These figures are drawn from the federal Department of the Environment, and what they tell us is that right now, despite recent policy innovations, on a biophysical level, we're not headed in the right direction.
Whether in pursuit of our nearer-term emissions reduction target for 2030 or in pursuit of our longer-term aspiration to build a net-zero society, the decarbonization of fuels must be a key element of our strategy for transportation. Vehicle-focused policies are necessary too, but they are not sufficient to decarbonize the whole system. Government must pay attention to the core energetic component of mobility, namely fuels.
How do we do this? Electrification appears increasingly likely to solve the problem of emissions from passenger road transport, but given the deep uncertainty about which fuelling solutions will propel medium and heavy duty freight vehicles in the long term, we still need to approach this challenge in a way that provides a clear investment signal while remaining technology neutral.
Thankfully, we have a policy coming into place in the form of the clean fuel regulations, sometimes still called the “clean fuel standard”, which will fundamentally reorient the regulatory paradigm for the fuel market across Canada around the criterion of life-cycle carbon intensity. This reorientation is long overdue, and I was really pleased to see this type of policy approach, a low-carbon fuel standard, also recently endorsed by the Leader of the Official Opposition.
This is an important contribution because it helps provide certainty about the path forward for both the obligated and voluntary participants in the market this policy will create. Certainty and risk minimization for investors are essential to making progress on both technology and deployment, and the best way to minimize risk is by means of a regulatory program such as the clean fuel regulations, which act effectively as a non-subsidy transfer from high-carbon to low-carbon fuel producers. In other words, without resorting to public spending, the policy will shift capital flows on an ongoing basis to companies that can accelerate our transition to net zero. Subsidies, by contrast, of course have a habit of going away.
Another essential virtue of the clean fuel regulations is that they enable a portfolio-based approach to decarbonizing the national fuel supply. Many models have attempted to project what the energy system might look like by mid-century, and many scenarios of our energy future remain possible, but where the models converge is on the basic finding that we will need a portfolio of cleaner fuel options in order to achieve our climate goals. Increasingly stringent clean fuel regulations will enable the cost effective build out of this diverse portfolio without government having to pick winners.
Whether your interests—or, perhaps more properly, those of your constituents—are to promote one type of low-carbon fuel or another, the most important aspect from both a business and a climate perspective is to ensure a stable investment environment for projects to get done. There is a virtuous circle to enable between financial dependability and emissions reductions. A properly administered clean fuel regulation will provide the financial architecture for accelerating direct investments in the market-ready solutions and promote innovation in the more expensive, earlier-stage technologies that need to be scaled up.
Thank you. I'll stop there, and I look forward to your questions.