NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, June 4, 1998

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[English]

The Chairman (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)): This is the June 4 meeting of the Standing Committee on Natural Resources and Government Operations.

On behalf of the committee I am pleased to welcome David Oulton, who heads the Climate Change Secretariat, and Ian McGregor, his deputy. They are with us today to advance our cause, which is to better understand the issue of climate change as it affects Canada and Canada's relations with the rest of the world.

With that short introduction, gentlemen, welcome to our committee. Thank you for coming. We invite you to say your opening remarks in 10 minutes, give or take a few minutes. This would then allow members adequate time to ask questions. I invite you to start, Mr. Oulton.

Mr. David Oulton (Head, Climate Change Secretariat): Thank you very much, Mr. Chairman. It is a pleasure to be with the committee this morning.

I have brought with me a deck, which is really just an introduction to the secretariat. I would like to spend a few minutes at the front end of the discussion today going through it.

In essence, turning to page 1 of slide 1, entitled “Developing a Strategy”, I would like to do three things: focus a little bit on the Kyoto challenge; talk about the federal response and then the national response; and then quickly take you through key milestones in the process ahead.

The Chairman: If I may interrupt, I believe, Mr. Oulton, unless you have already mentioned it and I missed it, that you were one of our negotiators, or our key negotiator, at the Kyoto conference.

Mr. David Oulton: No. Actually, my origins on climate change are more recent. I was engaged as head of the Climate Change Secretariat as of February. Prior to that, for the last two years or so, I was assistant deputy minister over at the Department of Agriculture doing their policy program. Prior to that I was with Natural Resources Canada. I wasn't present and didn't participate in the Kyoto discussion.

The Chairman: I would like you to proceed. Thank you.

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Mr. David Oulton: If I could turn quickly to slide 3 of the presentation, I won't belabour this. I believe members of the committee probably will have seen it in other forms. It's the graphic that really does the first-cut analysis of what the Kyoto protocol means.

It indicates if our 1990 level of emissions was about 567 megatonnes of CO₂ equivalent, in a business-as-usual context we would be going up to about 669 megatonnes of emissions as of the year 2010, which is the middle of the commitment period for Kyoto. If you compare that with our target of 531 megatonnes, that would give us a reduction of 21%.

As Minister Goodale noted when he met with you last week, initiatives that were already under way under the national action program on climate change have helped to reduce the overall challenge by something in the order of about 60 to 70 megatonnes. That is the differential between the 735 and the 669. That still leaves a 21% reduction that is needed from business as usual.

In essence, that estimate is also going to be affected by future economic growth as well as developments in key sectors in Canada, such as electricity generation. It is an estimate. It is not static and it will change over time.

If you had to say what was the challenge of the secretariat, it is to work with the provinces and the territories to come up with a strategy to deal with that gap.

Turning to slide 4, this is another way of trying to come to grips with what is the nature of the challenge we're facing. This slide gives you a track of CO₂ emissions on the left-hand axis, the vertical axis—growth since 1965 in GDP. It indicates that, by and large, when GDP grows, your emissions of CO₂ grow. That isn't a surprise. You can see there's only one period in recent history where in a sense that was de-linked, and that was the 1975 to 1985 period when we had, if you will, the energy price shock.

It tells you it is not unprecedented to de-link economic growth from energy growth, and it tells you that you do need a shock to the system that changes people's habits and changes technology. That really very much is going to be the key to coming up with a strategy that helps bring forward the technology we need, and that also helps bring forward the behaviour that's going to demand that technology and bring it onto the market.

[Translation]

Now, let's go to slide 6. Pursuant to the Kyoto Protocol, Canada undertook to reduce by 6% from our 1990 level, between 2008 and 2012, its average annual emissions of greenhouse gases. The national implementation strategy complies with the basic principle which claims that no province nor region of the country should be asked to bear an unreasonable burden to reach that reduction target. Efforts which will be made in order to achieve our objective will have to be shared by the federal, provincial and territorial governments.

Over the last few years, the potential economic impact which could be brought by the achievement of those targets of emission stabilization and reduction has been analyzed in many studies. Both in Canada and internationally, economic models were developed to assess that impact. However, more in-depth research must be made on the possible impact of the various directions and steps that we could take.

First ministers have asked federal, provincial and territorial Energy and Environment ministers to consider jointly the development of a national implementation strategy.

The next slide describes the federal secretariat. The federal Climate Change Secretariat was created by government as of mid-February. It has been mandated to support government's consultation efforts with provinces and territories and other stakeholders in order to develop a national strategy by fall 1999.

More specifically, the secretariat will act as a focal point for the development of the national implementation strategy, will ensure consistent approach and coordinated action at the federal level, will assume the stewardship of the Climate Change Action Fund and will constitute the core of the federal contribution to the national secretariat.

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We are also going to monitor international consultation and negotiations about climate change, since our domestic policies are necessarily linked to international policies.

[English]

Just to underline, the focus of the secretariat is very much to develop a domestic implementation strategy to follow through on Kyoto. Clearly to do that we can't be de-linked with what's going on in the international negotiations. Therefore, one will inform the other and we will hope to inform our negotiators at upcoming Buenos Aires and further international meetings. As well, their efforts will inform us in terms of what our efforts should be on the domestic front.

Slide 8 talks about the federal action fund, which was announced in the last budget. As you are aware, it is $150 million over three years. The intent is to try to use this money in concert with provinces, territories, and industry so as to leverage it as much as possible.

It really will be focusing on four principal areas: building the foundation for our policy efforts and the strategy; public education and outreach; science and adaptation; and finally, technology. In those four areas there are really two crosscutting thrusts. One thrust is developing the national implementation strategy and getting that in place by the end of next year. The second one is early action.

The federal secretariat is not the one that will be spending the money per se. What we are tasked with doing in essence is managing the due diligence and ensuring the money is well spent and that we are getting the maximum bang for the buck out of that money, whether it is supporting policy development or whether it is supporting early action.

Slide 10 describes the national process.

[Translation]

The national process is the approach that was adopted by the government to guarantee full engagement, in collaboration with the major stakeholders, into the development of a national implementation strategy. For the moment, that approach encompasses four areas of responsibilities: the first ministers, the Energy and Environment ministers, and other departmental councils; federal-provincial/territorial committees of officials; the national secretariat; and finally, about a dozen of issue tables linked through an integration group made up of issue tables chairmen and senior officers.

It is also considered to create a national advisory forum with membership coming from all regions. That committee would be made up of major stakeholders with different visions of the challenges that Canada must face in terms of climate change as well as a global understanding of the stakes.

Slide 11 is about the last meeting of Energy and Environment ministers. They met on April 24 in Toronto where they agreed on a process to develop a national implementation strategy by the end of 1999. One of the main decisions made by the ministers was about the creation of a second secretariat, that is the national secretariat to which I referred earlier. The secretariat includes federal, provincial/territorial staff and constitutes a virtual office connected electronically. I act as the joint chairman of the national secretariat, together with John Donner, the assistant deputy minister of Energy from Alberta.

The ministers also made a decision about some early actions. In that respect, they agreed on two measures: the establishment by next fall of a system for crediting early actions, and the strengthening and registering of voluntary action.

[English]

I will just take a minute with slide 12 to talk about the national secretariat. I mentioned that it is in the process of coming into being. It was created by ministers at the end of April. It is an experiment. It's a joint federal-provincial enterprise.

We will have roughly three federal people and half a dozen provincial people from the different regions of Canada, as I mentioned earlier, connected electronically. They will have the key role in trying to orchestrate and coordinate putting together the national strategy, and in particular managing the issue tables process that I've referred to and that I'm going to elaborate on in the next slide. They will also be the focal point for pulling together all the work and analyses that will be done over the course of the next year in putting together that strategy.

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Slide 13 provides a quick overview of what we mean when I mentioned issue tables. We've discovered from looking at previous experiences in putting together a climate change strategy that because the problem is so large, what we needed to do in terms of public consultation and engaging expertise was to try to break it down into manageable pieces of work and analysis in policy-making.

To date we've established what we call issue tables. They're going to be tables that are made up of both federal and provincial public servants, experts drawn from different areas, industry, environmental groups, consumer groups—a cross-section of groups. The tables will cover the full ambit of the economy, from natural resource sectors such as forestry and agriculture, right through to broader industry sectors and residential and commercial sectors. We also have horizontal tables dealing with crosscutting issues such as emissions trading as a possible solution, or the use of sinks as a means for enhancing Canada's ability to deal with its commitments from Kyoto.

The tables themselves are going to be a mix of different kinds of approaches to doing policy analysis and work. The outputs we're expecting from these tables are going to develop a set of options in each of the areas that we could put to ministers as options for solving the problem of following through on Kyoto in a sensible fashion.

Flipping to page 14 of the deck, it indicates that we've had eight ministers agree. We have added four more. We may create one or two other tables, but we will probably not go above 15.

We have said that this isn't the only mechanism we're going to use. Where a particular industry sector is adopting an alternative approach and analysis and where we have gaps, we're going to use the secretariat and the expertise that the secretariat can call upon in order to fill those gaps.

Page 15 gives you a sense of the full play of the issue tables that have been commissioned. You can see the approach we've taken is to ask for both the federal and provincial sponsors of each of the tables. As I mentioned earlier, it runs from a crosscutting approach of things like international emissions trading, technology sinks, credit for early action, and public education, through to looking at certain specific sectors where there are particular challenges. Transportation is clearly one. The electricity sector is another, as are forestry and agriculture.

Municipalities is one of the areas where actually there has been a lot of innovative action in climate change. We want to draw together the expertise in that area as well and see how they can help in terms of developing forward policies for us.

There will be some additional tables added on to those 12, but that gives a sense of the range and the approach we are taking.

If you asked what is the vision for the strategy, what it is going to look like, obviously we're going to be spending time over the next year developing that. This is something we are still discussing.

The vision on page 16 is in a sense just a framework for what we're trying to put together for ministers. We see it as being a menu of options. We have done a full profile of each option.

We have looked at every option. We have described who has the authority for it. We have described how it would work and under what business circumstances, if you will, in the external environment that particular option would be implemented. We have described what are the benefits and costs to that option from an environmental, social, health, and economic perspective. Finally, we have described what we would get out of the option in terms of CO₂ reduction emissions, or the enhancement of sinks if we're looking at soils or forests, and an evaluation of how that option would fit into a strategy.

From that menu of options we would build a road map for ministers. It would indicate how they can array those options over the period between 2000 and 2020. Even though the target is 2010, we don't think you can simply go to 2010 and stop. You have to answer the question of where do these options take you after that and how would they help meet future obligations.

We see it as being in a longer-term context. We see it being very much like a business strategy. We would provide a framework that would allow initial decisions to be made at the end of 1999 on how to get going and put this strategy in place. Then, like a business strategy, you would need to come back to it every year, evaluate your performance, evaluate whether options are making sense or not, bring down new options from the menu, and adopt that evergreen approach on an annual basis to renew the strategy regularly. We would hope to give ministers three to four paths over that 20-year period and an evaluation of their net benefits and costs so that a choice could be made from those different paths.

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Finally, in looking at the milestones as to where we're going over the next year, we hope to have all of our issue tables started up by July. We are looking forward to getting their first products in September, prior to our next joint ministerial meeting of energy and environment ministers in October. We hope those first products will provide us with an appraisal of how the table is going to work, an appraisal of what early actions ministers should be looking at, rather than having to wait for the full year in order to get moving.

Obviously we would also want to prepare for the JMM in October and the Buenos Aires COP-4 meeting in November. Clearly some of the international items are being discussed right now in Bonn in preparation for that meeting. We would want to be able to contribute to the development of the Canadian position on those items.

Finally, we would look to the issue tables reporting in the spring of 1999. That would allow the strategy to be put together over the summer and presented to ministers of energy and environment in the fall of 1999.

Thank you very much, Mr. Chairman.

The Chairman: Thank you, Mr. Oulton. Your presentation is appreciated.

We will start questions with Mr. Chatters.

Mr. David Chatters (Athabasca, Ref.): Thank you, Mr. Chairman.

I was very interested in a comment you made on slide number 4. You commented on the drop in the graph, I believe it was in 1980. The comment was that the analysis you draw from that is we do in fact need a shock to the system to bring about a fundamental change in thinking. Did I hear that correctly?

Mr. David Oulton: The conclusion we drew was that the only precedent there is for where that linkage has changed between energy consumption and CO₂ emissions and economic growth is that period in the mid-1970s to the mid-1980s when we indeed did have a price shock to the system. It caused changes in technology, smaller cars, and changes in consumer habits and how we used cars.

From that, one would assume we are going to need some fairly robust instruments in order to get the kinds of changes in technology and the kinds of changes in behaviour we are going to need in the future. It doesn't say we are going to need a price shock, but it does say we are probably going to need some fairly dramatic technology changes in order to bring about the change in that relationship. It doesn't speak to what the instrument would be.

Mr. David Chatters: That's a pretty frightening scenario, having lived through in agriculture and in the oil industry that price shock of the 1980s. Maybe it was seen as a positive thing here in Ottawa, but certainly out where I come from it was economic devastation. Of course, in my part of the world, and I think in most of Canada, there is a real fear that it's this kind of adjustment that is coming through greatly increased energy prices and prices to heat homes and light homes, those kinds of things. The federal government itself went out and paid triple the going rate for electricity to set an example on this thing.

Even the blue ribbon panel yesterday admitted there's still a lot of skepticism around this thing. Their recommendation was that action should be immediately taken, that we're moving too slowly on this. It was also said that action should only be taken after a thorough economic cost analysis is done.

We're not expecting any of this cost analysis, or cost benefit analysis, until the end of 1999. It seems to me that you're not doing anything very quickly here except creating bureaucracy.

Mr. David Oulton: I have a couple of observations.

One is that indeed, because of the nature of that relationship, I think it's going to take some pretty serious evaluation to figure out how it is done sensibly. Clearly, the price shock in the 1980s was something that happened because of events beyond Canada's shores to a considerable extent.

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In this case if we're trying to look at how to change that relationship, we are trying to determine what's a sensible policy approach. The reason we were given a year and a half mandate was to say because of the nature of this problem it is worth taking our time to figure out how you go about doing it, what's the right way to approach it.

I think I would agree with the thrust of your comments. It isn't something that you would do in one fell swoop, that one policy instrument is going to be able to do that. Clearly a lot of things from that menu of options are going to be used. They are going to have a cumulative effect. It's not just a one-year solution. It's a 10-year solution and, as I've tried to mention, a 20-year solution to the piece.

There is no doubt the graph says it's a challenge. Obviously the secretariat's view is because we are working on it positively with the provinces we can come up with options. It's our role in life that we can give ministers sensible options in order to go about building a strategy, but you have to do the work. Yes, a federal secretariat of 15 people or so is built, which is the size of our federal secretariat, to try to coordinate what departments are doing and put together what we hope will be a sensible approach to going about this.

It is a challenge. We agree with the national round table that you need to take the time to figure a way through it to do it well.

Mr. David Chatters: The other concern I have is the part of your mandate you are working on. I understand there was to be an announcement almost immediately, maybe today, on this domestic tradable credit option that you're putting together.

I think it has some possibilities. I think some of the environmental groups have also expressed the concern that trading credits with high emitters of greenhouse gases and low emitters of greenhouse gases, particularly internationally, amounts to a fairly massive transfer of wealth between the developed world and the undeveloped world. Overall globally there is very little impact on the reduction of greenhouse gases. This certainly would be a concern that we in Canada should have.

We have always been generous with the developed world. We spend a lot of money on foreign aid. If that's how this proposal is going to work, it makes our contribution to the developing world look minuscule compared to what this could be if you started down that road of buying and selling credits. Perhaps you could comment on that.

Mr. David Oulton: What we're doing now— actually a piece was in the press recently commenting on what was called a pilot in which a number of the provinces and the federal government are getting together to experiment to see how this might work. We're working with industry on it.

Part of it almost accepts your proposition that you need to spend some time actually figuring out how this thing works to know whether it is going to have practical benefits and whether it is one of the options that should be on that menu I've referred to.

There's a lot of opinion from people who started to work on it that some form of emissions trading may make an awful lot of sense. I think the theory behind it is understandable. It's whether the practice actually works out. The theory behind it is whether it's within Canada or between Canada and other countries, say, developing countries, you would be able to ensure that you were getting your emissions where they're most cost effective.

Rather than Canada having to spend $100 a tonne to reduce emissions in one of our coal-fired plants where it may have the most up-to-date modern technology, we might be able to have a win-win where that technology is sold to a country, China, Indonesia or whatever it is, on a commercial basis, which also produces lower emissions for that country. It's a lot easier globally to get those emissions in China than in Canada.

From our perspective we are looking at a full menu that includes both. Frankly, there are things we see in the work we're doing that make a lot of sense and that we can do in Canada. We hope to have our own domestic menu. But there may also be international solutions, such as international emissions trading, that are going to help us and other countries—it's not just Canada—reduce their costs to make it more cost effective.

The issue is the point you raised, which is that it looks good on paper. You have to start experimenting with it. That's what this pilot is trying to do, to see if it does really work in practice. The honest answer is we don't know yet.

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Mr. David Chatters: Maybe I'll come back to that area. I have some other things. I wanted to touch on a subject that may not be part of your mandate.

It seems to me there continues to be a fair amount of skepticism on the validity of the science surrounding this. The former head of the U.S. National Academy of Science is speaking out in the U.S. against the science and the controversial petition of 1,700 scientists.

Has the government abandoned or at least is it putting less emphasis on its efforts to prove the science and putting all the emphasis on taking measures to reduce greenhouse gases? It seems to me that we should continue to make fairly substantial efforts in cooperation with scientists around the world to try to firm up the science, to try to take some of the skepticism out of this whole thing.

Mr. David Oulton: As you might have suggested, I'm not an authority on the science and I can't speak to that element of it. That certainly isn't part of our mandate.

What is part is I mentioned that there was a government climate change action fund of $150 million. Part of that fund will be used to further our efforts in both the science and what is referred to as the adaptation in the impacts area. In climate change a lot of the focus tends to be naturally on mitigation, how you reduce your emissions or enhance the sinks of agriculture soils.

The other two legs of the stool are firming up the science and continuing to work on it. That debate does go on; it is very relevant. Indeed funding it is one of the things we would continue doing. We would also work on the implications of climate change. If it is taking place and if it's going to affect our prairie agriculture or the northern tundra, then we need to get a better handle on what those impacts are and what we need to do in order to deal with them. That element is part of the work that we would fund but we would not do.

The Chairman: Thank you, Dave. I'm sure we'll have time to come back to you.

Reg, please.

Mr. Réginald Bélair (Timmins—James Bay, Lib.): There are really two words in your presentation that seem to summarize what lies ahead for us in the next 10 years. Those words are “unprecedented” and “sustained”; unprecedented because of course there will somehow be a confrontation between whatever rules governments are going to come up with and the industry. It's a loaded word with heavy consequences.

I don't know if you can answer it today, because it seems at this point in time you are still at the organizational level of the secretariat. At least in your mind there must be some form of rules that you wish to come out in order to be able to balance between unprecedented, which means of course heavy, heavy investments by the companies, and sustained, which suggests livelihood, jobs, bread and butter. In your mind, what is it exactly that you want to do with the industry?

You were at Natural Resources before. You may be somewhat familiar with their rules. Environmental guidelines were issued five or six years ago to entice pulp and paper mills to de-pollute. It worked out quite well. Out of the 155 mills across Canada, the last I heard, last year there were only three or four that did not comply.

Would it be something like that that you would like to implement?

Mr. David Oulton: You were right in your comment that it's at the stage where we're actually starting to do the research work.

I talked about the menu. The real question is, what is on the menu? The question you were asking is, what sorts of instruments and what sorts of rules or regulations might be on that menu? That is something we're going to work on. I can tell you just a little bit to try to at least partially come to grips with the question you are raising.

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We look for having full industry participation in the process. If we're going to do this overall enterprise, the reason I've mentioned there's a federal secretariat created in February and a national secretariat created in April and a national process is because it's quite clear that the only way you're going to be able to deal with an issue as broad as this is by using all levels of government and working in partnership with the people who are going to be affected by it.

The process is designed to sit down and talk to industry. It's for governments to decide on the policy objectives. If we agree on what the policy objectives are, then we should sit down. Referring to the tool that was raised earlier, emissions trading, while emissions trading may be the flavour of the month and there may be an element of popularity with it, if it works, it's a regulation. You're putting in place something that says from single-point emitters here's a level of permitted emissions; if you want to go above that, you can go on the market and buy credits.

That is a form of regulation that has impacts. Part of our process is going to be to say to industry that this is one of the tools that makes sense. If we're going about it in terms of being the most cost-effective approach to doing it, it is better than a blunt mechanism, whether it's a tax, a subsidy, or some other form of going about it.

We are going to design those tools. I haven't been able to talk to you about a specific one, but when we design the mechanisms that are going to be on the menu, they are going to be done in concert with getting through these issue tables advice from industry as to what the impacts are and what looks to be most cost-effective.

In the end there will be impacts. One of the principles we're trying to work to is that you're going to have to try to get a balanced approach to this. An approach that's going to have unequal impacts from a regional perspective or from an industry perspective is something that is going to be very difficult to sell. When we come up with our menu, it has to be one that provides for a balanced approach to solving the issue.

Mr. Ian McGregor (Deputy Head, Climate Change Secretariat): If I could just add a couple of comments, in a number of our discussions with industry groups they are now starting to see this as an opportunity. It is shifting some of the mindset just a little bit, which I think is extremely positive.

Mr. Réginald Bélair: I noticed an observation from research that industry has somewhat changed its approach to the problem in comparison to what it was before the Kyoto conference.

Mr. Ian McGregor: Yes. There are two examples that maybe I could flag for you.

Du Pont recently put in some new machinery and equipment at one of their facilities. They were targeting a reduction in nitrous oxide emissions, which is one of the gases. It's just up and running. They believe they can reduce 95% of their nitrous oxide emissions. They're doing a small chemical change to it, and I can't say that I understand the chemistry. They're actually selling it for use as an agricultural fertilizer so that it's not a greenhouse gas emission.

Not only are they benefiting on the bottom line, they're now quite rightly asking for credit for having achieved that, assuming there's some mechanism put in place. They see it as an extremely valuable resource that they now have.

The other example is we were out talking to some oil companies. I won't name them because it's speculative at the moment. They're looking at a project in Nigeria. Nigeria is one of the largest flare gas emitters in the world, with about 40% of the flare gas in the world.

Mr. Réginald Bélair: What's flare gas?

Mr. Ian McGregor: It's when they're bringing oil up and it goes through the stack. That's what you see burning.

Apparently in Nigeria the equivalent emissions are about 600,000 barrels of oil per day. A consortia of companies is proposing to go to Nigeria and sell them Canadian technology—top-of-the-line technology.

It's not only a commercial venture for them. If we can get credit for that on the international scene, they also have a valuable asset there. They're starting to view it as a valuable commodity. It is starting to shift the thinking. That shift from business is extremely important because it's business and consumers, the people who are actually doing it who are going to come up with the best solutions to this. It's not government. We need their advice and we're expecting that we can get some extremely innovative ideas.

The Chairman: More questions, Reg?

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Mr. Réginald Bélair: I have two short questions.

In the last budget, you just confirmed there was only—and I say only—$150 million set aside to start the ball rolling, to get the process in gear. Fifty million dollars a year is not even a drop in the bucket as to what it is going to cost. We're talking about billions and billions of dollars to implement a strategy, something real, concrete. Do you think $150 million is enough?

Maybe I could rephrase it. Because it's going to cost so much, the federal government will not contribute financially for the industry to comply.

Mr. David Oulton: First of all, I should clarify that the $150 million for three years is viewed as being money to do two things.

One is to do the homework. I come back to the earlier comment about the homework needed to ensure that we can put in place a sensible strategy that has buy-on by the provinces and territories, our partners in the endeavour, and also benefits from the advice of citizens and industry.

A good chunk of it is going to be used by the issue tables for public consultation and outreach activities to ensure that we're getting the best advice possible and we have a good understanding of the lay of the land before we come down with recommendations on strategy. You have to do that. You would look at it in the sense of it being seed money to develop a good policy.

The other element of it is to deal with the fact that you don't want to wait for two years, until the year 2000, to be able to do incremental things. Technologies have been developed over the last number of years.

There are demonstrations of things, whether it's using municipalities, making good use of landfill gas instead of it going into the atmosphere, whether it's district heating that would be more efficient than individual heating— There are a number of things where government working with industry and with other levels of government can, through demonstrating technologies, get them moving more quickly rather than wait for a year or two.

The other part is to try to advance what we're doing. In the end, when we build the strategy and we know what the ticket is, frankly the prices that are paid are not all up front through government. When you regulate, the price is hidden to government. It's often borne by the industry and then borne by the consumer.

When you talk about costs of this, yes, there will be costs that will be borne. In our view, when you've put together the strategy, you've got to evaluate those costs, but there are benefits as well.

We are going to be looking at other things apart from the benefits on climate change itself. There are other air issues that you deal with when you reduce CO₂ emissions. The more you can, you build a strategy that gives you synergies.

You're dealing with urban air quality issues at the same time your dealing with, in the case of agriculture, because of my agriculture background, enhancing the use of Canadian soils of sink by promoting zero till or low till. You're enhancing the efficiency and the cost effectiveness of the farmer himself as well as reducing emissions in the air. You're looking for those kinds of solutions.

What I've seen so far early on in the process is that there are a lot of them out there. What governments can do is not necessarily spend wads of money. There was an allusion to what had happened in the 1975 to 1985 period, and there were some object lessons that people drew from that. Rather, it is to provide the right kind of environment. Sometimes it's with framework policy. Sometimes it's with a regulation. Sometimes it's with a voluntary mechanism. There are all sorts of clubs in the golf bag that we can use, but it's finding the right ones for the right situation.

The Chairman: Thank you, Reg.

Mr. de Savoye.

[Translation]

Mr. Pierre de Savoye (Portneuf, BQ): I must confess that you did not satisfy my appetite and I'm going to tell you why. Your agency is called the Climate Change Secretariat. You talked about two things today: about your organization in terms of responsibilities and bureaucracy and, later on, about issues relating to greenhouse gas emissions.

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In my mind, climate change is not only that. To try to get down to the level of 1990, that is a 6% reduction, means to continue to throw out into the air huge amounts of greenhouse gases. We don't know beyond which annual level of emissions nature is able to survive. Therefore, we can foresee almost undoubtedly that over the next decades, climate change will have major negative impacts on agriculture, populations, diseases, insects, bird migrations, and breeding in Canada and in Quebec.

I would have expected, quite frankly, that in your presentation, you would have talked about your mission statement first, and then of your action targets regarding, for example, emission reductions in the context of the Kyoto Protocol. But also, is it part of your mission to monitor the changes that are occurring now? Is it part of your mission to study their foreseeable impacts? Is it part of your mission to put into place adaptation measures? For example, if 50 million Americans decided to immigrate to Canada in order to leave the desert which is taking form in their country, what are we going to do? We're not talking about things that are going to happen in a century from now, but which might take place in 10, 15 or 20 years, or even in five or six years from now.

If we were to get every second or third year or worse every year freezing rains like those we had in Ontario, in Quebec and in New Brunswick, what would we do? Are those concerns part of your mission? If yes, could you comment about that?

[English]

Mr. David Oulton: Thank you very much for that question.

In one sense our mission, which is stated as the mandate rather than the mission, is very simple. It is to put in place the implementation strategy by the end of 1999, if I had to say it in a sentence.

You ask if there are other elements of that strategy, beyond those we've been discussing, which have been largely focused on mitigation. From my perspective, and this is me in terms of trying to develop my mandate and mission, it does include, as any part of a strategy should include, what you're doing in the science area. This is so that you better understand what's happening. You can make better policy in the future. In what you should be doing in the adaptation area, you can better understand what you have to do now to be able to adapt to those climate changes that are already in place. My view is that a complete implementation strategy should include in it the other elements you refer to.

One of the things we are doing now, because we are at the front end—we are all six weeks old nationally and three months old federally—is developing that mission statement and what should be included in it. My view is that it should include those things. We are still at the point of discussing those with the provinces and others to determine whether everyone agrees.

I should point out that in the end the science that is being done on climate change is not done by the 15-person secretariat. We don't overlap and duplicate. It is done by Environment Canada, Natural Resources Canada, and the Department of Fisheries and Oceans.

Similarly, there is the work that's being done on looking at the implications of climate change that is taking place now and in the immediate future and what we should be doing to adapt. If we think unpredictable weather is an element that is part of our future, what do we do in terms of ensuring that we are taking appropriate precautions to deal with emergencies, for example? Those are things that are the responsibility of emergency planning and other operations. It's part of our responsibility to build in the plan that gives the push to doing those other things in other areas of responsibility in the government.

The answer is yes, I believe you're right. It is something that should be part of our strategy, but it is still being debated with the other participants around the table.

• 1215

[Translation]

Mr. Pierre de Savoye: We talked earlier about emissions trading. I had the opportunity to participate in the Globe 1998 Conference as well as in the forum that preceded it. I fell it was obvious that the Americans, among others, attached much importance to that mechanism, which had already proved its usefulness in controlling SO₂ emissions. It is nevertheless a sensible mechanism which is still at the experimental stage. At Globe 1998, we were suggested to undertake pilot projects. Do you have already considered something of that type? How do you see that here, at the national level, and at the international level? What kind of process and time schedule have you contemplated in order to achieve that?

[English]

Mr. David Oulton: You are quite right in your comments. The U.S. is the only country that has had experience in emissions trading. They have had the experience over the last half a dozen years or so with regard to sulphur dioxide. It seems to have been very successful from their perspective as being a technique and a tool. As a result of that, they do see emissions trading in greenhouse gases as being one of the instruments they are going to focus on both domestically and internationally.

You are quite right. There is no doubt that from our perspective it is one of the more interesting and prospective tools we could use in the future.

Two pilots are going on now. One was alluded to earlier and was referred to recently in newspapers. Two or three western provinces along with Nova Scotia are participating in a pilot project. Another one has been running in Ontario for the last two or three years, which includes both acid gases and greenhouse gases.

All of those are really to give Canadian industry and Canadian governments a sense of the mechanics of how it will work and how it would be put in place.

We have talked to the U.S. Assuming that they go ahead with domestic emissions trading, the timetable they see for it is that they need to be in place for 2008 and that international emissions tradings can start taking place by 2008. However, I think everyone's view is that if you're going to actually be doing it in 2008, you should be putting yourself in the position a number of years before that. You actually do it domestically so that it is actually up and running.

We haven't set a specific target yet. My assumption is that if we go ahead with emissions trading domestically, and if the U.S. does, you'll be looking to put in place fairly broad pilot experimental projects in the 2002 to 2005 period. Somewhere in that period you'll be looking at putting in place a pretty broad national experimental project. This is assuming that the work we've done this year and over the early part of 2000 says that the mechanism is still worth pursuing and that it can work.

The important thing is that internationally there is going to be emissions trading as well. An awful lot of the value of it is not just within Canada. It is if you're able to do it in a broader context where definitely there are entities that have much lower costs to reduce carbon and you can take advantage of that.

The broader the market, the more valuable the mechanism. It would matter a great deal to us if the Americans go forward and if the rest of the world internationally among OECD and other countries goes forward with it. Then it would probably make a lot of sense. We hope to have a good fix on that over the next three years.

[Translation]

Mr. Pierre de Savoye: Thank you.

[English]

Mr. David Chatters: A couple of things came up. I wanted to comment on Reg's observation that at some point there has to be a confrontation between government and industry to make it happen. I suggest it's not government and industry; it's government and people in their everyday lives.

My observation on this whole issue is that industry seems to be ahead of government. Industry wants to get going and government is holding them back to some degree. It's the other two-thirds of the problem, the transportation industry and the population industry, people living and heating their homes who haven't bought into the strategy yet. That is where the confrontation has to come from.

Again I go back to my concerns. I would certainly caution your group when looking at emissions trading, particularly when you start talking internationally.

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We on the natural resources committee saw what happened to the Canadian mining industry. When regulations and land tenure and a lot of other things to some degree were hostile to the mining industry, they simply left for Chile. What that does to our economy, this idea has the same potential to do to many industries.

This is probably my last chance to talk a little about the tables and how they're going to operate. How will we be able to find out what their mandate is, what their road map is, what their agenda is? Can average Canadians have some input into this? I have concerns.

For example, the electricity table could recommend greater enhancement of nuclear power. Certainly huge reductions in greenhouse gases would be achieved, but then there is the problem of nuclear waste disposal. That doesn't enter this picture at all. It has to be transparent. Canadians need a chance to have some input.

Mr. David Oulton: I fully agree with you. Certainly the federal-provincial process also fully agrees that if we want balanced recommendations and outcomes, then how those issue tables are set up is very critical.

The way in which we're going about it to try to achieve that is first we are trying to make them of a manageable size. We discovered in the past that with 50 people in a group, it's very hard to allow them the opportunity for useful discussion and debate. We are going to try to make them manageable tables.

We are going to try to give them very clear mandates. Again, one of the criticisms of earlier exercises is that they didn't have clear mandates, clear deliverables, and clear timetables. That is indeed what we are in the process of discussing with the provinces. When these tables are commissioned, we will commission them so that they know precisely what is being asked of them, what their timetable is, how they're going to go about doing it. If research work is needed, they are going to be given a budget to be able to do the necessary research work.

We are going to ensure that the tables have a balanced representation of experts. In the case of something like electricity, not only will there be people who have a background in nuclear generation, but also people with a background in hydro and fossil fuel generation. Consumer, environmental, and user groups as well will have a point of view. Trying to put together the tables is really an art in trying to get an appropriate balance. Because that doesn't always result in a satisfactory outcome, not only are we giving them the mandate to generate ideas on options, but before they have finished their work they also must peer review the options. Apart from the table, they have to go out to a broader circle of people who have expertise, whether it's in agriculture or whether it's in electricity. They are going to have to peer review them. We want the results of that peer review and it needs to be a broad peer review.

Hopefully, they will have technically reviewed the proposals. Then a public engagement and consultation process is needed to see that the proposals are not only technically sound but from a broader public policy environment, that they are not advocating creating large public issues with regard to, say, nuclear waste disposal, which may be as big a headache as dealing with the climate change problem.

The commission we are giving to the tables is really that threefold exercise. By the time they finish their work next May, they will have gone through that process.

We are going to make it transparent. The tables are open. We are going to use the usual electronic means to ensure that everything that is going on is available and accessible to people outside the table. They can contribute. People who want to know what's going on can get the minutes. They can see the papers that are being delivered and developed by the table and they can contribute their views to the table.

This is also a bit of an experiment in public policy-making. We have had the benefit of looking at previous exercises and trying to figure out what didn't work and what we need to do to make it work. Having said that, we are developing a bit of a hybrid tool. Some of it will work well and some of it we're going to have to fix.

The role of the secretariat is to monitor what's going on, see what's working well and if it's not, to fix it. If it turns out that we have tables where the dynamics aren't working and it looks like there are not going to be balanced outcomes, then we're going to have to react to that and see if we can't fix it in midcourse rather than wait until it craters at the end of the process.

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The Chairman: Are there any other questions? I would like the indulgence of two short questions and then we'll thank the witnesses. Reg.

[Translation]

Mr. Réginald Bélair: In your opening remarks, you said that you intend to work in concert with the industry so that the industry itself develops the guiding lines which are going to be imposed, but on a voluntary basis. Did I understand well that part of your presentation?

[English]

Mr. David Oulton: Certainly one of the objectives is to see what can be done voluntarily. You will have noticed that one of the tables is enhanced voluntary— We don't believe that we fully exploited that mechanism in working with industry. There is more to be done in that particular area.

Those aren't the only tools. When you regulate and use subsidies and a whole variety of measures, not all measures you may end up choosing are going to be voluntary measures. The non-voluntary measures have not been excluded, but certainly there is a predisposition to want to maximize voluntary measures.

[Translation]

Mr. Réginald Bélair: I am pleased to hear that, Mr. Oulton. I had a little bit the feeling, much in the same line of thinking as my colleague Pierre, that you were too optimistic regarding the outcomes that we are going to get over the next 10 or 15 years or, I should say, over any period of time. I'm delighted at the comments you just made.

My second question is about advisory boards. Is it your intention to consult with members of parliament to establish who should sit on those boards? We're talking about 15 sectorial boards throughout Canada, which really means many members. Which process is going to be put in place for the appointment of the members who are going to sit on those boards?

[English]

Mr. David Oulton: It's less a formal appointment process. What we've gone to is—

Mr. Réginald Bélair: Did you say not?

Mr. David Oulton: It is not a formal appointment process. We have given to each table a federal and a provincial sponsor. In the case of something like international emissions trading, it's Environment Canada and I believe Alberta itself may be the province. We have said to the two sponsors that it is their responsibility to do a thorough canvass to come up with a list of those people who have the expertise and the representative background that will bring what is needed to the table. We develop a list of maybe 40 or 50 people.

The tables themselves are time consuming. We're asking people to dedicate maybe three to five days a month. It's a lot of work. Then we're going to ask people to volunteer.

Mr. Réginald Bélair: It comes back to the point that Dave made a while ago. The population will ask to be consulted, absolutely.

Mr. David Oulton: Indeed.

Mr. Réginald Bélair: What comes to mind is the participation of unions in the process.

Mr. David Oulton: Indeed.

Mr. Réginald Bélair: The way you're talking now, you're talking about experts in technology, scientists. The grassroots population will not be included, from what you're saying now.

Mr. David Oulton: We have tried to develop a concept that has— I guess the best way to describe it is different circles. In trying to build a manageable table of two dozen people, what we want at that table are both people who have expertise and people who have a representative interest. They come at the problem from different perspectives.

Mr. Réginald Bélair: Okay. I have no problem with that.

Mr. David Oulton: Beyond that, recognize though that there are other experts and representative interests, if you are saying there are only two dozen who have a legitimate interest in that table. We are going to have them be part of the table, but they don't have to be there for every meeting. They're connected electronically and they're going to be consulted on all the major issues.

We're trying to build a mechanism that allows for different levels of participation. Then there will be a broader one beyond that, which is the general public, which can look in on any table conversation that's going on and provide their point of view and their specific expertise.

We're trying to build two or three different types of participation in the table. This will ensure that even people who don't have the time, who can't devote three to five days a month because they've got a day job, but who do have the expertise, can still participate in the table. They can still have an influence on what the table is doing.

• 1230

It recognizes the practicalities that when we ask people for their time, you can't get all the experts—

Mr. Réginald Bélair: This is just a word of advice, and take it from me or not. Just be extremely careful that nobody, no Canadian, is left out of the process, because it's going to backfire on you. In the end you have to convince Canadians that this is a good thing for them. If they are not part of the process, they are going to send you to hell. If it's only technical—

Mr. David Chatters: Or elect a Reform government.

Mr. David Oulton: I get the message.

Mr. Réginald Bélair: You get the message. You get the drift, and it's extremely important. If you don't convince the workers that this is a good thing for them, it's going to backfire.

Mr. David Oulton: I understand. It is one of the challenges of trying to ensure that you don't have just expert consultation, that you also have public engagement. I agree.

Mr. Réginald Bélair: That's right, because we're going to be there to watch you.

Mr. David Oulton: Yes.

The Chairman: Any questions from members?

Mr. Ken Epp (Elk Island, Ref.): I am not an expert in environmental things, but I'm interested in your goal to de-link greenhouse gas emissions and the increase of them from the gross domestic product. You have that in the little graph that shows that they are presently linked. How do you think it is possible to do that?

Mr. David Oulton: I find the graph interesting because it alludes to the question that was made earlier. There have been periods where the relationship has changed.

If you look at the graph, there is a very steep relationship, one on one, back in the period of growth right after the Second World War through to the late 1960s and early 1970s. When you did have necessary motivations, you find that technology arises that changes that relationship. You do get engines that are a lot more efficient today in automobiles, in buildings, in heavy equipment or machinery.

The answer, to try to be very specific about it, is going to largely lie in technology and how we use technology. The question really is, is it being overly optimistic to assume that the technology is going to be there in 10 years or so, to be able to make the kind of change in the de-linking that is required? From what we've seen in technology change, there's reason to say if we put in place the right kind of business and the right kind of public environment, we can get the necessary changes.

Mr. Ken Epp: Okay.

My next question is, the graph takes only that little glitch when we had that huge motivation, when the price of fuel took a real leap. Not only I but a number of people made significant changes. I started riding a bicycle to work. That's why I'm in such fine shape now. I put over 4,000 miles on a bicycle going to work. I bought a motorcycle when we moved farther away and my work was too far. The motorcycle used less than three litres every 100 kilometres, which is really very, very economical. I now drive a little car that uses between a half and a third as much fuel as the car I had then. That is duplicated over and over again, as you've indicated.

Besides using less fuel, the technology now permits less greenhouse gas emissions from each litre of fuel burned. Yet the graph went like this and then it carried on upward. That was considered to be a big technological jump in solving this problem.

I'm afraid the government, with its iron fist, is going to simply say it will tax it and that will solve the problem. We have this in so many environmental things. When I buy a battery, I pay an environmental fee. When I buy a tire, I pay an environmental fee. I've never yet been able to figure out how the disposal of a tire or a battery is less polluting when the government puts a tax on it. It seems to me it's more polluting, because now I have to work harder and expend more energy in order to pay for the bloody thing. I'll end up having to go to work in the evening to do some overtime and thereby put more pollutants into the air because I have all these taxes to pay. I think taxes are negative as an incentive.

I don't know if you want to comment on that. I just wanted to get that off my chest.

• 1235

The Chairman: How small is that car, Ken?

Mr. Ken Epp: My car is a little Mazda 323. It's a great little car. It makes about 40 miles per gallon.

The Chairman: Dave Oulton, did you want to comment on Mr. Epp's comments?

Mr. David Oulton: Just by way of saying I certainly agree with him. The point of the chart was to say that it is a significant challenge.

You are right in that we have had all kinds of different experiences with taxes. In some cases they work well; in other cases they don't. When I speak of that menu of options, we have to look at everything and do the analysis. If the tax doesn't do the trick, and there are times when it doesn't work, then it's up to us to do the homework to know where it is effective and efficient and where it is not. That is part of our process over the next year.

Mr. Ken Epp: I would certainly urge you to make sure that there's a real study done of the impact on our economy before certain measures are implemented. In hoping to do what is right, you could end up not achieving your goal and putting our economy into a tailspin to boot, both of which are negative.

By the way, I want to also tell you, Mr. Chairman, that I drove my little Honda motorbike—and if you can imagine me on a Honda 125, it looked funny, but it always made me feel good that I was doing my share to reduce pollution.

An hon. member: There's that convertible too with the flag on it.

Mr. Ken Epp: Yes, that one too. That one unfortunately I don't think was that efficient.

The Chairman: Thank you, Mr. Epp.

Other questions from members? With that, I'll just indulge myself with two short questions, if I may, Mr. Oulton.

First, members, there is a list of the tables and their contact persons and phone numbers. The researcher has it and I'm sure it will be available to you. You should also know that the researcher is going to send the kit—Dave already has one—from the National Forum on Climate Change. He'll get those out to you in both languages.

Mr. Oulton, on the tables, unless I'm misunderstanding something, is there not one on domestic credit training?

Mr. David Oulton: There isn't one now. The reason is that with Buenos Aires coming up in the fall, one of the issues it is expected to deal with is whether there will be an international emissions trading system.

There are only so many people who have expertise in that area. The way we came at it was the same group of people are going to be asked to talk on the domestic system as well as on the international system. It is better to have them focus on the international system initially and then move probably in the fall to focus on the domestic system and possibly change some of the representation in the table to give it a broader domestic focus. We don't have one now. The intent is to be able to use the core of expertise from that table as the basis for building a domestic emissions analysis.

The Chairman: Except you did want some consistency. If there was to be a domestic system—

Mr. David Oulton: Exactly.

The Chairman: —you want it to be consistent with the international.

A second short question. I recall speaking to the president and CEO of EPCOR, the Edmonton power corporation. They have done a lot of work over the last few years, planting trees and what not.

There was a table on credit for early action. How early is it imagined early is? If they did something two or three years ago, is early maybe the beginning of the voluntary program?

Mr. David Oulton: When ministers talked about that in the spring, basically they said they agree that credit for early action should be given. We have created a forum for trying to figure out when you start it and how you do it. Whether it goes back to the base year, 1990, or to the start of the voluntary action program in 1995, if my memory is correct, or some other period, is one of the issues they have been asked to look at to find out what's reasonable.

The Chairman: Thank you.

With that, I'll offer thanks on behalf of the committee to you, Mr. Oulton and Mr. McGregor, for coming here today to help us in our pursuit of a better appreciation of global climate change from a natural resources perspective. We reserve the right to invite you back again some day, possibly in the fall.

With that, members, we will adjourn this meeting.