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, November 20, 1997

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[English]

The Chairman (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)): I'm pleased to commence this November 20 session of the natural resources and government operations committee as we further study the issue of climate change.

Today's session will be the concluding session for this round. We'll be coming back to this issue in the new year, but we appreciate that our witnesses here today, and previous witnesses, have given us a little bit of time in advance of the Kyoto conference so that we could have something on record and something to say about this subject in preparation for that conference.

On behalf of our entire committee, I want to welcome: the Coal Association of Canada—I think Don Downing will be the spokesperson; the Canadian Electricity Association—I believe Pierre Guimond will be the leading spokesperson; and from the Canadian Wood Council, Kelly McCloskey. As you take your turn, you could introduce those who are with you.

As a reminder, we've asked each of the associations to make a brief presentation of five to seven minutes so that we will have ample time for questions afterwards. We will take the liberty of inviting you back in the new year should you feel you'd like to do that.

Without any further ado, we'll ask Mr. Downing from the Coal Association of Canada to lead off.

Mr. Donald Downing (President, Coal Association of Canada): Thank you, Mr. Chairman.

The Chairman: Thank you for being here.

Mr. Donald Downing: It's a pleasure to have the opportunity to present a brief to the standing committee at this time.

I'm joined today by two representatives of coal mining companies in Canada: Mr. Ken Crane, from Luscar Limited; and Bernd Martens, representing Manalta Coal Limited.

I'll begin my brief now.

In Canada, coal is produced from 29 mines located in Nova Scotia, New Brunswick, Saskatchewan, Alberta, and British Columbia. The combined 1996 production from these operations totalled 76 million tonnes, a record level. Another new record will be achieved by year-end 1997.

Current and future production of coal in Canada is sustained by reserves in excess of 9 billion tonnes. Relative to other fossil fuels, coal represents over 66% of the total fossil fuel reserves.

The majority of Canada's coal mines are large-scale surface operations; 94% of our annual production is derived from these surface mines.

There are two broad market sectors served by Canadian producers. One is the domestic scene, where over 41 million tonnes of Canada's coal were used for domestic power generation. The other 35 million tonnes was exported.

Alberta, Saskatchewan, and Nova Scotia derive a majority of their electricity from the combustion of coal. New Brunswick, Ontario, and Manitoba also use coal for electrical generation. In total there are 25 large coal-fired electricity generating stations in Canada, with a total capacity of 19,000 megawatts. These stations currently fuel approximately 20% of the electricity produced in Canada.

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Mines supplying coal for domestic markets are located on the prairies of Alberta and Saskatchewan, in New Brunswick, and on Cape Breton, Nova Scotia. For geographic considerations, consumers in New Brunswick, Quebec, and Ontario also import coal from the United States and South America. In 1996 over 11 million tonnes of imported coals were consumed by utilities and industrial plants in these provinces.

To turn to exports, last year also saw a record for coal exports from Canada. Thirty-five million tonnes of coal were sent to markets in Asia, Europe, Africa, North America, and South America. The majority of coal exports are used in the production of steel in countries such as Japan, Korea, Brazil, the United Kingdom. Canada is the world's third-largest supplier of internationally traded high-quality coal for steel making. In total, almost 29 million tonnes of metallurgical coal were exported last year.

In addition to coal for steel making, Canadian producers shipped over 5 million tonnes of coal for use in electricity generating stations in Japan, South Korea, Chile, and eight other countries. Although Nova Scotia does export a small amount of coal, most of the exports are derived from the large-scale mines located in western Canada, in Alberta and British Columbia. Two of the export operations are located in northeastern British Columbia, five in west-central Alberta, and five in southeastern British Columbia. Additionally, coal from western Canada is railed east, where it is transshipped at Thunder Bay for use by Canadian and U.S. customers along the Great Lakes.

The International Energy Agency ranks Canada coal mines among the top two most productive on a tonne-per-work shift basis. Ongoing productivity gains are attributed to two factors: efficiency gains achieved through the application of new technology, and capital reinvestment in new equipment and processes. Annual capital expenditures at mines, reinvestment, is approximately $350 million a year.

Increased efficiency, like productivity improvements, also signifies reduced emissions from industrial processes. Since early in this century the efficiency of coal combustion has increased by more than 400%. Specific examples of new efficient processes for generating electricity are found at the Point Aconi generating station in Nova Scotia, Belledune in New Brunswick, and the Shand generating station in Saskatchewan. These facilities represent the vanguard of advanced technological approaches to coal-fired electricity in Canada.

The domestic use of coal and its export add almost $6 billion per annum to the Canadian economy. On a regional basis, over 73,000 men and women are employed directly and indirectly in our coal industry. These people live and work in over 20 rural communities across Canada, communities that are dependent on the vital coal industry.

To turn now to the international climate change negotiations, Canada is participating in an international process aimed at controlling global emissions of greenhouse gases. The current round of negotiations will culminate in Kyoto, Japan in December.

Canada's coal industry has a significant stake in the outcome of these negotiations. This is because reputable economic analyses have indicated that, first, Canada as a whole will be negatively impacted on more severely than other countries by measures to achieve a stabilization target; and second, the coal sector of the Canadian economy would be the most severely negatively impacted on.

While coal is an abundant and readily available resource in Canada and the world as a whole, carbon dioxide, a greenhouse gas, is the natural consequence of its combustion. On the face of it, this places the large-scale use of coal in Canada in opposition to global objectives to stabilize greenhouse gas emissions and therefore places at risk the mining of coal for domestic use and risks our competitiveness in international markets.

With the objective of recommending steps Canada can take while safeguarding its valuable coal resources, there are two aspects of the negotiations we would like to address at this time. First there is the overall objective that will emerge from the talks in Kyoto. It appears Canada is willing to aim to stabilize greenhouse gas emissions at 1990 levels by late in the next decade or thereabouts. It also seems likely Canada will take this position to the international negotiations. The challenge for Canada is to assist in the international negotiation of an objective that provides long-term flexibility for a diversified Canadian energy supply such that all our natural resources can continue to be utilized.

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It is important therefore for Canada to qualify the direct applicability of any international objective by Canadian circumstances. The existence of very large reserves of coal and other fossil fuels and their importance to Canada should form part of the context for Canada's participation in negotiations and for planning and implementing any measures after an objective is established.

We recommend that Canada develop a negotiating position that provides long-term flexibility for Canada's energy supply, and also that Canada support the development of a process that differentiates Canada and other countries based on national circumstances. We're aware that there are a number of elements dealing with flexibility that are being negotiated in the negotiations at this time.

Secondly, Canada should address the delicate question of developing country participation in an international protocol. There is a significant and legitimate debate over the participation of developing countries in any protocol negotiated in Kyoto. However, from the perspective of the Canadian coal industry, the practical concern about participation of developing countries in the protocol has to do with international competition. Several very large economies—including Indonesia and China, for example—are large or potentially large coal exporters and will pick up market share if Canada should adopt any measure that would increase production and transportation costs of export coal in Canada. New mine investment is likely to flow to those countries not constrained by any emission target that have exploitable coal reserves.

Ironically, although Canada would lose export market share in such a case, global emissions would not be affected.

We recommend therefore that Canada support the inclusion of all countries in a protocol or adopt a process to include all countries on a differentiated basis that reflects national circumstances and stage of economic development, with the aim of protecting Canadian competitiveness in international markets.

That will conclude my presentation.

The Chairman: Thank you. I appreciate your being right on time.

We'll move to the Canadian Electricity Association.

Mr. Guimond.

Mr. Pierre Guimond (Senior Adviser, Government Relations, Canadian Electricity Association): Thank you, Mr. Chairman.

The Canadian Electricity Association has been involved in the climate change issue for a number of years. In fact, we spotted this issue many years ago, somewhere around 1988, and have been following its evolution very carefully since then.

Last summer we issued the briefing paper that you have before you. I believe the clerk has distributed the document. That document essentially casts our look ahead as we see this issue evolving and affecting our industry.

I can remind members that Canada is blessed in terms of electricity in that 60% of our generated electricity comes from hydroelectricity, 20% from nuclear, and 17% from thermal sources.

The snapshot of the future taken last spring by CEA and communicated to the federal government in the briefing paper made essentially seven recommendations. They are listed at the back page of the document and effectively capture where we are.

To be very succinct about what we saw, all things being considered, if we can turn over our capital stock at the end of its economic life, we can keep our emissions of CO₂ at or below 1990 levels for the next 30 years. Somewhere around 2030 there is a projected rise in emissions, and that indicates to us that we will have to take additional measures in the form of economic instruments, joint implementation, and domestic and international offsets to address that particular phenomenon later on.

The seven points of advice that are given to the federal government on the last page of our document essentially stem from that finding.

I hasten to add that the snapshot of the future is merely that. It was a study done based on some scenarios, and in those scenarios we came to certain conclusions. Those conclusions were rolled together and portrayed as accurately as we could in the document.

What I would like to do now is perhaps introduce my colleague. His name is Roy Staveley, and he is the vice-president of public affairs and environment at CEA. We wish to speak to you about a new program that we are launching at CEA about managing our environmental responsibilities. We are launching that program next week at a conference here in Ottawa to which some of you have been invited, I believe. With that, I will ask Mr. Staveley to outline the program.

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Mr. Roy Staveley (Vice-President, Public Affairs and Environment, Canadian Electricity Association): Good morning. We call this program the environmental commitment and responsibility program. It's a collective decision on the part of our membership, which represents 90% of the generation in transmission of electricity in this country. That represents something like 90,000 people directly employed and $30 billion in revenue a year. It's the largest industrial sector in the country.

The membership made a decision last June to proceed with and implement this program, which is a national program from coast to coast dedicated to a commitment to continual improvement in environmental performance.

I think it has very meaningful implications for climate change. One of the reasons for this is that this program is very focused on results. It's verifiable, it involves public participation, and it's a commitment to sustainable development with respect to the environment and environmental performance.

The measures are very specific. They will be measured and tracked in a way that will be both accurate and timely. Some of those measures relate to CO₂ emissions, NO^x, SO², and air emissions in general, and will evolve to reflect and capture as dynamically as we can that whole air emissions issue.

Just put that in context. We're talking about a significant industrial sector making commitments to the public and to government to achieve continual improvement. We're prepared to be accountable for that. We're prepared to communicate and report that. If you think of it just in the context of CO₂, what we're saying is that we're not only going to measure and accurately reflect our performance on CO₂ in a timely fashion and share that information with the government and the public at large, but we're also going to continue to improve on that performance over time.

That is a voluntary self-initiated decision by our industry, a commitment to government. When we launch this on Monday, three senior ministers, senior government officials, representatives from the public, and our senior executives will all be there giving recognition to this launch. I think it's very significant for the country, and we want to suggest to you that this is a reflection of our continuing constructive approach to some of these issues.

The Chairman: Thank you very much. We look forward to hearing more about that.

The opening round will conclude with the Canadian Wood Council's Kelly McCloskey.

Mr. Kelly McCloskey (President, Canadian Wood Council): Thank you, Mr. Chairman. We thank you for the opportunity to make this presentation. The Canadian Wood Council is the national association of the solid wood products industry in Canada. We represent approximately 95% of the solid wood products produced in Canada. We are the manufacturers of lumber, plywood, OSB, trusses, treated wood—you name it. We have approximately 1,200 members in our association.

Fundamentally, our mission in life is to maintain market access for wood products, so my comments to you today will be focused more on the market implications of some of the measures that have been proposed with respect to this important issue.

I'm aware that the Canadian Pulp and Paper Association, my sister organization, made a presentation to you on Tuesday, and of course we have some common membership. A lot of the positions they presented are shared by my members as well. The big difference between the two of us is that whereas they have approximately 50 large members, we have those members that produce wood products as well as an additional 1,150 members. We have a lot of the smaller producers.

In the next three or four minutes I'd like to give you one background comment and then make two points. The background comment—and I'm sure this will be no surprise to any of you—is that the wood products industry depends very heavily on exports. In fact we're the largest exporter of wood products in the world. Just in softwood lumber alone we represent approximately more than 50% of the actual trade in the world in that one product. Ninety percent of what we produce is exported. Eighty-five percent of that goes to the United States. So the background point I really wanted to make was just to emphasize the importance of exports, particularly exports to the United States.

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So my first point is—this may be a bit of a surprise to you, and I have to confess it was a bit of a surprise to us—that some of the work, the studies that have looked at the impacts on different industries, showed that sawn wood products were one of the most heavily hit industries. That's surprising when you consider our sector's relatively minor contribution to the emissions issue, but the reason for it is fairly simple. That dependence that we have on the North American market is multiplied when you consider that the studies indicate the United States and Canada are the two countries that could be hit the hardest economically.

Secondly, the residential construction market, which is where the vast majority of our product goes, is viewed as being one of the most sensitive industries with respect to market health in general. That industry is seen to be twice as sensitive as the industry overall as it relates to potential emissions. So we could have a 5% or 6% reduction in residential construction in North America, and of course that would hit us very hard on the producer side. That is why our industry is very high on the hit list as far as pain is concerned, and again, surprisingly so given the emissions side.

The second point to make there is that construction activity is often a favourite of regulators with respect to energy efficiency, such as in a building like this, for heat, insulation, etc. One of the things that regulators like to do is increase energy efficiency requirements on homes, and this of course raises the cost of homes, pushes the construction market down, and again affects our industry.

As the Canadian Home Builders' Association will tell you, today's houses are 30% to 40% more efficient than ones that were built even 30 or 40 years ago. Thus, the incremental benefit you get from doing that is almost nil versus the cost of doing it, and also versus the fact that we only add approximately 1% to 1.5% worth of new houses to the housing stock, if you will, every year. So there is an energy efficiency problem with houses, and there is an opportunity, but it's not in new construction. It tends to be more in the old, existing housing stock, and that's quite a challenge.

The second point I wanted to make was that regulating energy efficiency in the construction market can actually increase greenhouse emissions, particularly in the short to medium term. This may sound counter-intuitive initially, but when regulators go to regulate energy efficiency, they tend to focus on one element, such as heat loss in a house, and they focus on that exclusively.

An example of that is the current energy code we have for houses in Canada. When it initially came out, it would have favoured using sheathing in a foam form—foam sheathing over wood sheathing—the reason being that you get very incremental savings in heat loss. What the code didn't consider, of course, is the increased energy required to produce foam sheathing versus a wood product, and all the other environmental aspects that go into that.

So the second point I really wanted to make to you today is that we think it's really important—and this may be a different perspective than some of the other ones you've heard—that when you and government are looking at whatever measures, you should take into effect a more holistic approach, or a life cycle approach if you will, so as to ensure that savings in one energy area are not offset by a loss in another energy area.

I just have one overhead. This is just one of the five or six that are in the back of your document. I just wanted to point out a new model that has in fact been created with government funding.

It shows a building that was constructed by a coalition of wood, steel, and concrete industries, and it includes all of the environmental impacts. It comes right from resource extraction through to manufacturing the product, to transporting it to market, to building the actual building. This is one measure that came out with greenhouse gases.

You can see that wood is one and a half to two times less with respect to a finished system in the marketplace. If you look at energy use, water pollution, or any of the other measures, again you'll see in your document that wood comes out very favourably in every single measure. The key difference is that instead of looking at wood and steel and concrete, this looks at building systems in North America. The North American building system, in energy terms and greenhouse gas terms, is the most efficient in the world when compared to the kinds of housing systems you have in Europe and some of the other countries that would like to see some of these measures put on in a major way.

That, Mr. Chairman, concludes my comments. I would be pleased to answer questions.

The Chairman: Thank you for your presentation. Thank you all for being concise and to the point.

We'll start questions with Darrel Stinson.

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Mr. Darrel Stinson (Okanagan—Shuswap, Ref.): Thank you, Mr. Chairman, and I want to thank the witnesses for being here today. I'd like to ask a couple of questions to the Coal Association.

To your knowledge, will any of the world's major coal-producing countries—and also, if I might add, coal-using countries—not going to Kyoto to sign this agreement...? What percentage of the world's emissions from coal would come from these non-signatories? Do you have any idea?

Mr. Donald Downing: In terms of coal-consuming countries, some of the largest would include China and India, for example. Brazil would be another. In fact Brazil is a significant customer of Canadian coal. They are not potential signatories to the agreement, and they would be responsible for a significant portion of greenhouse gas emissions at the moment.

In terms of producing countries that will potentially be signing up, Canada, the United States, and European countries would be considered part of the agreement, and the former Soviet Union would as well.

Mr. Darrel Stinson: If a number of these major coal-producing countries and major coal-using countries will not be signing at Kyoto, what will be achieved then if only countries such as Canada, or the developed nations, so to speak, go ahead with any agreement reached in Kyoto?

Mr. Donald Downing: The concerns about participation in the agreement, from our perspective, extend to existing and potential international competition. In that case, you have China, which is an exporter. They're a major producer and consumer of coal themselves, but they do export coal, certainly on the same scale as Canada exports coal. You have Indonesia; you have Columbia. So our investments in coal and the international trade in coal will be distorted, undoubtedly, if some countries are forced to take action and some countries are allowed not to take action.

Mr. Darrel Stinson: So what we're looking at here is possible—well, not possible; we are looking at job loss. We're looking at trade loss, export loss. So that brings up another question. If we lose that share of export in the marketplace, how will we ever get it back? Once countries make agreements for exports and that export is cut back, they look to other countries to supply that commodity. Once you've lost that—and we all know what the marketplace is like; to put it bluntly, it's a dog-eat-dog world out there—how can you ever hope to achieve to get that market share back?

Mr. Donald Downing: If some of the negative impacts that are possible for the Canadian coal industry were actually to come about, I would think it would lead to the permanent demise of the industry. It's not something we would see as a temporary impact.

If energy prices have to be altered in Canada in order to alter consumption of fossil fuels, then transportation costs will increase. We rail our coal the longest of any major exporter. That's been an achievement of ours, in fact—that we are able to compete and still move coal 1,100 kilometres from mine to port. The average rail haul in Australia, for example, which is one of our major competitors, is less than 300 kilometres.

Increase in our transportation costs would really debilitate the export industry, and I would think that would be a permanent feature.

Mr. Darrel Stinson: Thank you.

The Chairman: Is that okay for now?

Mr. Darrel Stinson: Yes.

The Chairman: We'll have time to come back.

Carmen Provenzano, please.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): Thank you, Mr. Chairman.

I have a question to the presenter for the Canadian Electrical Association.

On page 7 of your brief, there's an interesting graph that appears to indicate that carbon dioxide from Canadian electricity generation was dipping in 1990 and dipped to its lowest point in about 1995. Am I reading that graph correctly?

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Mr. Pierre Guimond: Yes, there are a number of peculiarities about picking the year 1990.

Mr. Carmen Provenzano: All right. I'd like to know if I'm reading that correctly.

Secondly, there's a note on the graph that says that “1990 Normalized values account for plants under construction & abnormal situations in 1990”. I looked through the brief to see if there was any discussion on those abnormal situations. Can you provide a brief explanation as to what those abnormal situations are?

Mr. Pierre Guimond: Certainly. You've hit on a very sensitive and well-debated point within the industry as we prepared this brief. As you know, 1990 was the year picked by the international process as the year that would be the reference point.

As it happened, for electricity 1990 was not all that great a reference point. It wasn't a good year for hydro. It was an abnormal year for generation in terms of thermal and the use of the thermal fuels. It was also a year where we had a whole bunch of plants under construction, but not yet into the rate base. We wanted to factor those things in. We had a lengthy and in-depth debate within the industry as to how we would handle that. In the end we decided to have normalized values and also the actual values, and that was a way of getting everybody on board so that we could produce a view of the future. It was a levelling effect that we were seeking, in terms of the range of opinions we faced within the industry on 1990.

Mr. Carmen Provenzano: My next question may have a relevance to you, and you may wish to come back if you see a correlation here.

In the presentation made by the Coal Association of Canada, on page 6 there's a graph that indicates a dip in production tonnes and production per person in 1990.

My question would be to both presenters. The point was made to us by the Canadian Automobile Association, I believe it was, that 1990 was a recession year. If that's the case, and bearing in mind your remarks about what happened in 1990 with respect to electricity generation, and looking at this graph on page 6 of the Coal Association of Canada, there are certain things that appear to be correlating.

Does that have any relevance to you gentlemen? Should we be looking at 1990 in a way that requires us to factor in these considerations, to make a case for some adjustment or some consideration? I think it's important to hear from you in that regard. If 1990 was an odd year—and it's showing up perhaps that it was, in your industry, sir, and in yours—is there a point to be made here?

Mr. Pierre Guimond: I can attempt an answer to that. Essentially 1990 was an odd year. It was a year that was a recession year. Thermal generation was not like it was in 1988, which was a more typical year for thermal generation. Hydro-Québec was refilling its reservoirs in 1990, and so electricity generation from hydroelectricity in that province was different from what it typically can be. But 1990 was not just an atypical year for Canada. It was an atypical year for everybody else—all other countries pretty well around the world.

I note that in the context of the international negotiations leading up to Kyoto that the Americans were toying perhaps with the idea of suggesting to the EU that the year should be moved from 1990 to 1995. That would obviate the sort of kick in emissions that the Germans and the British had, because before 1990 they had a drop in emissions in those countries, for reasons that are really not connected to climate change.

In that sense, your question is very relevant. It could be one of the negotiating tools that could be used in the international context. It would absolutely infuriate the Europeans if anyone were to suggest that, mind you, and there's a downside to it, but in fact it has been floating around the international negotiations as a negotiating lever.

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Mr. Carmen Provenzano: I'm wondering why your briefs don't make that point. Is it insignificant? If it's insignificant, fine. If it's significant, there's nowhere you find the point.

Mr. Pierre Guimond: The brief was trying to look ahead from the Canadian electricity sector's perspective. As I mentioned earlier, we had a very thorough discussion within our industry as to what we would do about 1990, and before we could talk to the federal government and really try to make the point you're making, the international community came down pretty hard on 1990 and said, that's going to be the year. Measure against 1990 as the base year.

Mr. Carmen Provenzano: Those are my questions.

The Chairman: Thank you, Carmen.

We'll go over to Mr. Canuel and then Roy Cullen.

[Translation]

Mr. René Canuel (Matapédia—Matane, BQ): My comment and my question are for the Chairman of the Canadian Wood Council.

Everybody knows how important forest is for our air, our water, erosion, etc. You said that you have 2,030 members. Since I am from Quebec, I can see that the forest is slowly disappearing from the Gaspé Region and I can tell you, frankly, that it worries me.

On the other hand, I see that most of those species go to the U.S. because of the Canada-United States Agreement which has been signed four years ago and which I applaud. However, if I start thinking about the consequences for the environment, I must tell you that I am seriously worried.

Two years ago, I was told that the U.S. wanted to protect their forests and were asking for our wood. And we merrily gave it to them. We also know that some cuts are disastrous for wildlife.

Would it not be possible to use our forests more responsibly in Canada? I come from Quebec and I am relatively well informed since I have worked in the forest industry for about 20 years. Is there not a major problem, especially in Quebec?

Mr. Kelly McCloskey: Thank you for this question.

[English]

I'm a forester by trade, so I'm very familiar with the forestry issues you mention. The industry, of course, from this perspective—and I know this was in the Canadian Pulp and Paper Association brief—has very much focused on the whole issue of our forests, the health of our forests, and how that relates to this whole greenhouse gas issue.

As I'm sure you have heard, our forests are considered to be a sink for carbon. As forests get old, they start to decompose and they become a source of carbon dioxide. When forests are young they are a source of oxygen, and within five to seven years after harvesting they are producing at not their optimum but at the equivalent of what it was as a mature forest. So forests can play a very positive role with respect to both the environment in general and the CO₂ issue.

There's a lot of debate on this issue in the world community with respect to how you manage this. There's a lot of debate within our industry on how this should be managed.

Canada's forests are very unique. If you look at Sweden's forests, for example, there is more diversity in any one of our provinces than in all of Sweden; in fact there's more diversity in any one small segment of any one of our provinces than there is in all of Sweden. We have a very old forest. We have a lot of old-growth forest. Our forests tend to be very old because we've done an excellent job of fighting fires. So there's a lot of complexity with respect to the CO₂ issue and the forests.

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The way the industry has collectively approached the issue of forest management, particularly with respect to the international issue, is that we have been very supportive of the Canadian Standards Association's standard on sustainable forest management. That's what most of the companies are working toward: to try to have an international standard for forest management so that issues like the ones you mentioned with respect to wildlife concerns, etc., are treated and viewed equitably across countries.

I toured the world with respect to forests, and I can tell you that Canada has some of the best, if not the best, forest management practices in the world. Certainly, we have nothing to be ashamed of.

Forest practices are in evolution. Forest practices are, in effect, a social practice. Societal needs have changed dramatically over the years, and so have forest practices.

With respect to the issue, particularly with respect to the issue in Quebec, there is a tremendous amount going on with respect to how we manage our forests, such that Canada should only be proud of what we have accomplished in world standards.

But there are always ways to improve. With respect to the CO₂ issue, I think it's one that needs a really close, careful examination. Most people in the world will view forest-product-producing countries as being where a major solution to the problem lies. I just warn you that it's not quite that simple.

The latest UN thinking on this is that it's really a zero sum game. As for using the forests and regrowing them, as long as you're practising sustainable management, it's a net zero sum game as it relates to CO₂ emissions. But we believe, as do many others, that by managing our forests well, by taking our forests and converting them into solid wood products like these and having these desks sit here for 300 or 400 years is part of the solution to fixing carbon. We can do more to try to do that.

There are forests lands that could be reforested, but they are vacant.

[Translation]

Mr. René Canuel: I fully agree but my question was as follows: Are we making good use of our forests? I agree with you when you say: "If our forests are well managed", but my claim is that they are not. I wonder if your association could foster, with the government, genetic research in forestry. We have been working for 20 years on animal genetics but not too much on genetics in forestry where we seem to be seriously lagging.

As far as I am concerned, I have nothing against selling wood and I would be very pleased if we could sell several billion dollars worth of it, but we have to think of reforestation if we do not want to end up with a desert if we do not reforest. I believe that we do not do enough genetic research and I am asking you if you would be willing to invest in this field.

[English]

Mr. Kelly McCloskey: The industry is prepared to invest in that area. It is investing heavily in that area.

Our forests are well managed in Canada. It's against the law not to reforest. The industry is investing tremendous amounts of money.

I will say this, though, as a practising forester, when you're dealing with crown lands—of course you know that the provinces are the major owners of those lands—and an industry comes in to try to manage them, it's very difficult to get the kinds of encouragements that are necessary to get the long-term investment that's required.

The private forest lands in Canada managed by forest companies are among the best and the most intensively well-managed forests in the world. We don't have to look far, such as in some other countries that have substantive amounts of forest management on private land, to see a lot of that.

So it is a public policy challenge and a challenge for the industry to try to improve the situation. I assure you, sir, that the forest management practices we have in Canada lead the world.

The Chairman: We'll go to Mr. Cullen and then to Dave Chatters.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you very much, Mr. Chairman.

Thank you, presenters, for being here and for your briefs. A particular welcome to Mr. McCloskey, a former colleague in the forest industry.

I have two questions. One is directed to the Canadian Electricity Association and the other to the Canadian Wood Council.

To the Canadian Electricity Association, I wonder if you could talk about your position with respect to co-generation. I'm not sure if you see that as a competitive threat or a compatible strategy.

I'm wondering about a particular context whereby utilities, monopolies, are being broken up in Ontario, for example. There's some nuclear capacity that's fallow, if you like, for the time being, in any case.

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I wonder if Mr. McCloskey could expand on this life cycle, environmental advantages of wood-based building construction. I think it's a very important point that maybe needs to be re-emphasized, particularly since wood is derived from a renewable resource, compared to steel- or concrete-based construction.

Mr. McCloskey, I wonder if you could talk about the potential for manufactured housing to contribute to the greenhouse gas issue within Canada, and perhaps internationally—what role we can play with our forest products industry.

So maybe we could start with the electricity association on co-generation.

Mr. Roy Staveley: Perhaps I could answer the first question on co-generation and then bring the nuclear capability into it later.

On co-generation, we see it as part of a mix of generation capability. There are co-generation facilities in Canada. I believe there's a number of electrical utilities and independent power producers who are keenly interested in that option and are in the process of looking at those types of options in the development process through discussions with industry. I met with the steel producers, for example, and it's an area they're interested in.

As the market opens up, we're going to see co-generation prevail and maybe even expand as part of that mix. I think that mix will diversify and co-generation will be one of those options. It comes down to how competitive it is relative to other options, and that will vary by specific circumstances and region.

The nuclear generation issue is also part of that mix, and it's a very important part. As we've heard, 20% of our generation is nuclear, predominantly in Ontario. It remains to be seen whether that nuclear capability will continue at current levels in the future. Those decisions are before some companies and provinces right now.

One of the most significant characteristics in the industry really goes back to why we make the recommendations we do in our climate change document. The industry is changing profoundly and it will no longer be a case of provinces and their public utilities deciding what the additional generation or replacement generation will be in the future. I think the market will be the predominant driver. We're seeing utilities move beyond their traditional regional and provincial jurisdictions into various other parts of North America as they pursue the marketplace and find their own markets and viability.

I think you'll see an expanding mix. Co-generation will be there and I suspect very strongly that nuclear will be there. Gas-turbine technology has advanced to such a point that it will continue to evolve and develop in response to the marketplace because of price and various other characteristics associated with that technology. I also believe hydroelectricity will be there.

The mix is not going to change. We hear a lot about green power, but green power is a very small percentage of total generation, and mass consumption is so huge that it will never fill that gap in the near future. We're still looking at the traditional forms of energy, and I've just described what they are, but I do think co-generation has a place.

Mr. Kelly McCloskey: I have one comment on the previous question. I think you're aware that co-generation is a big opportunity for our industry. The problem is that given the current economics, it has trouble competing. I think you're aware that our industry believes this issue needs to be looked at a little differently because the environmental and economic advantages of somehow making public policy work for that option can really pay off, as has been shown in certain jurisdictions like California.

With respect to your question on life cycle analysis, I put a two-page summary of that analysis in your brief. There are much lengthier versions of it, but the key point we see from that analysis is that it's a mistake to look at any one solution for these problems in isolation of what else is going on. It's very easy, particularly—with due respect to bureaucrats—for bureaucrats to focus on specific energy opportunities without taking into account...because frankly it's very difficult to take all those measures into account.

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This model that has been developed is the first one in the world, and it's being trumpeted around the world by the Canadian government as one that does a better job of trying to assess the whole picture. Clearly, greenhouse gases are a problem, but so is air pollution and water pollution, and so are a lot of others—wood waste, any kind of waste, and so on.

The thing we like about the model is it puts everything into a context so that people can make more informed decisions when they make decisions between one product or another or between one regulation and another. We think the regulators really need to look at that kind of model and test whatever they're proposing in models like that so they get a truer economic and environmental picture.

One other point with respect to that is that I think you're aware that some people are promoting the notion that since all of us here, and other industries, are very energy intensive with the products we produce. We export those products, and maybe some of the credit or debit for them should be accounted for in the receiving country.

Here we are exporting a wood system that in energy terms far exceeds and is far superior to other systems, particularly those systems in Europe. There may be ways in which we can lever the credit and debit gained by some recognition of the fact that we are exporting energy-intensive products, but into a system that is more energy efficient than the other one they're using. We need some more discussion on that.

With respect to the manufactured housing industry, we view that as very much one of our customers, quite frankly, but there are tremendous growth opportunities there and in all engineering wood products and wood systems.

I guess the downside is, although again there is a lot of public pressure to try to get more value out of every log we harvest, we use more energy to produce those higher-value products. So although there are more jobs, more economics, and reasons like that to do those things, it also creates additional challenges with respect to issues like this. We have to recognize again that these are high-energy-intensive products we're producing.

The Chairman: Thank you, and thank you, Mr. Cullen.

Dave Chatters, and then our clean-up hitter again today, Ovid Jackson.

Mr. David Chatters (Athabasca, Ref.): My question is fairly simple and straightforward. I would ask all of the organizations, in speaking for your membership, whether you accept that in fact we are facing an immediate and extreme crisis that would warrant moving from the voluntary challenge program to a legislated binding cap type of program? Are your organizations members and participating in the voluntary challenge program? What progress are you making as part of that program?

Mr. Donald Downing: Thank you for the question. At the moment we don't accept that the environmental risk is such that Canada should move to a legislated regime.

The voluntary challenge that is in place has additional possibilities. Over the past 24 months I think we've seen that sectors of the economy and companies will voluntarily move to improve efficiency in the way they operate their companies and their businesses, and that has a collateral benefit for emissions. I think we would certainly support the continued application of voluntary measures. The coal companies will be participating in the voluntary regime and working with other sectors to broaden and deepen the participation in the voluntary challenge.

Mr. Kelly McCloskey: The forest industry is on record as having continued support for voluntary measures and voluntary measures only. The industry has collectively shown that they have been able to achieve the reductions. I think that was presented to you by the Canadian Pulp and Paper Association on Tuesday. The industry is extremely active in all the voluntary government processes to try to continue the progress that's being made.

The Chairman: Mr. Guimond.

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Mr. Pierre Guimond: The Canadian Electricity Association remains a strong advocate of the VCR, the voluntary challenge and registry program. We were one of the first organizations to advocate the creation of that particular instrument and we continue to be boosters of that particular approach.

I think your question goes to a fundamental point: can Canada actually accept a hard flat reduction target imposed by the international community? The answer we've all seen to that particular question, through the literature and through the information that has come out in the House of Commons, through government channels and through the international community, is that quite frankly we suspect Canada would have a very difficult time with that kind of target.

From our perspective, we have advocated a differentiated target approach. Canada should be allowed to determine what its participation should be towards the international objective for reducing greenhouse gas emissions. In that way we can bring all of the good economics and our regional strengths to bear on the problem. We don't need to be hit over the head with a hard flat target, although we recognize that could be in the interests of some other economies around the world. But we suspect through our information that it is indeed not the case for Canada.

The Chairman: Thank you. Is that okay for now, Dave?

Mr. David Chatters: Yes.

Mr. Darrel Stinson: Could I ask just one quick question here?

The Chairman: Is it related to that?

Mr. Darrel Stinson: It's related to all of them. It's just that in 1990, when this was signed, Canada was already known as an environmentally conscious country. As was mentioned, in forestry practices we were known around the world, and we still are. It's the same for these other industries we're talking to here today.

Just one question comes to mind when we mention this. Was our technology superior to that of a lot of these countries in 1990? Would that put us at a disadvantage now? It's easier to clean up 5% of a 90% mess than it is to clean up 5% of a 12% mess.

The Chairman: Maybe you can give us a short yes or no type of answer.

Some hon. members: Oh, oh.

Mr. Donald Downing: I think the point has been made well by a lot of countries. The advanced economies produce goods and services much more efficiently than many other countries do, so spending dollars at the margin to reduce emissions will be much more expensive than if you went to the countries of the world where goods and services are perhaps not produced as efficiently. We would in fact be penalized for being good at what we do.

The Chairman: Ovid Jackson is next and then we'll conclude with a short question from Ms. Folco.

Mr. Ovid Jackson (Bruce—Grey, Lib.): Mr. Chairman and guests, I know it doesn't matter who came to see us: they're all basically saying that we have to be very mindful that we don't disadvantage ourselves by being good guys and that we understand all the ramifications about the various inputs and credits and so on, which we should have so that when we do start with a base, the base is one that is fair to Canada, in whatever year we start.

Notwithstanding the fact that we've been good guys and have been doing all this good stuff, I think you need to have your feet to the fire. You need a challenge.

For instance, in the automotive sector in California, I know that because of photochemical smogs they are forced to design the cars better. They are more fuel efficient. I guess they use a lot of lighter materials in order to make the thing more aerodynamic. They use the stoichiometric approach to combustion to make sure that they have complete combustion. They use technology and catalytic converters, of course, which remove oxygen or place oxygen in the air and control oxides and nitrogen and hydrocarbons and so on. For instance, you see it in the gasoline tanks, with the enclosed PCBs and so on.

What I want to know is how you guys are doing in terms of all your technology, because everything you use...if you use the hydro option, you flood places and you kill animals and vegetation, which creates problems. We've recently seen homes collapsing in Quebec. Things were falling into the ravine. Some of those things are caused because water erodes and causes collapsing. There are costs in that. In the nuclear field there's the spent stuff. We understand that it's a nice clean thing, but the problem with it is the waste. In terms of coal burning and so on, there's dirt and problems, and hopefully you have scrubbers and you've improved that.

I want to know how far you've moved. Is there a concern for trying to keep improving and for making sure that whatever ecosystem we have, we have to do the best we can?

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The Chairman: Could I ask you to make your responses fairly brief? We're going to be coming back to this in the new year, and we're going to actually be pursuing the area of what we can do. How about a short comment, starting with Mr. Staveley.

Mr. Roy Staveley: I think somebody asked the question about technology. I think there have been major technological advances, and I mentioned gas turbines and their increased efficiency. There's enormous drive for efficiency, and part of that trigger comes from the marketplace, the fact that we are moving into a more open and competitive market. Improved efficiency, just to be profitable, translates into reduced CO₂.

There's another learning that we've also grasped. I don't think we're going to reduce CO₂ emissions in an efficient and cost-effective way without co-operation—that is to say, co-operation between the provinces, the industry, the federal government and others—and we're learning how to do that. One of the reasons we announced the VCR program to this committee today was to try to indicate that five years ago, that kind of program wasn't being contemplated. Today it is, however, and from our industry's point of view there's obviously enormous promise for the country as well as for the industry. I think it's that kind of learning that's taking place, and with that learning continuing, I quite frankly believe we can reduce CO₂ emissions in a cost-effective way, and I believe there's a win-win for this country.

If we looked at our electrical generation in the context of a national grid, as opposed to its development on a province by province basis, we would be amazed at how many built-in efficiencies could be gained just from taking that kind of global approach. So I think a lot of learning is beginning to come out of this drive towards looking for ways to reduce CO₂.

The Chairman: Are there any comments by others?

Mr. Kelly McCloskey: I have one quick comment on the market side.

Again, the housing industry and construction industry have increased their energy efficiency by 30% to 40%. In fact, studies show they have had the biggest increase of any industries in Canada, quite apart from any regulation. It was all, or almost all, fundamentally driven by market demand for more energy-efficient homes. People want more energy-efficient homes. You don't need to regulate that into being.

The Chairman: Thank you.

Mr. Crane.

Mr. K.G. (Ken) Crane (Director, Environmental Services, Luscar Ltd.): I'd just like to give a couple of examples that relate to the rest of the industry, but they're from my particular company.

Replacing operating rolling stock with a conveyer to move material can be a really effective way to do that. Manalta Coal has done it at Line Creek. We did a very simple one at one of our preparation plants. Instead of hauling away the rock reject out of the coal processing plant, we put in a 40-horsepower electric motor and a short conveyer to a mined-out pit and that translated into a savings of 390,000 litres of diesel alone in one year. Here's another example: we took a small electric drag line to remove the rock material between two layers of coal. That translated into an 888,000-litre savings of fuel a year.

As for the reclamation component of coal mines, our company is up to over two million trees planted. We have lots of opportunities for carbon sequestration in soils and plant material.

Then there's the whole thing of how we use products, recycle them, and bring them back. We used to buy everything in 45-gallon drums. We now buy them in much larger unitainers. A big truck comes up and refills that container. You're never emptying it; you're basically just always topping it up. You don't have scrap steel to get rid of. You don't have waste or any unfriendly products to incinerate at costly incineration—something that generates more CO₂.

Those are the key areas in which the coal mining industry has made great strides in terms of improving efficiency, and we'll be looking for more.

The Chairman: Is that okay for now, Mr. Jackson? You certainly have opened up an area that will be of interest to all of us in the new year.

A final, short question to Ms. Folco, and then we'll adjourn this part of the meeting and move to the next.

[Translation]

Ms. Raymonde Folco (Laval West, Lib.): My question is for the representative of the Canadian Wood Council. We have just seen a slide showing the proportion of the pollution potential of mineral extraction compared to the manufacturing of products from those materials. Here is my question: if you could reduce carbon dioxide emissions through operational changes, for example through the use of rail instead of trucks to transport your products, could you not get additional credits? Have you considered that?

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[English]

Mr. Kelly McCloskey: No, we haven't. This slide shows—and I have another one that shows energy use, which looks just about the same—the total amount of greenhouse gases that are produced from extracting all those resources, transporting them to a mill, manufacturing a product, shipping it out into the market, and constructing a building. So again, it's that life cycle approach.

If I understood your question correctly, it's have we looked at this kind of information and tried to figure out how we could advise government on how we might get credit for some of this? The answer is no, we haven't. This is extremely new information, from the last two months.

[Translation]

Ms. Raymonde Folco: If I may, I wanted to say that, within the yellow part, "Manufacturing", there is the transportation sector. That is precisely where you could get additional credits if you were to rethink your means of transportation.

[English]

Mr. Kelly McCloskey: The reality is that the industry now will be using the most efficient, economic transportation means they have. If things change such that they can get credit one way or the other, of course that could influence the decision they make.

[Translation]

Ms. Raymonde Folco: Thank you.

The Chairman: Thank you, Ms. Folco.

[English]

On behalf of all committee members, I want to thank our witnesses. As I mentioned earlier, we reserve the right to invite you back in the new year, when we are able to go to the next level of this discussion.

We'll take a one-minute break and then invite Mike Cleland, ADM, energy sector, NRCan, to the table, and any of his colleagues.

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The Chairman: Okay, we'll bring our committee back to the table and we'll come to the concluding hour in the fall round of discussions of the climate change subject.

We have with us Mike Cleland, who will introduce his colleagues.

We'll ask you, Mr. Cleland, to make opening remarks of maybe up to 10 minutes, give or take, if you could do that, allowing us ample time for questions. We thank you for coming and ask you to proceed.

Mr. Mike Cleland (Assistant Deputy Minister, Energy Sector, Department of Natural Resources): Thank you, Mr. Chairman.

If I may, I'll introduce my colleagues: Bill Jarvis, the director general of the energy efficiency branch at NRCan; and Frank Campbell, the director of the CANMET energy technology centre, which is one of the laboratories that are part of the energy technology branch.

I will try very hard to keep to your time limits, because I know it's most productive to get on to the questions. We have a deck that I thought I would take you through, with your indulgence, quite briefly. I'm sure we can return to pages as we go along. I've also made hard copies available to the clerk. If you find it more convenient, you can refer to those.

The presentation is in two basic parts: one, just a very brief overview of the fundamental issue of the challenge of greenhouse gas reduction; and second, a very brief summary of NRCan's principal response strategies and the initiatives we've undertaken so far.

Greenhouse gases, under any of the scenarios that are around, are expected to increase in the absence of additional policies. That's a fairly obvious statement, but an important one to begin with.

The second one may be less obvious, and it is simply that the challenge we're talking about is very substantial. It is fundamental. I say that—and I want to underscore this—not to suggest that these sorts of changes shouldn't be undertaken. Governments, provincial and federal, at the meeting in Regina last week underscored their commitment to dealing with the issue and finding ways to reduce these emissions. But I don't think we should embark on this without a very good sense that it will be a big task.

The other one is that there will be some sort of outcome in Kyoto—we don't know what—but the real issue is that under the Framework Convention on Climate Change, Canada and other countries will continue to embark on this process of change.

I beg your indulgence if a lot of this is old hat or very familiar to you; I'm sure you've seen some of it before. This slide—and I'll just reference it—provides an overview of where greenhouse gas emissions come from in Canada by source, essentially by sector, and the distribution by gases. As I say, if you wish, we can come back to that.

This slide may be less familiar to you, but it gives you a sense of the fundamental determinants of energy use. Of course energy use is not the only source of greenhouse gas emissions, but it is far and away the dominant one. An important thing to note there is the increase we anticipate in the size of our Canadian gross domestic product over the forecast period to 2020. To the extent that it is driven by GDP, which is very substantial, that gives you some sense of the challenge.

Some of the others also give you a sense of the challenge: the number of vehicles we expect to see on the road, the projected increase in population, and finally, income per capita. As people have more income, they buy more consumer goods, they demand more housing, they buy more vehicles, and so on. All of those are factors pushing the greenhouse gas emissions up.

The next slide shows you, both historically and looking forward to the years 2000, 2010, and 2020, our current outlook for greenhouse gas emissions in Canada. The 1995 numbers are actuals; the rest, the ones forward, are projections. There's a small dip shown in the year 2000. That is probably outdated, substantially because of the recent changes in Ontario Hydro. In any event, by the year 2000, which may be the better place to focus, right now we see an increase. It's 18.6%. Given the error in these outlooks, call it 20% in round numbers and then 35% or more by the year 2020.

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This is the business-as-usual outlook, and it's important to note that this is founded on the assumption that there is no further policy change. We assume there would be and that would change the outlook.

Again, this next slide underscores the sort of challenge we're looking at. I have a couple of points. The first is in the numbers, as they're going up. The second is on what we believe to be the impact of the initiatives that have been taken to date. Of course this is a forecast; it's not definitive.

Then there's what we've called the challenge. You can think of the challenge in terms of the gap, or maybe a better way is to think of the trajectory of that line. What we're talking about here is taking that trajectory and pulling it down and in fact reversing it over the next few years—again, underscoring the size of the challenge.

Again, I won't belabour this next slide in the interests of time, but it gives you a breakdown of the actual emissions and the forecast emissions by sector of the Canadian economy. It gives you a sense of where the biggest challenges are. What I want to say here is that all of the sectors of the Canadian economy are areas where we should be focusing our effort. Notwithstanding the size of transportation, there may be more opportunities, for example, in the residential or commercial sector, and we need to think about that.

This next slide simply breaks it down by province and region. The Atlantic region is aggregated. It gives you a sense of where we anticipate the growth to be. Ontario, again, if you take into account the recent events at Ontario Hydro, probably would look a little different, certainly in the year 2000. The important point here I think is that all regions are anticipated to experience very substantial growth in the year 2010 and beyond, driven by a variety of factors—for example, in British Columbia, very strongly driven by population growth.

Since the early 1990s, and then on an accelerated basis since 1993, NRCan has put in place a number of initiatives to deal with this issue under energy efficiency; it's far and away our largest area. These include the voluntary challenge and registry, which many of you may be familiar with, a renewable energy strategy, a whole series of science and technology programs that support the other components, and a number of non-energy activities.

Again, perhaps we can come back to this slide. There's too much detail to belabour here. If you want to dig into it, Mr. Jarvis can take you through it. I have a couple of general points. We deploy a broad range of instruments to deal with the issue. It's often said that the only instrument we use is voluntary. That's not true. The voluntary component is very important, but it's by no means the only one. We do, for example, use fiscal incentives. We also use regulatory measures under the Canadian Energy Efficiency Act.

The voluntary challenge and registry, as I say, some of you may be familiar with. It is a joint program that was developed two or three years ago among the provinces and the federal government and among energy and environment departments. It's been housed, until recently, in NRCan. We are just in the process of transferring it to become a non-profit corporation, which will be two-thirds funded and governed by the private sector.

Under the voluntary challenge and registry we ask participants to submit a letter of intent, develop an action plan, and report on what they're doing—and that's done publicly. We believe we've actually made very considerable progress in this area in terms of the number of registrants we've got on board and in terms of the breadth of coverage. I think Canada is unique in this regard, in the use of voluntary action.

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The renewable energy strategy is a somewhat smaller initiative than the energy efficiency side, but it's still important. It focused on three general types of initiatives: enhancing investment conditions—in other words, levelling the playing field on the tax side; technology initiatives to develop renewable technologies; and market development initiatives, notable among them the recent green power procurement initiative undertaken by the federal government.

Science and technology is actually the largest single spending component in NRCan in support of this program. Again, I don't want to go into great detail, except you can note the distribution of the expenditures is roughly proportionate to the program expenditures. It is important to emphasize the degree to which we work in partnership with the private sector, provinces, other governments, and internationally to deal with this issue.

Clearly, more investment is needed. We need to find ways of bringing more investment, including private investment—and we may perhaps underscore private investment—to the table to deal with this issue.

The technology program focused on a number of different elements: industrial energy efficiency; building energy technology, where Canada has a number of niches where we are world leaders; community energy systems; transportation energy technology; and finally, a whole variety of components of the spectrum of renewables where we are also working.

Finally, to sum up, the point here is simply to underscore that we work with a whole variety of partners. We work with provincial governments through a number of instruments, including a number of letters of co-operation, and we try jointly to develop program responses with them and to co-ordinate, for example, in the area of energy efficient regulations. We work internationally, for example, with the U.S. government in standards development through APEC, where we've had some success in the last few months. We also work with the International Energy Agency, where we are very active participants and in fact now chair the committee on energy research and technology. We are a very key part of the international collaboration on this file.

Mr. Chairman, I've gone over my ten minutes, but I'll turn it back over to you.

The Chairman: Thank you, Mr. Cleland, for that.

We'll start the questions with Mr. Stinson and then Ovid Jackson.

Mr. Darrel Stinson: Thank you, Mr. Chair.

I'd also like to thank you for appearing before the committee, Mr. Cleland.

Could you tell me when the department was first instructed to investigate any and all possible interactions between Canada's natural resource sector and increasing carbon dioxide in the atmosphere? Also, to what extent did the department take part in the studies and discussions before, during, and after the Rio commitment? What percentage of your department's budget or manpower is involved in this issue, which we are led to believe is one of the world's most pressing problems?

Mr. Mike Cleland: In terms of the first, I guess you'd really have to go back to 1989. Some of you may recall the Toronto conference when this thing first surfaced in the public mind. In 1989, or by then, the department was active at working with the provinces to try to assess the situation, and from that time onward we've supported several studies. In addition to this, under the Green Plan we receive funding to support the energy efficiency and technology programs, and, as I said, later on in the nineties, 1993, 1994, we accelerated our activities and finally through program review effectively protected these activities or the majority of them against the cuts.

You asked to what extent we were involved in the run-up to Rio. We were very actively involved both in terms of providing the analysis and working with our colleagues at Foreign Affairs and Environment Canada. We had a provincial-territorial advisory committee that we co-chaired as well as a stakeholder advisory committee we co-chaired.

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I don't have the percentage of the total departmental resources we put into this issue. I didn't talk about some of the non-energy things we do in, for example, the Canadian Forest Service or the earth sciences sector. Those activities are significant but not enormous in terms of their total budgets.

With respect to the energy sector, as of this year something in the order of 63% of the energy sector budget for non-statutory items, which is the majority of our budget, is in support of this issue. That number will go up to around 70% next year when we take on board the programs announced in the 1997 budget.

Mr. Darrel Stinson: Do you have that broken down into dollars?

Mr. Mike Cleland: I can get that for you.

Mr. Darrel Stinson: If you could, please.

The Chairman: Do you have another short question?

Mr. Darrel Stinson: It's probably a little more complicated than the first one.

The Chairman: Okay. We'll come back to you.

Mr. Jackson.

Mr. Ovid Jackson: Mr. Chairman, the Government of Canada has invested a lot of money in the nuclear option. I guess there's always a time when we want to pull back and then we keep spending more money on it. This is a loaded question—I don't know whether it's true or not—and I don't know whether you'll want to answer it or not. We had a plant of a particular size and each time we built another one we made it bigger, so that complicated it. It's kind of like building a house. If you build the same house four or five times you might be able to get all the bugs out of it. Maybe some of the problems were related to the fact that every time we built a new plant we changed it.

From what I've heard, we are going to need a lot more electricity, and the nuclear option is still a very good one environmentally. Why should we refurbish or build more nuclear plants? How will they be better, environmentally and from a safety standpoint, than the current ones?

Mr. Mike Cleland: In some respects your first question should be directed more to provincial governments than to us because it's obviously a provincial responsibility to determine generating options. Clearly, the Government of Canada takes the view that the nuclear option is a viable one for the long term as well as for today.

I don't have the numbers, but the volume of avoided CO₂ emissions from our existing nuclear fleet is a very substantial number. We would anticipate that looking to 2010 and beyond, depending on the economics of nuclear power, governments in Canada and around the world will want to at least consider that as an option.

On the question of what we've done or are doing to enhance the safety and reliability of the reactors, AECL invests a couple of hundred million dollars a year in research and development, of which about half now comes from the federal government. Some part comes from what is called the CANDU owners group, which is Ontario Hydro, Hydro-Québec and New Brunswick Power, and the rest comes from AECL's cashflow. That R and D is directed to effectively increasing the efficiency of the existing and new nuclear plants and to enhancing their safety and reliability.

Notwithstanding the difficulties that have occurred with CANDU reactors, particularly in Ontario, I think the CANDU reactor still has a very good record of reliability and an excellent record of safety. I have every expectation that the continuing R and D effort will support that.

Mr. Ovid Jackson: Thank you.

The Chairman: Mr. Cullen, and then we'll go back to Darrel Stinson.

Mr. Roy Cullen: Thank you very much, Mr. Chairman.

Thank you, Mr. Cleland and colleagues, for being here. I have a number of questions on economic instruments, technology-driven solutions and co-generation. I don't know if we'll get to them all, but maybe we'll have a second round.

If we could come back to your slide that says “Emissions Increase From 1990 to 2020”, I have two questions.

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First, in the business-as-usual scenario, what kind of extrapolation do you put in, in terms of voluntary measures? Just to declare my bias, I think voluntary measures are only part of the solution. I'm wondering how you extrapolate that through to 2020.

Second, you made a comment, I think it was with respect to the 1995 numbers, that the number—I guess 619—is out of date. if I heard you correctly, you said it was because of events at Ontario Hydro. I wonder if you could expand on that.

Mr. Mike Cleland: Let me answer the second question first. It's the year 2000 number that is out of date for that reason.

Mr. Roy Cullen: Oh, okay.

Mr. Mike Cleland: The shutdown or the lay-up of those seven reactors will result in a fairly substantial increase in CO₂ emissions from Ontario Hydro in the year 2000. Ontario Hydro projects that they will bring their reactors back on stream. If so, then the year 2000 number will be a wash; it will effectively be replaced. That's the explanation of that.

I might ask Mr. Jarvis to comment further on this, but in terms of the voluntary, the substantial part of that block called “initiatives” in the graph down below arises from expected impacts of voluntary actions. That is based on an assessment that was done last year of all the initiatives that are in place and a detailed assessment of the commitments under the action plans that have been filed. Effectively we took those commitments on their face and indicated the expected impact of the voluntary.

Bill, I don't know if you want to add to that.

Mr. W.D. (Bill) Jarvis (Director General, Energy Efficiency Branch, Department of Natural Resources): Not surprisingly, most of the commitments made by corporations involved in the voluntary challenge and registry program reflected plans over the short term, so most of the impact you see in there is the impact between 1995 and 2000. A fair bit of that reflects an assessment by, as an example, the natural gas industry and what they could do to close down the methane leaks from their gas processing plants. They have a pretty good take on that. They can do it fairly quickly. As Mr. Cleland said, we took their commitment at face value and there's every indication they are moving ahead with it.

Mr. Roy Cullen: In essence then, after the year 2000 more benefit could show through voluntary measures up to the year 2020. In other words the action plans, as you said, go to the year 2000, and beyond that it gets fuzzier. You don't have much to base it on beyond 2000 in terms of the contribution from voluntary measures. Is that correct?

Mr. Bill Jarvis: We anticipate considerably more from the voluntary programs beyond 2000, but they're mostly not in this forecast. As you go out beyond 2000, most of the additional impact of the programs comes from issues that change the capital stock—things like the technology. As people replace their fridges, they get better. As people replace their houses, they get better.

Mr. Roy Cullen: Could we come back for a moment to this chart and Ontario Hydro in the year 2000? I know it's a provincial government decision in terms of whether they ramp up that nuclear capacity again, but one of the ideas I've been promoting is the co-generation option.

In years past, the natural resources sector in particular, but other sectors as well, have really not been able to take advantage of co-generation, which has created some huge competitive issues vis-à-vis our U.S. competition. Ontario Hydro would always say, well, yes, we love co-gen, but the reality was that with a surplus capacity, some happened at the local site level but not much really happened at a macro level.

When you look at the investments needed to ramp up this nuclear capacity again—the megaproject versus co-generation, which is at the margin—it's a win-win for industry, it's a win-win for electrical capacity. In terms of the environmental impact, though, I guess there are some trade-offs. If you look at the forest industry, say, using biomass, and it's really not a big contributor to CO₂, what is the calculus, as you see it, in terms of economic efficiency? I know it's a pretty grand question—the economic efficiency question against the environmental issues of trading off ramping up nuclear capacity versus promoting and really encouraging co-generation.

Mr. Mike Cleland: That's a difficult question to give you a very complete answer to, and I might ask either of my colleagues to add to my comments.

First of all, you really have to look into, in the first instance, the economics as each utility faces those decisions. It's difficult to know what is the economic calculus. Clearly, on the face of it, what Ontario Hydro is facing is a very big bill to bring those reactors back on stream. It would be a fair question as to whether or not that's the right answer, but that's really one for Ontario Hydro and Ontario consumers to have something to say about.

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I think the important point you've raised goes to the regulatory structures and the degree to which the maintenance of monopolies encourages or discourages other options such as co-generation. Our sense of it, and I think it is pretty strongly supported, is that in a more competitive and open electricity market you're more likely to get those sorts of options coming on stream. Clearly, there are options like that around, and I have no doubt that there is an appetite in the investment community to bring them on stream.

Mr. Roy Cullen: If you look at it just from its environmental impact, I guess the conventional wisdom would be that nuclear capacity is probably... How do you rank that against, from an environmental point of view, the option of co-generation and using biomass?

Mr. Mike Cleland: There are a couple of factors there. Biomass is not entirely without environmental impacts. It's CO_{*2xx-neutral if you accept that it's coming from sources of wood, or whatever, that are being replaced, but it also produces other emissions and those emissions have to be dealt with. It has its own local impacts presumably, but being relatively small scale those impacts tend to be pretty minor.}

The immediate environmental impacts of nuclear are very small, aside from its footprint on the landscape. The big issue, of course, with nuclear is some of the longer-term ones. I don't think there's a concern about nuclear safety, but there is the very real issue of the management of spent fuel over the long run, and ultimately the decommissioning of the reactors and the management of the waste that necessarily follows from that.

We haven't solved that problem. We have a number of programs ongoing to come to grips with it, as do other countries, but it's a very real question mark.

Mr. Roy Cullen: Thank you. Maybe I can come back later, Mr. Chairman, if we have another round.

The Chairman: Darryl Stinson.

Mr. Darrel Stinson: You were saying you've been working pretty steady on this since 1989, and you escalated in 1993-94. I find it a little strange that we do not have our position in place before we go to Kyoto, if this is the case. Do you find that a little strange, too?

Mr. Mike Cleland: I guess at one level, yes. At another, I think what it simply does is underscore the magnitude of the problem. We have been working pretty concertedly at this, both in terms of developing programs and doing analysis throughout that period. We've put programs in place with the resources that have become available to us, and other policy changes have been made that have been supportive as well. But the scale of the problem is enormous, and I don't think any government, to my knowledge, anywhere in the world has really seriously come to grips with that.

In terms of developing the plan for how we go forward after Kyoto, there have been a number of efforts, if you will, to develop such a plan, including one that we started about four years ago, a multi-stakeholder effort with the provinces, with all stakeholders, to develop an approach. That approach came up with a long list of potential measures that, if you added them all up and against our best analysis, would have got you something close to stabilization in 1990 levels by the year 2000 and presumably would have had a substantial ongoing effect.

The simple fact was that when the various governments, including very much so the provincial governments, assessed that whole list of measures, it wasn't obvious that they were prepared to take them on. Some of them were costly, some of them were likely to be distorting to the economy, and a good number of them simply wouldn't have worked.

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Mr. Darrel Stinson: How would we offset with the countries that do not come on board and sign this? What kind of penalties do you foresee coming in there in order to make this happen?

Mr. Mike Cleland: Good question. One of the positions the Canadian government has taken in the negotiations leading to Kyoto is that we are looking for the less-developed countries to, if you will, commit to work toward commitments.

The reason is that, under the Berlin mandate, there was no provision for less-developed countries to actually be asked to make commitments at Kyoto. But it has been our view that in order to really deal with this issue and, frankly, develop the public and political support for it, there needed to be evidence that the LDCs were coming with us.

We don't know how far we're going to get on that in Kyoto. It has been very tough slogging. We don't have any actual penalties that we can place on them. This is a matter for individual countries to either sign up to the convention and the protocols or not.

Mr. Darrel Stinson: Doesn't it seem to you then that we're making a commitment to a basically unknown contract?

Mr. Mike Cleland: Not entirely. We have a sense of the broad dimensions of the contract we would be undertaking. We have a sense that, yes, this will not be easy and that it will require governments to undertake substantial actions in order to start driving our greenhouse gas emissions back down.

Clearly, until we find a way to bring the LDCs under the tent, the world problem remains to be solved. I'm sure you're well aware that several countries—China and India are notable examples—are the biggest sources of growth. These will become the biggest sources in not very many years from now.

I don't have a satisfactory answer for you on that. It's a matter of the process of international diplomacy. All we can do is continue to press.

Mr. Darrel Stinson: Maybe I can come at this in a different way. We're using satellites more and more all the time, right? You are also using some of the data collected from satellites with regard to this problem.

Mr. Mike Cleland: Yes.

Mr. Darrel Stinson: We also know that it takes time for the ocean to register the warming effect. This is what we're led to believe as we study this further.

Under that guise or perception, and also with these countries not coming on board, what impact would your satellites have given you about what happened in Kuwait when Saddam Hussein's troops retreated? I believe they lit more than 500 oil fires there that went for months and months. What impact did that have there? Is that still what we're trying to address here with this problem? Is that part of it?

Mr. Mike Cleland: It would certainly be part, but I don't know the answer to that. I suspect that the answer could be found. I have a pretty good sense of how much was probably burnt off during that period of time, so you'd measure it that way at least.

In terms of the overall issue of greenhouse gas emissions worldwide, my sense is that this would be a relatively small part.

Mr. Darrel Stinson: What about the first and second world wars?

Mr. Mike Cleland: In their time, they were probably very substantial parts.

Consider one of the issues, for example, that was raised recently by the U.S. They actually suggested that they would look for an exemption from CO₂ emissions that would arise from peacekeeping or other military sorts of operations.

There's absolutely no question that those sorts of operations, because of the transportation fuels they involve, have a huge impact. I suspect that, in its context, the Second World War had probably a pretty large effect.

Mr. Darrel Stinson: I would think we have to be very careful here about where we're going.

Mr. Mike Cleland: I would agree with you on that.

Mr. Darrel Stinson: I can't believe it.

The Chairman: Mr. Cullen, and then Mr. Jerry Pickard.

Mr. Roy Cullen: I'd like to look at economic instruments for a moment. I have a general question in the sense that maybe you could talk about the dialogue you're hopefully having and will be having with the Department of Finance particularly on tax incentives, the balance between renewable and non-renewable, and the whole question of public transit. Transportation is a huge area that's going to have to be tackled. I'm wondering what sort of progress we're making on that front.

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Secondly, I understand the concept of emissions trading, but how will it work within a global treaty? Would you see emissions trading across borders, or would it be emissions trading within a country, based on certain targets?

Just as a supplemental to that, what about voluntary measures? I've asked this question of witnesses who are promoting voluntary measures. Do they see voluntary measures as being part of a solution, or is it a case of you being either pregnant or half pregnant? Can voluntary measures be part of the solution, or is it voluntary measures or predetermined targets?

Mr. Mike Cleland: Let me start with the first one.

We have made some progress on the tax side. When we did what was called the level playing field study a couple of years ago, it revealed that there was not a level playing field for certain types of investments, including renewable energy, at least given that analysis. As a consequence of that, there were some changes made to the tax system to favour renewable energy a little more—a small change in the right direction.

Mr. Jarvis can speak more to this, but in the past year, arising from the funds set aside in the 1997 budget, we've looked at a variety of options for determining how the existing incentive package could best be delivered. We had a public consultation this past fall to look at different options surrounding whether to do it through the tax system or through direct incentives. We're drawing that to a conclusion, but I'm not in a position to talk to you about the details. We haven't actually yet released the program, but we looked at what is the best way of doing that.

There are a lot of proposals out for changing the tax system to encourage different sorts of investments. It's one option, but it's not necessarily a very well targeted option. There tends to be a lot of leakage, but it is one option that you have to look at in the context of all the other possibilities. We are having ongoing conversations with the Department of Finance on that.

On emissions trading, to be honest with you, the question of how you would make an international emissions trading regime work is one that I don't think anyone has an answer to. The experience with emissions trading to date is almost entirely within the U.S. It's domestic and it's focused on very specific problems with SO₂, for which there's a pretty successful model in place. There are a relatively small number of emitters in a single domestic context and in a context where there was technology available to actually reduce, to abate, the emissions.

None of this would be true in the case of an international greenhouse gas emissions scheme. It raises all sorts of questions about the kinds of tree structure you would have. Would you be talking about fiscal transfers from one country to another? Would it be from company A in country X to company B in country Y? None of that has been sorted out. The way to build it would probably be to build some experience domestically and to then think about how you could take it out internationally.

Finally, on voluntary measures, they are a step in the right direction in a sense. One, you start getting results now that you wouldn't otherwise get for years into the future if you waited on, for example, a regulatory program. Maybe more importantly, what you do is hopefully engage the energies and the creativity of the business community out there to come up with ideas and to become seriously involved in dealing with the issue. I think you made the point earlier on that it's not the whole solution, and I doubt that it is the whole solution. You can only go so far until it needs to be supplemented by other instruments, whether they are incentives or regulations.

Mr. Roy Cullen: Do I have any more time?

The Chairman: Let Mr. Pickard go, and then we can come back to you.

Mr. Jerry Pickard (Kent—Essex, Lib.): Thank you, Mr. Cleland. I have two very fundamental questions.

I know the position of the Canadian government, and I am aware of positions throughout the world. From some of the questions that were asked today, though, it seems that the question being raised was whether or not the CO₂ emissions, the greenhouse effect, are a fundamental problem in this country. Do you fully support the fact that we have a major problem and that this problem has to be rectified?

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Mr. Mike Cleland: I guess I would have to fall back on the official Canadian government position in that regard. I'm not a climate scientist. I know something about it. I read some things about it, but to be honest with you I'm not qualified to provide a formal opinion here.

The Canadian government accepts the findings of the intergovernmental panel on climate change in that regard, and that is the basis for going forward.

Mr. Jerry Pickard: I guess I need go no further, because when we start talking about certain effects of Kuwait, the Second World War, and other events, it seems to lessen the urgency. There may be other factors that are creating our problem. I just wanted a response to that.

Mr. Mike Cleland: Sure.

Mr. Jerry Pickard: Secondly, what initiatives—and I think we hear yes. Most of the data I see indicates there are some things that could be done, but there are variables here and there. What specific initiatives do you believe need to be carried out in Canada in order to resolve greenhouse emissions?

Mr. Mike Cleland: It's probably a very long list. Let me just start by saying that I think the key thing is that over the next year or so we're going to have to more actively engage the provinces, the territories, and the Canadian public more generally in coming up with the right list, the things that actually work and are acceptable to the public and politically.

We have a long list of possibilities we've developed over the years, and it's not clear that there would be support for them. We need to go over that list and we need to look at the possibilities.

To come back to the voluntary structure, one thing that is quite clear is that people can go so far with voluntary initiatives, but they still have to take their investment plans to their boards of directors; they still have to meet hurdle rates and deal with that kind of thing. At present, given the price of energy people face, the incentive to act substantially beyond business as usual is simply not there.

So I would say the core question is, what do you do to change that incentive structure? Alternatively, you could do it through regulatory measures, simply putting a cap on the emissions from an individual company or an individual plant.

Mr. Jerry Pickard: I guess maybe sliding away from where I was looking... I understand the implications of provincial...working with the federal government, with industry and the political side—I do understand that—but I am looking at the technical side. These are the innovations that you see as important, not from the viewpoint of working with the provinces or with industry. What are the mechanisms we should be looking at in order to deal with greenhouse emissions?

Mr. Mike Cleland: When you say innovations, do you mean with respect to governing instruments, mechanisms as opposed to technologies?

Mr. Jerry Pickard: I mean all the instruments you would be dealing with in some priority.

Mr. Mike Cleland: Again, I guess I would come back to the point that you need to be looking at the incentive structure faced by investors and consumers.

Mr. Jerry Pickard: So incentive structures would be one. What others?

Mr. Mike Cleland: Then I think you can look at what regulatory options you may have, including, for example, equipment regulation. This is an area where the federal government acts, and we can go further there.

Mr. Jerry Pickard: Capital cost paydown and that type of thing?

Mr. Mike Cleland: And basically regulating the least efficient equipment out of the marketplace.

Similarly you can look at the regulation of structures, buildings—although that's provincial—and you can do a variety of things to support that. You can look at further information programs. That's pretty soft, but there is presumably some scope for further consumer education. You can also look at what you're doing to invest in new technologies. That has a longer-term payback—maybe 10, 15 years out—but also some associated economic opportunities for Canada.

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The Chairman: Is that okay, Mr. Pickard? Go ahead, if you have...

Mr. Jerry Pickard: No, I think there is a very long list, and what I'm trying to get in my own mind is, where are these priorities? We can talk about co-generation, we can talk about capital paydowns, we can talk about a lot of things, but on a major scale we're going to have to come up with the most fundamental changes.

We have to zero in on those and say this, this, this, and this all have to be dealt with. That's the kind of area I was trying to get to. I think we skirted a lot of that and a lot of the discussion.

The Chairman: That's a good subject for our next round in the new year, along with points raised on technology.

Mr. Cullen, you had a final question, and then we'll adjourn with that.

Mr. Roy Cullen: Yes, thank you, Mr. Chairman. I'll just make an editorial comment.

If you look at the major contributors of greenhouse gases in Canada, the transportation sector is a huge one, and I think that has to be a priority.

I'd like to talk a little and ask a question with respect to technology. While I get quite excited about what technology can do and how technology can help us deal with improving our environmental performance, I get a bit nervous about technology-driven solutions. I've seen technology-driven solutions in information technology, in environmental regulation technology; you know, best available technology, which doesn't make a lot of economic sense with respect to those jurisdictions that have pushed that solution.

Presumably you play around with different models in terms of the impact of anything we do on greenhouse gases. What kind of weighting do you put on proven technology versus technologies that may or may not be there in the future? Could you comment on the kind of weighting you put on technology solutions to some of these problems?

Mr. Mike Cleland: Sure. Maybe I could just divide this in two parts and ask Mr. Jarvis to talk about where we are in proven technologies, because that really goes to the program side of the shop.

But I'd like Frank Campbell to say some things about the longer look on technology.

Mr. Bill Jarvis: One of the unique aspects of this issue is its long-term nature. If we're looking at it to 2010, the solutions you have pretty much must be within the technology portfolio you have now.

By and large, those are mostly on how you use energy—energy efficiency—and to some extent how you transform energy on the electricity side, co-generation, which has been brought up, and things like that.

But as you get beyond that time, first, you use up your opportunities for improving efficiency with which your current economy is working. You use up all that potential from the given technology portfolio, and you have to move on to technologies you can develop between now and then.

For after 2000, maybe I'll turn it over to Frank to comment on how we see the field after that time.

Mr. Frank Campbell (Director, CANMET Energy Technology Centre, Department of Natural Resources): Let me try to answer that. There are market-ready technologies Bill has referred to. The technology is in the marketplace; it's commercial. The difficulty is getting more market penetration.

So we now know how to make a very efficient window that's very cost-effective, but we have to get them into more houses. That's very much what Mr. Jarvis's programs tend to support.

If we're going into the medium term, the issue tends to be around cost reduction. We have technologies, we kind of know how to do it scientifically, but we can't do it cost effectively. So the programs we have tend to be focused on reducing costs.

We're talking about things like truly high-performance buildings, twice as energy efficient as our current stock. The cost of wind energy, which again we have in very limited qualities, is coming down.

On micro co-generation, we talked about big central co-generation plants, but there also is a generation of very small co-gen. We've looked at putting it in individual buildings.

There is also making ethanol as a transportation fuel from biomass, not from conventional fermentation processes but more advanced biotechnology processes.

So those are just a small sampling. If you go to an even longer term, we're really still not at the kind of demonstration of the technology... We're talking about fuel cells—we certainly have a very strong lead in Canada at Ballard—the use of hydrogen in vehicles and the hydrogen fuel cycle, photovoltaics; things we are still a long way away from using in any way in bulk. You can go even further and talk about fusion and space power and all sorts of things that are probably 30, 40, 50 years away.

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Mr. Roy Cullen: Thank you. That helps a lot.

In developing our position for Kyoto, is there...? I would be nervous if we said we can reach some conclusion, because we can improve our performance this way and the other ways through a number of different strategies, and the rest will have to be accomplished through these technologies being transferred, becoming cost effective or actually being developed. I would be nervous if we were placing a lot of weight on... I think it will come and I think some of the work that's being done is superb, but in terms of committing ourselves to targets based on “what if”, I'd be nervous about that. Can you reassure us that we're putting appropriate weighting on technology solutions?

Mr. Mike Cleland: I am not sure what is the appropriate weighting. If you look at the situation right now, for example, our best estimates of current technologies that you could get into the marketplace with the appropriate incentive structures—those would get us a long way toward reductions to 1990 levels by the year 2010. It would require a very substantial push on the incentive front in order to do that, but the technologies are largely there. Beyond that, we are definitely looking into an uncertain future. We don't know how far we can get.

On the other hand, past experience with this sort of thing is that given a properly mobilized society, and given the willingness to invest in the necessary research and development, it would be astonishing to me if we were not able to find substantial new solutions. Then it's a question of time and of time for capital stock turnover in the economy, which is the other absolutely critical factor, and there you're looking at well into the next century.

Mr. Roy Cullen: Thank you very much.

The Chairman: Mr. Cullen, thank you very much. Those were good questions and excellent answers.

On behalf of all colleagues, I would like to thank you gentlemen for spending this hour with us. We reserve the right, as with other witnesses, to invite you back in the new year as we get to the next level of this discussion, post-Kyoto. We recognize at least the beginning of a recognition of the tremendous challenge that faces our country and the planet.

Colleagues, we'll have a draft report in your offices on Monday.

Thank you. We're adjourned.