Environment committee  There are two parts to your question. If Canada imposes tariffs to counter imports from countries which have not reduce their greenhouse gas emissions—

Environment committee  I will first address that aspect. I have just completed a study in August which shows that, even if we think this kind of measure could reduce emissions in other countries, the net result would be an increase in Canada's production costs, or in any country which adopts these measures.

Environment committee  Apart from the current climate problems, we must consider the life span of our energy resources, which is nearing its end. Beginning today, we must take measures to find the right technologies which will help us get around that situation. Regarding investment for the development of new technologies, the problem is that there is a market deficiency, or a market failure.

Environment committee  When I talk about technological progress here, we need to take into consideration that if we happen to put in place a cap-and-trade system, we are going to get some revenue. The question will come to this: how do we use the revenue? The point I'm going to make here is that taking part of the revenue that we get in order to subsidize our technological research and development--for example, to subsidize innovation--will help us, because just relying on the cap and trade, thinking this will solve the climate change problem, would be very difficult in the long run.

Environment committee  Okay, the program—

Environment committee  Rigour—what do you mean by “rigour” here?

Environment committee  No, I would not agree. The similarity I want to bring in the debate here is if we have different targets in the different provinces of Canada, is this something that is not good at all? So if we have different targets in the provinces of Canada, this is something that is workable and we can achieve something.

Environment committee  Yes, definitely. The target that we will be aiming at here will be more important than the one the U.S. will have, and in that respect the relative costs that we're going to bear will probably be higher. But as I said, as long as we have two or three markets that are linked together, this is something that will tend to equalize our climate costs.

Environment committee  From the last information from the Government of Canada website, there was a slight decrease between 2003 and 2007. But there was a peak of emissions recently. We are still waiting for the latest emissions data. We would expect that because of this recession—the recession itself is emissions reducing—we will probably have a reduction in emissions.

Environment committee  I will argue in the same direction. As I said in my speaking points, assessing the costs of any greenhouse gas reduction policy is something that is difficult to do without knowing what exact policy instruments you have. Usually I receive the question: what is the cost of doing this, what is the cost of doing that?

Environment committee  From a strictly economic point of view, if we adopt different targets but allow an exchange of permits between the two countries, the price of the permit would necessarily have to be the same for both countries. As long as there is some fluidity between the two markets, the emission reduction will take place wherever it is least costly.

Environment committee  I'm not sure of that. Let's suppose we adopt a target in Canada and we allow Canadian companies to buy permits that will cost less, for example in developing countries. In the final analysis, that would be significantly less expensive. As Professor Plourde said earlier, it would allow for fluidity between the two markets, which is important to minimize costs in this case.

Environment committee  I would agree that if the markets were completely separate, the cost of doing business in the energy sector would be far higher in Canada. If we allow fluidity between the two markets, the cost of the permits would automatically balance out in the two countries. Therefore, the reduction in emissions will take place where it is least costly.

Environment committee  I agree with you. You are referring here to the competitiveness impact that will probably emerge because of the different targets we will have in Canada and in the U.S, for example. Assuming that we have a more aggressive target, it will probably be more costly to reduce emissions in Canada than in the U.S.

Environment committee  As far as harmonization, it is necessary to have the two markets linked together in the possibility of trading emissions. We can have a different target in the U.S. than here, but as soon as we let permits move from one country to the other, that will equalize the payment price between the two countries.