Evidence of meeting #9 for Natural Resources in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was production.
A video is available from Parliament.
NDP
Charlie Angus NDP Timmins—James Bay, ON
On a point of order, can I welcome my dear friend Mr. McLean to our committee? I, as a member of the New Democratic Party, haven't had a chance to do that. I don't want that coming off his time, but I want to welcome him to our committee.
Conservative
Greg McLean Conservative Calgary Centre, AB
Thank you to all my friends around the table, as we share our goal of actually getting to a cleaner emissions industry and economy across Canada. I'm glad everybody here is focused on that result.
Let me first of all congratulate Mr. Tarvydas on his company's being at the forefront of dealing with the capriciousness of foreign political short-term decisions, especially on Keystone XL, which would have lowered the emission intensity of all of the oil consumed in North America, which will now be displaced by foreign oil supplying the United States. That's one of the things we have to look at here: lowering the emissions for all the energy consumed in the world.
This brings me to my point. I'm going to ask Ms. Winter, because she's an economist and she and I speak somewhat the same language.
When you look at this foreign balance of trade, if you will, in Canada in 2020, the oil and gas industry accounted for about $86 billion of foreign trade, primarily with the United States, of course. If we took that off, do you know offhand exactly how much the balance of trade would be in Canada?
Associate Professor, University of Calgary, As an Individual
I'm sorry but I don't have that figure at hand.
Conservative
Greg McLean Conservative Calgary Centre, AB
My apologies, but $86 billion, about 15% of Canada's export value at this point in time, is in oil and gas. So that's $86 billion versus $5.5 billion 30 years ago. It is a very important part of our economy.
I'll contradict some of your witness friends around the table, including Mr. Leach, because we actually do have data from the Canadian government that show we've reduced carbon emissions from oil and gas emissions in the oil sands by 33% since 2000. Thirty-three per cent in 20 years is a pretty good reduction. We still have some carbon, obviously, in our oil and gas production, which we do need to reduce even further, and every one of us acknowledges that here.
In your estimation—
Associate Professor, University of Alberta, As an Individual
Mr. Chair, do I get an opportunity to respond?
Conservative
Greg McLean Conservative Calgary Centre, AB
Ms. Winter, can you please answer the question I have about the....
Sorry, Mr. Chair, does Mr. Leach want to respond to something?
Liberal
The Chair Liberal John Aldag
It's your floor, so I'll let you decide who you're going to ask. If nobody picks it up, one of the other questioners may still do that, but it's your time.
Conservative
Greg McLean Conservative Calgary Centre, AB
I like Ms. Winter's statement that a tonne of carbon is a tonne of carbon is a tonne of carbon, because I think it ties in with this government's statements all the time.
If we reduce a tonne of carbon out of the U.S. by replacing it with more environmental production from Canada, is that net benefit for the world?
Associate Professor, University of Calgary, As an Individual
What matters overall is global reduction in emissions. Specific to Canada, what we're concerned about is meeting our targets rather than being concerned about the targets of other countries.
February 28th, 2022 / 4:55 p.m.
Conservative
Greg McLean Conservative Calgary Centre, AB
Does that mean perhaps we've set the wrong targets, in that we should actually be reducing emissions intensity in Canada's oil production in order for it to displace more emissions-intensive fuel from elsewhere? Of the six and a half million barrels of oil per day equivalent, counting natural gas, that we produce in Canada, about three-quarters of it is exported.
Associate Professor, University of Calgary, As an Individual
I wouldn't say that we're setting the wrong targets. The targets are what they are. I can comment on the most cost-effective way to meet those targets, which is to price emissions and—
Conservative
Greg McLean Conservative Calgary Centre, AB
Okay. If greenhouse gas emissions are a worldwide problem and we are contributing to that by reducing our emissions by 33% per barrel of oil intensity in 20 years, and the rest of the world has increased.... They've increased it because we've offshored production from Canada, to Asia primarily, because of two reasons, lower labour costs and lower energy costs. These are two of the most inflationary items that we face in an economy. That's what's happening. We're offshoring our production of hydrocarbons elsewhere for less environmentally friendly options.
Would you suggest that bringing it back onshore would be a better way to reduce carbon emissions?
Associate Professor, University of Calgary, As an Individual
Our current policies, federally and provincially, are in place to mitigate emissions leakage, including from the oil and gas sector, and that's by providing output subsidies.
I can't speak to the relative emissions intensity of Canada's oil and gas versus other countries, but I can say that there are policies in place to prevent the leakage that you're concerned about.
Conservative
Liberal
The Chair Liberal John Aldag
We're out of time. We're actually over time. Thank you.
Ms. Dabrusin, we're going over to you now, and you have five minutes on the clock.
Liberal
Julie Dabrusin Liberal Toronto—Danforth, ON
Thank you, Mr. Chair.
Because I believe there were some questions before, I wanted to make sure to clarify that Canada has not imported crude from Russia since 2019 and that, in fact, we are banning further imports. It's not as of today, because there are no imports today.
I want to start with Professor Winter.
I'm hearing from a whole bunch of witnesses who all want to row to the same place. We saw the IPCC report today. We know that we need to deal with responding to climate change and reducing emissions quickly.
I'm hearing from some people who have a contrary view to yours. They've been saying that an oil and gas cap is absolutely necessary to deal with that problem and to get us there.
If you were in my position, how do you respond to that? How do you make sense of where to go from there, because I have two very contrary points of view being presented today.
Associate Professor, University of Calgary, As an Individual
We have the policies in place to meet our targets. It's a real question of stringency.
Yes, moving to $170 Canadian per tonne may not allow Canada to reach its 2030 targets, and increasing the price after that may not allow Canada to reach its 2050 targets, but that doesn't mean there needs to be special treatment of the oil and gas sector. There can be an economy-wide increase in the stringency of the emissions price to create that incentive for emissions reduction.
There can also be a reduction in the output subsidies provided to sectors designated as emissions intensive and trade exposed, and that increases their costs, further providing emissions reduction incentives.
The other option is broadening the base of what is subject to an emissions price by removing special exemptions for specific economic activities.
Liberal
Julie Dabrusin Liberal Toronto—Danforth, ON
I have a quick question, because I would like to get to Professor Leach right after this.
Are border carbon adjustments an essential piece if we're changing some of the pieces to make them more stringent, as you've said?
Associate Professor, University of Calgary, As an Individual
Border carbon adjustments are one way to address competitiveness concerns. That's by levelling the playing field between domestic production of goods and services and the imports from other countries. However, it does not protect the domestic, the productions exports to other countries, so it doesn't address that aspect of competitiveness.
Liberal
Julie Dabrusin Liberal Toronto—Danforth, ON
Thank you.
Professor Leach, this is essentially the same question. How do I deal with this challenge of some people saying that an oil and gas cap is the only way when you're saying that in fact we should rely on existing programs?
Associate Professor, University of Alberta, As an Individual
I don't think there's a lot of contradiction there. I don't think anyone is saying that it's the only way. I think everybody seems to be saying that our existing set of policies is not turned to the appropriate level to meet our new goals.
I think that includes the current projections that were in the previous budget, before this one, which said that we were on track to meet our Paris goals and not our Glasgow goals. I don't think there's a contradiction in anyone saying that we need more stringent use of something to meet our policies; I'm just saying that this is not what I would choose.
Liberal
Julie Dabrusin Liberal Toronto—Danforth, ON
What would you do to make it more stringent? I have 40 seconds.
Associate Professor, University of Alberta, As an Individual
I think you can do a number of things. You have the carbon pricing regime, which you can apply at the border and you could apply to exports. You could use the clean fuel standard to impose a greater demand on the oil and gas sector, if that's what you want, on sectors of the oil and gas sector.
You have all the mechanisms in hand already to drive whatever outcomes you want to see and, of course, the tax code policies that you've already talked about in the previous budget, on carbon capture and storage, are an option. You have energy policies, so you have the tools in your tool kit. We don't need to start talking about and developing a new tool.
Liberal
The Chair Liberal John Aldag
Thank you.
I'm looking at the time. We have a bit of committee business that we need to do. We can do it in public afterwards. We're going to need a few minutes. I think we can get through four rounds of questions with five minutes each for the Conservatives and the Liberals and two and a half minutes for Monsieur Simard and Mr. Angus, if that's okay. Then we'll probably end at that point.
We have another 15 minutes for our witnesses if you're good to go.
We'll start right away with Mr. Maguire for five minutes.