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, February 17, 2000

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[English]

The Chair (Mr. Joseph Volpe (Eglinton—Lawrence, Lib.)): Colleagues, I call the meeting to order. Thank you very much for being patient.

I always get lost when I come to this place; I can never find it. Somebody always keeps picking up the crumbs after I drop them. I don't understand why. You need to do something like that to locate this place. I think maybe we should bulldoze the place down and just have everything over in Confederation or Centre Block, right?

A voice: Or Toronto.

The Chair: Or Toronto—some place like that. I'm glad I started a little bit of partisanship and parochialism. I'm so happy you guys always take the bait.

Mr. Oulton and Mr. McGregor, thank you very much for coming and once again making yourselves available to this committee. I apologize publicly for the inconvenience of having to cancel the last meeting because we were in the House on a vote. Sometimes that happens. It may even happen as we begin today.

We're glad you're with us nonetheless, so let me bid you both a hearty welcome. You will have the floor for 10 minutes. Does that sound good enough? Then we'll turn the floor over to questions and answers so we can have a dialogue amongst members and yourselves. I will try to make it as exhaustive as possible. We'll take it from there, then, okay?

Mr. Oulton, I guess you're going to be speaking first. Go ahead.

Mr. David Oulton (Head, National Climate Change Secretariat): Thank you very much, Mr. Chairman. It is a pleasure to come before this committee again to give you an update on where we're at in terms of the national climate change process. I'm a chair of the National Climate Change Secretariat, and that's one hat I wear. I also co-chair the National Climate Change Process with a colleague from Alberta, John Donner, who's the assistant deputy minister for energy in Alberta. So I wear two hats when I come here. I'll be talking about the national process, but I'll also be providing some information about federal activities in the area of climate change.

I'd like to give you something of an update. I'll move along fairly quickly, but if there is a question that needs to be addressed on a certain slide, with the chair's permission, feel free to stop me.

In the outline, I note that I'd like to talk a little about the nature of the Kyoto challenge, give an update on the national process, talk about the strategy and where we're going on the strategy and the path that's ahead.

The first slide, A.1, shows the forecast or scenario for business as usual, in terms of Canadian emissions of greenhouse gases, using megatons on the left-hand margin of CO₂ equivalent. You can see the baseline is the 1990 number of 601 megatonnes, and in 1997, the last year when it was measured, it was at 682, or about 13.5% above 601. The forecast for 2000—and that's still a forecast number—is 694, and that would put us about 15.5% above the 601 figure.

If you look at business as usual and the forecast for that, it would take us to about 764 megatonnes, and 565 would be our Kyoto target, once we ratify the Kyoto protocol. The gap between those two is 199 megatonnes. The challenge before us is to try to put in place a policy that will try to deal with that gap. That effectively means a reduction of about 26% from business as usual.

If you flip to the next page, A.2, it shows greenhouse gases by sector from residential through commercial, industrial, transportation, and, at the far end, something called “other non-energy”, which includes things such as emissions from landfill sites, waste incineration, and other bits and pieces that don't fit into the other categories.

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The main message there is you can see that the concentration of emissions is really in four principal areas: the industry sector, transportation, electricity, and fossil fuel production. If you look at the forecast or scenario increase for 2010—and this is consistent with the previous graph—you can see that the greatest challenge is going to be in the transportation and fossil fuel production sectors. The reason for that primarily is simple economic growth. What's built into this forecast is real economic growth, on average, in that 2000-01 period, in the order of the 2.5% to 3% real.

There's a forecast of reasonably robust economic growth, as well as an assumption of reasonably robust growth in the hydrocarbon sector in western Canada, in Saskatchewan and Alberta, whether it's with oil sands or natural gas. Of course, that affects the fossil fuel production number.

If you flip to A.3, it shows a similar picture, but by province instead of by sector. As you would expect, the two principal emitters, both now and in the future, are Ontario, because the bulk of industry and population lie there, and Alberta, because that's the centre and core for the hydrocarbon industry. When you look at the increases, you can see that the increase in Alberta is consistent with that increase because of expectations of a fairly flourishing hydrocarbon sector between 2000 and 2010.

The Chair: May I interrupt you, Mr. Oulton, to clarify something for me?

Mr. David Oulton: Yes.

The Chair: I'm newer on this committee than most other people.

On this A.3 slide, I guess it's just a reflection of where the percentage increases are. It doesn't relate to quantity, does it?

Mr. David Oulton: The black bar is the measure of the actual 1990 emissions, as best estimated. Remember these are derivations, if you will, from consumption figures.

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Are they in tonnes?

Mr. David Oulton: They're in megatonnes. On the 2010 figure, it's not fair to call that a forecast. It's what we call a business-as-usual scenario. If things go as expected, here's what we would expect emissions to be. But it looks at the total magnitude of greenhouse gas emissions in each province in the base year and in the forecasted year of 2010.

The Chair: Okay. I think you've cleared that for me. I don't know whether it struck other members, but just in terms of population, size, and therefore industrial activity and transportation activity, I guess I would have expected a bar graph that showed different results here.

Are you telling me there's a heck of a lot more in Alberta that's contributing to this?

Mr. David Oulton: Indeed.

The Chair: That's because of those oil wells that are—

Mr. Julian Reed (Halton, Lib.): It's because those gas wells are flaring up.

The Chair: So your buddies from your party are responsible for this?

Mr. David Oulton: It's correct.

Mr. David Chatters (Athabasca, Ref.): I object to that.

Mr. David Oulton: Remember, the hydrocarbon business is not just the production of hydrocarbons, but the transportation, which involves emissions, and the related industries, such as petrochemicals, which have a large concentration in Alberta as well. So Alberta still has a relatively substantial hydrocarbon economy.

There's one other factor. If you look at Ontario and Alberta, Alberta's electricity is largely generated by coal plants. There are some exceptions to that, but the bulk of its electricity is from coal, which of course is a large emitter of greenhouse gases. In Ontario they have a mix of nuclear, hydro, natural gas, and some coal. So the difference there, as well, reflects the difference in the electricity generation capacity of the two provinces.

The Chair: Sorry for the interruption.

Mr. Werner Schmidt (Kelowna, Ref.): Will we have questions later?

The Chair: Yes, we will have questions later. That was just to sort of get the chair on track.

Mr. Werner Schmidt: I'm so glad you're on track.

The Chair: Thanks a lot, Mr. Schmidt.

Go ahead, Mr. Oulton.

Mr. David Oulton: Okay.

The next set of slides, B, talk about the national process. Again, it's a bit of an update.

[Translation]

Slide B.1 is the starting point for the national secretariat's involvement. The premiers met immediately after the Kyoto Conference. The issue of climate change however wasn't on the agenda, but it was added, mainly at the request of the Western premiers.

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Here is what the federal and provincial governments agreed on: that we cannot ignore Kyoto; that Canada must take this issue seriously; and that we need to develop a joint strategy, and that the impact of this strategy would be more or less the same throughout the country, instead of a strategy that would be unfair to some regions. This slide suggests certain targets, as well as the shape that this federal-provincial partnership would take.

[English]

If you flip to B.2, that one simply says after that first ministers' meeting at the end of 1997, which really set off the national process, energy and environment ministers got together.

And if you flip to the next slide, B.3, which I call the wiring diagram, it shows this is the process that's been in place since April 1998, for the last almost two years now. Obviously first ministers, energy and environment ministers, and this thing called the national air issues steering and coordinating committees pre-existed. They were already there.

The new entity set up was the national secretariat, which was an innovation in the sense that it was both federally and provincially co-chaired and -personed, in terms of the resources that have gone into it. The issue tables and groups were expert groups that were set up in fifteen areas to look at specific aspects, some of them according to industry sector, some of them according to horizontal issues. And the integrative group was made up of the co-chairs of all of these groups that would help John Donner and me, the two co-chairs of the process, make sense of what the tables were doing and ensure the tables were able to do their job.

The last aspect I point to on this is that even though first ministers gave energy and environment ministers the point position in trying to develop a strategy, they also noted that other ministers in each government have a key interest. So we've drawn a connection with the federal-provincial councils in the agriculture area, the transportation area, and the forestry area.

B.4 talks about the progress to date and gives you a quick overview of where we're at. First of all, the National Climate Change Process, in its first, if you will, iteration and job, has been completed. The issue tables that were given the job of looking at the issue in each of the sectors and developing options that would help bring forward reductions have just about completed their work, and their reports are actually going up on a website to become public and national. We have about half a dozen of them up now—they're noted in the annexes to this table report—and about another dozen will be coming up over the course of the next month or two. So all of their reports on options that are input to the process will be up and publicly available in the course of the next month or two.

In terms of action, you'll recall that in the budget of 1998 the government announced a $150 million climate change action fund with two purposes. One was beginning to initiate action in terms of specific things that could be undertaken to help reduce or understand climate change, so a fund was set up that had an element for technology, a second one in the area of public education and outreach, and a third aspect in the area of understanding climate system science and impacts and adaptation. Each of those have been in place now for the last two years, and a considerable number of projects have been funded under those. Details of some of the projects and funding are again provided in the annexes.

One other thing I think is fair to note is that a number of the provinces have also been implementing their own processes on climate change. So this is not just the federal government taking action. It's not just the national process. It's also provincial processes.

Consultations have been underway publicly on certain elements. One we've called baseline protection. We can go into that, but there's further description of that later on. There will be public consultations in the future, and I'll talk more about the strategy in one of the upcoming slides.

We flip to slide C. C.1 is a diagram for how the process is expected to work. You'll see across the top we have what we've called the expert tables. What they were to do for us was economic environmental analysis on the options, and you can see those options reports are the input to the process. That then goes into an analytical process, which the federal-provincial council I co-chair is engaged in now. What will come out of that is in essence a draft national strategy that energy and environment ministers are going to be looking at over the course of this year.

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If I flip to page 2, it just gives a sense of the two products. We're going to try to synthesize that material from the tables to develop these.

The first product is what we've called the policy work on the strategy. That's looking at the options and basically saying to energy and environment ministers that these are the options that we think make sense for the federal government and for provinces and territories to look at over the course of the year.

We've developed what we call a Chinese menu of options for energy and environment ministers. They'll look in the transportation area and they'll see options that the table has put forward and what the costs and benefits of those options are. It's similar for each of the other sectors.

The other side of it we've called range-finding. It's really following through on what first ministers ask, which is what are the economic and environmental implications of Kyoto. That's really an analytical modelling exercise using macroeconomic and microeconomic models. That's running in parallel, and we hope to have the first results for that model towards the late summer or early fall, when we expect to have another meeting of energy and environment ministers.

If you look to section D, this describes what we aspire to be taking to energy and environment ministers when they next meet. They have a meeting set for the end of March in Vancouver, called the joint ministerial meeting, just after GLOBE 2000.

First of all, what we're looking at is an umbrella understanding or arrangement with the provinces that will just say, here's how we see the federal government and the provinces working on an ongoing basis to reduce emissions and to deal with adaptation and climate change science. So it's kind of a framework arrangement that would allow the federal government and the provinces to work on this in the future, in the long term.

The second one is the strategy itself. Basically what is being espoused is what we call a risk management approach that says we have a number of uncertainties in the outside environment. One of the uncertainties is that we don't know what the international rules of the game are going to be yet, so you can't make a full judgment on how our own domestic strategy should work and fit with those.

Secondly, we don't understand what all of our partners are going to be doing, the U.S. being a key one, but Europe and Japan being others. It's going to be pretty key to understand what they're going to be doing if we're not going to place ourselves at a competitive disadvantage in the actions we take. What it really says is that doesn't mean you don't take action, but you take the kind of action now that goes beyond no regrets.

There is going to be an investment cost in those actions you take in the various sectors. You are going to be doing it in partnership with industry and others in order to get maximum bang for the buck. But the decision on ratification of Kyoto, the decision on the kind of major economic instruments you might need to use in the event of ratification, is not something you need to take now. You need to take it when you can see more clearly what your partners are going to be doing and what is going to be happening with regard to the nature of the protocol when it's fully negotiated. We expect that's going to be two to three years down the road.

We've developed this phased approach that allows everyone to buy into a strategy but not to commit to the decision on ratification until we're better informed about it.

[Translation]

The third category deals with business plans. The national strategy will be implemented with 3 year rolling business plans. Because the nature of the strategy demands that we react with a progressive policy, there will be an on-going monitoring, examination and, if necessary, updating of the business plan in order to reflect any new knowledge, issues, and any new opportunities.

Business plans will be presented to the Energy and Environment ministers on an annual basis. Given the permanent nature of climate change, there must be a seamless federal, provincial and territorial framework which will coordinate the business plans in all of the sectors and regions of the country, which will monitor and report any progress concerning the implementation of this strategy, and which will act as the permanent mechanism for feedback from the stakeholders.

The next steps will be devoted in large part to finishing the analytical and updating work on the impacts and implications of the various options to reduce green house gases. The national committee on atmospheric issues will also work at developing options for the implementation of the first phase of the national strategy as well as the subsequent phases. We will also be asking for input from the ministers before beginning consultations on the national strategy and the possible measures to be implemented in phase 1.

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[English]

Finally, in section E, “Path Ahead”, you'll see just two short slides to wrap up on.

I've mentioned already the March 27 and 28 joint ministerial meeting. The way in which the year ahead is set up, in a sense, is that you've had two years of what I will call, charitably or otherwise, “bureaucratic” work to try to do the necessary groundwork to figure out what a strategy should be and what the analytical work needs to be. We're now entering into a phase where we're making, if you will, a preliminary report back to ministers for this meeting in March.

Basically, it's a checkup to say to ministers, all right, here's the type of strategy we're developing. Here's the type of business plan we're putting together for the first three years of the strategy. Here's the menu of actions we think jurisdictions should be looking at and doing their homework on in the period over the summer. What we would plan on, if you agree with these areas in principle, and what we would see ourselves doing is completing that, with some further public consultation over the course of the summer, and coming back to you in the fall, probably before the CoP6, the Conference of the Parties, where in mid-November the next step in international negotiations takes place.

We probably would then meet with them to talk about the final strategy, if you will, and about the preparations for CoP6.

[Translation]

Depending on the outcome of the JMM, the consultations on the approach for the strategy and possible measures for phase 1 will take place in April and in September. There will be other meetings in July and September in anticipation of the P6 Conference, which will take place from the 13th to the 24th of November, 2000.

During the second joint ministers meeting, in the fall of 2000, the ministers will study the outcome of the consultations and will make a decision on the general strategy and business plan, a decision which will constitute Canada's position at the P6 Conference.

The discussions at the 2001 JMM will depend on the outcome of the above-mentioned meetings. In any case they will move the strategy forward.

[English]

Mr. Chairman, thank you very much for the committee's patience in going through this presentation this morning. We're now open for questions and discussion.

The Chair: Mr. Oulton, thank you very much for taking us through this step by step. You've given at least the chair a little bit of an education. Those around the table who have a lot more expertise are probably going to have very poignant questions.

Mr. Schmidt, I think you wanted to start showing just how that works.

Mr. Werner Schmidt: Mine is really just a technical question. It has to do with the graph on page A.3. I'd like to know on just what base these things are put together.

The title really gives me some question as to what's involved here. If you look at page A.2, fossil fuel production is a contributor to greenhouse gas emissions. I think that's probably true. But if you compare Ontario, for example, with Alberta, the question I would have is this: What is the base on which these graphs were constituted? The production of fossil fuel is one thing and the consumption of fossil fuel in an industrial process of some type is a totally different thing.

Are we comparing apples and oranges on those graphs?

Mr. David Oulton: No, we're actually comparing what are the emissions from the consumption. In this case, in the case of Alberta, it actually means consumption of fossil fuels in the process of doing the hydrocarbon business. We're not measuring for them. What Ontario consumes, from natural gas or oil imported from Alberta, and emits itself is in the Ontario part of the graph, not the Alberta part. But the emissions Alberta makes in order to produce what Ontario consumes Alberta then gets the counting for.

So it is indeed by consumption in each province for those industries that are having to consume hydrocarbon in order to produce the goods.

Mr. Werner Schmidt: That's very helpful, Mr. Chairman. I appreciate that.

The other question I would have is with regard to the base here. We're dealing strictly with percentages here, is that correct?

Mr. David Oulton: The margin on the left side is indeed absolute. So to use the Atlantic one right at the side, in essence what we're talking about is Atlantic in the base year—these are the Atlantic provinces combined—having total emissions estimated at about 49 megatonnes of CO₂ equivalent, going up in 2010 to something in the order of 55 megatonnes, which is a 23% increase.

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So there are numbers behind this.

Mr. Werner Schmidt: I'm sure there are. I was just trying to get at what is the base of those numbers used here.

I just want to make sure I understand this. Given this explanation, then, what the graph is saying—and please correct me if I'm wrong here—is that Ontario is projected to contribute something like 200-plus megatonnes by the year 2010, and Alberta, in the development of and exploration for fossil fuels and the action of bringing them into production, would consume 224 megatonnes.

Mr. David Oulton: That's correct. The only other thing I would say is that it also includes all of the cars driven in Alberta and all the other consumption purposes. But you've interpreted it correctly.

Mr. Werner Schmidt: Okay.

I find it very interesting that Ontario, with its high industrial activities and the generation of particularly electricity, actually contributes a lower level of greenhouse gases than does Alberta.

Those numbers are verifiable, are they?

Mr. David Oulton: Yes. It's not true right now. I mean, if you were looking at what the picture is for the year 1997, which isn't in there—it's somewhere between that solid bar and the grey bar—the actual number in 1997 would have Ontario still emitting more than Alberta.

But if you do the forecast according to “business as usual”, if you will, then Alberta is indeed picking up the lead in 2010. But there's a reason for that. There's a very interesting story behind the figures that in a sense you're trying to unwrap.

Essentially, what's happening in Alberta is that there are three separate forces. One, there is a projection that their industry, particularly with regard to gas development and exports, will grow. Frankly, the opportunities to sell natural gas, a relatively climate-friendly hydrocarbon fuel, in both eastern Canada and more particularly the U.S. are going to grow. It will displace things like coal in powering electricity.

So Alberta sees lots of opportunities to be able to export more gas. The dilemma for Alberta is that when it does produce that incremental gas in order to export it to the U.S., the production of that gas and the transportation of that gas will cause emissions in Alberta. It's the nature of the process. Those emissions count on Alberta's register rather than on the U.S. register. Even though the U.S. picks it up for what it consumes, the production of it is Alberta's issue.

So one part of it is simply a burgeoning industry. The other part of it is the nature of the oil industry in Alberta. Of course, it's changing over time, from one that was a conventional light oil industry to one that is becoming a heavier-quality oil industry, particularly oil sands. Those heavier qualities of oil and oil sands tend to require more energy in order to bring them out of the ground and to put them in a form where they can be both transported and used.

So you're moving from a less energy-intensive oil industry to a slightly more energy-intensive oil industry.

The third part of the story, though, is that if you look at the reports the oil industry makes to the voluntary challenge and registry program, which allows individual companies and industries to put in an accounting of what they've been doing in terms of energy efficiency, you'll find that right across the board for pretty much the petrochemical industry, the oil production industry, the gas production industry, and even the transportation industry the unit of emissions per unit of output has been going down.

So in terms of hydrocarbon use, if you took a picture of 1970 and a picture of 2000, they're much more efficient than they've been in the past. The dilemma they have is that their opportunities for growth are exceeding their opportunities to make improvements to energy efficiency. The forecast here reflects that being a continuing dilemma that industry will face.

Sorry for....

The Chair: No, that's okay. Thank you very much.

Julian Reed, please.

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

First of all, I'd like to congratulate both of you at wasting no time in getting here. I've been reading the reports that have been coming in. They're a mouthful, so I have great sympathy.

I want to make Werner feel good here.

Mr. Werner Schmidt: Good, I'm so glad.

Mr. Julian Reed: I'm going to point out to him that Alberta is ahead of the rest of Canada in its consciousness about emission reductions. Private industry, particularly Suncor, has announced a commitment of $100 million to get into the green energy business, so that there's a perceived offset of what it knows are going to be emissions from the tar sands. Alberta was the first province to ratify the memorandum of understanding on green energy in Canada. Ontario still has not signed on and is actually way behind.

I'm particularly interested in the fact that you're going to engage in public education and outreach. I wonder whether that should not be extended to the education of the bureaucracies across the province in order to dispel the mythologies that are inhibiting the development of green energy. I've been there, done that, and bought the T-shirt. I know what the inhibitions are in Ontario particularly, and they're based on pure mythology.

There's also another mythology that Ontario promotes, and it is that gas is green. That in itself is yet another inhibitor.

I would urge that one of the areas that you dwell on be taking the truth to these approving bodies, which are getting very distorted messages perhaps from preservationists who call themselves environmentalists, from people who just are opposed to any kind of development on crown land, etc. These perceptions have been holding up this development. I can tell you there is no interest in Ontario at the moment in going green, other than in here. Nobody is willing to put their money where their mouth is.

Mr. David Oulton: Just as an observation on that, it's fair to say one of the reasons it's timely for us to come forward is that this is a process that, as of April, has now been working for two years. From my perspective, it's opportune to make sure we keep contact so that people know what we're doing, where we're going, and what our ambitions are.

One of the purposes of the process—and this is me wearing my federal government hat rather than a national hat now—was frankly to see the engagement of the provinces and territories on the climate change issue. It's fairly clear that if we're going to have a national climate change strategy, the federal government is not in a position to be able to implement it by itself. Many of the instruments rest with the provinces, territories, and indeed regions and municipalities.

As you will see from the graph, this is not an easy issue for Canada. It's a challenging issue, and if it's not one for which we manage to put together a strategy that has everybody behind the wheel together, if you will, we're going to have a heck of a time trying to follow through in the way other countries are following through. That's one part.

Frankly, from our perspective, the national strategy process was a vehicle for trying to ensure that provinces and territories had an opportunity, along with us, to get better educated on the issue. The issue tables were largely populated by people from outside governments. The intent was to get experts from the transportation area, the agriculture area, forestry, etc., so that they could come to the table. They weren't there as representatives per se—they always carried that hat—but they were there because they had expertise in their industry area that was relevant to climate change. That was meant to actually help to inform all governments at the same time about what the challenge is, but also about what the opportunities are.

From our perspective, if you're going to do a good climate change strategy, it should also be a good sustainable development strategy and a good industry strategy. You have to try to bring those things together.

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The thing with Alberta, interestingly enough—because Alberta was one of the provinces that had certain issues and still has issues with the Kyoto protocol—is that soon after we got into the process, Alberta said it doesn't make any sense for them not to agree that climate change is an issue. They decided that it's probably an issue that has legs, so they chose to undertake to say they're going to take this seriously and that they do think there should be a national strategy. What Alberta doesn't want is for the federal government to have to deal with this issue on its own, unilaterally. Ottawa needs to deal with this issue as a national strategy, and Alberta has therefore been very positive and proactive both in terms of their own domestic program and in terms of what they have been bringing to the table. We all have a long way to go, but Alberta has been very proactively engaged. That's been increasingly true as provinces have been able to get resources.

In the end, this is a resource issue both in terms of what programming you're willing to undertake, and in terms of what intellectual capital you're willing to bring to bear to figure out what makes sense for your province or territory. Individually, provinces have been coming more and more to the table and are grappling with how we sensibly turn this issue into something that minimizes the downsides and maximizes the upsides.

Ontario is one area that, if you look at the energy efficiency industry, would have a lot of opportunities, from our perspective. Frankly, for this to move more to the agenda in this area, my own view is that you need two things to happen. You need Ontario industries seeing this as an opportunity they need to start positioning themselves on. That indeed is what Alberta industries have done. This is very challenging for the TransAltas and Suncors of the world, but indeed that's what they've done. So you need to have that same mindset increasingly becoming part of Ontario industry, and I think there are some good signs that this is becoming the case in many areas.

Secondly, you need to see the government persuaded that in pursuing climate change, it can also deal with some other issues. Urban air quality is one. You can get multiple hits if you go at this issue the right way. Therefore, in pursing the climate change issue, you should be trying to pursue both an environmental policy and an industrial development policy at the same time.

I don't want to be quixotic, because it's not as if there are no costs and no difficult issues here. But what you want to be trying to do is to find out where your advantages are. I think that's something every one of the provinces is now beginning to try to look at. Given the material that's coming out on the table, it's something they have an opportunity to come to grips with. At least, my hope is that Ontario and the other provinces are going to start coming to grips with it now that we have material on the table for them to look at and for their industries to look at. I hope they'll ask how they can use this strategically.

The Chair: Thank you.

Mr. Chatters.

Mr. David Chatters: Thank you, Mr. Chairman. I have so many questions and so little time.

I did want to go back considerably in the process, back to the acceptance of the science. I follow this issue very closely and I've attended a lot of discussions on the issue, and I still have reservations about the science behind the issue of climate change. That's simply because even in the IPCC scientific group there were concerns about the distortion of their evidence as it was interpreted by the United Nations. So there are some concerns there.

I also have concerns about the fact that only 3% of greenhouse gases are CO₂. Water vapour makes up the bulk of greenhouse gases, but we're focusing in on CO₂ as the culprit.

Also, when you look at scientific history, if you go back far enough, there is evidence that the world was warmer back in AD 1300 than it is today. In fact, it was warmer then than what the predictions presented under this greenhouse gas thing are saying the climate will get to be in a hundred years. It was warmer back then than the most outrageous predictions.

You did suggest that some of that $150 million was set aside to work on the science. I'd like to know what you're doing in that respect. I'd like you to say in detail to this committee what work is being done on that side of the table.

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

Mr. Chairman, I shouldn't pretend to be a climate change scientist.

Mr. David Chatters: I don't blame you. I'm not either.

Mr. David Oulton: I'm a paltry economist, not a climate change scientist, so I cannot debate or even present the science issues well.

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But I would suggest that indeed the suggestion about wanting to find out what the status of the climate science is on this is something that could well be pursued by this committee. Indeed, there are experts we use at Environment Canada and there are a variety of other experts. Their views are accepted by our climate process, if you will, as being the best view that we can get on what is going on with this. My suggestion is not that I try to present their case, which I couldn't do, but rather that they have the opportunity to do that. I wouldn't suggest the forward agenda of the committee, but there's someone who can better answer your question.

Mr. David Chatters: However, with those same experts, their modelling has already been proven to be in error by up to 400%. Quite frankly, I spent my life in agriculture, and Environment Canada has great difficulty predicting the weather a week from now, let alone a hundred years from now, so this all raises concerns.

Mr. David Oulton: What I should say—and this is more as the policy wonk, because that's my job in this process—is that I think it's fair to say the governments around the table, the energy and environment ministries, have basically drawn from the science that this is a legitimate issue. We don't know, but it seems most of the questions on the uncertainty come about through the questions of whether increasing concentrations of emissions are going to have an impact, or whether there is some human impact on those increasing concentrations. There is some agreement now that seems to be relatively wide and is saying, yes, that's there.

But the really important part—and the part that I take from your question in particular—is how accurate is the sense of what the implications of that are. So what if it's going up by half a degree every twenty years, or whatever the right number happens to be? What are the implications of that globally? In particular, what are the implications of that for Canada and its different regions?

My perception is that this is the one part on which there still is a considerable debate. Many scientists will agree that you are getting changes in concentrations, and they think they can trace back at least some elements of why. They know there's a general implication for those that has a “warming effect”. But what's the implication of that? Whether it's serious or not is one of the areas that's still being very much debated.

I think governments have come down on a policy basis in Canada, and I think largely in the OECD countries, by saying we can't wrestle this thing to the ground fully. We are going to wrestle with it, and the science is going to improve on this. But what we take out of it is that prudent policy says this could well be a very serious issue, and therefore it makes sense for us to do things now. It's not that they're going to put us in jeopardy in terms of the competitiveness of our industries or other things. Rather, proactive actions are going to go beyond just no regrets as a good insurance clause, as a good precautionary measure in terms of policy.

The policy magic—and it's one area where there isn't full agreement yet—is in finding the right balance between the uncertainties that you face on the science, the uncertainties that you face on the international protocol, what our partners south of the border and what others are going to be doing, and the certainty that doing nothing is probably not an adequate response. You need to find out what the right thing to be doing is as a precautionary action.

Frankly, the whole strategy—and I mentioned this in the presentation—is based on trying to figure out what's prudent risk-taking and what's prudent risk management in this kind of policy and scientific environment. What we're trying to present to ministers are, in a sense, the kinds of actions and measures that we think should be on the menu if you're following a precautionary approach to risk management on this issue, recognizing that the scientific uncertainties that you're raising and some of the other uncertainties that I alluded to earlier are going to be there and are going to be there for a while.

It probably doesn't argue for not doing anything, and I think most of the provinces and territories are generally not leaning in the direction of not saying Canada doesn't need a climate change strategy. The question is the content of that strategy.

Mr. David Chatters: I would certainly disagree that the only uncertainty is the degree of impact that climate change may have. Again, I would ask you to produce for this committee the work that's going on in terms of the science. I would hope you could do that, because I think it's broader than simply the impact. I think there is good scientific evidence out there about sun activity, the tilt of the earth on its axis, and the rotation of the moon and how it affects climate. I don't think there's any argument at all that the climate is changing. There's no question; it is changing. The question is, how much impact is man having on that change? I'd like to see the work that's being done in that area.

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The Chair: Mr. Chatters, I think we're getting into a debate. You've asked for some specific information.

You gave us an indication, Mr. Oulton, that some of the scientists Environment Canada has access to will probably be able to provide that for us. I wonder if you would respond to us by trying to satisfy Mr. Chatters' question and maybe forward that information to us through our clerk for distribution to everyone.

Mr. David Oulton: Indeed. We will make contact with the climate science folks over at Environment Canada and ask them to prepare the package—and they do have one—that describes their current best view of it, and we'll give it to the committee. Then if you wish an opportunity to have a more interactive discussion—

Mr. David Chatters: It's just you said a portion of that $150 million was set aside to work on the science. I don't need them to reiterate their beliefs. I want to see the work that's being done.

The Chair: Just a second, Mr. Chatters and Mr. Oulton. On the issue tables, I note we have a science impacts and adaptation group. That particular group must have access to all of this information.

Mr. David Oulton: That's right.

The Chair: I wonder if you could forward that to us so that we might at least have an opportunity to satisfy ourselves with some of the information.

Then, Mr. Chatters, we might take Mr. Oulton's suggestion and invite those experts before the committee, where I think the kind of debate you're looking for might be a bit more productive. It really is a little unfair to engage Mr. Oulton in a scientific debate when he's come here on an economic premise.

Mr. David Chatters: I have some economic questions too, Mr. Chair.

The Chair: Well, now you're going to have to keep them for a while.

Mr. David Chatters: Okay.

The Chair: Mr. St. Denis.

Mr. Brent St. Denis: Thanks, Mr. Chairman.

Thank you, gentlemen, for being here.

In your presentation you mentioned the ratification. I want to ask you to explain in greater detail how you see the whole process ramping up to ratification at the federal and at the provincial and territorial level. To me, tied in with the ratification is the degree of public engagement in the process. The more public awareness and pressure, if you want, the more support there is for the ratification process.

So it's a two-part, integrated question. I'd like you to review the ratification process with us, but also, please describe the degree to which you see the public buy-in right now, which in my opinion is still pretty low, and how you see that ramping up as well in the one or two years ahead.

Thank you.

Mr. David Oulton: Thank you.

I mentioned earlier—and it was speculation on my part; I'm presuming—that if this next conference of the parties, in the fall of this year, is successful, then it will cover off most of the key areas of the protocol. That will allow then people to start making decisions on whether they can ratify or not.

It seems many in the international community have put down a timeline that says they would like to be able to make a ratification decision by 2002. Canada, the U.S., and a number of other countries have remained agnostic as to whether they would be in a position to make that decision by 2002 or not. They've said they'll be informed by their own domestic understanding and other things. But sometime in the next two to three years seems likely. If this thing remains on a successful track, that's when that decision would need to be made.

In the federal-provincial process, what we have said basically is, at the end of the day, the decision on ratification is a federal government decision. It's our jurisdictional responsibility to make decisions on ratification of treaties. However, we are in active consultation with the provinces and with industry and other stakeholders, which inform our positions at the conference of the parties and will inform our ultimate decision on timing and when and if we ratify. So it's a federal decision, but we've clearly undertaken that we're going to be getting input and will consult with provinces and industry in order to do that.

Indeed there's a process in place that parallels my process to look at the strategy, which looks at the international negotiation side of it and would allow full input from industry, other stakeholders, and provinces. So a process has been put in place to allow the information to develop for that, so that the decision the federal government has to take, whether that's in 2002 or in 2003, to be fully informed.

• 1200

From the strategies point of view, our undertaking to ministers was to say, before you ratify we should try to have in place a Canadian strategy that's fully elaborated and an analysis of what the costs and benefits are of ratifying Kyoto. You need to do it so that it's not just information about the international treaty you should have, you should also have a very clear strategy in place and you should also have completed your analysis on what is the impact, both good and bad, of ratifying Kyoto, both from an environmental and an economic and competitiveness perspective.

The undertaking really has been to give ministers this year a good first shot at what the strategy looks like, what the analysis looks like, and to define for them the work program that remains over the next two years, that period when we think the ratification decision is likely to be taken in, that's going to be needed to allow Canada to make a sensible decision on ratification. We hope any decision on ratification is going to be well informed by the domestic policy work that's gone on to build a strategy.

That was the first question, and I wanted to give you a chance for supplementary in case there's—

Mr. Brent St. Denis: On the public buy-in.

Mr. David Oulton: On the public buy-in one. I agree with your assessment. Anything I've read has said that climate change as an issue has a lot of brand recognition, because people see it in the newspaper headlines from time to time, but the understanding of it is a mile wide and an inch deep.

If you ask people in a survey if they are prepared to do things in order to reduce the prospect of climate change, the answer is of course they're prepared to do something. But if you don't ask that in the context of what it's going to cost in terms of the price of automobiles, or the price of fuel, or anything else, you can't get a good response to that.

From the federal government side and in the work we've done with the provinces, everybody came to the common conclusion that for a Canadian government to make a major decision on something like ratification of a Kyoto protocol, you want to have a better and more informed public that knows about what this means, what the implications are in terms of the policy options, and what it means to them. And that's a difficult thing to communicate well.

One of the elements we're asking ministers to look at—and again, it's not just the federal government, but it's with the provinces—is in essence a public education and outreach strategy that they'll have to see as a first draft this March and then have an opportunity to come back and say, “Yes, it works; it fits.” It's not a one-size-fits-all, because the other thing you find out is that what you say in terms of trying to communicate this in Prince Edward Island may not work worth a damn in Ontario, so you really do have to have a strategy that has a fair amount of regional sensitivity to it.

Our hope is that we will have in place by year-end a strategy that lays out what governments should be doing, the federal government's role in it, what resources are going to be required to bring it forward, and what the play-out is over the next two to three years.

The Chair: Thank you.

Monsieur Cardin.

[Translation]

Mr. Serge Cardin (Sherbrooke, BQ): I too, am relatively new to this Standing Committee on Natural Resources.

Could you please describe to me what 600 megatons of CO₂ represent? Could you give me an image, I'm a very visual person, an image that would allow me to understand?

The Chair: How do you say in French

[English]

“hot air”?

Mr. David Oulton: I have difficulty giving you a visual image. What I can tell you, though, to put it in context, is that if you look at total world emissions of greenhouse gasses, Canada is about a 2% contributor in gross. We are about the second highest country in terms of our emissions per capita, probably just after the United States.

To characterize how we fit, I can't give you a visual picture of how big 600 megatonnes is. It sounds pretty big to me, but I'm not good at painting that visual picture. But to try to put it in the context of our contribution and how those megatonnes fit with the rest of world, we're a small aggregate contributor. We stick out, in part because of the nature of our country—climate, transportation, nature of our resource industries—and that's why we're a large per unit emitter relative to most of the rest of the industrialized world. The other fact that's important to note is that if you looked at OECD countries, the developed world per se, their emissions in total per capital are about 10 times the emissions of the developing world.

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So it's very much an issue that comes with industrialization, and indeed one of the dilemmas of managing this issue is that it's an issue of the global commons, that while OECD is the major emitter now, in the future—not very far down the road, 10 or 20 years—the major countries emitting are going to be China, India, Indonesia, all of the large-population countries that are rapidly industrializing. And what we're attempting to do in our effort is to ensure that from an industry country perspective we're demonstrating that we can find the technology to solve the problem, to allow the countries in the third world to be able to adopt that technology and skip a lot of the processes we went through, so they won't become emitters like us.

Mr. Ian McGregor (Deputy Head, National Climate Change Secretariat): If I could add one point of information, even though we're only 2% of the world's emissions, we're the eighth largest emitter in the world. So what happens is that there are several countries that are relatively large emitters, like the U.S., but then just about everyone else is getting down at that level, so even though we're 2% we're in the top 10. So it's pretty significant, but it indicates that it's a world issue as opposed to an individual country issue to address this.

[Translation]

Mr. Serge Cardin: Canada shouldn't probably be giving lessons to other countries with respect to pollution per capita. However, could we be a leader with respect to the development of alternative energy solutions which would pollute less? We are trying to make findings and to come to a consensus with all the other stakeholders. We also bring pressure to hear on the people when we tell them that we recognize that they want a cleaner environment, a world without pollution, but that it is going to cost them more. Are the key stakeholders investing the money required to develop alternative energy solutions at a reasonable cost?

[English]

Mr. David Oulton: That's an important and also difficult question to answer.

I think what we have been trying to find in our process, in this developing options to allow for reduction, is where Canada has win-wins, where we have industries—and most people are most familiar with companies like Ballard, which are industries in the sense of the future—where we're developing a product that is either going to be very energy efficient or going to be using a new fuel. And Canada does have some niches where we have developed—in communications, transportation—areas of expertise, and if we have a smart strategy, what we should be doing is promoting the development of those industries.

So in those areas where we have technology, we're exporting to the world the technology that is going to enable other countries to be able to deal with this issue. There are a number of areas where that is happening, and one of the tables we had was a technology table, whose purpose was to look at those areas and try to identify them, and identify them regionally as well. So our technology table report on our website gives a pretty good identification of the kinds of areas where we think we have prospective opportunities in Canada to be able to actually deal with climate change, because we have the technology or the basis for developing the technology. And that refers to the comment I made earlier about trying to combine climate change policy and environment policy with good industry policy.

[Translation]

Mr. Serge Cardin: Given the current situation and the work that you are doing, are we justified in being optimistic and confident that we can get concrete results and achieve our goals?

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[English]

Mr. David Oulton: I said earlier that we have a very substantial challenge, and I think we do. I think it's fair to say that if you look at the other OECD countries, we have one of the tougher challenges. There are us and the Americans, but also the Dutch, interestingly enough, have a very significant challenge, although it doesn't seem obvious. You can pick out countries that, because of their industrial structure and fuel composition, are going to have a tough time with it.

Now, I'm paid to be an optimist. My job is to try to put together a strategy that allows ministers to say here's a way forward on this. When you hear me say we're going to try to put together a strategy to do that, I think the answer is that we're going to do that, but we are going to try to make sure we're doing it in a smart way.

This is not a no-cost strategy. In order to meet a climate change objective, whether it's Kyoto or even a different objective, it is going to take investment. It does take upfront investment. It is going to require some risk-taking, and that's why the risk management approach. But my view is that if we do it properly and try to take advantage of those areas where we have competitive advantages, there is a way ahead that's going to make sense for Canada. Indeed, we're going to have some significant challenges in building that bridge.

The last thing I'd like to say on that—I know the chair needs to move on to others—is that we're fixated on the Kyoto protocol because it's there and it focuses on what I call a short-term period to 2010. One of the dilemmas is that's really a short-term period to make some investments and harvest those investments.

Climate change, though, is really a very long-term issue, and Kyoto is only a first step. So what you're really trying to do is put in place a sensible technology policy that's going to plant the seeds for what you're going to be able to do 30 years down the road. The real issue is less Kyoto, although we have to make a decision on ratifying it, and really the 30 to 50 years down the road where, if the climate science says we have a problem, that's when we're really going to have to deal with it. We need to plant the seeds and the technology now that you're going to harvest in that period 20 to 30 to 40 years down the road. So part of our gain is short term, just managing that 2010, and the more important part is trying to manage the long term.

The Chair: Thank you, Mr. Oulton.

I'm going to go to Mr. Godin.

[Translation]

Mr. Yvon Godin (Acadie—Bathurst, NDP): There have been a variety of questions asked in a variety of ways, and I don't necessarily want to repeat those. In looking at the graphic representation of the GHG gas emissions by sector, one can't help but notice the number of megatons of CO₂ emitted in the transportation sector. The forecast is that in the year 2010, the transportation sector will emit the equivalent of almost 200 megatons of CO₂, that's to say an increase of 34%. So we know that that is the direction we are heading in, and I believe that that goes against common sense.

Could we not recommend that a railway system be built, especially when you consider that three locomotives replace 250 trucks? I believe that this solution really would allow us to reduce CO₂ emissions in this country. I think we've made the mistake of forgetting how our grandparents lived. Despite the technology that is available today, I think that they had a better answer to these questions than we do. We seem to be regressing.

Another table indicates that it's Ontario and Alberta, the two most industrialized provinces, where there are the highest GHG emissions. These are also the two provinces where there's a greatest amount of transportation. I think we need to focus on the construction of a good railway network in order to reduce CO₂ emissions in this country. Just imagine to what extent we could reduce GHG emissions if three locomotives replaced 250 trucks. We could set up a program that would encourage people to use railway transportation.

My second question touches on energy. In the energy sector, GHG emissions will increase by 25%. In the Gaspé Peninsula and in Alberta, there have been some tests made with wind turbines. I believe that this type of energy is making some headway. On the Atlantic coast, there's a lot of wind, and I believe that wind energy could be a solution. We all know the problems that have arisen in the mines in Cape Breton. We could start thinking about replacing coal-based energy with this new type of energy.

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I don't know if the residents of Miscou Island want to have these big machines spinning away on their island, which is not very big, but there is a lot of wind there and we would be able to reduce this country's CO₂ emissions. Those are the comments that I wanted to make. Thank you.

[English]

The Chair: Monsieur Godin, those were a couple of very nice observations. If you think there's something you need to respond to there, please go ahead. But I think Mr. Godin already prefaced his remarks by saying he just wanted to make the point.

Mr. Yvon Godin: I'd like to hear if he agrees with me, though.

The Chair: Sure. Well, he'll agree with that. Yvon, he already said “Whatever you say, I'm okay.”

A witness: The chair put words in my mouth.

Some hon. members: Oh, oh!

Mr. Yvon Godin: He went like this, and you can't hear that on the record.

The Chair: Oh, okay.

Mr. David Oulton: Actually, when you have a chance to look at the report on transportation and electric power generation, you'll see that one of the proposals in electric power generation, and building on the examples you were citing, is that indeed there is a role for using alternative forms of generation such as wind. So that is very much there. The issue is how economic that is, how that fits in, and what you need to do to bring that forward. Remember that electricity consumption is going to go up, so what you're really trying to do is both fill in the increment for demand growing and replace some of the base load that's using hydrocarbons. So the issue is how quickly you can put in place those new technologies in a cost-effective fashion that will replace things like coal-generated power stations.

But that is in the report. You'll find that the industry itself agrees there is room for putting in more renewables to generate power, and the issue is what the best way to do that is and what the options are. They've suggested some options to look at in order to bring that about.

In the transportation sector there's a bulky report on transportation options. What it doesn't say is that it is clear that rail in all cases is more cost-effective than truck transportation in all cases. It says that what you have to do is do an analysis that determines over the long haul where it is more cost-effective in each area. Of course there's a great debate between the two industries themselves simply on a competitive basis. But again, there is room for looking at what you need to do in your existing rail facilities to make them more energy efficient and cost-effective and what you need to do with regard to trucking. Programs are being suggested to make it more cost-effective.

What there's not agreement on is those areas where one is a good replacement for the other. When you read the report, you'll see that there isn't agreement with you on that per se, to say that in many cases trains will be more efficient than trucks. I think the argument is that it depends on the case you're looking at. It also argues that government should be cautious about making commercial decisions in that area and that it should focus on being more efficient in each of the areas.

I'm sorry, I said I would make short comments.

The Chair: This is a problem. When you're throwing out so much bait in this particular pool, everybody—

Mr. David Oulton: I have to shut up.

Some hon. members: Oh, oh!

The Chair: We'll go to Monsieur Godin for a very brief question, and then I'm going to close off with an extremely brief one from Monsieur St-Julien.

Mr. Yvon Godin: The only comment I want to make is that when you're talking about cost-efficiency and everything and you're looking at trains, at the same time you have to look at the pollution of our planet. That has to be part of it. I really believe that three engines are better than 250. I close on that.

The Chair: Thank you.

[Translation]

Mr. St-Julien.

Mr. Guy St-Julien (Abitibi—Baie-James—Nunavik, Lib.): I would appreciate if Mr. Oulton could table with the Chair of the committee a copy in both English and French, of the study on railway and trucking transportation to which he referred.

[English]

Mr. David Oulton: Yes.

[Translation]

Mr. Guy St-Julien: Thank you.

[English]

Mr. David Oulton: We're just actually translating this report now, and as soon as it's translated, we'll give it to the committee.

Mr. Yvon Godin: You're translating it [Editor's Note: Inaudible.].

Mr. David Oulton: Yes.

Mr. Yvon Godin: Merci. Thank you.

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The Chair: Mr. Oulton and Mr. McGregor, thank you both for coming before us and sharing with us the experience of the project as it is developing. We may even call on you again. We look forward to receiving those reports you indicated you would provide for us. On behalf of the entire committee, I thank the both of you for taking the time and the patience to be with us.

Mr. David Oulton: Thank you.

The Chair: We're going to adjourn for just about a moment or two, and then we're going to go in camera, so I ask members not to leave the table. Thank you very much.