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37th PARLIAMENT, 1st SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Tuesday, May 7, 2002

0930

The Chair (Mrs. Sue Barnes (London West, Lib.))

Ms. Julie Gelfand (Chair, Green Budget Coalition)

0935

0940

The Chair

Mr. John Bennett (Director, Energy and Atmosphere Campaign, Sierra Club of Canada)

0945

The Chair

0950

Ms. Christie Spence (Co-Manager, Wildlands Campaign, Canadian Nature Federation)

0955

The Chair

Mr. Jack Layton (President, Federation of Canadian Municipalities)

1000

1005

1010

The Chair

Mr. Mark Rudolph (Coalition Consultant Coordinator, Clean Air Renewable Energy Coalition)

1015

Ms. Monika Siegmund (Senior Tax Adviser, Shell Canada; Representative, Clean Air Renewable Energy Coalition)

1020

Mr. Mark Rudolph

The Chair

Mr. Grant McNally (Dewdney--Alouette, Canadian Alliance)

Mr. Mark Rudolph

Mr. Grant McNally

Mr. Mark Rudolph

Mr. John Bennett

1025

Mr. Grant McNally

Mr. Mark Rudolph

Ms. Monika Siegmund

Mr. Grant McNally

Mr. Jack Layton

1030

The Chair

Ms. Pauline Picard (Drummond, BQ)

Mr. John Bennett

1035

Ms. Pauline Picard

Mr. Mark Rudolph

Ms. Pauline Picard

Mr. Mark Rudolph

Ms. Pauline Picard

Mr. Mark Rudolph

1040

Ms. Pauline Picard

The Chair

Ms. Maria Minna (Beaches--East York, Lib.)

Mr. John Bennett

Ms. Maria Minna

1045

Mr. Jack Layton

1050

The Chair

Mr. Lorne Nystrom (Regina--Qu'Appelle, NDP)

Mr. Jack Layton

1055

Mr. Lorne Nystrom

Mr. John Bennett

1100

Mr. Lorne Nystrom

Mr. John Bennett

Mr. Lorne Nystrom

Mr. John Bennett

The Chair

Mr. Nick Discepola (Vaudreuil--Soulanges, Lib.)

Ms. Christie Spence

Mr. Nick Discepola

Ms. Christie Spence

Mr. Nick Discepola

1105

Mr. Jack Layton

Mr. Nick Discepola

Mr. Jack Layton

1110

Mr. Nick Discepola

Mr. Jack Layton

The Chair

Mr. John Bennett

Mr. Nick Discepola

1115

Mr. John Bennett

The Chair

Mr. Charlie Penson (Peace River, Canadian Alliance)

Ms. Christie Spence

Mr. Charlie Penson

1120

The Chair

Mr. Charlie Penson

Ms. Christie Spence

Ms. Joan Kuyek (National Coordinator, Mining Watch Canada; Representative, Green Budget Coalition)

Mr. Charlie Penson

Ms. Joan Kuyek

Mr. Charlie Penson

1125

Ms. Joan Kuyek

The Chair

Mr. Gary Pillitteri (Niagara Falls, Lib.)

Mr. Jack Layton

Mr. Gary Pillitteri

Mr. Jack Layton

The Chair

CANADA

Standing Committee on Finance

NUMBER 098

1st SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, May 7, 2002

[Recorded by Electronic Apparatus]

¿ (0930)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): Order. Good morning. Bienvenue à tous.

The order of the day, pursuant to Standing Order 108(2), is pre-budget discussions. Today we have with us, from the Green Budget Coalition, Julie Gelfand, chair; Joan Kuyek, national coordinator, Mining Watch Canada; and Sara Wilson, the program manager. Welcome to all three of you.

Julie, I understand you will be doing the presentation.

We also have the following: from the Sierra Club of Canada, John Bennett, director, Energy and Atmosphere Campaign; from the Canadian Nature Federation, Christie Spence, co-manager, Wildlands Campaign; from the Federation of Canadian Municipalities, Jack Layton, president; and from the Clean Air Renewable Energy Coalition, Monika Siegmund, a senior tax advisor with Shell Canada, and Mark Rudolph.

Welcome to everyone. Each organization as represented in our agenda will have up to ten minutes to make presentations this morning. After that we will have questions from our committee. The up-to ten minutes will include both question and answers. That way, all of us will have as much chance as possible to question you as you present to us. Your materials have been distributed.

Please go ahead, Julie.

Ms. Julie Gelfand (Chair, Green Budget Coalition): Bonjour. My name is Julie Gelfand, and I am the chair of the Green Budget Coalition, which represents about 15 national conservation and environmental groups. In our coalition we have groups such as Ducks Unlimited Canada, World Wildlife Fund Canada, the David Suzuki Foundation, the Sierra Club of Canada, Mining Watch Canada, Canadian Nature Federation, and the list goes on and on.

We're here today to talk to you about innovation, competitiveness, and a sustainable economy for Canada. We would also like to talk to you today about ensuring a high quality of life for Canadians.

What we really want to do today is make a case and challenge you, the government, the committee, to actually have a green budget this round. We think it's time. There have been budgets on other themes in the past, the latest one on security. We think it's time to address the issue of environmental security, and we think it's time for a green budget.

You might ask the question, how can we have a clean environment and an innovative economy at the same time? The real question is, how can we not proceed?

I have a quote here:

Sustainability is not just a societal obligation. It is a real business opportunity. The objectives of those of us who seek increased environmental sustainability and better social responsibility are in many ways exactly the same as the objectives of those of us who seek increasing shareholder value.

It might sound as though it's an environmentalist making those comments, but in fact they're the words of Gary Pfeiffer of DuPont, the oldest Fortune 500 company in the world, at a recent conference on environmental innovation.

Increasingly, business leaders are making the connection between environmental protection, social responsibility, sustainability, and good business sense. We're really pleased that the committee has invited another environment and green economy panel again this year. Congratulations on doing that. We thank you for allowing us to present our case.

This morning we want to demonstrate that when we talk about addressing climate change—and irrespective of what was on the front page of the Globe and Mail today, we need to ratify Kyoto—when we're talking about reducing toxics and pollutants in our air, water, and soils, what we're really talking about is innovation, which is one of the Government of Canada's agendas.

When we talk about protecting nature, our natural capital and biodiversity, what we're really talking about is protecting our competitive advantage. We're talking about competitiveness.

So it's clear to us on this panel that dealing with environmental issues, dealing with the conservation of nature, dealing with reducing emissions of whatever toxic chemical we're talking about, or whatever greenhouse gas we're talking about, will help us deal with innovation and competitiveness.

Last year your committee report started to make some of these connections, and this year we want you to continue to do so.

Another advantage of working on environmental innovation is to reverse what we've been calling lately the brain “drain”. We'd like to talk about a brain “gain”. We think an investment in energy efficiency, reducing greenhouse gas emissions, and reducing toxic pollutants means that we need to do more research, development, and implementation of leading-edge technologies and policies. Couple that with nature like nobody else has on this planet and we'll be able to find and keep the best and the brightest here in Canada.

However, unless government investments are smart and targeted so that they are interlinked with other government objectives such as clean air, clean water, and the conservation of nature, then a high quality of life, a sustainable economy for Canadians, and the brain gain may not be a reality.

Here are just a few examples of how a green budget can create economic opportunities while improving our quality of life.

Since 1995, global wind power has increased almost fivefold. Just in the past year wind power has jumped 31% globally and 63% in the U.S., and still we have barely tapped the world's wind resources.

¿ (0935)

What we need is a kick-start, or an opportunity to grab hold of renewable energies. The former head of Royal Dutch/Shell—and we have someone from Shell speaking to you later on—called for a commitment to increasing renewable energy targets. He recommended that:

If renewables are to flourish we must look at methods of financing the high up-front cost of green energy. Governments from Northern countries need to remove inappropriate subsidies and switch to supporting renewable energy.

In fact, Mining Watch Canada—Joan can speak to this later—is doing a study on the subsidies that we are doing for the mining industry. We are also going to be presenting you later this year with opportunities for cutting subsidies in the oil and gas sector as well as other sectors.

We know that renewables are economically viable. Another study from Royal Dutch/Shell concluded that renewable energy sources could supply 50% of the world's energy needs in less than 50 years. They also create huge numbers of jobs. Studies have shown that investments in green energy create about 50% more jobs than similar investments in conventional energy.

Energy efficiency retrofits create more jobs per dollar spent. My friend, John, will be talking about that later. They save money. The success of the Toronto Better Buildings Partnership—Jack can probably speak to that—could be spread right across Canada, providing energy savings for households, businesses, and schools.

Public transit and sustainable transportation also hold great opportunities for our cities. A recent World Bank study found that the world's wealthiest cities have the best sustainable transportation systems and that those cities actually spend less per capita on transportation. So you have the wealthiest, the most sustainable, and the cheapest.

The investments to deal with climate change and air quality will not only create more jobs but also cut greenhouse gas emissions and air pollutants, saving Canadians, and especially our kids, from such respiratory ailments as asthma and the public health costs caused by them.

We would welcome further opportunities to prove to you that when we are talking about dealing with climate change and air quality, we are really talking about innovation. Set a target. The best and the brightest will figure out a way to meet it. They most likely will stay in the country because of our other recommendations related to reducing pollutants. Having a lot of nature in this country will keep people here.

Another untapped source of economic opportunity and improved health for Canadians is an investment in healthy communities. To protect the quality of life and our health here in Canada, we need to reduce the use of toxics and pollutants. In doing this, Canadian communities and businesses will respond, again, by innovating new ideas and new technologies to address this challenge.

With targeted investments, the potential of the environmental industry's sector can be unleashed. Such investments are not only economically viable; they can also address issues that Canadians are highly concerned about—namely, the protection of our air, and recently the protection of our water, soils, and food quality.

According to a recent Environics poll, 84% of Canadians felt that cleaning up communities affected by toxic waste was very important, and almost 80% felt it was more important than cutting personal income taxes.

So we have several recommendations in our package, three of them in particular, to deal with the issues of healthy communities, clean water, and high-quality food for Canadians.

Finally, in addition to innovation, Canada wants to ensure a highly competitive economy. Well, our greatest competitive advantage has to be our great natural capital—nature. We are best known internationally for our natural areas, wilderness and wildlife. Tourists from Europe and Japan fly directly to some of the most remote areas in Canada to experience what they literally do not have left. We are one of the few countries that has any wilderness left.

I challenge any of you to travel around the world and go to other people's national parks. You'll laugh. You can walk across some of them in an hour. It's a joke. There is no wilderness left. We have some, and we need to protect it.

To take advantage of our domestic and international demand for nature and to protect our biodiversity, we're investing heavily in genome, and the Genome Project. Well, what are we talking about here? We're talking about genetics. All we're talking about is the rest of the diversity of genetic material that exists in all the other plants and animals that we have yet to even uncover. We need to protect these, because we don't know what is actually hidden in the genetic materials of these species and what they could be used for in the future. So we have several recommendations in that area, and in the area of nature conservation as well.

¿ (0940)

I started our case for a green budget this morning by quoting Gary Pfeiffer of DuPont on sustainability as a real business opportunity. I'd like to quote him again:

Every corporation is under intense pressure to create ever-increasing shareholder value, and environmental sustainability is an enormous business opportunity to do just that.

At the federal level, this statement can be translated into an intense pressure from Canadian society to increase their well-being. The federal government should take heed of the enormous opportunities Canada still has to invest in clean technologies and to protect nature across the country. By doing so, the federal government will be promoting an innovative, smart, and competitive economy and increasing our quality of life.

We recommend, therefore, that the finance committee recognize the need for a green budget that will link a high quality of life with an innovative, competitive, and sustainable economy. We challenge you to develop a green budget.

Thank you.

The Chair: Thank you very much.

From the Sierra Club of Canada, Mr. Bennett, please commence.

Mr. John Bennett (Director, Energy and Atmosphere Campaign, Sierra Club of Canada): Thank you very much, Madam Chairman, members of the committee. Thank you for inviting the Sierra Club to present today.

I bring greetings from Elizabeth May, our executive director. She would like to have been here herself, but she's in Newfoundland today.

Like many people in today's society, I have two jobs. I'll just tell you what the other one is before I start. I'm also executive director of the Climate Action Network of Canada, a coalition of over 100 groups from every province and territory in Canada, working to make sure that Canada ratifies the Kyoto protocol and begins to reduce its greenhouse gas emissions.

In that light, I'll focus my remarks today on part of one of the Green Budget Coalition's submissions, which is our national building retrofit program.

I would like to say one thing before I start. This committee needs to recognize the need to do something about the tar ponds in Sydney, Nova Scotia. There are several hundred people living in a toxic waste site, and Canadians demand that they be allowed to move. This government should be doing something to move them out of there.

As for the national building retrofit program, we saw in today's Globe and Mail that perhaps there is some thought in the government that Kyoto is somehow not attainable without the United States being part of the deal, or that for some reason Canada should turn its back on the international community and try to deal with climate change in its own way. I think that is just another way of saying, no, we're not going to reduce our greenhouse gas emissions.

We don't understand this thinking. Whenever we look at the facts, it's clear that Canadians can reduce their greenhouse gas emissions, make their air more breathable, reduce their health care costs, and make their homes more comfortable at the same time as developing new economies and new fortunes in the future.

One of the ways of doing that would be for the federal government to establish a national building retrofit program. Every building in this country needs to be renovated to make it energy efficient and ecologically safe. We can do that, and we can do it with very little money. In fact we can do it with the money we're now spending on fuel to heat those buildings. But we do need to have some investment and support from the federal government in order to get there.

I was at a presentation in Saint John yesterday by the Deputy Mayor of Fredericton—I'm sure Jack will want to talk about things like this as well—and they have now engaged in the process of renovating 18 buildings in the city of Fredericton, reducing their emissions by significant numbers. And it's costing them absolutely nothing. They are paying for the renovations by using the money they would have spent to buy fuel, paying for it out of the savings.

What they do need, and what Canadians across the country need, is help in identifying where those savings are and what those renovations should be in order to make those savings. That's the difficult part, and that's where the federal government and your committee can help.

We're looking for an investment fund that's revolving, that allows people or businesses to tap into it to get the expert advice and then go to the bank with a solid plan.

This is what's been going on in Toronto for a number of years. What they've seen there is a reduction of $19 million in operating funds for running buildings in Toronto. They've created 38,000 person-years of employment and $126 million of economic activity based on a very small investment.

Secondly, we need to get homeowners involved. One of the biggest challenges we have with climate change is that it's such a big problem—it's international, it's global, it's something to do with someone else who runs that big factory—when in fact there are huge savings available in the residential sector as well. But how do individuals get to the point where they're actually making the renovations in their homes that both save them money and protect the environment?

What we really need there is a reward system that allows people to get over the hump, because essentially these renovations take a very long time to pay back, not in terms of Canada and the world in terms of climate change but in terms of an individual's budget. What we've seen... and I have personal experience in this. I've supervised more than 1,500 green home visits, energy audits of homes in Belleville, Ontario. We found that people need a little incentive to get them to go for the more efficient window, the more efficient door. So we'd like to see a financial reward system for home energy retrofits.

¿ (0945)

Thirdly, in order to make sure that the people can understand what those retrofits should be, we need a national service that helps advise individuals and homeowners on how to renovate their homes. This has been done in a number of places already, known as “green community” systems or “green home” visits.

With financial help from the federal government, we can set up a thousand of these across the country so that every home in Canada over the next ten years, during the commitment period for Kyoto, could have a visit from an expert in energy efficiency in the home. They could outline for a homeowner on the renovations necessary: Here is how to do it. Here are the contractors in town who know how to do it. If you need any advice down the road, give me a call, and I'll help you out again later.

This kind of process has been very successful in a number of communities across Canada. It's been tested. It works. We just need to roll it out across the country. We can have a huge boom in renovation across Canada, create hundreds of thousands of jobs, renovate houses, and pay for it out of the savings created.

Finally, I would just like to let you know that in the coming two weeks, the Climate Action Network will release two new studies. One is on how Canada can have a soft energy path. As Julie mentioned in terms of innovation in the future, how do we get to a point in the future when we are not producing all the pollutants we are now, when we are not faced with climate change? The only way we could do it is if we decide to do it now, and then put the things in motion to do it.

We have commissioned a study, by Tory-Smith and Associates, that will outline how Canada can move from its present emissions status to reducing emissions by 50% by around 2030 while meeting the Kyoto target in 2012. The study will clearly show that it's not only economic and technical but it's possible, as long as we decide to do it. But we need leadership from the federal government through its budgetary process to get these things under way.

The final report we are producing is one by the Pembina Institute. It will outline the historical impact of environment regulation on competitiveness. One of the things mentioned in the Globe and Mail today is cabinet's concern over Canada's competitiveness.

What, in fact, is the history of environmental regulation and its effect on competitiveness? It's quite clear, from our initial look at the study, that in fact environmental regulation and control actually leads to improved competitiveness, innovation, and increasing of profits.

I think the best example is right here in Ontario, with International Nickel in Sudbury, which for 30 years fought any kind of control on its sulphur dioxide emissions, and threatened government with economic gloom and doom, very similar to what we have been hearing since Christmas on Kyoto. What happened? Finally, in 1990, they put in the new technology. And you know what? They make about $300 million a year more in profit, because we forced them to clean up their pollution. If we hadn't done that, they would be out $1 billion today. That's exactly what we are talking about with Kyoto.

So I would like to urge you all to support the Canadian government and the cabinet members in their decision on Kyoto and help us ratify the protocol.

Thank you very much.

The Chair: Thank you.

Now we will go to Ms. Spence from the Canadian Nature Federation.

¿ (0950)

Ms. Christie Spence (Co-Manager, Wildlands Campaign, Canadian Nature Federation): Good morning. Thanks for the opportunity to present to this committee again, it being five months after the last one.

As you know, my name is Christie Spence. I represent the Canadian Nature Federation's national parks program.

National parks is the top priority of the nature conservation agenda in the Green Budget Coalition package, and I would just like to provide a few more details on that. We have a detailed submission with some new figures, and that's worth looking at as well.

My job at the Canadian Nature Federation is to try to help complete the national parks system and also to try to ensure that our national parks are safeguarded for future generations.

I know that you and your committee members heard repeatedly in the last pre-budget consultations from the conservation community about the need to fund Parks Canada. We made a presentation last fall, and we were very pleased with the green economy section in your report. We were especially hopeful that the committee recommended funding this initiative—that is, both completing the national parks system and restoring the existing parks to ecological health.

We recognize that the last budget was delivered in a climate of fiscal uncertainty and needed to address some urgent issues stemming from last September's events. We suspect that this is the reason why none of the desperately needed funds were allocated to Parks Canada in the last budget, and that therefore this funding was simply delayed and not omitted from the government's agenda. Accordingly, we're here again today to reiterate our support for this really key initiative.

Why are we so preoccupied with funding for Parks Canada? It's getting to be sort of a personal thing for some of us. It's because completing and looking after our national parks system is important, and it's urgent.

Canadians, I think, recognize that we needed to get our financial house in order and that we needed to get our economy in a healthy condition. Budget cuts were made across the federal government in order to tackle our deficit and pay down the debt. But while this government has shown fiscal responsibility, we are running a huge environmental deficit. We recognize now that we have serious environmental problems ranging from climate change to air and water pollution to an alarming rate of habitat loss to—and it's totally related—a growing number of species at risk in this country.

The good news is, we can do something about it. You've heard from the Green Budget Coalition today, and you'll hear from other people, that there are lots of positive things we can do.

Within the conservation community in Canada there's broad consensus that the very first step that we can take for nature conservation, and in fact the most important one right now, is investing in the national parks system and national marine conservation areas. Protected areas are the cornerstone of any nature conservation agenda, and they're absolutely fundamental if we want to be able to protect species and their habitats as well as vital ecosystem services, including clean water. The benefits of this investment are many, and they're diverse.

First of all, national parks are a long-term investment in biodiversity, in fact in our natural capital. They provide habitat protection. It's easy; it's federal government...the laws in place for both common and threatened species. They protect the headwaters of rivers that provide drinking water to our communities. They support traditional ways of life for aboriginal people, and they diversify and stabilize rural economies. They contribute meaningfully to sustainable economic development, and, very importantly, to the quality of life of Canadians.

Fortunately, this government and previous governments have recognized the vital importance of national parks. In every Liberal platform since 1993, this government has promised to complete the national parks system. Right up until the last one, we were going to do it by the year 2000; however, we're still 14 parks short of that goal. In the last two throne speeches, this government also committed to this agenda. In fact, it's also made commitments to complete and restore the national parks system and also to fund national marine conservation areas. And yet, in all of that time, not a penny has been allocated in the federal budget to this initiative. Unfortunately, now we can no longer afford the luxury of putting nature conservation aside for perhaps a not-so-rainy day.

¿ (0955)

Virtually every single one of our national parks is under stress and deteriorating. That's been confirmed and reported to Parliament on numerous occasions.

We lose three football fields of wilderness every hour, and in so doing we are losing the opportunity to protect some of Canada's most important and most vulnerable landscapes. Worse, because Parks Canada lacks the funds to fund these agreements, which in some cases we have already negotiated, we risk losing those as well.

Last fall I told this committee about Wager Bay, a new park proposal in Nunavut, where five Inuit communities have been waiting for a year now, wondering why that planning ceremony was cancelled last June. After over two decades of Parks Canada's work and time and resources efforts to build community support for that proposal, it is now literally struggling to keep the goodwill of that community and to keep that proposal alive.

The communities on the north shore of Lake Superior and also on British Columbia's coast in the Gulf Islands are now in the same boat. They really support these proposals that they have worked on for years and years, and they don't know why they are not being delivered, either.

Canada was once a world leader in nature protection, but we have fallen far behind. It will be very difficult to hold our heads high on the tenth anniversary of the Rio Convention on Biodiversity in Johannesburg without really any notable federal conservation gains in ten years. But significant progress is possible with an investment in national parks. We recommend that $165 million be allocated over the next five years, which would give us eight new national parks and four new marine conservation areas, and another $328 million over five years, which would enable Parks Canada to make terrific strides in restoring our national parks to ecological health.

Once funds are allocated—as soon as funds are allocated—to Parks Canada, we could announce four new parks within a year and create numerous partnerships that would benefit many local communities.

In summary, investing in national parks and marine conservation areas will bring tremendous benefits to nature conservation and to regional economic development. But this can't wait for some time in the distant future when every other priority has been addressed. The time to make this investment for future generations is now. It's finally now.

Thank you.

The Chair: Thank you very much.

Now from the Federation of Canadian Municipalities, Mr. Layton. I understand you have a power-point presentation too.

Mr. Jack Layton (President, Federation of Canadian Municipalities): I have a couple of slides along the way, Madam Chair, thank you very much for making those arrangements.

[Translation]

Dear friends, thank you for giving me the opportunity to speak to you today.

As you know, the federation represents 1,000 municipalities, 1,000 democratic governments, and we are all very concerned about the environment and sustainable development.

[English]

I really appreciate that you're holding a session like this. We at the federation think it's an excellent example of budget preparation and investigation of financial issues to have these sorts of round tables so that we can have a frank exchange of ideas and views. Thank you very much for setting it up and for inviting us to be a part of it. It's a practice that more governments should perhaps engage in, and more committees. It's something we do in municipal government. I know that a number of you have had experience in municipal government, so perhaps that is where the impulse is coming from.

First, we represent 10% of the public spending in Canada. We're inviting you to help lever our spending to meet some of our collective objectives. In fact, we will be investing at the municipal level approximately $8 billion this year in capital spending, and we're inviting you to help us to steer that in the right direction.

We are facing a number of challenges at the municipal level, which means that we are unable to achieve the kind of environmental and sustainability objectives that we really could achieve if our fiscal situation were addressed and some of the gaps in financing were addressed. Naturally, then, that's going to be part of my comments.

First I want to indicate to you why municipal governments are so concerned about environment and sustainable development. I can summarize it very well by a little 20-second film, which we'll start in just a moment. This is actually produced by Environment Canada.

When our municipal leaders see this film, particular those who represent northern communities and coastal communities, frankly, they are shocked. This will show you the temperature change predicted by the Canadian supercomputer models in terms of what will happen in a business-as-usual case with global warming. It's very slow at first. You'll notice the changes are modest in the first 20 years. If you look at the top number, you will see 1991 is the starting point. But once we hit 2050, and CO₂ has doubled in the atmosphere, watch what happens. When we move from red to brown in this movie, we're up to 4^oC, 5^oC, and 6^oC average annual changes in temperature. We'll be talking about the loss of the entire Arctic ice mass in the summer. We'll be talking about the elimination of all glaciers in Canada south of the 60th parallel by 2030. These form the feedstock for our rivers in the west. We'll be talking about drying in the west that will have massive effects on our communities relying on agriculture. We'll be talking about flooding, about sea-level rise in our coastal communities that will require massive investments in infrastructure for protection.

Let's run that film.

Take a look at Canada under this scenario. Here we are at 2020. So we're up at 3^oC and 4^oC temperature changes in the north. Now the 3^oC and 4^oC temperature changes have reached right into the centre of the continents. And this is produced by the most advanced supercomputer modelling of climate change in the world. This is Canadian information, available from Environment Canada.

This is four generations away.

Some people are skeptical about these numbers. They're like the frog sitting in the water that is gradually warming up and is eventually going to boil. They are not going to notice. The difference is that in this case, we will be facing this situation as far as our grandchildren and great-grandchildren are concerned.

As dismal as this image is, the good news is that there are many steps that we can take municipally and collectively to address and reduce our greenhouse gas emissions. We don't have to actually achieve this future.

À (1000)

We think that working as a partnership with our federal government and our municipalities and the provinces—hopefully the provinces will join us, although sometimes some of them are reluctant—there are ways forward together that are very important.

Our municipal governments are very committed to working in that direction. In fact, we presented to the finance minister last year a proposal that was to achieve 20%, and maybe as much as 25%, of Canada's Kyoto target—through the municipal sector, a series of municipal initiatives.

I want to indicate that part of what we requested in fact was provided, an expansion of the Green Funds, a set of revolving funds and investment tools that are allowing us to mobilize our municipalities, our 1,000 municipal governments, communities all across the country, to reduce emissions through building retrofits, through public transportation initiatives, and through a whole series of other steps, including renewable energy.

The first urban wind turbine 30 storeys high in North America will be placed on Toronto's waterfront, financed in part by funds from the Green Funds. This is just the beginning of what is going to happen in this country if we take the right steps. Solar, renewable energy and energy retrofits, community energy systems, district energy, landfill gas capture, transformation into electricity--the list is huge.

Addressing our water systems in ways that will actually accomplish water efficiency at the same time as we clean up the water and make it safe for Canadians is a goal that I know every one of you at this table shares. It's certainly a goal we share, because usually, when the tap is turned on, there's a mayor at the other end of that tap, and a council.

So we are concerned, we are very concerned, and we have a huge deficit in our water infrastructure. But if we invest in it properly, including using tools like revolving funds, which will pay for themselves, such as the Americans have done, then we will be able to rehabilitate our water system at the same time as we dramatically reduce the energy involved in our water use.

Here's a little model for you. We're looking at financing the retrofit of toilets, actually replacing 24-litre toilets with 6-litre toilets. Now, that sounds pretty mundane, about as mundane as you can get, but imagine if you replaced hundreds of thousands of these toilets. The water that has to be taken, in Toronto's case, from Lake Ontario all the way up to North York—if you've ever tried to carry 24 litres of water that distance, you'll know this--involves a huge amount of energy. That energy is produced by electricity, produced by coal, which produces emissions, which in turn produce smog. Well, if we can cut that by a quarter, so that it's only six litres of water that has to be carried that distance, the pumps will save a lot of energy.

By the way, this type of initiative pays for itself entirely out of energy savings. So if you can create a revolving fund that then gets paid back with interest, it's a very exciting sort of prospect. And in our city, we're looking at replacing a million toilets—a million.

Other communities have come up with dramatic initiatives that you can have confidence are going to yield terrific results: Vancouver, with its terrific planning model for promoting urban transit; Calgary, with its absolutely brilliant scheme to put in an LRT system powered entirely by windmills. This will be the first urban, rapid-transit system in the world to be powered entirely by windmills. This is in Calgary. Right in the heart of the urban, oil-patch head offices.

Take Regina, the first city in Canada to set CO₂ reduction targets and to begin to have a plan to implement them.

Hamilton, recognized by the United Nations as the most ambitious community as far as a total sustainable agenda, is bringing in district energy that will eventually use waste heat from the steel company in order to provide heat and electricity to downtown buildings, thus making money for Dofasco, saving money for the building owners downtown, and reducing emissions at the same time.

Of course, Charlottetown was the first one to bring in district energy, and they've had a district energy system for years.

The city hall in St. John's, Newfoundland, did a complete retrofit and paid for it entirely out of energy savings.

The number of steps we can take to reduce emissions and improve our environment are enormous. So many of them are good-news stories that addressing our climate change crisis, our water quality crisis, can be a good-news story. And it's an investment, it's not an expenditure. It's not an investment in just a moral sense, which it clearly is; it's an investment that also yields an actual rate of return to the investor, whether it's the Government of Canada, the municipality, or the private sector investor, who we try to involve in the revolving funds, levering their funds as well.

À (1005)

In municipal government we've done a survey to see whether all municipalities share this sort of view. We've studied their official plans, their strategic plans, and their budget plans, and we've found the things they all seem to want to emphasize: sustainable development, healthy communities, efficiency, democratic decision-making, social diversity and inclusion, and quality of life.

Now, I believe that virtually every part of our political spectrum would actually subscribe to a list like that. In fact, municipalities represent the entire rainbow of politics in this country, from coast to coast to coast, in every party and every background, and yet there's this huge consensus. When it comes to specifics, they've set objectives around transportation. They virtually all say they want to reduce auto dependency. They virtually all say they want to change urban form and land use so that it is more efficient and people don't have to drive so far. They virtually all say they want to preserve green spaces, agricultural land, wildlife, and cultural heritage, and to reduce energy consumption. They virtually all say they want to have a strong economy.

So the level of consensus is rather enormous, but here's the problem we're facing in the municipal government. In municipal Canada, we rely increasingly on the property tax. That's because there have been, over the years, cutbacks in financing, provincially and federally. This is beginning to change; the thinking is beginning to change. We have the recent report of the Prime Minister's task force, which was a landmark document. Certainly it points the direction towards new initiatives, very much in line with what the federation has been calling for, as has the Toronto-Dominion Bank, as have the United Ways, as have the labour councils, as have the city councils, and as have the editorial boards.

There's a unanimity developing in this country, which is kind of rare. It's an exciting opportunity for all of us. Our hope is that there will be a level of unanimity in responding to the problem.

Here's the problem. Our revenues municipally in the last five years have grown by only 14%, whereas provincial revenues have grown by 30% and federal revenues by 38% in the last five years. Inflation has run at approximately 14% in the period. So municipal governments are, as it were, locked in at an inflation-level situation, barely treading water.

We are facing, because of the economic strength that's happened in the last few years, a growth in the growth taxes. Even with reduced tax rates, there continues to be a significant growth in tax revenue.

In Europe and the United States, when this phenomenon was acknowledged, programs were designed to funnel some portion—actually, it was quite a small portion, but for municipalities it would be quite large—of the growth taxes revenue back down in designed programs, focused on things like portable housing, water infrastructure, public transit initiatives, building retrofits, and so on and so forth. We proposed in our budget submission last year, and we stick by it this year—we'd ask you to take another look at it—a series of initiatives directed very much that way.

The TD Bank has echoed them. The Prime Minister's task force has echoed them. Social groups, you name it, they're all echoing the same call. And we believe this is the year, this is the budget, to turn this around--strong, healthy communities achieving environmental objectives through the most advanced policy-making levers and tools available on the planet. There is absolutely no reason why Canada can't be using these tools, implementing them in a package that will be celebrated around the world. At the moment, we're not exactly being celebrated around the world for our environmental initiatives, and yet we could be and we should be.

The will is there. Our communities are ready to work with you to achieve these goals, and my hope is that you will study our numbers, our proposals, and do whatever you can from all parties to press forward on this agenda.

We will be, I believe, back before you, because the finance minister and others have asked us for our comprehensive vision of the reform of urban financing and its relationship to the federal government. We are this very day, and have been for this last two weeks, calling in the best minds in the world to help us design a comprehensive response for you. It will be completed in about two weeks. I understand there's a further session of the committee down the road, where we'll have an opportunity to present you with that latest thinking. In the meantime, our last year's budget submission is where we would invite you to turn for specifics.

Thank you very much.

À (1010)

The Chair: Thank you very much.

I'd just mention that if people wish to circulate reports to the committee after they've presented, just send it in to the clerk with a note that it's to be circulated and it will be. As well, if you don't have it translated, we'll get it translated and also circulated.

Our final presenter today, from the Clean Air Renewable Energy Coalition, is Mark Rudolph.

Mr. Mark Rudolph (Coalition Consultant Coordinator, Clean Air Renewable Energy Coalition): My name is Mark Rudolph, and I'm the consultant coordinator for the coalition. I'm joined by Monika Siegmund, the senior tax adviser for Shell Canada.

A small slide package was sent out to the committee members in advance, which we'll be speaking to. At the outset, I just want to take the opportunity to note that the coalition had been here in the past, making presentations in support of renewable energy initiatives last year, and we want to express our appreciation to the committee for its support of renewables in its report to the House.

Let me sort of try to set the context for you about the coalition. Business and environment groups have their uniquely distinct views of the world, but in an increasing number of cases we're starting to move from conflict to consultation and to collaboration. We're moving together to solve difficult environmental and social challenges, and there's a growing convergence of interests in that area.

The Clean Air Renewable Energy Coalition represents an important multi-stakeholder partnership of business, environment group representatives, and municipal governments formed in December 2000.

Indeed, the cover page shows a list of our members, which I just want to go through quickly. On the non-corporate side, we're represented by the Pembina Institute, Pollution Probe, Toronto Environmental Alliance, Friends of the Earth, the International Institute for Sustainable Development, and Jack's group, the Federation of Canadian Municipalities.

On the corporate side, from the west coast to as far east as we go, we have corporate representatives from B.C. Hydro, West Coast Energy, Suncor, Shell, BP, TransAlta, Enbridge, Benign Energy Canada Inc., Toronto Hydro, Dofasco, OPG, and a company in Montreal called AXOR.

Together we are a new voice calling for policy changes to support Canada's renewable energy industry. We've included the next two slides, on the importance of renewable energy and of government support for the emerging renewable industry, from our last presentation to this committee. We're not going to go through them again in detail. Suffice it to say the renewables represent a significant part of the solution for future energy supply, sustainability, greenhouse gas, emission reductions and offsets, as well as clean air co-benefits.

Canada, unfortunately, is still lagging the world, and particularly the United States, in renewable energy production, and the challenges have not really changed. Indeed, in the United States, the single state with the greatest number of incentives for, and the largest megawattage of, renewable energy is the state of Texas. Those incentives were all designed under Governor George W. Bush.

The capacity of wind power facilities worldwide grew by 32% in the year 2000, with Canada receiving a very small part of that growth. Total installed wind capacity globally is over 17,000 megawatts. The solar photovoltaic market was worth $2.5 billion in the year 2000, and is expected to expand to become a $23.5 billion industry by 2010.

Canada is not part of that equation at the moment. Indeed, what Canada needs is a supportive policy environment to attract that investment in growth.

Now I'd like to turn things over to Monika to go through some details.

À (1015)

Ms. Monika Siegmund (Senior Tax Adviser, Shell Canada; Representative, Clean Air Renewable Energy Coalition): We have made some very excellent first steps in the last few years in supporting renewables. In 2001 the coalition recommended a short-term producer and consumer incentive to be introduced at the same time, to generate both a market push and a market pull, for the emerging industry response, to get an effective response.

In the 2001 federal budget we were very pleased to see that the federal government introduced the wind power production incentive. While it was roughly half the level requested by the coalition, it still provided a strong message to encourage the provinces to introduce similar measures. It was a wonderful first step.

In its action plan 2000, the federal government had originally announced a program to incent consumer awareness of energy sources. This last March the proposal was expanded with the release of the marketing incentive program in terms of eligible activities to provide support for funding marketing rebates for consumer green-power purchases offered by retailers.

In the 2001 federal budget the government also extended the 30% rate for tax depreciation rules to more small-scale hydroelectric projects by increasing the maximum eligible capacity from 15 megawatts to 50 megawatts. Even beyond that, there has been a call for consultation as to how to expand or how to more effectively manage that class of tax depreciation by the Department of Finance, just in the last month or two, with submissions required by mid-May.

However, more is required. If the provinces do not respond to the federal encouragement to implement both producer- and market-based consumer policies, the current federal initiatives will not be enough to kick-start the renewables industry.

Currently the wind power production incentive has a value after tax of approximately 0.6¢ per kilowatt hour compared with 2.4¢ per kilowatt hour for the same U.S. production tax credit. The incremental cost of green-power production compared with conventional energy sources is between 2¢ and 6.4¢ per kilowatt hour, depending on both the province and the wind capacity factors.

The cost differential in producing the power is only a small part of that green-power premium, and does not include any wholesale or retail markups or additional administration costs charged by utilities to handle green power. These can be another 1¢ to 8¢ per kilowatt hour. Furthermore, the wind power production incentive only relates to wind power. It does not include such other renewables as solar, tidal power, etc.

We have also left with you a copy of some background slides that we had prepared on Canada's wind resource, with some comparative economics and relative incentive levels compared with our competitors in the U.S. If you have any questions on these, please feel free to contact the coalition afterwards and we will try to answer your questions.

In light of where we are and where we have come to, we have some recommendations for some next steps. The first step that we recommend is to extend production incentive payments to other low-impact renewables, such as solar photovoltaics, sustainable biomass, low-impact hydroelectricity, and so on.

It is also critical to monitor the response to both the wind power production incentive program and the marketing incentive program in the first year and compare those with the comparable policies internationally that are available for renewables.

In our review, it's important to ensure that Canada begins meaningful development of alternative energy supply in order to compete in the next century in a carbon-constrained world. We require immediate response by all levels of government—we encourage you to do so—to ensure that we do not fall behind the U.S. and our other major trading partners.

À (1020)

If it turns out that the wind power production incentive is insufficient to incent producer investment, we would recommend that the federal government respond within a year to increase the amount of the government's support. The rules themselves contain very effective stop-payment and recapture rules where wind farms are already economic to ensure that the incentives do not go where they should not go.

If the marketing incentive program projects are successful, the government should also consider increasing that program's budget for the remaining three years to expand both the engagement and awareness of green-power choices available to consumers.

Now I'm going to turn it back to Mark to do the final wrap-up.

Mr. Mark Rudolph: We have a few other recommendations for the path forward.

The federal government must continue to work with the provinces towards establishing comprehensive policies to facilitate expansion of low-impact renewable energy. Indeed, there's a menu of things that can be done. These range from matching the federal production incentive payments, such as the wind power production incentive; alleviating market and transmission barriers; implementing green-power marketing and renewable standards; and providing customer education.

In the area of climate change policy, we would like to ensure that renewables are included in the definitions of eligible offsets for GHG emissions in any domestic emission trading system.

Finally, we would like to see the development of a new assessment initiative to map Canada's wind resources, similar to the U.S. wind mapping initiative. With the wind power production incentive, it's not going to be a useful use of the federal government's money if people are trying to invest in locations where the wind resource is not that great. To that end, we think it would be very useful to try to cobble together all of the information out there and have a wind resource map for the country.

Those are the final pieces we have at the moment. We want to thank you for your attention today, and look forward to any questions you might have.

The Chair: Thank you.

I'm sure the committee members do have some questions, starting with Mr. McNally for ten minutes, please.

Mr. Grant McNally (Dewdney--Alouette, Canadian Alliance): Thank you, Madam Chair.

Thank you to all for your presentations. So many questions, so little time.

Perhaps I can pick up where our last presenters left off. How do you feel deregulation has helped the producers of alternate sources of energy to tap into the grid? It seems as though there's more openness to that now. In some jurisdictions in the past that hasn't been available, which perhaps has been a detriment to allowing renewables into the grid.

Do you see that as being helpful, or...

Mr. Mark Rudolph: Frankly, many of the barriers one finds with renewable energy or green power across the country tend to be at the provincial level. In the past, where there have been provincially owned and regulated utilities, there's often been—what would one best say?—a reason not to allow others to generate electricity and put it into the grid. Where and as there's been a loosening of that perspective on things, you now have the ability for investors to put into place some new renewable technologies, provided they can then sell that electricity into the grid.

There are still a lot of places that don't allow it, or, while they may allow it, that provide impediments along the way that add extra costs. But things do seem to be loosening up across the system.

Mr. Grant McNally: Across Canada, which jurisdictions do you find are the most friendly to that?

Mr. Mark Rudolph: That's a good question.

John.

Mr. John Bennett: B.C. has definitely been quite progressive in this area. Indeed, B.C. Hydro is a member of our coalition, and quite a progressive member from the perspective that I believe they have set their own voluntary renewable portfolio standard of 10%—i.e., they're planning on generating 10% of their electricity from renewables by the year 2010. Obviously they want to be part of this equation, and they're allowing other investors to be part of the equation.

In some recent revisions to plans, if memory serves me correctly, Nova Scotia has also opened up the grid, if I can put it that way. Ontario is beginning to, and I believe Saskatchewan is starting, but that has to do with SaskPower and the federal government trying to meet the 20% green procurement policy that the feds have in Saskatchewan.

À (1025)

Mr. Grant McNally: How important do you think the federal tax incentives are—I think you touched on that—in order to stimulate or get renewable energy sources even further down the road here?

Mr. Mark Rudolph: Well, from the work the coalition did last year and from what we're attempting to do again this year, it doesn't necessarily have to be a tax credit; it can also be a variation on CRCE, the Canadian renewable conservation expense. You could have elements relating to section 43.1, or you could have a program like the wind power production incentive.

At the end of the day, the coalition sees the need for a kick-start. Investors are out there, and they're interested. There are technologies, as you saw in the wind numbers. It's not like wind power is some wacky idea of a bunch of little green environmentalists. With 17,000 megawatts of power being generated by wind globally, this is a real, live thing. There are real, live investors who want to invest in it. It's a matter now in Canada of saying, okay, there's a marginal difference between conventional and renewables. Wind happens to be part of the low-hanging fruit. How do we help kick-start an industry that, at the end of the day, will help reduce GHG emissions, provide clean air benefits, help with the children's health agenda, add to the innovation agenda in the new economy, and create jobs and regional development? That's what this is all about.

Ms. Monika Siegmund: Perhaps I can add to that.

Currently, if you try to do the economics on a wind farm, it's either pretty marginal or not there. So an incentive is needed to help kick-start that and get the economics to a point where businesses will go ahead and invest the money in this type of program.

Mr. Grant McNally: I lived in California for a year in the 1980s, and wind power wasn't a wacky thing; it was part of the system. Between Tehachapi and Bakersfield--the “Grapevine”, they called it--there were hundreds and hundreds of wind generators, without which the system wouldn't have been operable, basically.

Does anybody else on the panel have any numbers for us in terms of Kyoto? I know it's the hot topic, and it was mentioned earlier on. Do you have any numbers for us on the economic impact of moving to Kyoto, or on how we lessen the blow for those...or should we ratify it in certain sectors of the economy?

Mr. Jack Layton: Thank you for that opportunity and for that question.

As a result of Canada's negotiations at Bonn, where I happened to be, and also at Marrakesh, the Canadian target has changed dramatically. We are actually no longer required to reduce emissions by 6% over 1990. The actual Canadian target now in terms of megatonnes is 5% above the 1990 emissions. This is what has been negotiated as a result of the sinks and a variety of other features, including clean development export mechanisms.

No one, to my knowledge, has yet calculated, in a transparent way that could be critiqued, the economic change that results from that new target. In the BCNI analyses, which we often see, it's projected that as compared with a business-as-usual case of 30% growth in GNP by 2010, in their estimation, with a 6% reduction in emissions over 1990, the GNP would be between 26% and 29% higher than today. In other words, it would be a drop over the business-as-usual case of 1% to 4%. However, they have not had an opportunity to assess the impact of the new Marrakesh numbers.

Our belief, quite simply, and our experience, quite simply, is that you generate economic growth by enhancing efficiency. In Toronto we are making a great deal of money by reducing emissions. We have retrofitted, and our goal is to retrofit every building in the whole city, no matter who owns it. We've set a target of 40% of all buildings by 2010. And the city is making money at that, at a rate of 7%. The private sector is making money at that, at a rate of 13%. Jobs are being created and efficiencies are being accomplished on about a seven-year payback.

We believe we can retrofit 80% of all buildings in Toronto—it will be a $4 billion undertaking—entirely at those rates of return. So that is one example.

On the other hand, renewables are more difficult, because there are these subsidies inherent in the oil patch that are not yet available to renewables. When we go off to find remote resources, we work with the companies and figure out what subsidy or tax arrangement they need in order to make it economically viable for them to find and recapture those hydrocarbon resources. We do not do the same thing with renewables.

Were we to do that, we could begin to do what German cities are doing. They rent rooftops from citizens. The utility comes in and pays rent to you to put a photovoltaic on your roof. You get a rent payment of about $800 a year equivalent, and the power company gets the solar energy. They are doing this in whole towns. Ultimately, this will replace entirely fossil fuel requirements in Germany.

This is the kind of creative thinking we need to get into. We need to simply offer to the renewable sector the same level of economic incentive that is available to the hydrocarbon combustion sector. Frankly, if we created that level playing field, the whole thing would rapidly take care of itself, provided there is an education program going along with it. If people don't know about these opportunities, and we haven't structured the programs to reach them, then they will sit there. Even though they are good ideas, people won't implement them.

That is why these two things have to fit together.

À (1030)

The Chair: Thank you.

[Translation]

Ms. Picard, please.

Ms. Pauline Picard (Drummond, BQ): Thank you.

Thank you for your very interesting presentations. You were very clear. The issues you raised are usually very difficult to follow for those who aren't dealing with the environment. There are a lot of figures and a lot of words I am not familiar with because I sit on the finance committee and I hear more about figures than the environment. Of course, we are all aware of the articles we read in the newspapers. Our parties also inform us of what is going on, especially with regard to the Kyoto Protocol.

Right now, the Canadian government is having trouble taking a position. One gets the impression that it is withdrawing somewhat from the agreement and is waiting to ratify it. We don't know whether the government will ratify it or not.

I would like to have your opinion on that. What will be the impact if it doesn't ratify it? Do you think such a decision would be made because of U.S. pressure?

[English]

Mr. John Bennett: I think the first consequence of Canada not ratifying the Kyoto protocol could be that the whole international agreement crumbles. Canada is not essential to bringing the protocol into force; however, if Canada, who at one time was the leader in the negotiations and one of the forces that actually brought it about, were to turn its back on it now, a number of countries that are presently considering ratifying may also turn their backs. So we could end up turning the withdrawal of the United States into a parade if we actually joined that parade.

So that's the most important thing in terms of the international agreement. The second is if Canada does not ratify the Kyoto protocol, then all the effort that Canada has taken in the last 15 years to make sure that the protocol has enough of what we would call “loopholes” and the government would call “flexibility mechanisms” in order to make it easier and more attainable to target for Kyoto... If Canada were to turn its back on those options, there would not be any availability to do things in developing countries to gain credit, and there wouldn't be any availability to do emissions tradings with countries in the emerging economies in eastern Europe.

Most importantly, though, Canadians would be given the message that this isn't important enough for us to be part of the world activity, and we would end up not doing anything at all.

We have to ratify the Kyoto protocol. In the last 15 years of international discussions and domestic debate, we have not passed one law or put one regulation in place that controls carbon dioxide or even recognizes that climate change is an environmental problem. If there were an environmental assessment tomorrow on a power plant anywhere in the country, I would be ruled out of order to try to argue that carbon dioxide emissions from that plant has an environmental impact, because Canada has not put a rule in place that says it does.

So without the protocol, we will not get any kinds of action to reduce emissions. We'll be disgraced in the world community, and it could lead to all the world abandoning the work to reduce emissions, which would be a catastrophe.

À (1035)

[Translation]

Ms. Pauline Picard: Thank you. I would like to speak to Mr. Rudolph. You spoke a great deal about the wind energy initiative. You mentioned a few provinces.

I am from the province of Quebec and I know that it is an energy source that was implemented a number of years ago, especially in the Lower St. Lawrence, around the Gaspé peninsula.

Efforts are currently being made to see whether it would be possible to create another wind farm.

You spoke about incentives for wind energy. In very specific terms, do those incentives mean a sum of money or subsidies? What do you mean by incentives?

[English]

Mr. Mark Rudolph: You're correct about the Quebec situation, and I'm sorry I didn't mention it directly. The Nordais site in the Gaspé has approximately 103 megawatts of power, representing about 50% of the wind power in Canada.

The wind power production incentive that came out through the December 10 budget is a production incentive. This means that when something is built and is actually producing electricity, for every kilowatt-hour of electricity produced you get a certain amount of money, which helps to offset the differential between conventional power and renewable power for the time being.

As I mentioned in our presentation, we have been seeking from the federal government any range of opportunities to incent people to construct these types of renewable facilities.

So it could be a tax credit, it could be a subsidy, it could be whatever; we just want to see some kick-start in the short term. Originally in our proposals we had recommended that this be for a three-year period of time and/or until such time as the country adopts a domestic emission trading system, because once you have a domestic emission trading system in place, you in essence have credits through the renewable energy itself, and you can use those credits to offset the differential in price. So there's no reason to have double-dipping.

But to get that kick-start up until that point in time, we wanted to have something in place.

[Translation]

Ms. Pauline Picard: Do you think there are several places in Canada with enough wind to set up that type of wind farm to produce electricity?

[English]

Mr. Mark Rudolph: Oh, yes, there's a phenomenal amount of wind in Canada. The Atlantic areas--Nova Scotia, New Brunswick, P.E.I.--have a phenomenal wind resource. The Gaspé in Québec has a phenomenal wind resource, as does Saskatchewan, Manitoba, Alberta, and then offshore in B.C.

But what we really need to do, you see, as you recommended, is develop a wind map to show investors where those resources are so that they can then make decisions about developing these types of technologies in those areas.

So Canada does have a lot of wind--and it's not all just at Parliament Hill, I can assure you.

Voices: Oh, oh!

[Translation]

Ms. Pauline Picard: Is it expensive to implement that type of system? I realize that wind energy may catch up with other current forms of energy in the long term, but is it very expensive to implement that type of system, and is that why there is no investment in it?

[English]

Mr. Mark Rudolph: Yes, the initial capital costs are expensive, but you have to realize that in terms of ongoing operation maintenance costs, you don't have to pay for fuel. That's the key difference.

À (1040)

[Translation]

Ms. Pauline Picard: Thank you very much.

[English]

The Chair: I had Mr. Cullen on my list, but I think he'll rejoin us later.

Ms. Minna.

Ms. Maria Minna (Beaches--East York, Lib.): Okay. Thank you, Madam Chair.

First of all, I want to say that I agree that good environmental practice makes good business. If we don't step up in that area, I think we'll probably fall behind.

That takes me to the two areas I want to touch base on. One is the issue with Kyoto. We keep talking about ratifying, not ratifying, about the U.S., the impact, the business. There's a great deal of talk about negative impact on our businesses, or some sectors of our business, if we don't ratify it. There are sectors of our businesses who are already working in the field.

Those who are negative seem to think that, because the U.S. is not ratifying, this is going to be of huge detriment to our business here, which is one of the arguments for not ratifying. I just wondered whether you had any information from your counterparts down south or the people you talk with on whether the U.S., while officially not ratifying, is actually ratifying. I mean, it's actually doing the work, but it's not ratifying because it's not going to do what everybody else says it should do. That's one of the latest things I've read.

Everything I've seen over the last several months--well, more than several months, it's been for some time now--in terms of the information on renewable energy and so on... My sense, although I could be wrong, is that while the U.S. is not officially ratifying, it is in fact going in that direction, because it has no choice, in essence. And in terms of innovation, it's going to be so far ahead of us if we don't kick our heels up that we'll be buying their stuff and just importing their ideas and purchasing rather than selling ours abroad.

So that's one question. Perhaps you can just answer that quickly, and then I want to go to Mr. Layton on the municipal issues.

Mr. John Bennett: The United States is clearly way ahead of Canada in all efforts to reduce greenhouse gas emissions.

I had an interesting discussion a couple of weeks ago with the president of the Canadian Renewable Fuels Association. One of the problems they are facing is that the two leading executives in the industry who know how to make ethanol are part of the brain drain, because there are huge subsidies from the federal and state governments in the United States that support the production of ethanol, which is one of the things we need to do as well. We're talking a couple of cents per litre of excise tax in terms of our incentive. They're talking dollars per gallon in incentives.

I have talked to people from TransAlta, the Alberta coal-fired power company, which is an international company that tries to compete with Americans around the world to build power plants. They keep losing out on contracts, because the tax incentives available to U.S. companies are far better than they can access. So they keep losing the bids.

There are incentives even to the point where...like some of the things that we have asked for today. If you're a homeowner in the United States and you want to install a solar panel on your roof, you can get a tax credit. If you want to buy your electricity from a windmill, you can get a tax credit. Almost every state in the United States that has deregulated--or, better put, “de-monopolized”--including Texas, as Mark mentioned... Texas under George Bush put incentives in the deregulation of electricity that forced the creation of 2,000 megawatts of wind.

In Ontario and Alberta, the two provinces that have completed the deregulation process, there are no incentives. In fact, there are disincentives. If you want to build a windmill in Ontario and you want to transmit that electricity, you have to pay off the old debt created by the hydro, the coal and the nuclear plants of Ontario Hydro in order to be in that free and open market.

So they are way ahead of us. They are not trying to reduce their emissions, they are trying to reduce their intensity. And that's a good thing, but it's not good enough. If they actually decided somewhere down the road that they were actually going to reduce emissions, they would just pass us like a freight train.

We need to think about how we compete with them in the long term. And we have to compete with them. A lot of the Farm Bill, which passed last week and caused such an uproar with our farming community, is about subsidies to encourage farmers to produce grain to make ethanol. They are willing to use subsidies and tax incentives where we're not, and we have to move that way if we want to compete.

Ms. Maria Minna: Thank you. It just reinforces to some degree some of my thinking in that area, and I appreciate that. I could go on for a bit longer on that, but I also want to get my digs in on the municipal end of things.

Mr. Layton, you said--and I agree entirely, obviously--that the financial arrangement of municipalities has to be looked at, and how we deal with programs. In your submission you said that you need funding arrangements that are reliable, accountable, transparent, administratively simple, efficient, and equitable. Now, that's a mouthful, but it's great.

In your discussions, both at the federation and in your role as municipal councillor for the City of Toronto, are there discussions of this same nature that you are having with us with the province, and to what extent do you expect the provinces to partner?

The reason I raise this is that, as you know, there has been a constant battle back and forth with provincial, federal, and municipal issues. In Ontario we have the situation with housing at the moment, where, as you know, the affordable housing program has kind of stalled, because of the fact that the province isn't participating...and I think we've been told that it's okay to bypass and go to the municipalities, or at least there seems to be a message that it's okay.

The problem with this, though, is that it lets the province off the hook, and you need to have a real partnership in all of these areas, not only in housing, which is very important, but also in the areas that you mentioned earlier and we're discussing here this morning.

I wondered if you could give me an idea of how or what discussions the federation or the city is having in our own province, and what model you're looking at that might be helpful to make sure that there is in fact a partnership with all three levels and not the constant difficulty that we seem to be facing right now.

As well, you talked about revolving funds. In the 2000 budget the Government of Canada set up the Green Municipal Enabling Fund and the Green Municipal Investment Fund, but it's being managed, if I'm not mistaken, by the federation. Is that what you mean by revolving fund, or do you mean as specific to each municipality? If you wouldn't mind, perhaps you could let me know how that one's working and what kinds of changes you might want to make to that.

I know that's a lot.

À (1045)

Mr. Jack Layton: Let me start with the last one first.

Thank you for the question. I'm actually the chairman of the investment committee of the green funds, so I can report to you that it's working extremely well. We're not recommending that individual revolving funds be set up in each individual city unless that city decides to do it with the resources it happens to have.

We in fact felt that a national revolving fund was the answer, and that's what the Green Municipal Investment Fund actually is.

The enabling fund is a fund that is invested in the creation of the capacity within municipalities to then apply to the investment fund. In other words, it's helping them to learn about what's available out there. We recognized, and we're glad the federal government recognized, that an enablement was required to get municipalities going and started.

We now have grants and/or loans to municipalities representing over 55% of the entire population, and that's after only about 16 months of operation since it was first created. Within another year and a half virtually everyone in Canada will be in some way engaged in terms of having received green municipal fund investment or grant money. That was one of our key goals, so we're very happy with that model.

We'd like you to consider now a similar sort of model for water. This is described in considerable detail in our budget submissions from last fall. We can resurface those. They're probably worth a read again. We will be bringing forward a formal submission, packaging them up, in this year's version, and it's also available on our FCM website.

It would be a revolving fund in the $1.5 billion range. It's quite a bit larger, but we have a $44 billion shortfall in our infrastructure, and we can't wait for the water rates to pay for it. What we need to do is invest in it and have the water rates of the future pay for the investment, pay it back, with interest if necessary. In the U.S. they have no-interest revolving funds, interest-bearing revolving funds, and forgivable interest revolving funds depending on circumstances. Certain kinds of incentives then are built in for enhanced efficiency.

For example, if you achieve certain levels of efficiency as you retrofit your water system, you then qualify for certain reductions in the charges on the loan, etc. It's a very sophisticated system, working quite well. So that's the sort of model we had in mind.

For transit, we see it as a straight-up investment. We believe revenues are clearly being collected—13.75¢ per litre—by the federal government from gas. We're not asking that specifically there be a share of the gas tax. We understand the resistance within Finance to anything like that. Let's just say that some portion of the revenues coming in over here could be returning to the very systems that are moving people in our cities one way or another. We've calibrated that at a $1 billion annual investment.

This would not bring us to the level of investment experienced in the U.S. on these matters. In fact, a recent report by the Prime Minister's task force flagged the Transportation Equity Act for the 21st Century in the U.S., which is a remarkable piece of legislation.

The Americans do have an advantage: they have a lot more money than we do. And that's what we're seeing happening. We're simply going to have to be better with less.

You asked, as well, what about discussions with the provinces? To be frank, our federal system is not working. The province with the most vociferous opposition to a federal initiative lines up with its foot on the brake, and all the other provinces seem to fall in behind, on the principle that if something then comes up that province B is concerned about, everybody will line up behind that province when it puts its foot on the brake.

The result is incredibly frustrating for those of us at the municipal level, waiting, for example, for some federal dollars announced for housing and yet unable to reach the municipality. On the other hand, it's a patchwork quilt. In Quebec, the Government of Quebec took the federal housing money and matched it immediately. They didn't cut any existing affordable housing programs they already had on the go, and then they asked whether they could spend it in two years instead of five. The result is that last week the Montreal city council passed a plan to build 5,000 new affordable housing units in 24 months, the most ambitious—

À (1050)

The Chair: Sorry, you're going to have to wrap up.

Mr. Nystrom, it is your time now.

Mr. Lorne Nystrom (Regina--Qu'Appelle, NDP): Thank you very much, Madam Chair.

I want to welcome everybody here this morning. You're onto very important issues. About a year ago I suggested that the finance committee look at a green budget round table. We did one, and then a second one. Many of you were here at that time, so I really commend you for all your efforts and all your work.

I have questions really in two areas. First of all, to Mr. Layton, I certainly agree with you that the cities need more revenue, whether it's transfers to the cities or taxation powers. Those are two different ways to go.

But I wanted to ask you, when you're looking at more revenues for the cities, is there any problem with the smaller centres in terms of small towns and villages? Bigger cities have a bigger taxation base, and it's easier to generate revenue from a bigger taxation base than it is for a smaller town or a smaller city or a village, or indeed rural municipalities. I wonder if you can address that very briefly.

As well, what kinds of taxation powers should we be looking at? Are you looking at special income tax points for the cities, or a sales tax for the cities, or a combination of different taxing powers?

The third question I have for you...and I assume your answer will be that you don't want this to go into the realm of a constitutional change, and having a constitutional status for the cities. But you may want to, and I just want to get your feelings on it. Having been through a constitutional war, I certainly do not recommend that.

Mr. Jack Layton: Thank you.

First, on the small centres and rural communities, you are very wise in raising that problem. At FCM, most of our members actually are very small communities. So we have crafted our proposals bearing the different capacities in mind.

For example, if you look at water, we realize that to improve our water infrastructure, big cities could pay for upgrades to their water system out of what they charge for the water over time. Therefore, a revolving fund would make sense; infuse the funds, pay it back. But for a small centre, the likelihood is that if you have a small community, a rural municipality of 300 people, well, they're never going to drink or consume enough water to pay for the cleaning units they're going to have to put in their community. Therefore, we have recommended for those kinds of communities that it be a grant program so that all Canadians, no matter what the size of their community or the financial capacity, would have the right to clean drinking water.

So that is a very important point. We have highlighted it in our budget submission. Thank you for raising it.

The same would apply to some other infrastructure elements. Some day tolls on roads are going to be common. Well, I can't see tolls on roads in rural Saskatchewan. You know, that's never going to pay for the roads that will be required there. However, there will be charges on transit systems. There will be tolls on major express routes to try to balance and even influence the travel patterns of people. Canada is a country that does include a lot of people living in dispersed, small communities, and our strategy has to take account of their needs at the same time.

In terms of what kinds of tax powers, actually, FCM is not asking for tax powers. Some people have discussed tax powers. Some people have suggested that we should levy income taxes and what have you. We are not requesting that. We don't believe that would be wise. We don't see income tax departments springing up in every city hall across the country. That's quite a horrifying prospect, actually. It makes the most sense to have a national collection of growth-related taxes—for instance, income, corporate, and value-added taxes, whatever one thinks of those.

If they are being collected nationally, efficiently, according to rules that apply across the country and have been agreed to, all we are saying is that a portion of those funds, one way or another, needs to direct itself back to the local economies that are actually generating the taxes in the first place.

There are two essential techniques. One is funneling money through programs, which is what we have been advocating. In other words, take some federal objectives—for instance, a national transportation policy, reduction of emissions, clean water, affordable housing—and funnel dollars collected federally to the municipalities, hopefully in partnership with the provinces if they will join us, into those kinds of programs, so that your goals are being met through local implementation.

In the longer haul we are investigating how the Europeans do it, which does tend to be more along the lines of a number of tax points collected to recalibrate the gap that seems to exist. We're still studying that, as I know you are, and we'll be bringing forward some further thoughts on that.

But taking us now to the Constitution, because clearly there will be some constitutional issues and tax point shifting, we are not advocating that the Constitution be changed, because it's a long haul. The Constitution consists of three parts—what's in the act; what is the Supreme Court decision-making regarding what that act means in practice and in law; and finally, what are the practices that governments establish between themselves. They all form part of our Constitution, in a sense.

We're focusing on the courts. We have had some real success there, empowering municipalities recently with certain key cases. We're also focusing on practices. The green funds are an interesting new practice, perhaps showing the way forward to how the partnership that sometimes gets jammed up with the provinces can be more creatively addressed.

À (1055)

Mr. Lorne Nystrom: Okay. I'll switch to some environmental stuff, if I may.

Saskatchewan has been the first province to mandate blended ethanol and gasoline. It's the first one in the country. We have an endless supply of grain, of course. The American Farm Bill really hurts us very badly in terms of Saskatchewan. There are things the federal government can do on that front but also in terms of tax credits and so on in terms of ethanol production.

I wanted to ask you what progress you're making with the provinces in terms of your green budget presentations. Is there something we should be aware of? Are you meeting most of the provincial governments, in terms of lobbying, on their budget-making process as well? That might be useful to our deliberations here.

You also mentioned Inco, making an extra profit of $300 million. I wonder if you could expand on that a bit more. Inco is a very good example. Are there other examples, too, that might be useful to us in terms of the wisdom of investing in cleaning up the environment?

Mr. John Bennett: On the first part, we represent national organizations, so we're focused on the federal governments. Some of our regional branches are working with provinces, but I don't have the specifics of that, unless Sara has something to add.

In terms of other examples, the steel industry in Canada makes now about 30% more steel than they did in 1990, and they produce 15% less emissions. Throughout the 1980s and 1990s Canadian manufacturers increased their production by much higher numbers than that, and actively reduced their emissions by about 2% per year. They became more efficient.

So we have numerous instances like that across the country, especially in the retrofit field. It's possible to meet all our retrofit with the money we'll save. We just need to put the money up front.

In terms of small businesses and small industries, in order to convince the owners to do the retrofit you often need to have some kind of technical assessment, which could be expensive, and those who are not familiar with the possibilities may not be willing to put the money up. Once they have that, though, it moves them forward. So once you've had someone come through and say, “If you do these 15 things in your building, you're going to save this many thousands of dollars”, you can actually go to the bank and finance it.

Getting to that place where you have the business case for your emissions reductions is very difficult for the small business. It's not a problem for the Incos and the Stelcos, but for the average business in Canada it's a challenge. They don't have the resources, they don't have the infrastructure to actually monitor those things. So that's why we're asking, in terms of building retrofits, to create a fund for people to tap into.

But there are lots of examples. When we produce our report later this month on the impact on competitiveness of environmental regulation, we'll be sure to share that with you. It'll be chock full of examples of companies that, once forced to react, have actually become more profitable

Á (1100)

Mr. Lorne Nystrom: That would be extremely useful.

You mention that the Americans are way ahead of us in many aspects in terms of climate change and environmental cleanup. Where do we rank in the world in terms of most other countries? Are we very close to the bottom?

Mr. John Bennett: In terms of action on climate change, we're really close to the bottom. We have not taken even the easy steps—

Mr. Lorne Nystrom: In comparison with whom? Perhaps you can give us that.

Mr. John Bennett: I don't know; that's a hard thing to do. We're definitely no better than the Australians, who have also rejected Kyoto. We're way behind any of the European countries. Similar to the third world countries, we have just increased our emissions while talking about it.

We have not put anything in place other than voluntary measures, which clearly don't work. If voluntary measures were going to reduce our emissions enough to reach the targets necessary, we would have reached them by now. We've had voluntary measures in place. I think I went to my first meeting on climate change, sponsored by a government in Canada, in I think 1989. At that time they talked about things that are done that are just all profit, and we should do those things first--you know, the “no regrets” moves--and most of that has not been done yet, either.

So we really have to put some impetus behind this. I think Canadians understand how critical this issue is, but the government, by its lack of actual action and leadership, is convincing them that it's not something they have to be personally concerned about. So you have this weird message coming out where one day we're saying, “Look at the weather, it's changing, and catastrophic things are happening”, and the next day the minister is saying, “We're going to trade emissions with someone in Russia down the road, so it's going to be really cheap to meet them.”

If it's a really serious problem, why are we looking for ways to escape responsibility? It's a bad way to message to the public that this is something we're all going to have to work together on.

The Chair: Thank you, Mr. Nystrom.

Mr. Discepola, ten minutes, please.

Mr. Nick Discepola (Vaudreuil--Soulanges, Lib.): Thank you, Chair.

To Ms. Spence of the Canadian Nature Federation, do you have a chapter in Quebec?

Ms. Christie Spence: We're a federation right across the country. We're associated with UQCN, the Union québécoise pour la conservation de la nature.

Mr. Nick Discepola: Of the 14 parks that you've identified, are any of them in Quebec?

Ms. Christie Spence: Parks Canada has a system plan. They've divided the country into 39 natural regions. The idea, in completing the system, is to have at least one national park in each one of those.

On the map, the ones that have a park in them are green; the ones that are close to having a park in them are sort of taupe; and Quebec is all brown, with brown meaning there are four natural regions in Quebec out of 14 where we still need national parks. And there really is no movement on that front.

Mr. Nick Discepola: It's not coincidental; I'm just bringing this up because as soon as I saw the budget last year, I salivated, since we have a jewel in our riding, a beautiful mountain with ecological value beyond comparison. I talked to the local mayor, and although it didn't surprise me, I was still shocked; the Government of Quebec has adopted legislation whereby it prevents a municipality from dealing directly with the federal government. I think you should be aware of that, because you should put pressure on some of the provinces who have taken that kind of extreme position. With the Millennium Foundation, for example, each time there was a program, the municipality had to go through the bureaucracy of getting approval from the provincial government before they could even announce or accept.

So that does exist, and I just red-flag that for you. I do believe we should do more for national parks, but there are stumbling blocks.

That leads me to my next question, for Mr. Layton. I wish that 20-second clip could be integrated into the film that our viewers will see on CPAC. Unfortunately, it can't, but it's incredible what can happen. On viewing that, I feel that we're on the point of a precipice, and if we don't do something it's going to accelerate it. I'm just wondering if we really are that close. Do we have a timeframe within which we must act? Can you reverse any of the trends that have been happening?

Surely we can't be oblivious to the fact that global warming is a phenomenon that's occurring on a daily if not seasonal basis. I'm just wondering what any of your groups are doing--this question has been asked three or four times already, I think, but nobody seems to have answered it--in terms of addressing the ongoing debate that seems to be happening, on at least the political level, in our country. There are those who are going to always use the economic argument of whether we should ratify or not.

I think you'd serve this committee well if you could come up with some recommendations for sure. I know, in my own mind, that I haven't really decided. I know we should ratify it, but I'm trying to think of what timeframe we have to ratify it within.

Á (1105)

If we take a look at what's happening, and see our delegation trying to negotiate credits for some of what seems to me logical.... In other words, if a country takes initiative and develops some form of technology, for example, that is then used elsewhere in the world to reduce greenhouse effects or carbon dioxide emissions, shouldn't the country get credit for that in some form, or partial credit for it?

I'm wondering if you have an opinion as to Canada's stance with regard to that demand before ratifying Kyoto.

Mr. Jack Layton: Thank you for that question.

Others here will have more knowledge than I have on this. Once the CO₂ molecule or another greenhouse gas molecule is placed into the atmosphere by human action, it's not easy to retrieve it. Prior to our combustion of fossil fuels, we had forest fires and other techniques whereby CO₂ and greenhouse gas entered the atmosphere. But you also had the bioaccumulation of that carbon. It was in a cycle. The problem is, we are now depositing into the atmosphere, at a far more rapid rate, greenhouse gas molecules, and they are unable to be returned to their natural state. The cycle has been interrupted.

This is analysed in great detail by the largest group of scientists ever assembled on any human topic in human history with a level of consensus that has never before been achieved by world scientific minds. Now, we can always pick a scientist who comes along and raises a question, and then say, “You see? There's no scientific agreement.” But that reminds me a lot of the smoking days of the sixties. My grandfather was the vice-president of Imperial Tobacco. We had a lot of discussions about tobacco. He died of lung cancer, by the way, God bless him.

They kept coming up with science saying, “You haven't proved it. You haven't proved it.” Well, world science has come up with a new principle, and it's a humble principle, called the “precautionary” principle, which says that we don't know everything, but we'd better act on the basis of what we're able to know. And what we do know is that, once we deposit those molecules, they're not going to come back down for at least 100 years. That's the best estimate in terms of stabilization.

So what you saw in that graph is what will happen, according to the best estimates, with business as usual. If we adopt Kyoto and we achieve Kyoto, it will slow that graph down by ten years. That's all.

That's why--

Mr. Nick Discepola: Are the economic or social costs justified just to gain ten years, then? It seems to me it's more serious than that.

Mr. Jack Layton: Yes. First of all, I think I would dispute... and we are disputing at the municipal sector, because our experience is different. We see economic advantages; however, there is one thing we noticed. We've asked our municipalities whether they want Kyoto endorsed. We now have 150 municipalities, representing about 9 million Canadians, who say they want it endorsed. We have 25 municipalities, representing 75,000 Canadians, who say they have a concern about that. They're mostly from Alberta and Regina. They're our members too, and we're concerned about why they're concerned.

So we've gone back and taken a look at the emissions profile of the provinces and the different communities. We've found that, because Alberta and Saskatchewan produce the fossil fuels, there's a huge emissions burden associated with the production process. If we in Ontario reduce emissions, there's Alberta, having produced all this fuel for us, having to carry the burden of a massive reduction and therefore very extensive costs.

What we have done, then, in the last few months, is analyse and propose to the government—and it's within the various ministries right now, being examined—that all Canadians shoulder the burden of the energy-producing provinces and that we partition it according to our energy use.

So that would actually transfer to Ontario a considerable obligation over and above what's there now for Ontario in the current way it's being calculated. We're prepared to take that on. We're arguing that we should support a more egalitarian implementation strategy so that we can sign Kyoto.

Why should we sign Kyoto? Because if we don't, we will not be part of the international trading regimes that are going to be set up, and therefore there will be no obligation on the Canadian government to meet the targets. If you sign Kyoto and you don't meet the targets, then you don't get to trade in the next cycle. There's a severe economic penalty if you don't meet your targets.

Á (1110)

So we want Canada to sign, because then it will have to invest in public transit. It will have to invest in renewable energy. It will have to—

Mr. Nick Discepola: Can you answer the question? Should Canada sign with the precondition that it receive credits for some of the initiatives it takes, which the European Community refuse to acknowledge?

Mr. Jack Layton: I believe there will be, certainly internally within Canada, all kinds of credits available. As to the intricacies of the credit rules vis-à-vis investment in other countries, I'm going to suggest that's beyond my own expertise, that particular piece. There will be others here at the table who might be able to respond to that.

The Chair: Mr. Bennett, a quick response.

Mr. John Bennett: I assume you're referring to credits for clean energy exports. Well, if in fact we had clean energy exports, and if in fact they did reduce emissions in the United States as a result of that, then we should have that considered in terms of our emissions reductions. However, what we're arguing for now is not part of the Kyoto protocol. It's never been part of the Kyoto protocol. It's an attempt, after everyone's agreed to the rules, to try to reopen the negotiations.

In fact, most of the things we export into the United States don't clearly result in a reduction of emissions that are additional or supplemental to what we were doing in the past. In the Kyoto protocol, the principle is that you get credit for supplemental action. If you do things in addition to what you would have done ordinarily, then you should get a credit for that. But we're not doing anything additional in the United States to what we were before.

We've already won a concession from the Europeans in terms of the amount of sinks we'll be able to use that are not supplemental. That was the major argument in the Hague when the negotiations broke down. Canada wanted, and eventually won, recognition and credit status for tree growth that's already there--not for planting additional trees, not for making sure that new trees grow to maturity, but for watching the trees, trees that we already have, grow.

That's a huge advantage over other countries. We have it, as do the Russians, and the Americans would have had a much larger one had they remained part of the agreement.

But when you look at the facts in terms of what we're exporting, we're talking largely about natural gas exports into the United States and trying to claim that those exports result in a reduction in the burning of coal. But if you look closely at what actually happens with the natural gas we sell, what's going on in the States is that we're not replacing coal plants but we're replacing gas plants.

Mr. Nick Discepola: The underlying question, it seems to me, in reaction to Jack's comment, is that maybe our goal should be not the elimination of greenhouse emissions but the accelerated reduction of those greenhouse emissions.

I'm just wondering how quickly we have to act. Is it conceivable that we could reverse it eventually, maybe in 100 years or 200 years? What do we have to do?

Á (1115)

Mr. John Bennett: We have to understand that fossil fuels gave us the wealth and the knowledge to understand that we can no longer rely on them, that we have to phase our economy, and the world economy, off fossil fuels in the next three or four generations.

We've already produced a study in Canada on how to get to 50% reduction in our emissions, and we're going to have an updated version of that in a couple of weeks. We show clearly that it's technically and economically possible to do that. While we do that, we also address the huge problem we have with children's health in terms of asthma and other air quality-related problems.

Environment Canada has a study that indicates that for every tonne of CO₂ we reduce in eastern Canada, we save $16 in health care costs.

So when we talk about the cost, we have to talk about three sets of cost—the cost we're experiencing already, because we rely on fossil fuels; the cost of what we're going to have to pay out to adapt to the changes; and the cost of actually trying to avoid those adaptations and those health care costs by reducing emissions.

It turns out that emissions reductions are largely profitable for us. In the short term and then in the longer term we'll have to make some more investments. But that's how we've always done it. We have nuclear power, huge power dams, and coal-fired power plants because we invested in them as a society. We now have to make investments in new technologies.

The Chair: Go ahead, Mr. Penson, for five minutes.

Mr. Charlie Penson (Peace River, Canadian Alliance): Thank you, and I would also like to welcome the panel.

You know, coming from a rural part of Canada, it seems to me there's a growing idea that you can basically shut down rural Canada. I mean, 80% of the people live in the cities. Pay the farmers off and let them move to the cities. The softwood lumber industry is facing difficulties; better let that just grow to trees to create carbon sinks.

What is going to happen to rural Canada? Is that the model we're looking at here, that we're creating this huge green space, and farmers and ranchers are part of the problem?

Ms. Spence, you talked about the need to protect ecosystems, wildlife habitat, and water resources in and around the parks. The species at risk bill, Bill C-5, that's before the House right now talks about the need to protect habitat and endangered species. Well, who could be against that? But 30 million Canadians want it, and if that's what they want, shouldn't they pay the cost of having farmers and landowners and ranchers...share the cost of that?

In the agricultural industry they're losing their asses, and here we are, putting burdens like that on them, not trying to share it across the country. What is wrong with this picture here? We're not going to have an agriculture industry very much longer at the rate we're going.

Ms. Spence, I would put it to you—and to you as well, Mr. Layton, since I think you probably also represent the rural municipalities—shouldn't all Canadians pay the cost of protecting these kinds of species and their habitat?

Ms. Christie Spence: Absolutely, which is why we're here. We're looking for an investment from the federal government, which is all Canadian taxpayers, to do these things.

I think the difficulty in understanding some of the co-benefits with environmental protection is getting out of the mind frame that we're locking off areas from people. One of the really exciting things about national park creation is that it enables people to stay in their communities.

Look at Labrador, for example, where they don't have cod any more. Look at some of the national parks in the Rockies, where coal mines are not viable. Look in the Yukon, where some of their mines are no longer viable. The one-industry towns have been shut down because the industries got left behind, or are no longer compatible. A lot of the park negotiations we undertake—in fact, all of them now—are done with the consent, the participation, the collaboration, and the co-management of those local communities who actually choose national parks. They choose them as ways to protect their livelihoods.

Mr. Charlie Penson: Ms. Spence, can I just interrupt you for a second? I don't have much time.

You raised the issue of places like the Yukon, where the mining industry is no longer viable. Well, I put it to you they are no longer viable because of some of our land use policies. If you go to Chile you'll see $8 billion to $10 billion of investment by Canadian mining industries there. When you ask them, “Why have you moved out of Canada?”, they'll tell you that land use issues are big factors.

So people living in those rural areas that we are talking about no longer have jobs in Canada. And that's part of what I'm talking about with our problem with rural Canada.

Á (1120)

The Chair: Joan Kuyek.

Mr. Charlie Penson: No, I would like to have Ms. Spence's response. She raised the issue.

Ms. Christie Spence: Joan is an expert in mining, and mining in small communities. Maybe she can answer.

Ms. Joan Kuyek (National Coordinator, Mining Watch Canada; Representative, Green Budget Coalition): I'm the national coordinator for Mining Watch Canada, and we as an organization belong to the Green Budget Coalition precisely because of some of the questions you're raising.

We've been undertaking a study of the costs and benefits of the mining industry, federally and in the Yukon, B.C., Ontario, and Quebec. We're working with the Pembina Institute on this. The study won't be ready until June, but it speaks to a number of things that I think are really important.

The mining industry used to be a really good generator of regional employment for people who moved there—

Mr. Charlie Penson: It still is in Chile, by the way.

Ms. Joan Kuyek: Well, that's a very good question, actually. There are some questions around how that's being calculated and how that's raised.

What generally happened with mining in the past is that a mine would be discovered, and you could count on it lasting for a number of years. It would generate an opportunity for people to move to that area and work in mining. So cities like Sudbury, which I lived in for the last 30 years of my life, gained a great deal, and grew because of mining. However, the aboriginal people, who lived there first, don't work in mining. Very few of them work there. They've lost not only their land but also their livelihood in the process of that mine growing.

For the people who have moved to Sudbury, and my family was one of them, it created a real opportunity for employment. That's been certainly true in the Yukon. The Yukon was a product, first of all, of the gold rush. People came there and stayed, and made homes for themselves. Most of the northern communities, which are still federal responsibility in terms of mining, end up creating really good livelihoods for people, or did.

In recent years there have been a number of changes. One is that the technology in mining has changed a great deal, although their production levels have remained the same. A city like Sudbury, where I moved in 1970, had 33,000 blue-collar workers. Right now, if you disaggregate the figures, there are only 33,000 miners in all of Canada.

So you're not looking at a major generator of employment, and it's not because of anything except the industry's own interest to remain competitive and create new technologies, and replace miners with machines.

Mr. Charlie Penson: What about the question of the industry moving out of Canada?

Á (1125)

Ms. Joan Kuyek: Actually, a number of things are happening. One is that the Canadian government subsidizes industry outside of Canada as well as in Canada. So a whole range of incentives for exploration in Canada are also available to companies that move outside.

The federal exploration tax credits and the development credits enable companies to go outside. They go outside because they have the structural adjustment programs in those countries that have made it easier for them to violate...in many cases not pay attention to human rights.

In some places there are fewer restrictions on land, and they can get more easy access to minerals, but in many cases it's exactly the same companies going in and trying to lower the environmental standards in those countries so that they can come back and say in Canada, “Your environmental standards are too high, and we can't compete with Chile, we can't compete with Brazil.”

What we've found in the studies we're doing on the full costs of mining is, first off, there are huge subsidies to mining up front in the exploration and development phase, huge subsidies. Those subsidies diminish as the company goes into production. At the end, most companies are leaving behind an inordinate amount of destruction. In the older mines--there are abandoned mines all over the country--there's over $1 billion worth of responsibility for it.

The Chair: Sorry, but five minutes is long since up, and Mr. Pillitteri wanted to have the last question.

Mr. Gary Pillitteri (Niagara Falls, Lib.): Thank you, Madam Chair.

My question is a really small one, and it's to Mr. Layton.

I'm asking it because he brought up the consumption of water, and how we could save a lot in water. Since the municipalities operate the plants the sludge goes in, if there was less water in there, there would be less water that had to be cleaned up in order to go back into the rivers, into our streams.

You're asking for funds for the municipalities in order for a transition to implement some of these new toilets available now. Why isn't it like other building commodities in the province of Ontario? For instance, in plumbing you have regulations. In hydro you have certain regulations you have to comply with. All of those are with provincial and municipal. Why are the municipalities...?

Actually, they've done this on their own, because they have site plan agreements and so on. So they could impose this within the building trade. It is between municipalities and provinces, so why has nothing been done there? Why are you asking the federal government to have this pot, to have this transition, when right now you have building going on galore, specifically in the urban areas, specifically Toronto, and there are no restrictions of these here being implemented in order to save on the use of the water, considering what you have to pump in and what you have to clean out in order to put the water back into the streams?

Mr. Jack Layton: That's an excellent question. The municipalities have responded to that issue and they have put those restrictions in place for new development. The problem is, we have all these existing homes, all these existing buildings, millions of them, and those are the ones we need to address.

In terms of new buildings going in, both the municipalities and the province have regulations in order to insist on higher levels of efficiency and water efficiency.

Mr. Gary Pillitteri: They're mandatory?

Mr. Jack Layton: Yes, they're mandatory for a new development. They could be improved upon, but you can't put a 24-litre toilet in a new development in suburbia in Ontario any more, or in Toronto at least.

So it's an excellent point. We're acting on it.

In terms of energy efficiency, the requirements are not as stringent. We tried in our city to implement them, and other cities have, but provinces have sometimes, under protest from the buildings sector, come in and annihilated those. So we are in a bit of a struggle with provinces on energy efficiency requirements.

The Chair: Thank you very much.

Our time is up right now. I would like to thank all of you for coming today.

I remind the committee that tomorrow we have our session on equalization. As well, Mr. Cullen has a motion that he wishes us to deal with tomorrow. It's being circulated by the clerk to your offices. Please check and make sure that you have it.

We are adjourned.