Natural Resources Committee on Oct. 23rd, 2023

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

My question is for Mr. Arnold.

In terms of economic and political considerations for clean energy transitions, there's a lot of misinformation regarding pollution pricing and carbon capture policies.

Can you share your insights on how the Inflation Reduction Act may influence carbon pricing policy and targets in Canada, and how we can communicate the urgency of climate change to Canadians struggling with paying more for fossil fuel items, such as gas and home heating oil?

[Jonathan Arnold]

Thank you for the question.

As I mentioned in my opening statement, we see Canada's carbon pricing system as an advantage in responding to the U.S. Inflation Reduction Act. It is one of the most—if not the most—economically efficient ways to go about regulating or pricing emissions, and it does so with a relatively low fiscal cost.

The next big step that Canada needs to take is implementing carbon contracts for differences, which can essentially give businesses and investors some assurance that the price on carbon will rise according to its existing schedule so that it becomes, essentially, bankable. That's often a term we hear with the production tax credits in the U.S.—that these are “bankable”. Well, putting a price on carbon and wrapping carbon contracts for difference around that makes that bankable, just as the investment tax credits are bankable.

In terms of affordability, obviously a revenue-neutral carbon tax is a critical plank to ensure that. Ensuring the ways in which those revenues are returned to households is especially important, in terms of making the whole system more progressive for the lowest-income Canadians.

There are multiple ways to do that. In many cases, the Canadian government is already taking that approach. I think there are a lot of opportunities to leverage instruments such as carbon contracts for difference, as well as investment tax credits. Then, on the private sector side, implementing a climate investment taxonomy can give businesses and investors more certainty to invest in a clean economy.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Arnold.

Another question I have for you is this: How can we bring Canadians together to move forward on clean technology without people or industries feeling as though they're being unfairly affected by environmental policies?

[Jonathan Arnold]

That is a very big question.

I think a lot of it needs to be about the benefits associated with the technologies that Mr. Wicklum was talking about in terms of getting us to a net-zero pathway. A lot of these technologies are more efficient. Oftentimes they're better from a user experience perspective, and they're also more affordable.

The analysis that we've done at the institute shows that the switch to electrification can actually save Canadians money on their energy costs or on their energy bills. It's those types of data points and statistics and running the numbers that I think can really make it clear that this isn't just about climate or energy but about moving to an energy system and to products that are going to make people's lives better. I think there are a lot of opportunities there that aren't yet being captured.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you.

My next question is for the Canadian Chamber of Commerce.

I'm the MP for Sudbury, so you can imagine the role of mining and critical minerals in Canada's clean energy. Transition is always top of mind.

We know that we can't have a clean energy transition and that there is no net zero without critical minerals. However, I think we need to look beyond large multinational companies and large government subsidies. We also need to focus on the smaller businesses and innovators right here at home.

What opportunities do you see in our domestic market, as well as in international markets, for value chain and supply chain opportunities for our small and medium-sized businesses?

[Bryan Detchou]

I would say that there are many mining projects that hopefully will be developed in Canada in the coming years, and with those projects come incredible jobs and opportunities for the people and the communities in the regions.

I represent many members who are collaborating with their local communities and with indigenous communities, and they're talking about all the jobs that could be created, all the opportunities for training, all the opportunities for education. Of course, with these mining projects also comes incredible infrastructure. A lot of these projects, as you would know, are probably in more remote locations in the country. Therefore, you have to build roads. You have to build broadband. Those also come with jobs and opportunities.

The critical minerals that we have in Canada and the projects that we'll be hopefully building with some smaller junior mining companies will create incredible opportunities for many regions across the country.

[Viviane LaPointe, Liberal, Sudbury, ON]

Quickly, which policies or provisions within the Inflation Reduction Act do you believe could have a significant impact on Canada's economic competitiveness?

[Bryan Detchou]

I know that Canadian companies could benefit from many policies that are part of the Inflation Reduction Act and other acts that the United States government has put forward. There is, for example, the Department of Defense funding that Canadian mining companies are eligible for, and I know that there are a few that have put forward white papers and would hopefully benefit from that as well.

[The Chair, Liberal, George Chahal]

Thank you.

Thank you, Ms. Lapointe.

We'll now go to Mr. Simard from the Bloc Québécois. You have six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Chair.

I'm now going to ask the witnesses, each in turn, the same question.

You probably know that this study will lead to a report and that it is always helpful to hear what witnesses have to say.

In a government clean energy plan, is it really essential to have carbon pricing mechanisms? Also, given that the gas and oil sector produces the most greenhouse gas, would you agree that standards are required to reduce carbon intensity in this sector?

Let's begin with the Canadian Chamber of Commerce witnesses, Mr. Holmes and Mr. Detchou.

[Bryan Detchou]

Thank you, honourable member.

I'd like to begin by saying that the Canadian Chamber of Commerce is in favour of carbon pricing. The only thing we would like to see is a level of certainty, because otherwise, industries won't be able to attract investments.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Detchou. I don't have a lot of time and would like brief answers.

Ms. Bruske, I'd like to ask you the same question.

[Bea Bruske]

I'm going to ask my colleague Alex Callahan, our director of environment, to give you context.

[Alex Callahan, National Director, Health, Safety and Environment, Canadian Labour Congress]

Thank you very much for the opportunity.

I think the CLC has intervened in the past on the constitutionality of carbon pricing and is supportive of it as a way to give clarity.

As far as the broader piece of the economy is concerned, I think it's important to have regulation and to have incentives to get us to where we need to be. The thing to remember in all of this is what this means for workers who are on the job, because there are opportunities in change, and we can either get those opportunities or we can miss those opportunities.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Callahan. I'm sorry, but I don't have much time.

I'll ask Mr. Arnold to answer that question now.

[Jonathan Arnold]

Thank you.

The Canadian Climate Institute has been unequivocal that carbon pricing should be the foundation of Canada's climate policy strategy, along with contracts for differences to ensure that the price rises over time specifically for the oil and gas sector. We have also been supportive of introducing a cap on oil and gas emissions to ensure they come down over time, complemented by investment tax credits as well as strong methane regulations and a climate investment taxonomy.

Thank you.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

Ms. Exner‑Pirot, is that your view as well?

[Dr. Heather Exner-Pirot]

Thank you for the question.

I think oil and gas in Alberta is subject to carbon pricing through the Alberta TIER system. I don't hear a lot of complaints about that. I think it's an effective mechanism. I think it's all the other layers of pancaked regulation that are detrimental.

I also think the committee should consider not just clean energy and the climate but also energy security. According to S&P Global, if you impose an emissions cap, it would reduce production by 1.3 million barrels. This would be absolutely detrimental to the energy system and to global supply security, especially with what's happening with Russia and the Middle East.

[Mario Simard, Bloc, Jonquière, QC]

So you're in favour of a carbon pricing mechanism then?

[Dr. Heather Exner-Pirot]

The one that's in place I have no problem with.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

Could Mr. Wicklum and Mr. Cloutier answer briefly?

[Daniel Cloutier]

Briefly indeed, because our answer to both questions is yes.

[Mario Simard, Bloc, Jonquière, QC]

That's clear and concise.

Mr. Wicklum, I'll conclude by asking you that same question.

[Dan Wicklum]

The Net-Zero Advisory Body takes a look at expert advice from economists. That advice for decades has been that one of the most efficient mechanisms is a carbon price. I think there's a question about efficiency related to whether it's a public-facing carbon price or it's an industrial carbon price.

The reality is that the carbon price on the oil and gas sector is incompletely administered. There are exemptions that apply to different companies in different regions. One of the key things we would like to see is a cleanup of the exemptions so that we get full benefit from the pricing of emissions from the oil and gas sector.

[Mario Simard, Bloc, Jonquière, QC]

Thank you. So you're in favour of a carbon pricing mechanism.

My second question is for the representatives of the Canadian Chamber of Commerce.

You spoke about certainty, clarity and transparency. I believe there is consensus. All the witnesses said they agreed on the need for a carbon pricing mechanism and carbon intensity standards for oil. Now if a government were to announce that it intends to go in that direction, it might perhaps be ill-advised for the opposition parties to defend a conflicting perspective that might send the world of business an ambiguous signal that is not necessarily based on certainty. Would you agree with me on that?