ENVI Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Environment and Sustainable Development

EVIDENCE

CONTENTS

Thursday, June 12, 2003

Á

1110

The Chair (Hon. Charles Caccia (Davenport, Lib.))

The Honourable Herb Dhaliwal (Minister of Natural Resources)

Á

1115

Á

1120

The Chair

Á

1125

Mr. Roy Bailey (Souris—Moose Mountain, Canadian Alliance)

Hon. Herb Dhaliwal

Mr. Roy Bailey

The Chair

Á

1130

Mr. Roy Bailey

Hon. Herb Dhaliwal

The Chair

Mr. Gary Lunn (Saanich—Gulf Islands, Canadian Alliance)

Hon. Herb Dhaliwal

The Chair

Mr. Serge Cardin (Sherbrooke, BQ)

Hon. Herb Dhaliwal

Á

1135

Mr. Serge Cardin

Hon. Herb Dhaliwal

The Chair

Mr. John Herron (Fundy—Royal, PC)

Á

1140

The Chair

Hon. Herb Dhaliwal

The Chair

Mr. Joe Comartin (Windsor—St. Clair, NDP)

Hon. Herb Dhaliwal

Mr. Joe Comartin

Hon. Herb Dhaliwal

Á

1145

Mr. Joe Comartin

Hon. Herb Dhaliwal

The Chair

Mr. Julian Reed (Halton, Lib.)

Á

1150

Hon. Herb Dhaliwal

The Chair

Mr. John Godfrey (Don Valley West, Lib.)

Á

1155

Hon. Herb Dhaliwal

Mr. John Godfrey

Hon. Herb Dhaliwal

Mr. John Godfrey

Hon. Herb Dhaliwal

Mr. John Godfrey

Hon. Herb Dhaliwal

The Chair

Mr. Andy Savoy (Tobique—Mactaquac, Lib.)

Â

1200

Hon. Herb Dhaliwal

Mr. Andy Savoy

Hon. Herb Dhaliwal

Mr. Andy Savoy

The Chair

Mr. Alan Tonks (York South—Weston, Lib.)

Â

1205

Hon. Herb Dhaliwal

Â

1210

The Chair

Mr. Rick Laliberte (Churchill River, Lib.)

Â

1215

The Chair

Hon. Herb Dhaliwal

The Chair

Â

1220

Hon. Herb Dhaliwal

The Chair

Hon. Herb Dhaliwal

The Chair

Hon. Herb Dhaliwal

The Chair

Hon. Herb Dhaliwal

The Chair

Hon. Herb Dhaliwal

The Chair

Hon. Herb Dhaliwal

Â

1225

The Chair

Mr. Neil MacLeod (Director General, Office of Energy Efficiency, Department of Natural Resources)

The Chair

Hon. Herb Dhaliwal

The Chair

Hon. Herb Dhaliwal

The Chair

Mr. Roy Bailey

The Chair

Hon. Herb Dhaliwal

Mr. Roy Bailey

Hon. Herb Dhaliwal

Mr. Roy Bailey

The Chair

Â

1230

Mr. Serge Cardin

Hon. Herb Dhaliwal

Mr. Serge Cardin

Hon. Herb Dhaliwal

Â

1235

The Chair

Mr. John Herron

Hon. Herb Dhaliwal

The Chair

Mr. Joe Comartin

Â

1240

Hon. Herb Dhaliwal

The Chair

Mr. Julian Reed

Hon. Herb Dhaliwal

Â

1245

The Chair

Mr. Andy Savoy

Hon. Herb Dhaliwal

The Chair

Mr. Rick Laliberte

The Chair

Hon. Herb Dhaliwal

Â

1250

The Chair

Mr. Julian Reed

Hon. Herb Dhaliwal

The Chair

Hon. Herb Dhaliwal

Â

1255

The Chair

Hon. Herb Dhaliwal

The Chair

Hon. Herb Dhaliwal

The Chair

Mr. Serge Cardin

The Chair

Mr. Serge Cardin

Hon. Herb Dhaliwal

·

1300

The Chair

Hon. Herb Dhaliwal

The Chair

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CANADA

Standing Committee on Environment and Sustainable Development

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NUMBER 027

l

2nd SESSION

l

37th PARLIAMENT

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EVIDENCE

Thursday, June 12, 2003

[Recorded by Electronic Apparatus]

Á  (1110)  

[English]

    The Chair (Hon. Charles Caccia (Davenport, Lib.)): Good morning. Bonjour.

    We welcome the minister. This is a very important meeting from the perspective of Kyoto implementation. We are very anxious to hear your words, and after your intervention there will be a round or two of brief questions. We also welcome, in addition to the minister, his officials.

    We give you the floor, Mr. Dhaliwal, and thank you for coming.

    The Honourable Herb Dhaliwal (Minister of Natural Resources): Thank you very much, Mr. Chairman. It's a pleasure for me to be here to speak on this very important issue.

    As we all know, one of the most pressing environmental issues Canadians currently face is climate change. What I want to do today is update you on the progress the Government of Canada is making to address this issue.

    Responding to climate change is about one thing; it's about choices. Do we carry on with business as usual? If we do, Canada will be left behind as the world searches for innovative ways to address climate change.

    Do we continue to live our day-to-day lives the same way? If we do, the Canada we leave behind will be diminished environmentally, socially, and economically.

    Do we continue to think that there's little we can do about issues that are as complicated as climate change? If we do, we underestimate ourselves. We underestimate the power of individual decisions and actions. We underestimate the change that can result if we put that familiar credo--think globally, act locally--to work. The decisions and choices we make today will dramatically shape our world in the years to come.

    Mr. Chairman, I'm confident we're on a track to make the right choices, and the Government of Canada has laid out a detailed plan, the climate change plan for Canada, to make those choices a reality.

    Our plan is founded on building new avenues to help us work together--provinces, territories, municipalities, aboriginal communities, industry partners, non-governmental organizations, and individuals--because we all need to be pulling in the same direction. Our plan will provide individual Canadians with the tools and information they need to reduce their greenhouse gas emissions in their daily lives.

    Our plan will invest in the new, innovative changes and innovative technologies Canada and the world will need to effectively address climate change, new technologies that will bring new economic opportunities to our country. Our plan, Mr. Chairman, will show that the Government of Canada is leading by example and is reaching well beyond the reduction targets set out in the Kyoto Protocol.

    Finally, our plan is based on clear guidelines. Our economy cannot be put at risk and no region will bear an unfair burden. We must provide a favourable investment climate.

    Over the past year we've seen three important milestones in our efforts. In November last year we released our “Climate Change Plan for Canada”. On December 17 we ratified the Kyoto Protocol. In our 2003 budget we dedicated $2 billion to help implement Canada's plan. Only yesterday Minister Anderson and I tabled a comprehensive report on climate change in the House of Commons, the first comprehensive report on the Government of Canada's investment in climate change from 1997 to 2002. This report is our first effort to provide a measure of overall accounting and it established a precedent for future reporting. I'm pleased to share this report with you this morning, and I look forward to documenting our progress and successes in future climate change reports.

    Mr. Chairman, I'm here today to talk about that progress and about new developments in a number of climate change areas. The potential economic and environmental benefits of reacting to climate change are enormous. Acting now makes more than just environmental sense, it makes good economic sense. It means new business opportunities, new markets, and new jobs. The global market for environmental products, technologies, and services is estimated to be $1 trillion a year, with exceptional growth potential. Those countries and those companies that develop the best technologies will find themselves in an enviable economic position in the years to come. Our investments are paying dividends, dividends that will continue to multiply in the future.

    As you may be aware, my cabinet colleagues and I have been meeting to discuss how to best allocate the resources identified in the budget to reach our goal.

    Our approach is one of partnerships. Every aspect of our climate change plan ultimately requires cooperation with our partners at all levels, and this is the key message we need to reinforce. Our plan wasn't developed in a Government of Canada vacuum; it's the result of years of listening to Canadians, provinces, industries, and other groups. It responds to the extensive consultations we've had. No other country in the world has put such an emphasis on consultation.

    All of our partners have acknowledged that we need to take action on climate change now. Essentially, we're inviting our partners to bring their ideas forward, to invest with us, to develop new technologies, and to get programs up and running that will help individuals do their part. These programs will show the world that sustainable development that puts together our environmental, social, and economic concerns is not only possible but also the road to future prosperity.

    Mr. Chairman, that being said, I'll now go through some key areas in addressing climate change.

    New technologies will be fundamentally to responding to climate change. Developing new technologies isn't an overnight proposition, it requires time, money, and patience. It requires learning from our mistakes and turning them into long-term successes.

    Mr. Chairman, we're pursuing a wide range of new climate change technologies: hydrogen and fuel cells, solar power, wind power, carbon dioxide capture and storage, biomass, and alternative transportation fuels. For example, Natural Resources Canada and other Government of Canada organizations have for more than twenty years supported the development of Canada's hydrogen and fuel cell industry.

    Fuel cells are on the cusp of revolutionizing how we produce power. The long-term potential seems almost limitless. Our investments in hydrogen and fuel cells are paying dividends, dividends that will continue to multiply in the future. Canadian companies like Ballard, Hydrogenics, Stuart Energy, and Dynetek, to name only a few, are leading the way.

    NRCan first started working with Ballard in the early 1980s. Today Ballard's fuel cell technology is being used in a variety of ways. The Ford fuel cell vehicle and the Citaro bus are just a few examples. They were both on display at the Hydrogen Fuel Cell Conference in Vancouver last weekend, which I attended.

    We've also supported Dynetek for more than a decade. Today its hydrogen storage cylinders are used in a number of vehicles.

    We've supported Stuart Energy Systems as it created Canada's first hydrogen refuelling station, established in Vancouver. Today Stuart is a recognized international leader.

    We've worked with Hydrogenics since it opened in 1995. Today, after only seven years, it is delivering clean energy solutions for the commercial market across the transportation, stationary, and portable power spectrum.

    Just last Sunday I had the privilege of announcing over $14 million in new funding to support three important hydrogen fuel cell projects. Canada is leading the way in fuel cell technology, and we intend to reinforce this position with this and other important promising technologies. That's why we boosted our support for Sustainable Development Technology Canada by $250 million, bringing our total investment in SDTC to $350 million.

    Mr. Chairman, emerging renewable energy sources such as wind power and related technologies are a key part of our climate change strategy. The Government of Canada has been investing in renewable energy sources for many years, having put $350 million towards encouraging markets for renewable energy sources since 1997. We're investing $260 million of this investment for renewable energy in the wind power production incentive, which will increase the amount of wind power available in Canada by 500%.

Á  (1115)  

    Our plan calls for 10% of the nation's new electricity generation to come from emerging renewable sources, and we have committed to purchasing at least 20% of our electricity for federal operations from green power sources.

    Fossil fuels, however, will remain a major part of our energy mix for decades to come. We are committed to finding ways to produce and use these fuels as cleanly and efficiently as possible. We're working to capture CO₂ and store it underground. The Government of Canada has been investing in this area for many years. Developing the innovative technologies is the key and is worth the effort.

    Mr. Chairman, the large industrial emitters, the oil and gas, electricity, and mining and manufacturing sectors account for about half of Canada's greenhouse gas emissions. They are vitally important to our economy and crucial in our response to climate change.

    Our approach to the large industrial emitters was set out in the climate change plan for Canada. At its centre are negotiated covenants with a regulatory backstop. Our objective will be to minimize the cost of achieving the 55 megatonne emission reduction target. This approach is smart regulation action. We will keep the regulatory backstop as simple and transparent as possible. We will deal with complicated and unusual situations through negotiated covenants.

    Since the release of the plan, officials have met with all of the industry associations and with many individual companies. These meetings have provided industry with clarity, and the government's commitment to the 55 megatonne reduction target has been reiterated.

    One thing industry has made clear to us is the need for governments to work together to minimize the compliance burden. To meet this objective federal officials have met a number of times with their provincial counterparts. They are working on developing a joint system for measurement, reporting, and verification that will provide us with the data we need while ensuring that business is not faced with an unreasonable compliance cost. These actions, Mr. Chairman, are helping ensure that we continue to strike a balance between a vibrant, flourishing economy and our climate change objectives.

    Mr. Chairman, let me turn to Canada's forests and their role in helping us address climate change. Forests can be carbon sinks, effectively absorbing CO₂, and our Kyoto partners have recognized this fact. Canada's forests already play a role in lowering greenhouse gas emissions. For example, a single tree can absorb many tonnes of carbon dioxide during its lifetime.

    I'm particularly excited by the possibilities presented by afforestation, planting trees on marginal farmland and in other suitable areas. Fast-growing, high-yield forest plantations can contribute to our climate change targets through their use as sinks. These plantations could increase the rate of carbon storage in the first commitment period, with even greater results as trees mature in subsequent periods. I continue to discuss this with my provincial and territorial colleagues so we can have a coordinated approach going forward.

    To deal with climate change, Mr. Chairman, we all need to take action, companies of all sizes, governments at all levels, and individual Canadians. The climate change plan for Canada outlines a number of areas where we will encourage action: expanding the Canadian industry program for energy conservation to help small and medium-sized enterprises become more energy efficient; establishing a goal for 25% of new buildings to be above the Model National Energy Code for Buildings by 2010; reducing our emissions by 31% below 1990 levels by 2010, and we have already cut them by 21%; and asking Canadians to cut their personal greenhouse gas emissions on average by one tonne. That means becoming more energy-efficient, and we're committed to helping Canadians to do this.

    In conclusion, I can say we have a clear and detailed strategy to meet our climate change goal and create an economic advantage for Canada so we can work with our partners, so we can be flexible, and so we can take advantage of new opportunities and technologies. We're already working with the provinces, territories, and other stakeholders on energy efficiency, technology development, and renewables. That work will continue as we move forward.

Á  (1120)  

    The climate change plan for Canada is ambitious but achievable. It points Canada in a direction that will take us to an even brighter future. Years from now Canadians will look back and see that we took a step in the right direction. This is a responsibility we must fulfill for the generations to come so our children and our children's children enjoy the same opportunities we do. It's a responsibility we cannot shirk.

    I want to thank you, Mr. Chairman, and I would welcome any questions the committee might have at this time.

    But before I do that, let me just say that I attended the recent hydrogen convention and I was impressed with the Canadian companies there, impressed with what they had accomplished. I had the opportunity myself to drive a fuel cell vehicle fuelled by hydrogen. It shows it can be done; the technology is there. The question is, can it be done economically to compete within the current industry? There's a huge effort by both the auto industry and technology companies to bring the cost down to where fuel cells can be economically competitive and commercially viable. I think the show that was done in Vancouver was very interesting and it displayed Canada's lead in the whole area of fuel cell technology.

    Thank you very much.

    The Chair: Thank you, Mr. Dhaliwal.

    Certainly, there will be quite a number of questions. The list is already full.

    We'll start with Mr. Bailey.

Á  (1125)  

    Mr. Roy Bailey (Souris—Moose Mountain, Canadian Alliance): Thank you, Mr. Chair.

    About fifty years ago, when the REA was coming in just south of where I live--that's in the state of Montana--I was down purchasing their windchargers; it had something to do with the old 32-volt system. What you said, Mr. Minister, brought back some memories.

    But I have to ask this question. Saskatchewan Power has its two largest coal-generated power systems in my constituency, and I know several instances in the constituency where people have made an agreement with SaskPower, which is a crown corporation, that whatever power they don't use from wind generation will go back into the system.

    I just want to make this point to you. What legal measures have you taken or considered so more of these wind generators can be used by individuals where excess power goes back in and is accounted for by whoever runs the power grid?

    I say that because the federal government, as you know, has installed windchargers out at Gull Lake in Saskatchewan, and they get credit from SaskPower for the power generated. It becomes a legal thing then, doesn't it? What I want to know is, what legal steps would have to be taken for a large farmer to buy a 110-volt or 115-volt windcharger and then feed his extra electricity into the grid system?

    I think that's a very important message to get out because where I live, a great deal can be saved by doing this instead of using the carbon-fired power plants. What legal measures have you taken to make that possible?

    Hon. Herb Dhaliwal: Thank you very much.

    First of all, as you may know, we've been very supportive of wind energy through the $260-million wind energy incentive program.

    The other thing we're doing is encouraging large utilities to ensure that they buy a certain amount of their new power as renewable energy, and certain utilities have taken a lead role, for example B.C. Hydro in British Columbia. They've said that for any new energy needs they will buy 20% or 30%--I can't remember the exact percentage--through their renewable portfolio. This is a standard they've set up, a part of their program. It will create opportunity, certainly, for farmers and other people who want to sell back into the grid system.

    I would think that most utilities would want to do that because many of them are adopting a certain percentage, what we call a renewable portfolio standard, for power that comes from renewable energy.

    But as to whether we can legally force them to do that, I think it's within the provincial context. Provincial governments could force them to do that because they're crown corporations. Federally we could not legally force them to do that, but we certainly encourage it, and when we meet with energy ministers from across the country, we encourage all their utilities to adopt a portfolio standard that will commit them to buying a certain percentage of their power as renewable energy.

    Mr. Roy Bailey: I can see the corporation itself wanted to go this route, but you have to understand that for those people who are employed in the production of the coal, the moving of the coal, and so on, the moment you take on more electricity through the grid, the fewer people you need to employ, so you also get into a labour situation.

    I can see back 50 years; I can see ahead 50 years as well. This is going to happen, and I hope I live long enough to see some of it happen.

    Thank you, Mr. Chairman.

    The Chair: Thank you, Mr. Bailey.

    You might want to invite the minister to write a letter to the major utilities across the country, urging or inviting them to achieve the goal you are proposing.

Á  (1130)  

    Mr. Roy Bailey: I will just say, Mr. Minister, that I have had experience with this. Let me tell you that on any given day I can see how much electricity can be generated by whatever measurement they have, and the production of coal-generated electricity would drop very quickly.

    I know we should have the power. You, sir, as Minister of Natural Resources should have the power to say to a crown corporation--they are not above federal legislation, and I don't like arguing with the provinces--this power is available and we encourage this; it's the way of the future and we might as well get used to it.

    Hon. Herb Dhaliwal: In fact, at the last meeting of energy ministers I raised this, that we could have all the utilities make a commitment to buy renewable energy as a certain percentage of new demand. We raised this but we couldn't get a consensus. In B.C., as I said, they are saying a minimum of 30%. Once they make that commitment, it will encourage them to buy solar energy, wind energy, and other renewables. Once they make that commitment, they'll be required to fulfill it, and I think that will encourage the purchase of power onto the grid. It's something I'm very much trying to get consensus on, and there is movement towards that.

    The Chair: Thank you, Mr. Bailey.

    Mr. Lunn.

    Mr. Gary Lunn (Saanich—Gulf Islands, Canadian Alliance): Thank you very much, Mr. Chair.

    As we are moving forward to cleaner energies and looking for ways to get into more natural gas and away from some of the fossil fuels, as you know, there is great potential to develop the natural gas reserves off the Queen Charlottes. What is the Government of Canada's position on opening up the exploration and development for these reserves off the Queen Charlottes?

    Hon. Herb Dhaliwal: First of all, as the honourable member knows, I have announced a panel with a chair so we can consult with British Columbians, because as you know, there is a moratorium. We will also have a science panel with one person to review all that, and we will also be consulting with aboriginal communities through my department. Once we have all that information in a report some time next year, we will be making a decision on that.

    But it's important to consult British Columbians, have all the facts on the table, look at the science, and have a comprehensive review before we make that decision. That's what I am attempting to do.

    The Chair: Thank you.

    Monsieur Cardin, s'il vous plaît.

[Translation]

    Mr. Serge Cardin (Sherbrooke, BQ): Thank you, Mr. Chair.

    Minister, I am pleased to meet with you. Given that the Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources is mostly examining aboriginal affairs issues at the present time, we do not have many opportunities to meet with you to discuss natural resources issues. I would hope that you will support the request to create a committee that would focus strictly on natural resources. This would give us the opportunity to meet much more often.

    I will start by saying that there is a lot of work being done in the climate change file. A lot of money and energy are being spent, both in terms of human resources and research. However, I would have a quick question about the government's direction. If Russia decided not to come on board the Kyoto Protocol, would the government keep the same targets regarding climate change and would it be involved in the same way?

[English]

    Hon. Herb Dhaliwal: First of all, when we were at the International Energy Agency meeting just recently in Paris, Russia did make a presentation. They were asked this question about whether they were going to ratify, and their response was that they would like to hear from the rest of the world in terms of how Russia could benefit from this and whether there was a country that was willing to buy some of the opportunities there. A number of countries said they were very interested.

    I can't predict whether they will sign on. I expect that they will because I think it's in the long-term interest of Russia, but they are evaluating it at this time. We don't have any clear direction from them.

    We have made a commitment to Kyoto because we think it's good for the world. It's good for Canada, and we should not back down if Russia does not sign it because it's in the interest of our future generations for us to deal with climate change. It should not change our view. It should not change the objectives and goals we've set. We think it's in the interest of the international community.

    We would continue to make sure we fulfill our objectives because it's good for Canada and it's good for the world.

Á  (1135)  

[Translation]

    Mr. Serge Cardin: At one of the last meetings, on April 29, representatives of your department said that there would be some negotiations with large greenhouse gas emittors and that there would be as well some negotiations with a view to a potential bilateral agreement. What is the status of these negotiations at this time?

[English]

    Hon. Herb Dhaliwal: We have with us Howard Brown, who has been dealing with the large emitters to make sure they meet their target of 55 megatonnes.

    We are reviewing what we need in terms of legislation and regulatory systems to ensure we make that happen; that's being reviewed right now. We are very committed to making sure we have first of all a system that does not create a whole new bureaucracy but a system that is transparent, flexible, and simple.

    We also want to work with the provinces because we think they can play an important role.

    In our overall goal of climate change--and I've always said this from day one when I was on this file--we can only accomplish our objectives in climate change if we work in partnership with the provinces, with the territories, with Canadians, and with all other levels of government. We are very committed to doing that.

    My deputy minister and the Environment deputy minister have met with provincial governments across this country to look at what their priorities are and how they feel they can contribute. We are working toward developing an MOU with the provincial governments to make sure they play a role.

    In the review of our budgetary items we're looking at opportunities where financial resources can be provided so we can also work in partnership with the provinces on technology and other priorities we share. There will be a number of programs we can work on in partnership with the provinces, and they'll have to play an important role.

    Those discussions are going on, and we hope to sign MOUs with the provinces on what they feel is important for them and how that can fit in with our agenda in the federal government.

    The Chair: Merci, Monsieur Cardin.

    Mr. Herron, five minutes.

    Mr. John Herron (Fundy—Royal, PC): Thank you, Mr. Chair.

    I have three issues I'd like to address or comment on. First off is that our principal objection during the Kyoto debate of last fall was that we didn't want to sign onto an accord where we ratified it but didn't implement it. We used the term “disingenuous ratification”. The fact is that Canada has put its international reputation at stake by signing onto the accord. We believe a country as progressive as we are needs to keep its word, so we'll support the implementation of the accord under certain circumstances in that regard.

    We've always believed we have to pull our own weight, but the minimum we owe Canadians is a plan to see if we can get there.

    I have three questions I'd like to ask, and you've touched on a couple of them already. First, I think we can fully acknowledge that many of the recent announcements pertaining to the retrofit of homes and NECA are about no-regret items we should have been doing anyway. I think you would fully acknowledge that we should have been doing those types of initiatives since 1997. That's a five-year-old debate, and these are initiatives we could have been doing over the last little while to at least get closer to the target.

    The second point I'd like to make is that you cannot implement an accord of this nature without the active participation of the provinces, and you have fully acknowledged that. We think it would be prudent for the federal government to ensure we have bilateral agreements with each and every province, agreements that respect the unique circumstances that rest in each province, in order to earn their active participation. That was very successful in the acid rain debate as well. Could you explain the MOU approach versus a bilateral agreement approach.

    My last comment is quite simple. Do you believe you have the capacity for Canada to keep its word and to hit the Kyoto target within that window of 2008-2012?

Á  (1140)  

    The Chair: These are wide-ranging questions. Would you please, Mr. Minister, compress the answers.

    Hon. Herb Dhaliwal: Yes, these are questions that can take a long time to answer.

    Let me state first of all the commitment of the government. As you know, we committed $1.7 billion in our first major commitment and $2 billion in our second major commitment. This is a huge commitment the federal government has put forward, and we'll be making announcements on the second budgetary item in more detail in the near future. We're very much committed to things like the retrofit of homes, alternative fuels, and energy efficiency. We have to do all of those things and we'll be moving on that.

    In terms of the active participation of provinces, yes, as I stated earlier, it's our intention to work with them closely to determine what their priorities are and how they can be part of this program. There'll be many opportunities for us to work with the provinces. It's a little easier to do an MOU, where we sit down with them and figure out what their priorities are, what they can deliver, and how we can help them. Those are in the works right now and there's ongoing communication.

    In terms of your third question, whether we can fulfill our responsibility, well, we have to. We've signed onto the Kyoto Protocol. We as a country have said that we will do our part, and I don't think we have any choices. If there are areas where we don't achieve as much, we'll have to reassess our position and make sure we carry out our responsibility. Canada is known in the world as a country that's responsible; when we make commitments, we fulfill them. I think both this government and the future government would have to make sure they carried out that commitment.

    Signing the protocol was very important for us. It said a lot about Canada, and we have to make sure we fulfill it. I'm certain as Minister of Natural Resources that we'll be able to do that.

    The Chair: Thank you, Mr. Herron.

    Mr. Comartin, five minutes.

    Mr. Joe Comartin (Windsor—St. Clair, NDP): Thank you, Mr. Chair, and thank you, Mr. Minister, for being here.

    I have to challenge you on your commitment to Kyoto when I hear that next week ITER is coming before cabinet for consideration. The funding will be in large amounts, actually in excess of the $1.7 billion you've now committed to Kyoto. It's a system that will use the full equivalent of a nuclear reactor, 500 megawatts of power; that's what's going to come out of the system in Ontario to service ITER if in fact you fund it.

    You said today here that you want every Canadian to meet that one-tonne challenge. How do Canadians respond when you're going to take 500 megawatts on an ongoing basis out of the system in Ontario, funding it with $2 billion-plus. Where's the rationale in that in terms of a meaningful commitment to Kyoto?

    Hon. Herb Dhaliwal: I think the honourable member is assuming that we've made a decision on that. No decision has been made.

    Mr. Joe Comartin: Are you prepared to commit yourself today?

    Hon. Herb Dhaliwal: Any commitment of that nature would have to be made by cabinet, not me as the Minister of Natural Resources.

    The Government of Canada has not made commitments in the past. In fact, the current mandate does not allow me to make any commitments for that project. What we did have was a private sector consortium that was trying to attract the project to Canada, but there's no decision by us as a government to support it or provide funding for it. I don't think anybody should jump to any conclusions.

    All we've said is, there's been a request made to us by ITER Canada. I've consulted with my colleagues, with members of the cabinet, and we're reviewing it. Nobody should come to any conclusion that we've made any decision on that.

Á  (1145)  

    Mr. Joe Comartin: I'm continuing on with the commitment at the international level. There are preparatory meetings going on right now that will finish this week in Bonn on the use of carbon sinks and credits. You've had a lot of opposition to Canada's position from NGOs around the globe. We've taken a position that's going to significantly weaken that mechanism. In particular, Canada's position is that we're not supporting provisions that there be environmental assessments and that local community concerns be taken into account as to the assessment of these carbon sinks and how many credits you're going to get for them.

    One, are you aware of that, and two, what is your position as minister responsible for energy in this country as to how those carbon sinks should work? Should we in fact have environmental assessments and local community involvement before they're allowed to go ahead?

    Hon. Herb Dhaliwal: First, as you know, Canada was very instrumental in getting credit for carbon sinks because we think it'll be of great benefit to Canada. One of the areas where we think we have a huge advantage is with what we call Forest 20/20, where we take marginal farmland and use it for large plantations of fast-growing trees. As you know, they absorb CO₂; we think it will be beneficial and we can get credit for carbon sinks. Because of our huge land size as a country with such a large area where we can plant trees, we think, not only for getting credit for now but for the future, this is a huge opportunity.

    The details of how it will work and how it will be calculated have to be worked out, but our position has been very clear, that we as a government support carbon sinks. We think it's a great advantage for Canada to have carbon sinks, not only with the existing sinks we have but with additional sinks we can develop through afforestation, and in the long term this will be good for the world as well.

    We support carbon sinks and the government has done so, but the details of the rules and how we calculate that are still being worked out. I don't know enough about that to give you a more detailed answer.

    The Chair: Thank you, Mr. Comartin.

    We now have Mr. Reed.

    Mr. Julian Reed (Halton, Lib.): Thank you, Mr. Chairman.

    I wonder if the minister would allow me to enlarge on one part of the statements that had to do with hydrogen. For the purpose of making it clear to all of us here in this room, I will point out that hydrogen is not a primary form of energy, and our challenge has to be to have the primary form of energy creating the hydrogen. Until we get that nailed down, we are really fooling around with something we can't handle very well. There's no point trying to make hydrogen from gasoline, ethanol, or anything else because in the long term it has to come from a clean primary source if it's going to be deemed clean itself. I just wanted to put that on the record.

    There was a comment about investing in renewable energy, in particular wind power, and I wonder if the minister could tell us why the 11,500 megawatts of water power in small hydro operations has continually been ignored for the last year in statements that are made at committee and so on. Wind seems to be the flavour of the year, and I'm wondering why all renewables are not getting equal treatment.

    I have one final question, Mr. Minister. I know that some of the investments that are going to be made to meet Kyoto are not necessarily for the low-hanging fruit, as we have come to describe it. Because of the co-benefits that are involved with some of the investments, I wonder if the ministry is thinking outside the box in order to enlist the cooperation of those other ministries that will also benefit from that investment. I'm thinking here of ethanol investment, which is not low-hanging fruit, if you like, in terms of cost per tonne of CO₂ replacement; in fact, there are other co-benefits that go along with it that are outside the scope of direct Kyoto investment. I wonder if the ministry is taking that into account and enlisting the help of other ministries in recognizing that.

Á  (1150)  

    Hon. Herb Dhaliwal: Thank you very much, Julian.

    Let me talk about small hydro projects. We are supportive of those hydro projects. I guess they don't get the same attention because for what we do in wind energy a large amount of money goes in there. But through many of our programs, technology early action measures or TEAM, for example, we're working on small hydro projects.

    A good example is in the National Capital Region; there is a program that focuses on refurbishing hydro plants in Ottawa and Gatineau. At Morgans Falls in Nova Scotia as well we are focusing on that, so there are programs that are focusing on small hydro projects. As well, there's the government's program to buy green energy at a higher cost than it would otherwise pay. Our program to buy green energy also helps the small hydro projects.

    So we are interested in doing that. There may not be specific programs, but we have programs in place through TEAM and also through the technology work at CANMET--this is the energy technology centre--to look at new hydro turbine generating systems and also the development of low-cost mini- or micro-hydro systems for off-grid applications. There are a variety of programs for research and for working with small hydro generation.

    I was involved in opening the one in Gatineau, where they have a small hydro project, which is green power because it doesn't have any environmental problems and doesn't create any problems for fish moving up the river. There are lots of examples of small hydro projects that are working, and we're involved through a number of different programs we have.

    Maybe we're not giving enough attention to that area, but I can assure you that we are in a variety of programs. In terms of the co-benefits, we have a budget we announced of $2 billion, and we have to make sure it's cost-effective. It's based on reducing greenhouse gas emissions, and we're looking at balancing that to deal with the short, medium, and long terms.

    And yes, there are co-benefits, and there are opportunities for other departments to also play a role in that and say, well, this is important for my department; can we also partner in some of those areas? I think that's a good idea, and people should be able to partner along with the provinces as well. That's why what we announced will allow partnerships with provinces as well as with other departments who feel they can participate because it's important because of the co-benefits. Co-benefits are important; they are taken into consideration and will be when we introduce a final package.

    The Chair: Thank you.

    Mr. Godfrey, please.

    Mr. John Godfrey (Don Valley West, Lib.): Thank you, Minister.

    Like Mr. Cardin, I too am a refugee, as it were, from the aboriginal affairs and natural resources committee who can only meet you in the environment committee. I am also double-shifting across the room, so if you think I'm dining and dashing, please forgive me.

    I notice that in the report on federal investment from 1997 to 2002, under Natural Resources Canada on pages 53 and 54, you seem to have some degree of responsibility for fuel efficiency in vehicles. I'm just reading this section:

Initiated by the federal government, company average fuel consumption (CAFC) is an industry-wide, sales-weighted measure used to determine the average fuel consumption of the entire new vehicle fleet. The CAFC is calculated for each model year and expressed in litres per 100 kilometres....

    And you note that between 1990 and 1999 the average CAFC of new passenger cars sold in Canada improved by 2.4%.

    Now, I'm glad that you're in charge, but the difficulty with the process is that it's essentially a voluntary process, and there are three flaws. First, there's the failure of some vehicle manufacturers to submit fuel consumption data. Second, there's been a failure on the part of certain manufacturers to meet the annual fuel consumption target. But worst of all has been the extension of this category called light trucks to SUVs and minivans, which means they are exempted from all of this. So when you talk about passenger vehicles, of course you're not talking about SUVs and minivans.

    Now, there is a solution to hand that would take you five minutes--or would take, actually, the Governor General five minutes--which is to proclaim the Motor Vehicle Fuel Consumption Standards Act of 1981. It has gone through all the stages of Parliament and it would allow us to deal with the SUV- minivan problem because under the definitions, motor vehicle is described as anything prescribed under regulations. We would simply have a governor in council order saying that minivans and SUVs were under it.

    So I guess the question is, when are you going to proclaim the Motor Vehicle Fuel Consumption Standards Act, since obviously the motor vehicle industry has broken the treaty?

Á  (1155)  

    Hon. Herb Dhaliwal: I believe that comes under the Minister of the Environment.

    Some hon. members: Oh, oh!

    Mr. John Godfrey: Then why is it in your section of the report card?

    Hon. Herb Dhaliwal: Let me comment more generally, first of all. We've set an objective that we should have a 25% improvement by 2010 for fuel efficiency of automobiles--25%.

    Mr. John Godfrey: That's for all vehicles?

    Hon. Herb Dhaliwal: We're working with the industry to have that improvement.

    We could do all sorts of things to mandate. In the end, we still have the powers to mandate greater fuel efficiencies for all motor vehicles, but we think at this time it's better to work with the auto industry, have them come up with solutions, and have them make the commitment so they become partners. We've clearly put in our Kyoto plan that we expect them to improve fuel efficiency in motor vehicles by 25%.

    There are a lot of new technologies coming up, for example the hybrid vehicles; there's a huge increase in fuel efficiency in hybrid vehicles, and there are a lot more hybrid vehicles coming on the market now.

    Actually, in Alberta I saw an SUV the university is working on to convert into a hybrid vehicle. There are tremendous opportunities to improve it, and we expect an improvement of 25% in fuel efficiency from the automobile sector. That's what we hope to achieve by 2010.

    Mr. John Godfrey: Surely there's a moral to the story here for when you go into voluntary arrangements. I would say the auto sector did not behave in good faith. Simply put, why would you think, based on experience since 1981, that voluntary partnership arrangements work better than regulation, considering what happened with that particular category of vehicle, SUVs and minivans?

    Hon. Herb Dhaliwal: Let me say that this is an important part of our Kyoto target. If we're not able to get cooperation from the auto industry, then we should look at legal instruments to make sure that happens. It's part of our Kyoto obligations, and if they don't carry that out, we have a problem. We should look at legal instruments if they do not comply.

    The Chair: Thank you, Mr. Godfrey.

    Mr. Savoy.

    Mr. Andy Savoy (Tobique—Mactaquac, Lib.): Thank you very much, Mr. Chair. Thank you for coming, Mr. Minister.

    I would like to follow up on something my colleague Mr. Reed said, specifically the issue of ethanol.

    As you and the department well know and have studied, you are looking at two basic types of ethanol, cellulosic and grain ethanol. There are, as Mr. Reed said, low-hanging fruit in this process and some that may be a little higher up on the tree that offer enormous co-benefits, specifically to rural Canada. I know there's a cabinet committee struck now to look at the allocation of these dollars. Can you give us some indication in terms of the specific allocation you are looking at for grain and cellulosic ethanol, both individually and in total.

  (1200)  

    Hon. Herb Dhaliwal: First of all, let me say, as you know, there are already a number of programs we have on ethanol. One of them is the 10¢-a-litre excise tax that is not paid for ethanol. We are also encouraging vehicles that are E85--85% ethanol fuel content--and we're also involved in research and development as well as providing $140 million in loan guarantees, so the government is already carrying out a number of programs on ethanol.

    We are as a government looking at the $1.7 billion to encourage the development of more plants, both on the grain side and on the cellulosic side. Cellulosic ethanol is included in the R and D; we don't think it's at that critical stage yet but it may be in the next few years, and we are encouraged by the research that's being done in this area.

    Our objective is to encourage the establishment of several more plants across the country by having money up front in the early part of the program. There will also be opportunities in other areas through technology and new opportunities programs. We hope that we will not only have some specific funds dedicated to ethanol but opportunities in other areas to try to speed up the process of having new plants built across this country. That's what our objective will be. I'm sure you'll be happy with our announcement in the near future about supporting ethanol.

    Mr. Andy Savoy: On a separate issue, I'll follow up Mr. Bailey's point on wind energy. I think we're at the point now where wind energy on an individual basis is feasible. We are looking at it; coming from a farming community in western New Brunswick, I have a number of farmers who have looked at wind energy and have in fact implemented wind energy and are selling, as I understand it, electricity back to NB Power.

    In terms of feasibility, are we better off looking at a flexible program for individuals who want to reduce their emissions by one megatonne? Are we looking at a situation where you can either retrofit your home, get an energy-efficient car, or do any of a number of things? Shouldn't we be adding into that initiative or incentive something around wind energy on an individual basis or a homeowner basis? In these rural areas we have a lot of open expanses of ground; I know the Prairies, for example. We have a lot of farmland and high winds, so the potential is there.

    Has the government looked not only at incentives to undertake retrofits, to purchase fuel-efficient cars, and to pursue other initiatives but also at incentives to undertake wind energy on an individual homeowner basis?

    Hon. Herb Dhaliwal: I can't say we've looked at providing incentives for individual homeowners under the wind energy program, but what we do is provide a certain amount of incentive per kilowatt hour. I believe it's a little over 1¢ per kilowatt hour under the $260 million program.

    Now, if there's a situation where in an area it makes good economic sense to do that with the subsidy we're providing, I'm sure there'll be an interest from commercial enterprises or others. But also, if we encourage the electric companies as part of their portfolio to buy a certain amount of renewable energy, this can create opportunity, as Mr. Bailey has said.

    That's one of the things we're encouraging, to get the utilities to buy power. If I want to put a solar panel on my home but I can't use that energy, I should be able to sell it back onto the grid so I can benefit from it.

    I think that will happen. This is happening in other utilities and it's happening in other places, so I think that will happen; that will encourage smaller-scale renewable energy sources that will add onto the grid.

    Mr. Andy Savoy: Mr. Chair, I don't have another question, just a statement.

    If we as a committee can come together in making some type of recommendation to the various entities--whether it be this minister or a provincial minister--I realize we have no provincial jurisdiction, but is there any role we can play as a committee in moving this agenda item forward?

    The Chair: That's what we're doing right now, Mr. Savoy.

    Mr. Tonks.

    Mr. Alan Tonks (York South—Weston, Lib.): Thank you, Mr. Chairman.

    Mr. Chairman, I have three questions for the minister. First of all, with respect to carbon sinks, does it give the minister concern that in fact there are statistics that have been put forward that indicate that over the last decade there has been a depletion of forests with respect to the capacity for carbon sinks to be figured in accurately in the overall Kyoto reduction targets?

    That's my first question, and following from that, how are we measuring carbon sinks so we have some accurate database as part of our plan?

    The second is with respect to conservation. There are those who would put forward scenarios and back them up with statistical data that would indicate conservation hasn't been figured in to the extent it should have been in the overall Kyoto plan. Yes, technology and high value-added applications of research and development have their role, a very consequential role with respect to sustainable development, but we haven't measured accurately enough and we don't have the architecture to measure what the real impact of energy conservation would be. That's my second question.

    My third is with respect to the process you use to evaluate technologies. In particular, since ethanol has been mentioned, you have to appreciate that lay people, whether generally or those in Parliament, are rather befuddled. There doesn't seem to be a process where the best science is being used to measure so the best value added can be quantified in an open and transparent way. You have these issues just within the fuel technology itself. You have ethanol and the two subsets with respect to grain-based and cellulose-based, and you also have bio-diesel, which may make a larger impact with respect to value added.

    I'm not even crossing into other technologies such as fuel cells and so on. What I'm trying to get at is, do you have a strategic plan that in an open and transparent way measures these kinds of initiatives? When you have fiscal resources that are restricted, do you want to get the highest value added with a strategic financial plan that in ten years is going to show you what you have been able to accomplish? I suggest that you shouldn't take a risk on the low-hanging fruit without that kind of comparative evaluation.

    There are the three questions: the sinks, the conservation issues, and the whole process of transparency and how we can measure these technologies.

  (1205)  

    Hon. Herb Dhaliwal: Those are very good questions, and let me start with the last one first: how do we measure some of these? A program has to be a balanced program, which means, some of it has to include targeted measures where we can measure what the reduction in megatonnes of greenhouse gas is. It's a targeted measure, for example, if someone retrofits their home and reduces their heating costs by 20% because they have better insulation, they've sealed their doors, and they've done all this. We can measure those fairly precisely.

    One of the things we're doing is, we do know what the cost on a per-tonnage basis is. We know the low-hanging fruit; we know what the most cost-effective items are, so they of course get priority because they're at the lowest cost and we want to have a cost-effective program. There are areas where we can clearly measure what's needed, and those are for the short and medium terms.

    Other things are more difficult to measure, for example technology. We can't tell how much greenhouse gas will be reduced in ten or fifteen years as a result of the investment we're making in technology. This is moving further down the line and even into the second commitment; some of the technologies will not pay for themselves. There are some measures where we can measure very precisely; other measures we need to do are less precise but they're more long-term.

    There are some measures that have a high cost but where we think there'll be a long-term benefit later on. They may have a high cost today, but in the later years there'll be a benefit if you can lower the cost, for example with ethanol. If we can encourage more plants, it will encourage use of that fuel in the long term, and there are also some co-benefits involved regarding the environment and other areas.

    Is it transparent? We know what the cost of bio-diesel is and how much the per-tonne cost is to us. We know how much we want to achieve through bio-diesel, and we announced a 4¢ reduction in taxes on bio-diesel involved in research and development. People will know what those details are.

    Conservation is very important. There are programs we're encouraging, for example where people put in a computerized thermostat, so at 10:00 your temperature drops by 3º and it starts back up at 6:00 in the morning. We encourage those types of conservation behaviour where people take action such as shutting their hot water tank off if they're going away for three days. A lot can be done through the action of people.

    This is a one-tonne challenge, to encourage Canadians to do that. In the end we may get more if people want to participate and we may get less if we don't get as much participation, but we think one tonne is something we would like to achieve. We hope we get better in conservation.

    Utilities have had power smart programs, which you may know about. I was on the board of a utility, so I know a little bit about it. It was cheaper to get people to conserve than for the utility to produce new power. At BC Hydro we spent $200 million on what we called Power Smart, which supported putting in more efficient generators and furnaces for people if they bought the more efficient furnaces that are available now. All those things are part of the mix, being more power smart with conservation and encouraging people to change their actions.

    I think the best way we can encourage people to change their actions is through educating our children, who do a better job in changing the behaviour of adults, and I know that from my own children. There's a major program in education as well to conserve energy.

  (1210)  

    The Chair: Thank you, Mr. Tonks.

    Mr. Laliberte, please.

    Mr. Rick Laliberte (Churchill River, Lib.): Thank you, Mr. Minister, for sharing your views with us.

    Maybe it's the time for me to give you a little perspective from the bush. In Canada we have a region called the boreal forest. We've coined the term “the mid-Canada region”. It's large in geography but low in population.

    One of the highlights within that region is a community called Oujé-Bougoumou in northern Quebec, which adopted district heating, where one stove heats the whole village. But it hasn't caught on. Nobody else in Canada is talking about this--or there's no incentive from the federal government to create this or for other villages to try to do this.

    In my region we don't have natural gas. We have natural gas fields right under us, but our province has shot all the gas lines south. It's forgotten its north, and this means high costs. We're living off diesel, propane, and electric heat, and the electricity in our province comes from the south. Of all places, it comes from the coal-fired generation Roy talks about.

    But we have hydro plants. We have the Island Falls Hydro Station, which has a dam already; it was built in 1927. If you put new technology turbines in this plant, you could boost the power output by at least three times--this is old technology--without even creating a new dam. You have an existing dam; you wouldn't be making an environmental impact.

    But the other part I want to share with you on the boreal forest is, this is scary terminology for me, what you call “plantations”. You're talking about carbon sink plantations. Our biggest plantation in my concept is Weyerhaeuser. Weyerhaeuser, which is an American company, has taken the forest management lease of our whole region.

    We're also in the middle of the softwood lumber issue, the people who live in the north, the traditional land users and the communities.

    In the south you have what are called rural municipalities or counties, with democratically elected people. In the north we don't have that equivalent, but we have traplines. People have forgotten that we have organized systems in our communities and villages. Why couldn't you engage with the northern communities in a forest management process instead of engaging with the companies?

    And I've seen the engagement of carbon sink credits. It makes the forest companies salivate because they hold the timber leases. Because it has to be done through forest management practices, they're going to grab all the credits and the communities aren't going to get any value out of this. Their forests are going to be managed and their forests are going to be harvested, but the industrial happening is all going south. It's like colonizing the north for the south.

    Maybe it's time a policy was adopted to take a look at this mid-Canada region. Let's take a mature look as a country at what can we do together with these communities. It's a specific region.

    Right now you're focusing on the provinces and territories, looking at each of their norths, but there are thirteen of them. Why don't you engage with that region as a specific region on how to address it.

    You're talking about research and innovation. Research and innovation technologies deal with institutions. All the institutions are in the south. Nobody's going to do innovation and research in the north. This is a whole new area, and it's like virgin territory. It's time we took a look at it, and it's time for Natural Resources to roll out the map and see there's a huge region called the mid-Canada boreal forest. It's a huge carbon sink. Our muskegs are the hugest carbon sinks you can find, but nobody is going to put a value on them until you put development in or whatever. In the meantime we have to take an accounting of that region.

    The other part I just wanted to add is, engage Canadians, maybe through a communication strategy, and show us on a graph the carbon in megatonnes. You have to start breaking in Canadians in general at the personal level so they can grab onto it.

    In 1997 I was in Kyoto, and that's what I saw right away. You need to engage people in this dialogue. That's what happened in Kyoto with Canadians pitching tables, but it hasn't happened here, and I think we need to make that bridge. It's a communications bridge. It's new technology, it's new terminology, and people have to see on graphs what their impact for the greater good is.

    In terms of the boreal forest, let's see what you have as a minister, and tell us how you would engage with these communities. Roll out the map. There are people who have lived there for centuries--sustainably. Maybe you can use that knowledge for long-term sustainability instead of looking at capitalization and value added, things that have been used in compensating those people who are losing the value. How about working on a northern view?

  (1215)  

    The Chair: Mr. Laliberte, with your first set of questions you have raised issues that would take a three-day conference to examine and answer properly.

    Mr. Minister, you have quite a challenge in replying in a short time.

    Hon. Herb Dhaliwal: First of all, let me compliment the honourable member, who has done a lot of work in this whole area of the boreal forest and mid-Canada and on how we can look at that as a region for development and as a rural economy. He has done a tremendous job in bringing it to our attention that this area needs to be looked at and referred to as the boreal forest or mid-Canada region and in explaining how we can take benefit through knowledge of the huge asset we have.

    One of the things Forest 20/20 tries to deal with is the rural areas and how they can benefit from afforestation. It is really directed towards opportunities that may exist in those parts of the country where it will create economic opportunity for first nations and for farmers who have marginal farmland. It's something we're examining seriously in this whole area. I know the honourable member is very interested in that.

    In terms of R and D, that's a very good point that we should think more about mid-Canada and northern areas. We do have a minister for rural development to make sure that in any decision we make in cabinet rural Canada is taken into consideration, and the boreal forest is part of that agenda.

    As to engaging Canadians, I think that's an excellent point. One of the things we hope to do is get Canadians to go on the Internet and go in and see how much they're reducing greenhouse gases according to what action they're taking. They'll be able to be fully engaged through the results of the actions they take in terms of climate change. Also, we'll be having a major program in terms of advertising kits and all that to fully engage Canadians to be partners and to be part of the solution for climate change. That is something we're working on, and I thank you for your excellent input in this area.

    The Chair: Thank you, Mr. Laliberte.

    We'll start soon with the second round of questions, but the chair would like to ask a few.

    The first question has to do with this unique invitation contained in the Canada plan, namely the one-tonne challenge, which is unsurpassed by other countries and is of a typically Canadian flavour. Would it be possible, Mr. Minister, since it would take up too much time for the details, for your department to supply the members of the committee with a detailed reply on how the one-tonne challenge is going to be met by your department?

  (1220)  

    Hon. Herb Dhaliwal: Absolutely. We can provide a clear plan as to how we hope to accomplish the one-tonne challenge. I'd be happy to provide all the information on that.

    The Chair: The next question has to do with taxation, and it is roughly this. Why is it that the taxation system we have still encourages the production of greenhouse gases and does not adequately encourage the production of energy through renewables? How can you explain that fact?

    Hon. Herb Dhaliwal: First of all, we are moving to develop an economy that reduces greenhouse gas emissions through a variety of programs.

    The Chair: I'm focusing on taxation, Mr. Minister. We do not yet have a tax system tailored to implement Kyoto. How come?

    Hon. Herb Dhaliwal: Probably the finance minister could better answer that, but what I can say is, first of all, we are investing in R and D to make sure we do our part in research and development. Also, we're creating incentives for renewable energy. For example, our tax system encourages ethanol. That's a taxation change we've made, getting rid of the excise tax of 10¢. So there have been changes in taxation. On the bio-diesel there has been a change in taxation as well, where we're getting rid of the 4¢. There are examples now where we're moving towards providing changes in our tax system to encourage renewables.

    Have we gone far enough? Probably not. There are other things we can do, but there is a move now since Canadians are more aware of the challenge of climate change.

    The Chair: The question is, why are we not removing subsidies that encourage the greater production of greenhouse gases?

    Hon. Herb Dhaliwal: I think there are now fewer and fewer subsidies that exist. You could argue, well, we give some capital cost allowance in the oil sands or we provided loans in Hibernia--

    The Chair: That was through accelerated depreciations. The question is, why are we subsidizing an industry that would do very well even without the subsidies?

    Hon. Herb Dhaliwal: I think we recognize that some industries require some additional tax benefits because of the large upfront investments and the higher risk involved. Let me give you a good example, the oil sands, where we've spent a lot of money on R and D. This requires a huge upfront investment. But look, we've also benefited the economy in the thousands of jobs created and the billions of dollars we collect in taxes from them as well. There are benefits on one side because we've encouraged growth in those areas.

    What we need to do is to spend money on R and D to reduce greenhouse gas emissions. For example, clean coal technology is one area because we're going to burn fossil fuels for a while. It's not like we're going to close down the fossil fuel industries tomorrow; they're going to be here for a while, and we need to invest in R and D so our economy can continue to benefit from those natural resources. That's why we invest in technology to reduce greenhouse gases.

    The Chair: Thank you.

    The next question has to do with the table on page 38 of the report “Climate Change: The Federal Investment”. The question that comes to mind is, how many megatonnes will be reduced by these measures amounting to $1.7 billion? For instance, there's the measure that is indicated as “Action Plan 2000” with seven federal departments; what is the objective of that particular measure in terms of megatonne reductions? In other words, we have money figures but we don't have any megatonne figures. How come, and is that something you're going to produce in due course, namely the megatonne figure?

    Hon. Herb Dhaliwal: Yes, we will be producing more details on the amount of megatonnes we would reduce. Maybe Neil can comment on this with more detail and precision.

  (1225)  

    The Chair: Could you indicate when this committee can be informed about the megatonne reduction for all the measures listed on page 38.

    Mr. Neil MacLeod (Director General, Office of Energy Efficiency, Department of Natural Resources): I can tell you a few right now, Mr. Chair. Action Plan 2000 had a target of 65 megatonnes, of which 45 was domestic. Rather than my listing the few, it would perhaps be better if we did give a written response that would list all of them. For some it would be more difficult, for example the funds we've given to the Federation of Canadian Municipalities. We have very strict criteria for how that money is used. Precisely what individual projects will come forward is something that is up to the municipalities, but for many of these we can provide answers.

    The Chair: Finally, because my time is up, in your presentation this morning, Mr. Minister, you made reference to innovation technology several times. Is innovation technology the responsibility of your department or the Department of Industry?

    Hon. Herb Dhaliwal: Both our departments are involved. We share this area. They have some advantages where they're able to do a better job. We have certain advantages, and we have a platform of research and development we're involved in. We share this area of innovation and technology.

    Let me give you an example, Mr. Chairman, the Ballard fuel cell. The fuel cell is something we in NRCan have been involved in for the last 20 years, and we have a lot of expertise and knowledge in this area. We have a shared responsibility in technology and innovation, and there are some areas where we've done a lot. Energy efficiency is something we've been in the forefront on, and we'll continue to do work in those areas. It's a shared responsibility between both of our departments.

    The Chair: Could members of this committee be supplied with a breakdown of how in your department the innovation investments are being allocated.

    Hon. Herb Dhaliwal: Yes, absolutely; we can provide that for you.

    The Chair: Thank you.

    We'll start the second round with Mr. Bailey.

    Mr. Roy Bailey: I'll just make an observation so everybody can get in.

    I recently spent a week in Normandy. They have good sun there and I burnt up pretty nicely.

    One night I did something I would challenge my colleagues to do. Take a notepad and, for the first 100 vehicles you meet--not trucks but vehicles from station wagons down--take a look and do what I did. First of all, I wanted to know how many were powered by gas--petrol--and how many were powered by diesel, what they call gas oil. Of the first 100 cars--and I included in these 100 three you would call SUVs--71 had a standard transmission. Of those 100 cars, almost 90% were diesel-powered. Of course, when you get a smaller engine, an automatic doesn't work so well.

    But I picked up on something else, Mr. Minister. In order to protect the highway--I asked these questions--with the bigger trucks the back axle of the tractor was a single axle. I asked why and found that it was because in turning, while they use that much more fuel, it's also that much harder on the highways.

    I say this because North Americans are in love with SUVs and big vehicles; not so where I visited in Normandy. They drove faster, but even the women could handle that standard transmission like a charm. I'm going to tell that to my wife because I think I might have to go that way.

    The Chair: Thank you, Mr. Bailey.

    I'm not so sure it was a politically correct statement on your part, but....

    Some hon. members: Oh, oh!

    Hon. Herb Dhaliwal: I'm not going to comment on that, Mr. Chairman.

    Mr. Roy Bailey: They are very aware of the cost factor, but conservation comes through their use of petrol and carbon fuels much more than with us.

    Hon. Herb Dhaliwal: Gasoline in Europe is much higher priced than in North America as well.

    Mr. Roy Bailey: That's right. They are forced into it.

    The Chair: Thank you.

    Monsieur Cardin.

  (1230)  

[Translation]

    Mr. Serge Cardin: Thank you, Mr. Chair.

    Here is a fine example of the effectiveness of solar energy: my colleague is full of energy after having spent a week in the sun!

    I would like to come back to bilateral agreements and the approach advocated by the federal government. The sectoral approach is of course favored by the federal government. My colleague and myself have never shied away from the fact that we favor the jurisdictional approach. I referred to a meeting of the Industry Committee on April 29. Mr. Brown explained on that day to my colleague Mr. Bigras that there could be a sectoral approach but that would be applied in a jurisdictional fashion. One example of this could be that of the two paper companies on both sides of the Ottawa River.

    We are in favor of the jurisdictional approach within a sectoral approach. On the other hand, the Minister of the Environment said before the Industry Committee on June 10 that he was open to the idea of concluding agreements with the various jurisdictions, providing of course they were based on good ideas, to quote his own words. I would like to know, Minister, what is your position, given the fact that Mr. Anderson told us that we could favor a jurisdictional approach, while on the other hand Mr. Brown seems to favor the sectoral approach. What is your position?

[English]

    Hon. Herb Dhaliwal: Mr. Chairman, I think what we have outlined in the plan is a sectoral approach, because this is a national plan. It would be difficult to have the same industry having different requirements in different provinces; it would make it a lot more difficult if we didn't have a sectoral approach. You would have a situation where an industry in one province would have different requirements from those for the same industry in another province.

    We have chosen to have a sectoral approach, but that does not mean we cannot cooperate with the provinces. There will be important partnerships developing with the provinces to make sure we deliver on them. There is ample opportunity to work with the provinces through MOUs and through other agreements, and in fact that's what we're working towards. We have chosen the sectoral approach because this is a national plan and it ensures we have a national program to deal with industry.

    It also provides us with some flexibility in working with each sector because each sector has different needs, where they've approached this differently. That's why we have also created a covenant situation, where we can actually sign a covenant with a sector, which gives them flexibility, as well as having them just comply, dealing with it on a non-covenant basis. So we provided flexibility for the industry.

    I think it would be very difficult to have a situation where one provincial government had a different set of requirements for an industry from those in a different province. I think the sectoral approach is the right approach; it reflects that it's a national program, and it doesn't break it down on a provincial basis.

[Translation]

    Mr. Serge Cardin: Do I still have some time?

    We could have some difficulty agreeing on this. Will negotiations with large emittors allow taking into account the level reached by individual companies? As well, will we respect, more globally, the fact that some provinces, including Quebec, have reached some targets?

    There could be significant gaps, for example if pulp and paper companies on each side of the Ottawa River are not at the same level. Will we ask both companies to comply fully, even though they are not necessarily in the same jurisdiction and their emissions do not have the same impact?

[English]

    Hon. Herb Dhaliwal: First of all, as I said, there is an MOU that is being discussed with all provinces, and specific interests will be included in the annex. In terms of standards, we're working with each sector to establish that. That's what we are dealing with now, we're negotiating with them, and as I said, different sectors will want to deal with this on a different basis. Once we develop that, then we expect the industry and each sector to comply with it to reach our 55 megatonnes. That's what we are doing; in the end we have to reach 55 megatonnes.

    We've put in some measures that will ensure we don't create an unreasonable burden on any one region of the country. That's what we are trying to do, get a balance. Those are things we are negotiating with the large emitters right now, how they can comply to reach our target of 55 megatonnes.

  (1235)  

    The Chair: Merci, Monsieur Cardin.

    Mr. Herron, please; one question.

    Mr. John Herron: I would like to pick up where the chair had started to question with respect to financial incentives, particularly tax incentives for renewable energy sources.

    You mentioned that perhaps we are not moving as far as we likely need to go. I would like to point out that the government really has essentially sat on its hands over the last five years with respect to delivering tangible initiatives to the Canadian public. I remember, coming out of the Kyoto debate itself, the then Minister of Natural Resources said we would reward early action. Well, you still don't even have an early action framework, and we're five years after Kyoto in terms of what early action means on the ground from an industry perspective.

    The message I'd like to deliver is that you're five years behind. You made a commitment with respect to what the country would do in terms of hitting its target by 2008-2012. If you say this is a question for the Minister of Finance, then I strongly encourage you to have that conversation hard and fast. I find it very difficult when on one hand you're saying this a joint project between Industry and Natural Resources and you are working with the other department, and then here you say, well, that's really Finance's call about whether they do that or not.

    I know you're trying to be constructive, Minister, but the message I'd like to deliver is that if we're going to hit the target and if we've put our word there, we need to be far more aggressive with respect to tax incentives to foster the growth of renewable energy sources.

    Hon. Herb Dhaliwal: I don't disagree with you that we need to look at more measures to encourage the use of renewable energy. We've announced some financial incentives, and I think over time we'll probably introduce more, but it's something we continue to work on. I certainly support the government doing more in this area and providing tax incentives to people who make the right choices.

    In terms of early action, we have made a commitment that anybody, any companies involved in early action, will not be disadvantaged. Now we have to get into how that will be translated when we actually do the detailed negotiation. This is something that's being worked on right now, how we put that into the formula, and we're working with industry to do that. These are complicated things. How do we determine that early action doesn't disadvantage us in how we accomplish that?

    The other thing we have to remember is, for people who take early action, one of the reasons they did that is because it's good business. I remember, when I was a business person, we converted our fleet to propane. Why? Not because we thought we'd be part of the Kyoto plan 20 years from then, but it was good business. We would get a payback in 12 to 18 months, so we were saving money but it was also good for the environment.

    Also, taxis have converted to compressed natural gas. They've been doing that for 15 or 20 years as well because it saves them money. Some major companies have made major changes in the way they do their operations because it was good business; that's why they took early action to reduce energy consumption and reduce greenhouse gas emissions.

    The Chair: Thank you, Mr. Herron.

    Mr. Comartin.

    Mr. Joe Comartin: Thank you, Mr. Chair.

    Mr. Minister, I recently had one of my staff try to find out, in terms of federal procurement of vehicles, just how many we had that used alternative fuel sources and were bought because of the focus on energy conservation. I think we went through every department in the government, and quite frankly we basically encountered a high level of ignorance as to how many vehicles they had and whether they were fuel-efficient or used alternative sources.

    I'm wondering if you have an inventory, and if you do, I would like to have that and I'm sure the rest of the committee would as well. Also, are there are any plans within the planning that's going on now for federal procurement of vehicles, with internal combustion engine vehicles in particular, to replace them with alternative fuel vehicles?

    Finally, you just announced--at least it was in The Globe and Mail yesterday--that you were going to provide some subsidy incentives for retrofits in housing. Are you looking at any similar type of program for people purchasing vehicles that may be more expensive but use alternative fuels?

  (1240)  

    Hon. Herb Dhaliwal: First of all, let me say there is an effort by the federal government to procure alternative energy vehicles. In 1997, when I became Minister of National Revenue, the first thing I asked was that the ministerial vehicle be converted to natural gas. My ministerial vehicle has been powered by natural gas ever since then; my current vehicle runs on compressed natural gas.

    Some departments, frankly, have done a better job than others. I understand that Natural Resources Canada has actually done a very good job in converting to E85 vehicles, which use ethanol, and in converting to compressed natural gas and alternative fuels. We've done a good job but other departments have not done so well. We need to make sure that all government departments do a better job in converting to alternative fuels.

    In terms of incentives for consumers to buy alternative fuel vehicles, this is one of the options, of course. There are some rebates for new vehicles that run on alternative fuels, but I honestly don't know the details of that. We can provide that for you, but they do exist when you buy a new vehicle that runs on compressed natural gas or alternative fuels.

    As a government we need to make sure that all departments do a better job in this area, and we'll provide you with the details as to what's happened. We have made progress but we have a long way to go.

    The Chair: Thank you, Mr. Comartin.

    Mr. Reed, do you have a question?

    Mr. Julian Reed: Thank you, Mr. Chairman.

    I was just given some information, Minister, a few minutes ago. I don't have the documentation to back it up but I trust the source. Ducks Unlimited research is showing--

    Some hon. members: Oh, oh!

    Mr. Julian Reed: --that wetlands are good at sequestering carbon. The question that arises out of that is--and this is something that never occurred to me--is the Minister of Natural Resources able or prepared to enter into partnerships with organizations such as Ducks Unlimited to quantify the sequestering that does place in water in addition of course to what's happening with forest cover? Would that be something the ministry would give consideration to?

    Hon. Herb Dhaliwal: First of all, let me say that Ducks Unlimited is doing a tremendous job in preserving wetlands, and they should be congratulated for the good work they do.

    There has been research in the whole area of oceans and wetlands as to whether they sequester carbon. I know that when I was at DFO there was a project being looked at. I don't know if there's any conclusive evidence, but I know the research has been done on oceans as well as to how we can sequester CO₂. There are different views I've read in the science. Some believe there is a way, others believe there isn't. I don't know if there's anything conclusive on that, but I know research has been done.

    Preserving wetlands is an important objective and we've been involved in that; we've been supporting programs. As a former DFO minister, I know this is something we've participated in. Whether there's a sequestration of CO₂ or not, wetland preservation is certainly something we as a government have supported, and Ducks Unlimited does a tremendous job in this area.

  (1245)  

    The Chair: Thank you, Mr. Reed.

    Mr. Savoy, do you have a question?

    Mr. Andy Savoy: Thank you very much, Mr. Chair.

    We've recently seen a reduction in emissions, the first time apparently since 2000-01. It's the first time we've had a growing economy and a reduction in emissions at the same time. What government policies do you think contribute to that, and how are we going to learn from that for future initiatives?

    Hon. Herb Dhaliwal: First of all, I'm glad there's a reduction, but really, we have a long way to go. People don't realize that this first commitment only defers the problem 10 years; this is an issue we're going to have to be dealing with for a very long time as a global community.

    The program we're announcing doesn't really actually start reducing CO₂; this will take some time for us to accomplish. As to what government programs have accomplished that, it would be difficult for me to say. Obviously, in the last decade there's been a greater consciousness of greenhouse gas emissions and the whole problem of climate change that was not there before.

    For those people who still say this is not a problem, all they have to do is go up to the north and see the receding glaciers. The local communities and the pilots who fly over those areas will tell you there's been a huge change in the north. That's where they're seeing the real impact of climate change, with the receding glaciers.

    This is going to be a long-term problem. We have had a program with our first commitment, on which we spent $1.7 billion; that will certainly have an impact, and the program we'll be announcing in the second phase will have an impact. It's a step-by-step process, and we have a long way to go as a global community to deal with climate change. This is only the first, small step to deal with it.

    The Chair: Thank you.

    Mr. Laliberte.

    Mr. Rick Laliberte: This is just to dust one off from 1997, so to speak. When we were in Japan, both in Kyoto and Tokyo, when the preliminary hearings were taking place, the one difference I noticed between our cities and theirs was that they turned their lights off at night. After working hours and on weekends, they shut off the office building lights.

    In coming home, I thought one strategy we could use would be to empower our youth, something like a Katimavik program, perhaps short-term with teams of youth throughout the country who can be the conscience of Canada. They could go knock on the door of the Bank of Canada and say, why do you leave your lights on at midnight? Go to the government departments, go to corporations, go to homes. They could say, take stock of your water heaters.

    It's the youth; empower the youth. You and I and all of us as parents can't deny what happens if you talk the truth with your children. Kyoto is a truth. It's something about the way we're impacting our world, and we have to change our society. Now, the will to change our society is carried in our youth, and we all look at the future as to what we're leaving our youth and our children. So why don't you empower the youth as allies in creating Canada's society? We're going to have to change. We can't look at the Americans and say, hey, that's what we're going to do, drive Hummers and SUVs up until we run out of fossil fuels.

    For this situation, for us to awaken and be conscious of it we should focus on the youth and empower the youth. You're giving all these incentives to corporations, adults, and academics. Give some resources to our youth. Let them be empowered, let them be employed, and let them knock on our people's doors and knock on Canadians' doors and wake them up about the Kyoto reality.

    The Chair: Mr. Dhaliwal, please.

    Hon. Herb Dhaliwal: Let me just comment, first of all, that we are very much including youth by making them energy ambassadors to help out, to participate; we're working with youth to have them be part of the program.

    Let me say this about the other thing, leaving lights on. I remember, when I became Minister of National Revenue, I drove by our National Revenue building and I saw the lights on at night, so I wrote a note saying, why are the lights on during the weekend? And I got a note saying, it's Public Works.

    Some hon. members: Oh, oh!

    Mr. Herb Dhaliwal: So I wrote a note to Public Works saying, why are lights on at night, especially on the weekend? I asked for an answer as to why this happened, and people got on it.

    We have to be conscious, and it's good that each one of us is also conscious of this and can bring it to our attention as to why this happens. We see it all the time. We see that after midnight tennis courts are still lit up in our parks, and I wonder, who's going to play tennis after 12 o'clock? Let's shut those things off. So there are a lot of things we can do.

    But the Government of Canada is taking a leading role. In our commitment to reduce emissions by 31% we are taking a leading role, and we hope other governments will take the same role. But all of us have to be very vigilant to make sure that when we see we're wasting energy, we bring it to the attention of the appropriate people and have it changed as quickly as possible.

    I welcome your comments, and it's something I did when I first became Minister of National Revenue.

  (1250)  

    The Chair: Mr. Laliberte has the germ of an idea in his question, to urge you to launch a program of student employment next summer under your auspices to achieve what he was saying. It may be quite worthwhile.

    Mr. Reed has a question.

    Mr. Julian Reed: I just wanted to point something out for the Minister's information. This question of energy conservation with turning off lights in buildings was something that was introduced by the Minister of Energy in Ontario during those heady days when crude oil was hitting the Chicago market at $50 a barrel, so it's not a new idea. Some of the argument that was put up against it was that some of the newer buildings were engineered in such a way that the lights contributed to the internal temperature of the building.

    But this is not a new idea, although it's a very good one, I think.

    Hon. Herb Dhaliwal: I'll just to add to that, Mr. Chairman. There are some new, high-tech buildings now where the lights only go on when someone's in the room and they automatically shut off when people are out. So there are new technologies that do that, and it's something we have to focus on.

    I know that in our buildings every switch had a little label that said “Power Smart” to remind people to shut lights off when they left. We need behavioural changes for people to do that, where every time they step out they shut the lights off. We just need to educate people and make sure they're aware of it and recognize that, and that's how we can conserve energy as well.

    The Chair: Mr. Minister, in March of this year the U.K. government announced a target for the reduction of greenhouse gases by 50% by the year 2050, if I remember correctly, or even 60%. It was an astonishing announcement, one that evidently shows that the U.K. government has an energy plan.

    The question to you, therefore, would be roughly this. How come we can have a climate change plan without having a sustainable energy plan for Canada?

    Hon. Herb Dhaliwal: I know the British government has put out a paper on energy, looking at the long term for energy and setting out some clear targets on how much should come from renewable energy as well. There are some people who would question the reality of some of their targets; can they in fact attain the percentage they have set out?

    We have set targets for the federal government, and we've set a target under the Kyoto plan in the first commitment. Now, whether we should set a target for the second commitment as well or further into the future is, I guess, what your question is.

    Should we be looking beyond 2010? By 2005 we will be working and negotiating under the Kyoto for the next commitment period. We don't know what that will be, but certainly for us as a country that's a good point to make. Should we be having a much longer-term target to do that, and would it be realistic to plan them now? I don't know. That's a good point, Mr. Chairman. It's not something we've done, but I'll certainly take your representation into consideration.

  (1255)  

    The Chair: Mr. Minister, even the most ardent supporters of the government would find it difficult to claim that the current fiscal system strongly supports the renewable energy sector. Could you give an indication of whether you intend to press the Department of Finance for a more generous fiscal system, possibly one as strongly in favour of renewables as the one we have at present for the non-renewables?

    Hon. Herb Dhaliwal: I can assure you that I support renewables, and we are always pushing Finance to give more support to it with programs such as the wind energy program, in which we're investing $260 million.

    In terms of providing credits for renewable energy and alternative fuels, this is something I support as well. I can assure you and the committee that we'll continue to encourage and push Finance to support the use of alternative energy and renewable energy as a program for us as a government.

    I think you've seen some of the changes, and I think you'll see more as we make climate change a major objective and priority for this government. We have no choice except to encourage alternative fuel and renewable energy if we truly want to make a difference in climate change.

    The Chair: Minister, we haven't yet heard from the Minster of Industry, who has been invited to appear before this committee and hopefully will come next Tuesday, and we haven't heard from Transport, nor from Agriculture. But so far many members of this committee have had the impression the Department of Finance is not pulling its weight in the implementation of Kyoto, and we would like to bring that to your attention.

    Hon. Herb Dhaliwal: Well, I want to thank you very much for the excellent questions and your comments. I certainly will take all that into consideration, and we'll try our very best to give you comprehensive answers on those areas you've asked us about, Mr. Chairman, with full details.

    The Chair: We thank you for appearing before us. We are most grateful you did come.

    Monsieur Cardin, vous avez une question?

[Translation]

    Mr. Serge Cardin: It is on the same subject.

    The Chair: I will give you only one minute.

    Mr. Serge Cardin: Mr. Chair, under the fiscal system that you have talked about, billions of dollars are collected by the government in the gas or oil industry, as the minister told us. We know that the net amounts are around five or six billions dollars per year. So it seems that it is rather easy to collect some money, but more difficult to distribute it in order to reduce greenhouse gases.

    That is why I am saying that the government is timorous. It collects five or six billion dollars per year by taxing oil and it invests only three billions over five years. This shows how timorous we are, and not as rapid as we could be. Given that the people must still be taken into consideration if we want to reach our goals, the information must be transmitted.

    Let's take the example of the automobile industry. You were spending some 30 millions dollars to make the people more aware, while the automobile companies were spending billions of dollars to sell their cars. We are not fighting with the same weapons. In my view, it is important for the public to be well informed.

    An other example: I know that the government does not want to label GMOs, but would it accept that all products be labelled, so that consumers would know when they buy a product how much they contribute to the production of greenhouse gases?

    I consider the government to be quite timorous at the level of their investments, compared to what they collect in taxes on the sources of pollution. There is a great irony there. That is why we can question whether long term targets can be reached, given that the present situation is yielding huge benefits.

[English]

    Hon. Herb Dhaliwal: We have a program of labelling, for example Energy Star, which shows that those appliances are the most efficient equipment for homeowners.

    We are looking at off-road vehicles being labelled as well, and we're working with the auto industry. I've seen information available where it clearly shows you the amount of greenhouse gas produced by a vehicle you buy. So there is more work being done on labelling, and we're working with the industry in this area. I appreciate your input in this area.

·  (1300)  

    The Chair: Mr. Minister, again, thank you for appearing before us. We are very indebted to you. We hope to see you again.

    Hon. Herb Dhaliwal: Thank you very much, Mr. Chairman. It's been my pleasure.

    The Chair: Meeting adjourned.