Public Accounts Committee on Oct. 28th, 2022

[Michael Kram, Conservative, Regina—Wascana, SK]

Okay.

Similarly, the navy is in the process of procuring 15 new frigates. Those frigates are supposed to last until the 2080s. Again, are we accepting that it is not realistic for the frigates to get to zero emissions and are we looking at purchasing carbon offsets in the open markets for those as well?

[Bill Matthews]

I think it's a bit of a repeat, Mr. Chair, of the same answer, which is that we hope and encourage industry to do better to make fuel consumption more green. That being said, if we are still burning those fossils fuels, then it's the same answer: we have the credits option.

[Michael Kram, Conservative, Regina—Wascana, SK]

Okay.

It's looking as though in 2050 we're going to be buying a significant amount of carbon offsets then. Can you explain to the committee how that will work? Do we have the market in place already that DND is planning on writing the cheque to? How will that work?

[Saleem Sattar]

The market is—

[The Chair, Conservative, John Williamson]

I'm afraid that is the time. I hope we can come back to that question. That is the time for now.

We turn now to Mr. Fragiskatos.

You have the floor for five minutes.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

Thank you to the officials for being here.

The question I have will go to National Defence and to Transport.

Recommendation 2.88 states that both of these are advised to develop “a risk management approach that defines significant risks and corresponding mitigation measures”. I see that the recommendation has been agreed to.

I'd like to hear from both National Defence and Transport on where progress is on that. Perhaps we can begin with Mr. Matthews.

[Bill Matthews]

Certainly. Mr. Chair, work is under way. Obviously, if you're dealing with anything relating to targets in the future, you want to have a sense of how realistic your plans are and what your risk mitigation measures are in case they aren't working out as anticipated. We have a road map coming up that includes a risk assessment. December 2023 is kind of a target we have in mind to finalize that risk assessment.

Saleem could probably add more details.

[Saleem Sattar]

That's correct. We're looking at risks and opportunities and costs to get to 2050. In the next year or so we'll have decarbonization plans for both the real property portfolio and the national safety security fleet. That will give us what we call a road map to 2050.

[Michael Keenan, Deputy Minister, Department of Transport]

Mr. Chair, at Transport Canada, like our colleagues at DND, we are working on drafting both our carbon neutral road map, which lays out our plans to 2050, and the risk management strategy.

While the carbon footprint is much smaller, Transport is a bit like DND. We're unique in government in the sense that for most departments, the carbon footprint comes from buildings. In Transport the vast majority actually comes from the transportation fleet. In fact, the majority is from ferries.

One of the key strategies to achieve the targets is actually switching to lower-carbon fuels. There are some very promising developments in broader industry with respect to the development of low-carbon fuels but that also represents a risk. That would be one of the key risks.

A second issue in terms of dealing with our largest source of emissions is that the current procurement of new ferries through Davie shipyard is going to create a step-wise improvement in fuel efficiency and create opportunities. They are designing diesel hybrids, so there will be some electric propulsion involved. The inevitable construction issues and ensuring that the construction of the new ferries stays on schedule will be key issues and key risks that we're managing in terms of improving how we stay on the carbon road map.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

Still on recommendation 2.88, it says there ought to be an effort made to “continually identify new activities that will contribute significantly to emission reductions and prioritize them based on risk”. I want to go to the second part of that: prioritizing based on risk.

What methodology do you use to carry out that prioritization?

I'll go first to Defence and then I'll go to Transport again.

[Bill Matthews]

Mr. Chair, the basic concept on this would be to look at the likelihood of success around an initiative and also the payback you would get if it is realized. You can basically plot out a chart that says if it succeeds, here's the bang you get for your buck and how risky it is. When you develop your plans and the road map, they include the risk assessment that would indicate which of the initiatives are more likely to succeed or also are more likely to be on schedule. You then prioritize your investments because there will only be investments here.

Saleem, do you have anything to add?

[Peter Fragiskatos, Liberal, London North Centre, ON]

We have about 50 seconds.

[Saleem Sattar]

No, I won't add anything.

[Peter Fragiskatos, Liberal, London North Centre, ON]

We'll go to Transport then.

[Michael Keenan]

Very similarly, Mr. Chair, the strategy is calibrated on risk. Risk is a key determinant, but it's not the only one.

For example, if we have a choice of two things to invest in and they're going to have about the same scale of emission reductions or moving us towards carbon neutrality, but one is riskier than the other, that would give us the methodology to take the less risky one.

However, there will be times when the risk measure framework will allow us to take on more risk to try out new technologies and new procedures because the prospect of emission reductions is worth the risk. It allows us to better calibrate the risk reward in this transition. We do have to take some risks and we do have to try some new technologies in order to hit that carbon neutral target we're striving for.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Mr. Keenan.

[The Chair, Conservative, John Williamson]

Thank you very much.

Go ahead, Ms. Sinclair‑Desgagné. You have two and a half minutes.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you, Mr. Chair.

My questions are for the Treasury Board Secretariat officials. I'd like to know why the majority of scope 3 emissions weren't reported. I also have some general questions about the strategy.

It's clear from the commissioner's report that rather important sources of GHG emissions were omitted, and that independent reviews were completely lacking. A number of departments didn't even publish results, and even when results were published, the underlying data were questionable. Frankly, I find the strategy, itself, questionable.

I have a number of questions I'd like to ask, but I'm going to zero in on the fact that Crown corporation emissions weren't included in the analysis. They are major GHG emitters and, obviously, a huge arm of the federal apparatus.

Everyone knows that Crown corporations are independent and all that. I don't want to hear that. I want to know why the data for Crown corporation emissions weren't included in the strategy.

[Graham Flack]

As you mentioned, Parliament created Crown corporations, which are unlike other federal institutions and sometimes have boards of directors that are different. Treasury Board rules usually don't apply to Crown corporations.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Isn't that in itself a problem, Mr. Flack?

[Graham Flack]

That's the model used most of the time. It stems from Parliament's decision to create Crown corporations that are independent and, as such, are closer to an organization you would find in the private sector.

In budget 2020‑21, the Minister of Finance indicated that Crown corporations should follow the model recommended by the Financial Stability Board's Task Force on Climate-related Financial Disclosures. That's the model Mr. Carney recommends for all private corporations when taking into account, and reporting on, their environmental impact. Those rules will apply to Canada's Crown corporations.

That said, Mr. Edwards created a community of interest with Crown corporations to help them take advantage of our tools. As we indicated to the commissioner, we will be consulting Crown corporations. Given their independence, we have to go about it the right way. As you know, some—

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

That's fine.

[The Chair, Conservative, John Williamson]

Thank you, Ms. Sinclair‑Desgagné. You're out of time.

Mr. Desjarlais, you have the floor for two and a half minutes.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I want to turn to the Treasury Board as well in relation to the scope 3 emissions.

I think it's important for me and for Canadians to know, in your words, what the scope 3 emissions are. How are they being monitored to date? What are the plans to continue to monitor them?

[Graham Flack]

I'm going to turn to Malcolm in a minute because he's the expert, as the engineer.

Scope 3 is more challenging than the other emissions because you often need to develop methodologies to be able to assess them. The easiest one for us to do is travel and we've been reporting that since 2018, I think.

The next one was trickier. Malcolm can describe the international group of experts we put together to help, but it was procurement. That one we have now been publishing since February.

The third one that we're tackling is commuting costs. That's a study with U of O and some others. It's an area where the methodologies have to be sound.

Malcolm, maybe you can describe where we are on this and what's next.