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37th PARLIAMENT, 2nd SESSION

Standing Committee on Industry, Science and Technology

EVIDENCE

CONTENTS

Tuesday, April 29, 2003

1530

The Chair (Mr. Walt Lastewka (St. Catharines, Lib.))

Mr. Howard Brown (Assistant Deputy Minister, Large Industrial Emitters Group, Department of Natural Resources)

1535

The Chair

1540

Mr. James Rajotte (Edmonton Southwest, Canadian Alliance)

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

The Chair

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

1545

Mr. James Rajotte

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

The Chair

Hon. Gilbert Normand (Bellechasse—Etchemins—Montmagny—L'Islet, Lib.)

1550

Mr. Howard Brown

Mr. Gilbert Normand

Mr. Howard Brown

1555

Le président

Mr. Bernard Bigras (Rosemont—Petite-Patrie, BQ)

Mr. Howard Brown

1600

Mr. Bernard Bigras

Mr. Howard Brown

Mr. David Oulton (Head, Climate Change Secretariat, Department of Natural Resources)

Mr. Bernard Bigras

1605

Mr. David Oulton

The Chair

Mr. Howard Brown

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

The Chair

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)

Mr. Howard Brown

1610

Mr. Brent St. Denis

Mr. Howard Brown

Mr. Brent St. Denis

Mr. Howard Brown

Mr. Brent St. Denis

Mr. Howard Brown

1615

The Chair

Mr. Brian Masse (Windsor West, NDP)

Mr. Howard Brown

Mr. Brian Masse

Mr. Howard Brown

Mr. Neil MacLeod

1620

Mr. Brian Masse

Mr. Neil MacLeod

Mr. Brian Masse

Mr. Neil MacLeod

Mr. Brian Masse

The Chair

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.)

Mr. Howard Brown

Mr. Dan McTeague

1625

Mr. Howard Brown

Mr. Neil MacLeod

The Chair

Mr. Dan McTeague

The Chair

Mr. Bob Mills (Red Deer, Canadian Alliance)

1630

The Chair

Mr. Howard Brown

Mr. Bob Mills

Mr. Howard Brown

Mr. Bob Mills

Mr. Howard Brown

Mr. Bob Mills

The Chair

1635

Mr. Howard Brown

Mr. Bob Mills

Mr. Howard Brown

Mr. David Oulton

Mr. Bob Mills

Mr. David Oulton

Mr. Bob Mills

Mr. Howard Brown

Mr. Bob Mills

Mr. Howard Brown

Mr. Neil MacLeod

The Chair

Mr. Bob Mills

1640

Mr. David Oulton

The Chair

Mr. Larry Bagnell (Yukon, Lib.)

Mr. Howard Brown

1645

Mr. Larry Bagnell

Mr. Howard Brown

Mr. Neil MacLeod

Mr. Larry Bagnell

Mr. David Oulton

1650

The Chair

Mr. Larry Bagnell

Mr. David Oulton

The Chair

Mr. Bernard Bigras

Mr. David Oulton

Mr. Neil MacLeod

Mr. Bernard Bigras

1655

Mr. David Oulton

Mr. Howard Brown

1700

Mr. Neil MacLeod

Mr. Bernard Bigras

Mr. Howard Brown

The Chair

Mr. Brian Masse

1705

Mr. David Oulton

Mr. Brian Masse

Mr. David Oulton

Mr. Brian Masse

Mr. David Oulton

The Chair

Mr. Larry Bagnell

Mr. Howard Brown

Mr. Larry Bagnell

The Chair

Mr. James Rajotte

1710

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

Mr. James Rajotte

1715

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

Mr. James Rajotte

Mr. Howard Brown

1720

The Chair

CANADA

Standing Committee on Industry, Science and Technology

NUMBER 039

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, April 29, 2003

[Recorded by Electronic Apparatus]

¹ (1530)

[English]

The Chair (Mr. Walt Lastewka (St. Catharines, Lib.)): I call this meeting to order pursuant to Standing Order 108(2), briefing on the potential economic impact on Canadian industry of implementing the Kyoto protocol.

Today we have Mr. Howard Brown, assistant deputy minister, from the large industrial emitters group; and David Oulton, head of the climate change secretariat.

I'd like to welcome both of you to the industry committee. I will ask for your opening remarks, and then we'll open it up for questions.

Mr. Brown.

Mr. Howard Brown (Assistant Deputy Minister, Large Industrial Emitters Group, Department of Natural Resources): Thank you very much, Mr. Chairman.

I've tabled a prepared statement. If it's agreeable to you, I don't intend to read it word for word. Perhaps I can just make a few brief opening remarks, and if there are any remaining questions after that I'll be happy to get into them.

Let me start by reviewing where we are on the policy framework with the large industrial emitters. There are five or six points I'd like to make here.

First, we've said we're looking for a reduction in emissions of 55 megatonnes from the large industrial emitters. The Prime Minister has been very unequivocal that we will not ask them to do more than that without incentives. On average, 55 megatonnes translates to about 15% from where we're projecting them to be in 2010.

Second, we've said that we will base their targets on emissions intensity, that is, emissions per unit of output, and not on some absolute level. The operational significance of this is if output is higher than expected in the plan, the risk will be with the government. I don't want to be completely unequivocal about this, as there may be cases where it makes more sense to deal with targets in some industries on an absolute basis, but we'll deal with that case by case.

Third, we've told industry that any credits they may need to purchase to meet their obligations will be available at a price no more than $15 per tonne. We did that because there really isn't a functioning carbon market. There's a great deal of uncertainty out there. I will say that we did not write industry a blank check. It's understood that there will be terms and conditions on this $15 price assurance.

Fourth, we've said we'll be sensitive to international competitiveness.

Fifth, we've agreed that firms that took early action will not be disadvantaged.

Sixth, we've said that no region or jurisdiction will face an unreasonable burden.

These principles point us in a particular direction and give us a good start, but clearly there is a lot of dotting of i's and crossing of t's. A number of very difficult policy questions are yet to be answered. What I'd like to do is draw your attention to two of those issues.

The first is the backstop. The climate change plan said we would achieve this 55-megatonne reduction through negotiated covenants with a regulatory or financial backstop. The backstop is really the foundation of our entire approach on this part of the plan. If we don't have an effective backstop we won't have effective covenants, and we certainly will not have a 55-megatonne reduction in emissions. Why is that?

There are two reasons. First, just from an administrative point of view, we need a legal framework and a legal authority to sign covenants. When we sign a covenant it will have to be done under the authority of some piece of legislation. But more fundamentally, the covenant is the incentive that will get people to the table to negotiate reductions. I think this is just common sense.

If businesses think they can get a better deal by not negotiating, they're not going to negotiate. In fact, I've already been told by people in industry: “We don't agree with your target. If you don't change it we're not going to negotiate with you”. We clearly need some way of dealing with that kind of situation.

I'll say as well that there are some companies, some industries, particularly small and medium-sized companies, that would prefer not to negotiate covenants. They'd prefer us to just set out a fairly simple kind of regulation in legislation and get on with it. Perhaps we should use the backstop to be responsive to that request.

There are four logical possibilities we could use for a backstop. One is using the tax system. This idea was thought about and rejected very early on in the process, for good policy reasons. It's not under active consideration now.

Second, we could use the Canadian Environmental Protection Act. We could declare greenhouse gases toxic substances and use CEPA to regulate them.

The third possibility is to start from scratch with a new bill. I don't think anybody is enthusiastic about the idea of legislation for legislation's sake, but we would probably need to amend CEPA. We will probably need to create legislation for other parts of the approach to the large industrial emitters, so there may be some merit in simply starting de novo.

Finally, we could use provincial regulatory structures. The federal government might sign an MOU with the provinces, or some provinces, for example, and ask them to enforce the agreement.

The third possibility of new legislation and cooperation with the provinces is not mutually exclusive. We could build into new legislation opportunities for cooperation with the provinces.

We need to make a decision on this issue fairly soon, and we're hoping to go to cabinet before summer with a recommendation.

¹ (1535)

The second issue I want to draw to your attention is the question of how we allocate the 55-megatonne target across industries. There are really two ways we could come at this. One way would be for your negotiators to go to industry with a number. We could tell one industry they were 18%, and tell somebody else they were 15%, 7%, or whatever. We could come up with those numbers through engineering studies, modelling results, or analysis of financial data, or we could just say 15% across the board.

The other way to come at it is to not negotiate a number, but to negotiate a process that, in turn, yields a number. That is what the Dutch did. The Dutch asked their industry to benchmark themselves to be in the best 10% worldwide in emissions intensity. Then they accepted whatever number fell out of that. We could do what the British did and agree on what a cost-effective investment might be, have industry make those cost-effective investments, and then accept whatever number came out.

So there are two ways to come at it: negotiate a number, or negotiate a process that yields us a number. There are advantages and disadvantages of both ways. Again, before we sit down and begin formal negotiations, we have to make a decision about which way we're going to go. On this one we will be going to the ad hoc committee fairly quickly.

Finally, I'd just like to say a few words about timing. The plan indicated that we would aim at finishing this process by the end of 2004. That is because industry needs some time to assess their situation, make their investment plans, and put those investments in place. It can't be done overnight. I think three years is really the minimum reasonable time for them to do that. So you just count back from 2008. That means they need to be ready to go by the beginning of 2005, hence the target of being finished by the end of 2004.

Frankly, it's going to be very difficult to meet that target. It's going to be very difficult to have all of the covenants negotiated and signed by the end of 2004, but I think we can be substantially complete. What I mean by that is we'll have some covenants signed, and in the remaining cases industry will have clarity, if not certainty, on what government is going to want from them. They may think they can do 10% and that the government's holding out for 12%, but they'll have the number narrowed down enough that they'll be able to make their investment plans.

That's what I wanted to say, Mr. Chairman. I'd welcome your questions.

The Chair: We also welcome Neil MacLeod, director general, office of energy efficiency.

We'll begin questioning with Mr. Rajotte. You have ten minutes.

¹ (1540)

Mr. James Rajotte (Edmonton Southwest, Canadian Alliance): Thank you very much, gentlemen, for coming in today.

I have a series of questions. If I do not get through them all, I wonder if I can submit them to the chair so you can provide answers to the chair and he can provide answers to all of us.

My first question deals with your presentation. You've agreed that firms that took early action to reduce emissions would not be disadvantaged. We've heard from many industries and associations, and one in particular that strikes out is the chemical producers. They said they've taken a lot of action to reduce emissions. Between 1997 and 2002, they've dealt with what they call the low-hanging fruit, which is the easy stuff to deal with.

If you look at one particular company, NOVA Chemicals, they made a real concerted effort to be good corporate citizens. I've toured their plant in Joffre. It's a state-of-the-art plant, yet according to the plan by the government it still does not meet Kyoto standards. The changes NOVA are now required to make to cut further emissions are much more difficult to execute than changes other companies that did not take action between 1997 and 2002-03 are required to make.

I have two questions here. Are good corporate citizens like NOVA Chemicals that have already done a lot to reduce emissions going to get credit for what they have already done since 1997, versus the companies that have done nothing since 1997?

Second--and this is the point they made--do you not believe that companies like NOVA will cease to build new facilities like the one they had in Joffre in Canada, and will instead choose to locate them either in the United States or Mexico, which do not have to make emission reductions?

Mr. Howard Brown: I can't speak to the particular situation of NOVA; I don't know the details at this point.

I have just one small correction, observation perhaps. I'm not sure who told them they didn't meet Kyoto. It certainly wasn't me, and I'm the lead negotiator on this. We haven't engaged with NOVA or the other chemical companies at that level. There's an inference there. Maybe it's true, but I don't think they have any basis for saying that.

Mr. James Rajotte: They said they would have to make further changes to that plant in order to meet the Kyoto reduction targets. Is that not correct?

Mr. Howard Brown: I don't know whether it is or not, but we have certainly never said to them that was the case. I cannot guarantee to you that nobody in the Government of Canada has said that, but nobody in my group has said that, and we're the ones who have the responsibility for negotiating the agreement.

The Chair: In your fifth item, you agreed that firms that took early action to reduce emissions would not be disadvantaged. That would come into play here, if they were at the level they said they were.

Mr. Howard Brown: Rather than speaking about NOVA--we'll be sitting down to negotiate with them soon and I don't know the details--maybe I could speak hypothetically about a company. A company that has taken action and has made significant reductions in its emissions when others in its industry have not should be treated differently from those other companies.

We've had some thoughts on what principles you might use to determine whether a company has taken early action or not. We've put those out to industry. We're having a series of meetings with industry on subsectors, one by one, looking for their feedback. We're generally open to comments. It's not official government policy or a white paper; it's simply some early thoughts on how we might determine that.

In principle, a company that has taken action, has substantially reduced its emissions, is a leader in the industry, and is using state-of-the-art technology would be a good candidate for early action.

Mr. James Rajotte: The second question I have deals with the measuring of emissions. It's my understanding--and correct me if I'm wrong on this--that Environment Canada currently has the system or the model by which to measure emissions. It's also my understanding that their current system of measuring emissions does not take into account the economic impact of emission reductions.

Is this true? Does the Department of Natural Resources accept the measuring done by Environment Canada, or will it have a different system of measuring emissions?

Mr. Howard Brown: We're discussing the best way to measure, in cooperation with Environment Canada and the industry. I view our overall objective, in reducing emissions by 55 megatonnes in this sector, as minimizing the economic cost. I think everybody recognizes that compliance is just a dead-weight cost. It benefits no one. It doesn't benefit government or industry, and does nothing for the atmosphere.

We're trying to find a way, in cooperation with the provinces and industry, to measure once and report once. We should not have companies reporting fundamentally the same data multiple times in multiple formats to multiple government bodies. I don't know whether we'll be successful with that or not, but I've certainly made the point to the provinces. I think the provinces--as we have heard very clearly from industry--want us to do whatever we can to minimize the compliance burden. That's a principle I wholeheartedly agree with. I don't know where it will wind up, but it's certainly an objective we're working toward.

¹ (1545)

Mr. James Rajotte: My third question deals with a specific industry. You say you're going to be negotiating with the various industries. A clear decision was made--I'm not sure who made it--to exempt the auto industry, of the large industrial emitters. I would just like to ask who made this decision within the government, because we've heard different stories. Whether it was PCO, the environment minister, or Natural Resources, we haven't got a clear answer on that.

If other industries approach you and ask for this exemption, what will your answer to them be?

Mr. Howard Brown: I'm glad you asked that question because it's maybe an opportunity to clear the air a little bit.

Before I get into my answer, I have to tell you that I joined Natural Resources roughly in November of last year, so I don't have personal knowledge of this. The word “exemption” implies they would have been on the list, or were on the list by some criteria and were taken off. That's simply not the case. The emissions per dollar of output in the automobile sector are no more than 10% or 20%. In other words, the emissions intensity is lower, by almost an order of magnitude, in automobile manufacturing than in any other industry on the list.

The reality is that putting automobiles together is not very emissions-intensive. There's a large quantity of embodied emissions in steel, aluminum, plastics, and there are large indirect emissions from the electricity used, all of which will be dealt with in those respective sectors. But objectively, the emissions intensity in automobiles is far lower than in any industry on the large industrial emitters list.

Mr. James Rajotte: So just to be clear on this, they may not have been on the list and taken off, but they are exempted from making the 55-megatonne reduction. Is that true?

Secondly, is it because of their emissions, and at what level do you decide whether they have to make the megatonne reductions or not?

Mr. Howard Brown: It is factually true that the automobile sector is not on the list of large industrial emitters. That is because their emissions per dollar of output are far lower than anybody on the list.

I'm doing this from memory. My memory has never been great and it isn't getting any better with age, but I believe the cutoff used was 20 kilos of carbon dioxide equivalent per $1,000 of output. I'll certainly be happy to check on that and confirm it for you. The emissions in the automobile sector are below that.

Mr. James Rajotte: Can we get a list of all the large industrial emitters, with all of the emissions as you stated them, the decisions, and just exactly where you drew the line and why?

Mr. Howard Brown: Sure.

The Chair: Maybe I could also add to that question and answer, having worked in the auto industry.

In the last ten years, a lot of foundries, forge shops, and heavy-duty hardening and plating shops have been closed because of new technology. In other words, the auto industry is not using castings and forgings as much, and technology has made those industries obsolete. At the same time, they were the emitters, especially the foundries and forge shops.

Mr. Normand.

[Translation]

Hon. Gilbert Normand (Bellechasse—Etchemins—Montmagny—L'Islet, Lib.): What worries me in all this Kyoto paperwork is what is suggested by your presentation, which is that industries want more time and money and want to be supported by the government.

Currently, one cannot see how the government could fund all this. There is talk of 25% of the industry's sales, because in fact, we're talking about energy-producing industries: gas, oil, electricity, and we know the United States refused to ratify the protocol. They are currently the largest polluters in North America. And this is only the greenhouse effect; we're not even talking about acid rain.

I would like to know why this never came on the table, why a surtax is not imposed on all energy products sold in the United States. Quickly calculated, we sell for almost $60 billion of energy products per year to the United States. If we add a 5% tax, it would cover the entire cost of the Kyoto transfer for all Canadian industries, for all the years to come.

So somebody, at some point, will have to ask the question as to how we pay for this. In your deliberations within the department, you must surely have considered different ways to pay for this. In any case, I for one suggest it, and I would like to have your opinion on this. That's my first question.

Second, instead of requiring businesses to reduce their emissions compared, for example, to oil, a reduction in the production of oil could also be required. What I mean is this. This morning, I was looking at Hydro-Québec, who have just signed an agreement with Renault, if I'm not mistaken, for the production of 10,000 electric motors, including batteries. If Canada could become one of the countries where electricity and hydrogen would become the main source of energy for what I would call motor vehicles, then we could reduce our energy production and enjoy the benefits of the surtax we could charge to those who don't strive to do it.

So, I would like to know whether in your scenario, this is something that could be considered.

¹ (1550)

[English]

Mr. Howard Brown: On the first question, for the large industrial emitters as a whole, our climate change objectives are achievable without damaging their competitiveness. But I think that has to be assessed case by case. We'll want to look very carefully at individual industries and individual companies, and put some principles out for industry to think about, as to how we might assess competitiveness.

On the question of an export tax, I think you'd have to ask somebody from the Department of Finance for their views. I spent 15 years at the Department of Finance and I know they guard their responsibilities for tax policy very jealously. I guess I could say, in general, that export taxes are not an instrument of policy that we are often open to.

On the question of reducing emissions by reducing output, we said very clearly in the plan we thought we'd struck a balance between having a healthy growing economy and achieving climate change goals. My personal view--and I think the view of the government--is that economic growth and climate change objectives are indeed compatible. So the philosophy of the plan, rather than trying to reduce emissions by reducing output, was to balance growing output with reduced emissions.

[Translation]

Mr. Gilbert Normand: Yesterday, in an interview, the American ambassador said that the Americans will probably ask Canada's permission to run a pipeline through Alberta to link Alaska with the U.S. In addition, Canada will be asked to increase its energy production to meet their needs. Currently, almost half the country, in the east, does not have access to natural gas, while we sell it to the Eastern United States, including Boston and all that market.

I understand that the Department of Finance is responsible for managing finances and taxes, but in your scenarios, couldn't Canadian natural resources be used precisely to finance all this program, which otherwise would have to be supported by Canadians?

[English]

Mr. Howard Brown: I'm going to have to repeat my previous answer. I think my former colleagues at the Department of Finance would be very angry with me if I ventured into their terrain. I know from previous experience that earmarked taxes are not wildly popular at the Department of Finance.

Taxing a particular sector to pay for a particular expenditure is something I suspect they would philosophically oppose.

¹ (1555)

[Translation]

Le président: Mr. Bigras.

Mr. Bernard Bigras (Rosemont—Petite-Patrie, BQ): Thank you very much, Mr. Chairman.

First I would like to thank you for being here, at the committee. My questions will first deal with the report you tabled a few days ago on the reduction of greenhouse gases for 2001.

You announced in this report that Canada had reduced its greenhouse gases by 1.3% for 2001. When looking at this and analyzing sectors and reductions, I'm always a little surprised. I took a small table here that predicts the evolution of emissions between 1990 and 2010—you may be familiar with this table—and I compared it with the reductions in each sector of activity.

For example, the manufacturing sector, as we learned in your report a few days ago, has reduced its emissions by 18%, while in the evolution of emissions, a 3% increase is anticipated. The steel industry has reduced its emissions by 18%, while in the evolution of emissions, a 6% increase is anticipated. Pulp and paper industries have reduced their emissions by 11%, while a 15% increase is expected. As for other sectors of activity, such as natural gas, transportation and production, you announced, a few days ago, 150% increases.

My concern is that, in the end, the industries and sectors of activity that did their share and are a long way from the evolution you anticipated will be forced to bear the brunt of the reduction, while other industries, such as natural gas, will increase their emissions. What's even more of concern is that you have already begun to negotiate and have concluded agreements with certain industries, while you didn't do so with the most performing ones.

There is a principle that seems fundamental to me in the negotiations you need to undertake, which is that of fairness. This means that, in the end, the wait-and-see policy will have to be penalized.

So, what share do you have for the industries that decided to wait and see as opposed to those that take action and we know are already performing? In other words, what is the value of fairness and penalizing wait-and-see in the negotiations.

[English]

Mr. Howard Brown: I think I'd like to break the data into two parts. One, there's an increase in total emissions, but you have to think of that as partly a change in emissions intensity and partly a change in output. One reason why emissions in the oil and gas industry have gone up is because the industry has been growing very rapidly--more rapidly than manufacturing, as a whole. If you looked at the change in emissions intensity, the difference between manufacturing and the other sectors would not be quite as dramatic.

Secondly, the changes that have taken place between 1990 and 2000 in emissions intensity don't by themselves tell you very much about the opportunities for emissions reduction between 2000 and 2010. For example, a technological breakthrough that's in the process of being implemented in the industry could lead to quite dramatic reductions over a long period of time. So I think you need to go into a little more detail, and that's exactly what we're going to be doing.

Having said that, I have heard from many manufacturing companies, including aluminum, that they have taken early action. That's why we're consulting with industry to help us decide what criteria we should use to determine whether a particular action should qualify as early action or not, rather than just judging us case by case without any principles.

We have not yet finished our negotiations with the manufacturing industry--aluminum or any of them--but neither have we with any of the other sectors. So we're in pretty much the same position with all of the industries. In fact, I'll be in Quebec City tomorrow talking to the aluminum producers about exactly this question, among other things.

º (1600)

[Translation]

Mr. Bernard Bigras: But how can you explain, for example, that you have a second round of discussions with certain companies and certain sectors, while you didn't finalize agreements yet with other sectors of activity? That's rather disturbing.

What we hear from the outside is that you're negotiating and having discussions with certain sectors, large emitters, for the second round, while for other sectors of activity—such as manufacturing industries—, you have not even negotiated or don't have a negotiated agreement. So it's rather disturbing.

Second, do you still intend to sign a bilateral agreement with Quebec? If so, I would like to know what principles will guide you in this negotiation.

How much time do I have, Mr. Chairman? I have 10 minutes.

Let's go with these questions, for starters. I'll come back later.

[English]

Mr. Howard Brown: We're not negotiating targets for the second commitment period with anyone. It is true that some industries have raised concerns about the second period, and I think it's legitimate for them to put their concerns on the table. It's particularly been the case with some companies that are planning very large investments with very long lives. But we are not negotiating targets for the second commitment period with any industry.

I would say that our discussions with all of the industry sectors are in more or less the same state. My intention is to begin negotiations with all of the large industrial emitters through May and June. I started on that today with mining. As I said, we'll be talking with the aluminum people in Quebec tomorrow. I'll have a fairly busy next couple of months.

On the question of a bilateral agreement between the Government of Canada and the Government of Quebec, that's much broader than the large industrial emitters. I'm only a fairly insignificant part of the overall agreement.

Perhaps I could ask my colleague, David Oulton, to tell you where we are on that.

Mr. David Oulton (Head, Climate Change Secretariat, Department of Natural Resources): We have indicated to Quebec, and we indicated to all other provinces and territories last week, that indeed we are prepared to sit down with any province or territory that would like to negotiate a bilateral agreement with the federal government. We've had no discussions yet with any jurisdiction, because they're considering what they would like to do right now, presumably, but we've indicated to them that we have three objectives in mind.

We see these agreements as being fairly brief and pointed. They basically commit both governments to work in partnership; pursue common objectives under climate change; set out some areas where we have agreed to mutually work, and establish a list of priorities on areas where we will mutually work in each jurisdiction on climate change objectives; and set up an accountability mechanism so the federal government, along with the government of each province, will come back and review these agreements each year to make sure we're following through and progress is being made.

We've also indicated to them that these agreements are voluntary. They're a way of trying to order our relationships with an interested province or territory, but they're not mandatory. It doesn't mean that provinces and territories can't work and pursue particular government programs if they choose, without having an agreement. They're really a way of organizing for both the federal government and the interested province or territory.

We haven't had any responses yet because we just indicated to them at the end of last week that we were prepared to start discussions with those provinces and territories that were interested.

[Translation]

Mr. Bernard Bigras: I have one last very short question, Mr. Chairman. I've had the answer and I would have a last question.

In the 2003 budget, it was announced that $300 million would be devoted to targeted measures. However, there are no measures directly in the budget.

Could this amount of $300 million be included in the negotiations as part of bilateral framework agreements with certain provinces, based on fair distribution, of course? Since there are no targeted measures in the budget, it's therefore totally open. Is the $300 million amount open to negotiation with the provinces?

º (1605)

[English]

Mr. David Oulton: The intent of the bilateral agreements is not to have them set aside specific amounts of money and divide it up amongst each province or jurisdiction, but to provide a vehicle so if we decide we're going to work together on a particular program in the area of technology or in the area of promoting public education and outreach, those specific subagreements to this overall memorandum of understanding could have each jurisdiction committing a certain sum of money.

Indeed, as you noted in the budget, there was $2 billion announced. Of that $2 billion, $300 million was set aside for Sustainable Development Technology Canada to work on the science of climate change and other atmospheric issues. There's a further $1.7 billion that the government has to address, as how it sees doing those in terms of technology-targeted measures it would do on its own account or with the provinces and territories.

Indeed, some of the resources from that $2 billion could be used to work on specific programs that are of interest, either nationally or in particular jurisdictions. But it's not the intent to use the memorandum of understanding to carve up that overall budget amongst particular provinces or territories.

The Chair: Mr. Howard.

Mr. Howard Brown: Thank you, Mr. Chairman.

Just as an afterthought on cooperation with the provinces, I think there are two ways of coming at this. One is to negotiate a framework agreement or master plan, and David Oulton is working on exactly that. The other way is to look for practical areas of cooperation. One is top-down and the other is bottom-up.

I think all of the provinces and territories have said they believe we need to take action on climate change. They're spread out in a line. Some of them are closer to the federal position; some of them are quite far away. But even the ones that are quite far away could cooperate with the federal government on areas like measurement and reporting. We all have a common interest, I hope, in minimizing the compliance burden on industry. So there's a practical area where even parties that are otherwise quite far apart could cooperate. For others that are closer to the federal position, we could cooperate on compliance mechanisms, for example.

So I think there's a range of practical steps we can take. I certainly hope we'll be able to make progress on that. Cooperation isn't either/or; there are many vehicles and many ways of doing it.

Mr. Neil MacLeod (Director General, Office of Energy Efficiency, Energy Sector, Department of Natural Resources): Maybe I could add to Mr. Brown's response.

Over the past month and a half or so we've had a number of bilateral meetings at the deputy minister level with most provinces. There's certainly an appetite for the kind of thing Howard was suggesting. Some provinces would like to join us informally to have a program to encourage homeowners to make their houses more energy efficient, for example.

In many cases, such as British Columbia, it builds on partnerships that already exist, where we cost-share some programs to make buildings use less energy. So I think there are really lots of opportunities there.

The Chair: Thank you very much.

Mr. St. Denis.

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Thank you, Mr. Chair. Thank you, gentlemen, for being here. I have a couple of short questions if you'll allow them, Mr. Chair.

First I would like a clarification, Mr. Brown. There's a sentence I don't quite understand. I'm sure it's my fault and nobody else's. In the first paragraph on page 2 it says:

In other words, they would be allocated free permits covering approximately 85% of their expected emissions in 2010.

What's the meaning of “free permits”? I don't understand that.

Mr. Howard Brown: I understand entirely your puzzlement. I think this was written for Kyoto aficionados.

The idea here is that companies will be able to comply in a number of ways. One way, of course, will be to reduce their emissions. Another way will be to buy emission permits from a variety of sources. In order to comply, at the end of the day they'll need to have in their account with us the same number of permits as the emitted tonnes of carbon dioxide equivalent. We're giving them 85% of that gratis to start with, so they could comply if, by reducing their emissions by 15% per cent, what they had in the bank was exactly what they owed us.

A different way would be for some companies to not reduce their emissions at all but to buy those credits and give them to us. Then they would have 85% free, and if they bought 15% their credits would equal 100%.

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Mr. Brent St. Denis: That's the bookkeeping term for it.

In the weeks and months prior to the ratification of the protocol there was much hand-wringing and many reports in the press, particularly about the oil and gas industry's concerns--other industries too--about the protocol. Since the ratification there's been a lot less--almost negligible.

I recall reading an article in January or February on a U.S. or U.K. company--I don't think it was a Canadian company. It figured the cost to it of investing in the oilsands, because of the Kyoto protocol, was more or less negligible. It was part of a dollar per barrel--not a big expense. A couple of Canadian companies--Canadian Natural Resources and Petro Canada--more or less came to the same conclusion.

Can you characterize the mood of the large emitters community? Are they sort of buckling down to do their homework and get on with it? We don't hear the griping anymore.

I'd appreciate any comments, if you could.

Mr. Howard Brown: I think there has been quite a marked change in mood among the large industrial emitters. I don't think any of them, if they had the choice, would have ratified Kyoto. They're not happy about it.

But I think the focus of their concern has shifted from a rejectionist attitude of “don't do this” to more practical issues about questions like early action, competitiveness, how we measure things, how we report, how we minimize the compliance burden, and so on. In just the brief period that I've been on this file since early November, I think the tone has become very much more constructive and very much more oriented toward implementation.

Mr. Brent St. Denis: Is there a consensus that the costs to the industry aren't going to be as great, as a percentage of their total income, as they had imagined?

Mr. Howard Brown: That's certainly the case for many industries. As they do their analysis and put pen to paper, they realize that perhaps it's not so bad.

That said, I think there are particular industries that do have real legitimate competitiveness concerns. So in thinking through the criteria for competitiveness through the principles, we need to determine how to separate those people who have a genuine legitimate concern from those who are simply reflecting a bit of grumpiness over ratification.

Mr. Brent St. Denis: Finally, this is partly related to the answer to your first question. On the same page you say there is no functioning carbon market. It's still early days. Obviously a carbon market involves international consensus and will grow like currency, I suppose.

Is there any sense of how long it will take to get to a functioning carbon market? Is it a given that it will eventually evolve? If so, how long do you think that will take?

Mr. Howard Brown: I think there's absolutely no doubt that the carbon market will grow significantly and will, in all likelihood, be an efficient liquid international market. Part of our problem is that you can't really trade Kyoto permits until Kyoto begins. For the most part, they don't exist yet.

We'll likely see the derivative markets begin to trade in a much more liquid way before the actual spot market does. So people will start trading on what will happen. The futures market and the options markets will begin. I think we'll see that happening, but it's hard to put a time period on it.

We're certainly working with the international emissions trading association and its Canadian members to see what we need to do to develop that market. It's hard to put a precise date on it, but certainly by 2006 we'll see a fairly liquid market emerging.

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The Chair: Thank you, Mr. St. Denis.

Mr. Masse.

Mr. Brian Masse (Windsor West, NDP): Thank you, Mr. Chair.

I'll start with the credits and permits and that. Will there be any restrictions or consideration of maybe one jurisdiction or area that has excessive permit purchases versus others? Has that been contemplated? Will it relate to geography, environment, or any location? Will you be able to purchase them no matter where you are or types of industries are around you?

Has that been discussed at all, or will it be done by province quota, or anything like that?

Mr. Howard Brown: No. I don't envision any kind of geographic restrictions in Canada on the purchase or sale of permits. I think Kyoto envisions that most compliance will be through actual emissions reduction rather than the purchase of credits, but I don't think there's any issue with respect to Canada on that.

Mr. Brian Masse: With the auto industry, the big issue is not really the factory; it's the tailpipe. What is being done right now with the industry? I know that the State of Michigan did an incentive program of approximately $80 million and they now have the DaimlerChrysler hybrid engine, which they'll be producing for all of their vehicles for sale. I've met with them, and they won't be developing another facility in North America.

What has been done over here to maybe advance construction of those facilities in our country, and how does it relate to our other industries?

Mr. Howard Brown: I'll ask Neil to answer that. But just before he does, there are a lot of embodied emissions in a car, through the steel, the aluminum, the plastics, and so on, and they're not negligible. How they compare to the emissions over the life of the car I honestly don't know, but they're non-trivial.

Mr. Neil MacLeod: Perhaps I could speak to the 25% reduction and what's going on. That's your question.

We have begun discussions with the industry. The first slide deck on the plan was released around November. We're continuing at the company level and will continue through the spring and summer.

Some of the facts behind this 25% are important to keep in mind. We're usually talking about 25% below the standard known as the company average fuel consumption, or CAFC. Its analogue in the United States is CAFE. We often hear of the CAFE standards, but they're the same numbers.

In Canada today, based on the sales-weighted figures, we're already 8% below the standard. In other words, if you look at the cars that are sold, which is what we're talking about making improvements in, we're already 8% below that level.

In the United States, the National Highway Safety Traffic Agency, which is responsible for making changes to the standard, have already recommended, for light-duty trucks, a one and a half mile per gallon improvement. That sound like a small number, but on the base on which it's operating that's a further 7%. So if the Americans do nothing more than take that very modest improvement--and many people think much more than that will be done over the next ten years--it will put a further 7% on and we will, in effect, be at 15%.

I think the most interesting elements here are the facts that have come out of the auto industry themselves. In October, General Motors issued a major press release where they announced some new technologies that will be in automobiles--not pilot automobiles or some test automobiles, but in 40% to 60% of their fleet--by 2006. They listed those technologies and gave their figures on what the improvements in fuel efficiency will be. I'll just mention two or three.

One is called displacement on demand. The details aren't important, but basically the cylinders don't use the gasoline if they don't need it. In the words of General Motors, that alone will lead to an 8% to 20% reduction in fuel consumption. They listed a new six-speed transmission with a 4% to 8% reduction. There was a third, based on a clutch.

So their numbers alone showed these reductions, and they would build on the percentages we already have in the bank. So when you put these factors together, this 25% all of a sudden doesn't seem all that unusual anymore. In fact, that's been corroborated by the American National Academy of Science study released in late 2001. It showed that improvements from 25% to 35% are definitely doable with today's technologies and materials.

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Mr. Brian Masse: That's going to be dependent upon getting the older vehicles off the road and the newer ones with this technology on the road. Is that going to be passed on to the consumers? What are we doing about that, because vehicle purchasing is very expensive? If production of these technologies--and I use DaimlerChrysler as an example--won't be happening in our country and the good jobs are gone, what will we do about that?

Second, if you've been following the State of California's case, has our government considered participating in that? That is being challenged even by the American government right now. That could lead to significant emission reductions, because the standards you have identified are very complex and involve that particular thing.

Perhaps I can have your input on that.

Mr. Neil MacLeod: On the cost per se, there is no indication, certainly from General Motors, that the introduction of these technologies, which they are doing as part of their.... I don't want to diminish them, but these improvements are part of their ongoing advancement of their business, so we don't envisage there'll be price shocks associated with them. Given the percentage of their fleet they intend to put them in, the economies of scale will definitely take place there.

As for any measures we would have to assist consumers, David referred earlier to the $1.5 billion in new measures. Certainly there are possibilities there, and not only now; there will be further monies in the future. There are certainly measures that have been analyzed that would help the consumer. They may go ahead, but will depend on cabinet decisions.

On California, we are watching it very closely. California is not alone. Many of the major eastern states are of the same mind. You're quite right that it will likely be challenged. Whether it will be by the U.S. government or the auto manufacturers, I'm not sure. Our understanding is it will probably be before the courts for about two years, so we're watching.

Mr. Brian Masse: My understanding is the federal government in the United States has actually intervened now. I could be wrong, but that's just going by the top of my head right now.

Will we consider taking a position on it if it's going to take place? It will affect the business and manufacturing facilities here.

Mr. Neil MacLeod: All I can say for now is we're monitoring it closely. I can't say what kind of decision we would take. It would be hypothetical, based on a hypothetical outcome.

Mr. Brian Masse: Thank you.

The Chair: Mr. McTeague.

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.): I want to shift a little bit to the practical side of what we advocate here with Kyoto.

If tomorrow I were to tell you that a company in my riding could improve the efficiency of the fluorescent light by 38%; that I had a very cheap product that could increase the horsepower output of a pickup truck or take a diesel-powered truck and improve its efficiency by 50%; or if I could burn coal with zero emissions, what would your department do, in terms of receiving these potential technologies and translating them into credits for companies to use them immediately overnight? In other words, where is the practical side of what we're advocating here?

Mr. Howard Brown: Perhaps I could answer the slightly broader question of how our department could help those companies, because I think Neil's work in the office of energy efficiency is an important part of the puzzle.

The clean coal answer is very straightforward. We will need to negotiate or, in the end, legislate an emissions reduction obligation for coal-fired plants. That will mean an extra cost will be involved. Companies will be able to avoid those costs by making the investment and putting the clean coal technology in place.

That being the case, I'm not sure we need to do an enormous amount more than that to encourage the product. I think the market will work its magic and the inventor of the technology.... We'd be delighted to have his name, by the way.

Mr. Dan McTeague: It's Dr. Andrew Chizmeshya. He's a Canadian researcher and has the patent on it. It was delivered by the U.S. Department of Energy. He asked to come to Canada to work under OPG for $100,000. They didn't think sequestration was a great idea, except there are seven plants now in the United States, all in the area of 1,500 megawatts, that are producing energy. He would love to come and talk to you about this.

Before continuing with your answer, I'm trying to figure out how we can have an open approach to people who come to see us in our constituencies--I think Mr. Normand alluded to this a little earlier--with new ideas and ask how they can access the government. The first thing I do is phone someone from the minister's office, and three to eight weeks later I might get a phone call back.

In the meantime, these technologies do exist. They are not hocus-pocus. In fact, when I mentioned the one about the truck, Mr. Chair, you'll be very happy to know, having a bit of a background in carrying 40,000 kilograms of weight, a truck with six cylinders can start in 12th gear on a dead start and build up power by using a very small amount of hydrogen for every 900 kilometres at $3 a bottle, literally like a pop bottle. That person has difficulty accessing your department, the Ministry of the Environment, about their product.

In many cases they may be looking for certification, and some may be looking for money. But the question is, how do we convey to these people their ability to trigger an interest on behalf of the government, which has advocated a reduction?

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Mr. Howard Brown: This certainly falls into Mr. MacLeod's area of responsibility, and I'm sure he'd be very open to meeting with people who have these proposals.

Mr. Neil MacLeod: I guess there are a couple of answers. I know part of your first question had to do with how they can get credit within the sector. I guess that isn't the point. The point is really how can they do something with this technology; what are we going to do to help them deploy it?

I guess there are a couple of answers. One is that with the announcement by the Minister of Finance of $2 billion for climate change, there will be definitely an increase in demand across the board for technologies to actually improve energy efficiency, reduce energy consumption. At an aggregate level, that is definitely going to happen. No one has said this is the last step toward Kyoto either. So we are definitely on a track toward making huge investments in smarter energy use.

I would also like to add, as I think David mentioned, $250 million of that $2 billion is for an organization called Sustainable Development Technology Canada. Unlike some others, where that money is solely for basic R and D--going into the laboratory and getting at first principles--that money is also specifically earmarked for marketing technologies that are ready to go into the marketplace but are just new. They're not common enough that suppliers would commonly use them, but they are ready to go. So there's a significant amount of money there.

There are also other technology pockets that exist. In order to help with the questions, we could provide the committee in writing with a list of all the technology deployment funds/organizations that are in place now, with a thumbnail sketch of how they work. You could have that available and be able to readily answer these questions.

In the meantime, and in addition, as Mr. Brown suggested, I'd be glad to talk with any of these people.

The Chair: That would be an excellent item. We'll make sure it's circulated amongst the committee, and have it readily available.

Mr. McTeague.

Mr. Dan McTeague: Thank you, Mr. MacLeod. In all three instances I have indicated, the technology is there. In the case of the 38% I alluded to as a hypothetical, it deals with yet another person who was formerly chief engineer at OPG. He was responsible for the retubing of the nuclear reactors years ago. He patented that, was successful, and brought the cost down. His next step is at that level, but unfortunately he may not have the $500,000 required to get everything ready and up to market level.

So Mr. MacLeod, I have a lot of business going your way if you're interested.

Thank you, Mr. Chair.

The Chair: Mr. Mills, welcome to the committee.

Mr. Bob Mills (Red Deer, Canadian Alliance): Thank you, Mr. Chair. Thank you, gentlemen.

I have a series of questions and some responses to some of our colleagues here.

First of all, I guess I would ask who your boss is. I understand the ad hoc cabinet committee now chaired by Mr. Vanclief is where everybody reports on Kyoto. In fact, the Department of Natural Resources and Environment report to Mr. Vanclief. I'd like to know how that creates more efficiency in dealing with this, and how that's working.

Second, in answer to Mr. St. Denis, I'm hearing from the provinces and companies that the federal government committed to a 240-megatonne reduction, but has now lowered that target to 140 megatonnes. It is largely going to take credit for 80 megatonnes of clean energy credits with the U.S., even thought that's been rejected by Europe, and so on. I'd like to know your comments on that. That's certainly what they're feeling, and that's why they're not upset anymore.

Third, as Mr. McTeague said, how do you access this $1.7 billion dollars? I have all kinds of inventors standing at the door of my constituency office. They say they get no answers from Environment Canada or Industry Canada. Where do they go and how do they get there? Some of these are high-tech people who probably have some pretty good ideas.

Fourth, I guess I wonder how Canadians are--

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The Chair: Let him answer those first few before we forget about the question.

Mr. Howard Brown: There was a question about my boss. My boss is George Anderson, deputy minister of Natural Resources Canada.

Mr. Bob Mills: Who's his boss?

Mr. Howard Brown: His boss is Mr. Dhaliwal. I guess like all deputies he has two bosses--the clerk and the minister.

Mr. Bob Mills: Who's in charge of Kyoto? That's what I'm asking.

Mr. Howard Brown: Somebody described this as the mother of all horizontal issues--a horizontal issue being the Ottawa buzz word for things that cut across departments. It does inevitably cut across departments.

It clearly involves the Department of Finance. There are fiscal issues and we've heard questions about some of the tax implications. It clearly affects Natural Resources, since we're the department responsible for energy. It's hard to imagine an issue like climate change that does not involve Environment Canada. It involves Foreign Affairs. When we have ADM meetings on climate change there are quite a few people in the room.

I know it's not a very satisfactory answer, but the fact is a lot of people are involved in managing different aspects--

Mr. Bob Mills: It sounds like the UN.

The Chair: Excuse me, Mr. Mills. I think we were both going the same way. Who is leading it? Is there a leader?

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Mr. Howard Brown: David may want to touch on that; he has more experience than I do. I know who's leading on large industrial emitters, and it's me. So that part I'm very clear about.

There was a question about clean energy exports, and I think David will probably deal with that as well.

I'm sorry, I've forgotten what the other one was.

Mr. Bob Mills: We've committed to 240 megatonnes, and industry and eight of the ten provinces are saying, “That's right, but we're not really going to have to achieve that. We're going to claim the transfer of 80 megatonnes of clean energy because that's what we think we should have got”.

It's interesting because I was in Britain three weeks ago and they said the same thing. They're not going to achieve their targets. Japan's not going to achieve their targets.

Mr. Howard Brown: Nobody in industry has said to me, “Don't worry, we're happy to sign on to your target because we're going to claim credit for clean energy exports”. So there may be people out there, but nobody I've negotiated with has said that. If they did, I would quickly disabuse them of that notion.

Mr. David Oulton: Just to deal with the 240 megatonnes, our target has not changed. It's 6% below 1990 levels, and based on our best estimates of business as usual that means you have to get to about 240 megatonnes of reductions.

We did have an issue in the international negotiations, where we basically maintained that because of our exports to the U.S., it made sense for Canada to get a credit for our cleaner energy exports. We didn't get acknowledgment of that in the current round of discussions.

In essence, we've said in the international negotiations that we didn't get acknowledgment of it this time around, but this convention lasts for more than the first commitment period, from 2008 to 2012. This is still an issue on the table that we will reserve the right to come back to at the appropriate time.

Mr. Bob Mills: But the European countries say they'd have to give it to Russia then, and they don't want to give Russia more credits than they already have.

Mr. David Oulton: We understand their arguments, but we think we have a good argument. We understand we didn't win it this time around, therefore we've put in place the plan that would get the 240 megatonnes. We said, “We have a marker on the table because we think we have a point about cleaner energy that needs to be acknowledged, but we'll come back to it at the right time”.

Mr. Bob Mills: Going to the cost of carbon credits, in Johannesburg Mr. Putin himself said, “We must get $50 a tonne for carbon. That is the bottom line for us to sign on, for Kyoto to come into effect”.

The British said three weeks ago they believed the price of carbon will be $35 a tonne. We have capped it at $15 a tonne. Obviously there's going to be huge implications for Canadian taxpayers if it ends up at $35. Because the Russians see it slipping away, they are lowering their price and it may well get to our $15, but nobody knows that. If I were investing money in a company, I would certainly not like those kinds of huge questions out there that go unanswered.

I come back to just basic Canadians. We're asking them to reduce their emissions by 20%. We don't know if we're going to give them credit for doing that. I put in triple-pane glass 10 years ago. Are you going to send me a cheque so I get the credit for that?

How are you going to convince Canadians to make that reduction? How are you going to measure it? How are you going to get them to buy into the need when the three Great Lakes froze over for the first time in 100 years? I drove through nine feet of snow to get from Red Deer to Calgary on Sunday. We've had the greatest snowfall in two days that we've seen in 100 years. How are you going to convince me that I have to reduce my carbon output by 20%?

Mr. Howard Brown: I must say there were times this winter in Ottawa when I thought I might be on the wrong side of the climate change issue. But in all seriousness, there's a difference between long-term trends and year-to-year movements. I don't think you can infer much from one year to the next.

As to how we're going to convince Canadians on the one-tonne challenge, I'm not sure we have the right people here today to--

Mr. Bob Mills: Is there a plan?

Mr. Howard Brown: I'm sorry to be bureaucratic about it, but it's just not an area where I have a lot of expertise.

Neil will pick it up.

Mr. Neil MacLeod: We mentioned the many items that are being looked at to make use of that money in the budget. Certainly one of them is the idea of a one-tonne challenge, where we actually get out there and, through an aggressive social marketing program, not only try to convince Canadians to reduce their emissions and explain to them why it's important to do so, but give them some tools and products so they can do it.

Since we first started talking about this in the document that came out last November, we've found what I would almost call a groundswell of interest by consumers saying, “Okay, we'll do it, but help us out here. What do we do?”

That's certainly one of the areas that's under serious consideration for funding for the first tranche of money from the budget.

The Chair: Please carry on with one more question.

Mr. Bob Mills: I sat in the House in 1997 before Kyoto and listened to the lack of planning prior to the environment minister leaving for.... There was the Regina meeting and then he went off to Kyoto. The Australians had done a lot of economic planning, and talked about the difficulties they would have achieving targets. They ended up at 8% above 1990 levels.

Canada, on the other hand, decided to try to beat the U.S. The U.S. went for 5% below 1990 levels and we went for 6% below 1990 levels. There was no understanding, because I sat in committee and asked questions like, “How are we going to do this? What's the plan?”

I'm concerned now that we're going to begin in 2005 to negotiate from 2012. The Conference Board of Canada indicates the same concerns. Are we going to go into those negotiations with as little planning as we did with Kyoto? We went in there and didn't have a clue. Only now are we starting to even come close to having a plan, but this is five years after we signed the darn thing.

It again comes back to who's in charge. Who's doing the planning? What sort of long-term thinking are they involved in?

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Mr. David Oulton: It's quite right that the negotiations on the next commitment period will start as early as 2005. Indeed, we internally--the federal government collectively--are now beginning to look at what we need to do in order to get our planning and negotiating positions in place for 2005. It's not very far down the pike, in terms of planning time.

There's no doubt that you learn by doing, and we've had a fairly challenging last five years learning about the negotiations of the Kyoto protocol. It was not just negotiated in 1997; the final negotiations were really only completed about a year and a half ago.

We thought we did a fair amount of homework, and indeed we did if you just take it by the volume of trees cut down to look at various modelling studies and analytical works. But we've learned how complicated it is and how difficult it is to ensure you have a good understanding--as Howard's finding out now--of what it means to do something, in terms of a reduction, in a particular industry sector.

I think we are going to be in a much better position as we go into 2005. Those negotiations are going to take easily three to five years, but having learned what we have over the last five years, we're going to put that to good use in preparing for 2005. Indeed, all countries--and I forget which comment was made earlier--are learning that it is a challenge to simply put in place the necessary plans and actions to get to roughly the minus 5% that all of the OECD countries agreed they were going to do.

We're all learning as we go along what it means to put in place plans that will actually get you reductions. When it comes to negotiations in 2005, we and all the other countries that are going to be sitting around the table will have benefited and learned a great deal from our experience. So I think we will be a lot better off, and we'll be negotiating with a group of OECD countries that will be a lot better off, in terms of their understanding of what it takes to go to the next commitment period.

There's no view right now on what that next commitment period will look like, whether it's Kyoto, an extension of what we have, or a further reduction. An awful lot will depend upon how things are going and what progress we and other countries make as we get toward 2008.

I think it's going to be a tough negotiation and will take a long time, but we and everyone else will have learned a great deal from our experience over the last five years and the next two or three years, before we start really getting into it seriously.

The Chair: Thank you, Mr. Mills.

Mr. Bagnell.

Mr. Larry Bagnell (Yukon, Lib.): Thank you.

My riding is Yukon, so my questions are related to that.

As you know, we've been lobbying hard for the Alaska Highway gas pipeline. It would bring tens of thousands of jobs to Canada, which would be great. It would put Canadian gas in Yukon and take out Canadian gas to run our northern cities.

Of course, natural gas creates carbon--greenhouse gases, and this is probably the largest pipeline in the history of the world. People ask how we can do two things that are diametrically opposed: create a project that will make all these greenhouse gas-producing liquids accessible, and at the same time sign Kyoto.

Mr. Howard Brown: I think anyone who looks at the long-term energy future, going out fifty years, thinks there will be a significant role for hydrocarbon fuels. I don't know anyone who thinks that renewables or other clean sources will completely displace hydrocarbons in the foreseeable future.

Gas will continue to be important. Given that gas is so clean compared to coal, you can certainly have a significant reduction in emissions, even while your total hydrocarbon source of energy remains the same. So I think our climate change objectives and increasing our supply of natural gas are not only compatible, but in a sense kind of mutually reinforcing.

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Mr. Larry Bagnell: Given the fact that climate change is more dramatic in the north, has a larger effect, and is probably moving faster, are plans any different for implementation? In some areas, for instance, where it affects the migration of the caribou herd, it could lead to wiping out an entire nation of people. I'm just wondering if our plans in the Arctic are cognizant of that critical and rapidly advancing climate change.

Mr. Howard Brown: I was asked who was responsible for climate change, and I said I was responsible for the large industrial emitters part of it. I won't take ownership of the rest. I will say that as we do that we are being sensitive to the commitment we made in the plan. I highlighted at the beginning that no region or jurisdiction in the country would bear an unreasonable burden. So we are trying to analyze, as we go along, what the impact will be on each jurisdiction.

I know there are particular industries in Yukon, such as mining, that are large emitters, and they're a very important part of the economic base there. So we'll have to look at that and take that into account as we go ahead.

Mr. Neil MacLeod: You can look at it as whether we are doing more for sources of emissions in the Yukon, but in a sense that doesn't really get at the problem because the problem is really an impacts and adaptation issue. We do have an impacts and adaptation group. Unfortunately they're not here this afternoon, but we could certainly refer you to them.

As you know, for point sources in Yukon, an awful lot of work has been done with the Yukon government and the federal government. The first inter-jurisdictional solution centre was opened just two years ago in Whitehorse. I believe you were there with Minister Goodale at the time.

I would say Yukon is probably the one jurisdiction in Canada where we have been most active and have had the most success partnering, but others would have to deal with the deeper issue of the impacts and adaptation.

Mr. Larry Bagnell: I was thinking of the impacts, not the emissions.

Just in general--maybe you're not the right people to answer this--there's climate change, which is partly man-made and partly not. In the federal government's strategy, is there a good balance between reducing our emissions--given that they're going to be increasing anyway to some extent--and adaptation? There's no use spending all our money reducing emissions while people are going out of business, or nations are becoming extinct because they're not adapting.

So are we putting sufficient resources into adaptation, as well as looking for resources to reduce emissions?

Mr. David Oulton: If I might try to respond to that question, there are two things. First of all, we are actually talking. I spent some of last week on the phone with colleagues in Yukon.

The issue of how to tailor climate change programming, whether you're talking about the reduction side or the impact and adaptation side for a particular province or territory circumstance, is one of the reasons for trying to do these umbrella bilateral memoranda of understanding. So we hope we will be sitting down with them over the coming months and working out what they see as their priorities and what we can work with them on, with respect to their priorities.

In the specific area of impacts and adaptation, we've had discussions with federal, provincial, and territorial energy and environment ministers. They agreed a little less than a year ago to work on developing a strategy for looking at impacts and adaptation.

But having said that, the straightforward answer to your question is we are really just starting to focus on that right now. Climate science and understanding it on a regional basis is just now getting the kind of resolution we need to be able to draw some inferences about what the differential impacts are going to be on the prairies, versus the Great Lakes area, versus the north, for example.

So we're getting enough from the science and the anecdotal evidence through the north, as we've heard, to start understanding what some of the impacts are going to be. The issue then will be trying to prioritize what to do first. We're just starting to do that now.

Frankly, we're no different from any other jurisdiction. Most other jurisdictions in the world have been focusing on the mitigation aspect first. They are only now beginning to ask: “If we think we understand the science and this is going to happen to us anyway over a period of time, with lots of cycles to it, what do we need to do to start getting ready for the change that we're not going to be able to avoid?”

That's certainly a very pressing issue because Canada, interestingly enough, is potentially one of the more affected countries, in terms of the impacts of climate change, particularly in the north and in the prairie regions.

º (1650)

The Chair: One more.

Mr. Larry Bagnell: I appreciate all the money you specified in the last budget for the north for our centre. We're also looking at a megaproject, maybe the biggest one since Confederation railway-wise, joining the Alaska railway and the B.C. railway with 1,000 miles of new rail.

I assume, of course, you would all be supportive of that because of the great reduction in greenhouse gases that would occur. One train, as opposed to 200 trucks, would certainly reduce greenhouse gases.

Mr. David Oulton: I am certainly aware of it. I don't know enough about economics and the environmental impacts to actually make a clear statement.

There is no doubt that rail transportation in freight is one aspect of transportation and what it means to climate change that we'll be looking at. So we're aware of that; we just don't know enough about the net puts and takes yet.

The Chair: Thank you, Mr. Bagnell.

Monsieur Bigras

[Translation]

Mr. Bernard Bigras: Thank you, Mr. Chairman.

I would like to get back to the bilateral agreements. You will find me persistent, but that's my job. I would like to know what a bilateral agreement with a province would represent in terms of reduction objectives.

In the end, in a given region for example, will you establish reduction objectives by sector of activity, or will you achieve an overall objective for a province while allowing them to take the steps they want to achieve the desired objective? In other words, will you establish sectoral objectives by province, or will you wait, for example with Quebec, for them to reduce greenhouse gases, say by 6%, no matter what means they use, the important thing being to meet the 6%? That's my first question.

[English]

Mr. David Oulton: We're not using the memorandum of understanding to set out specific targets or divide up minus 6% per province or territory. Frankly, our experience over the five years from 1997 to 2002 was that you could not negotiate a split of the objective amongst the territories and provinces. You wouldn't end up getting a mutually agreed target.

So we're going at it a different way and focusing on where we have mutual agreement on specific mechanisms we want to use in particular areas. Indeed, with a particular jurisdiction, whether it is Quebec or another, we can decide to focus on a particular program--in the area of reducing residential or commercial energy use, for example--and set some objectives for what resources we are going to put in and what we are going to target as particular reductions in a particular area.

So our focus has not been on trying to divide it up explicitly among provinces and territories, because our experience has been that we cannot get agreement on that. But if we focus on where provinces have priorities, where we share those priorities, and then try to negotiate specific subagreements on where in particular areas--whether it is technology or working on partnerships for reductions in particular sectors--we agree we will use mutually reinforcing tools, then we can agree to work to a specific objective in a particular area.

I don't know, Neil, whether you want to...whether that covers it reasonably well.

Mr. Neil MacLeod: No. That's fine.

[Translation]

Mr. Bernard Bigras: I don't see why we cannot agree on reductions by province.

I think, for example, of Europe. You are probably familiar with the triptyque model, where 15 sovereign countries managed to agree on a fair distribution model. Why couldn't we agree on the basis of fair parameters?

Climate is another issue. We all know that the climate in Canada is not the same from coast to coast. Energy efficiency is not the same. The economic structure is not the same. Demography is not the same.

So, couldn't we use fair parameters, as Europe did, establish reduction objectives in a bilateral agreement, define an overall reduction objective, and require that the province achieve results, i.e. to apply the measures they want to meet their objective? If certain provinces wish to apply measures in the transportation sector—this is probably what Quebec will need to do, in my opinion, because this is where efforts should be made—, they are free to do so. But why not allow this flexibility, which would in fact enable the provinces to really cooperate and collaborate? Why not consider this? If it was done elsewhere, why not in Canada?

º (1655)

[English]

Mr. David Oulton: Thank you, Mr. Chairman.

We actually explored with the provinces collectively, back in our mutual work with them on climate change programs between 2000 and 2002, whether we could arrive at a common understanding for burden sharing--how to equitably share the responsibility across the country. We looked at a number of different models and formulas for doing it, including what was called the European triptych model.

We discovered that the complexity of that model and the differing views of what equity meant to individual jurisdictions meant we could not arrive at a mutual agreement. We had further reflection, after not having an agreement.

You asked why Europe could do it when the Canadian provinces, territories, and federal government had difficulty. The most common answer, although I don't think it's the only answer, is that in the European case they had good fortune--circumstances, serendipity--in a couple of jurisdictions.

The United Kingdom shifted from coal to natural gas over the latter part of the 1990s and into 2000. Germany, because of the expansion of West Germany into greater Germany with East Germany, was able to renovate East German plants. So there were situations where a couple of countries could take much larger targets than other countries and assumed the burden voluntarily because it was very cost-effective. Indeed, that's what both Germany, in the European model, and the U.K. did. That allowed for reduced targets for places like Spain, France, and Holland.

In Canada, we didn't have a similar situation where any one province could take a large burden to allow other provinces to take smaller burdens. It just was not on the negotiating table. We didn't have that benefit, and that's one reason why people thought it wasn't going to work as easily in Canada as it did in the European Union.

Mr. Howard Brown: I spoke earlier about the need to minimize the economic cost of achieving this reduction, when we're talking about the large industrial emitters, and the very real concerns industry has about differing federal-provincial regimes. Having 10, 11, or 13 different regimes with different reporting requirements, different measurement standards, and different targets is probably the most inefficient way to do this. By doing this on a Canada-wide basis you really make life much easier for business and you're much more efficient.

It's also more equitable to deal with it on this basis. It's very hard for me to understand why a pulp mill, for example, on one side of the Ottawa River should have a different standard or be treated differently from one on the other side of the Ottawa River.

I suppose one could ask where the constitutional authority lies. I'm certainly not an expert, but lawyers at the Department of Justice tell me there's no question about federal jurisdiction. So it seems to me there are very real benefits to doing this on a national basis.

» (1700)

Mr. Neil MacLeod: Perhaps I could also add, along the lines of targeting a province versus a sector of the economy, which is the kind of approach we're taking now, we have already, prior to any bilateral agreements.... I mentioned earlier an example in British Columbia, but one that would be of more interest is in the province of Quebec. Absent any agreements on being able to bring their interests to the surface, we have a program at the national level called the commercial building incentive program, where we actually pay people building new buildings if they make them more energy efficient than the norm.

In the province of Quebec, Gaz Métropolitain has decided to make use of our program and partner with us because they have a very intelligent interest, I might say, in making sure.... It's such a waste to build new buildings that aren't as energy efficient as possible that they partner with that program and actually top it up to add an even better incentive in the province of Quebec.

So there are examples of where we've worked things out where there are specific interests, without any need for recourse to a kind of province-wide target.

[Translation]

Mr. Bernard Bigras: What I have a problem with is your definition of large emitters. We find in this definition industries that did their share in the past compared to others that did not, whose emission evolution is different, and for which the same levels of reduction will be required. It seems to me that you don't need a course in Economy 101 to know that marginal costs will be different. That's what worries me.

If you can guarantee that the same reduction objectives will not be imposed on companies such as Alcan, who did its share in the past and continues to do so, as those that will be imposed on companies that increase their emissions by 300%... It's as if, Mr. Chairman, one would ask a 120-pound person to lose 10 pounds. It's more difficult for that person to do that than for a 300-pound person who also needs to lose 10 pounds. So, it's the marginal cost principle.

I was not looking at anyone around the table.

You must understand that what it means is that there must be fairness in the system you want to develop. Otherwise, polluters will be rewarded, and energy-efficient companies will have to pay.

[English]

Mr. Howard Brown: I think there's a basic misunderstanding here and I haven't been clear.

We haven't yet decided what the target will be, so I don't think it's quite accurate to say we're asking everybody to do the same thing, regardless of what they've already done.

If you think about the Dutch approach and benchmarking, for example, you're asking people to be leaders worldwide. There may be industries in Canada that are worldwide leaders in emissions intensity and will not need to do anything more. Maybe other industries will have to do a bit to get into that category, and other industries will have to do a lot. But that's one way of coming at it. The amount of additional effort required could be quite different for different industries.

Secondly, just suppose we took the opposite tack and asked everybody to do 15%. Then there would always be a qualifier--15% with adjustment, if needed, for competitiveness and early action. It's quite possible that if we asked everybody to do 15% with those conditions some industries would have no additional effort to make because they could show they had taken early action and had done everything that could be done.

So we're at the beginning of a process, not the end. I think it's a bit early to be evaluating whether we've been successful in equalizing marginal costs, because we really have not gone very far. I'm only just beginning this month my negotiating sessions with industry.

The Chair: Are there any more questions over on this side? No.

Mr. Masse.

Mr. Brian Masse: Just to follow up on transportation, rail transportation, for example, was noted earlier. Will there at least be recommendations to pass to other departments about alternative developments of national infrastructure that could lead to some Kyoto reductions?

I'll give you an example. In my constituency there's a rail tunnel that's a double-stacker, and we need triple for the cars. DaimlerChrysler and other auto dealers used to use it extensively but cannot now, or choose not to. It would alleviate a lot of smog, congestion, and a number of different things with existing infrastructure right now. But the way the rail system works right now, it's not profitable enough for Borealis to do the borrowing on it as a lone project.

Is that something that can be explored under this? Are we going to go down the road where things like that will be looked at? I know it's more of a regional thing, but it's a very significant thing in the larger reduction targeting.

» (1705)

Mr. David Oulton: That is a good question. It was noted in the budget that with the $3 billion that was set aside for the next phase of infrastructure expenditures, we were going to look at how we could use those funds to meet a variety of objectives, including those relevant to climate change.

A related but separate proposal now going forward for discussion amongst ministers is: what is the basis for the new infrastructure program; what are the criteria that should be used; and what sorts of projects could it entertain? I can't answer your question definitively because that's one of the items for discussion.

From a parochial climate change perspective, which is my optic on it, we're trying to ensure there is a climate change optic on decisions that are made on infrastructure funding. It doesn't mean that will happen, but it means it will be taken into account when decisions are being made.

Mr. Brian Masse: Where would a company or community go at this time if they could demonstrate a significant reduction in benefit with a project such as that? The government's giving a number of considerations right now that actually induce more climate problems with another couple of recommendations.

One of the impediments for a real solution is the fact that right now on its own it just can't be done; it's not within the parameters of profitability. So where would you go with that to explore the viability?

Mr. David Oulton: There is a separate group within the government that is looking at the infrastructure proposal. The hope is that there will be an announcement fairly shortly, because they're following up on the budget. While I can't give you the specifics, there's an intention to try to get something out between now and the summer on the government's intentions in that area. That will provide some sense of where to go, in terms of applications and interest in that area.

You can never make promises about when ministers will make decisions, but the desire is to try to get a focus on the infrastructure group of decisions as early as possible. I know they're in the same line as we are, in trying to get ministers' attention.

Mr. Brian Masse: So there is an emphasis on that. It's good to hear because we could continue to pave roads and block other really viable options, and we're really behind.

Mr. David Oulton: How you look at infrastructure is very different from one part of the country to the next.

The Chair: Mr. Bagnell.

Mr. Larry Bagnell: Given that a lot of targets would be reached by energy reduction, thus making the company more efficient and more cost-efficient; that the government is going to be partner in this, and industry is only paying part of it; and that the United States hasn't signed Kyoto, is there a chance we could be charged with trade subsidies?

Mr. Howard Brown: The lawyers will tell you there's always a chance. I think it depends on how it's done. But that is one issue we need to keep our eye on, and the lawyers are looking at exactly that. I think we'll do what needs to be done to make sure it doesn't happen.

Mr. Larry Bagnell: I guess a lot of the countries that have signed Kyoto would also be on our side in a feud like that.

The Chair: Mr. Rajotte.

Mr. James Rajotte: I just want to clarify a few issues.

On page two of your presentation you say there is no functioning carbon market. Then you talk about the commitment that industry would be able to purchase carbon credits at a price of no more than $15 per tonne. The government will assume the risk.

Speaking hypothetically, if the market does turn out to be $20, $25, $30, or $35 dollars per tonne, which does not seem unreasonable, and the government is assuming the risk, what exactly does that mean? Does it mean general revenues will be used from government revenues to make up the difference between $15 and $30?

» (1710)

Mr. Howard Brown: It's very hard to know precisely where carbon prices will be because the market isn't really operating. There is lots of data on prices of particular points on the cost curve, though. We know, for example, that the prototype carbon fund at the World Bank is able to achieve a tonne of reduction for something in the order of $8 U.S. The World Bank is kind of the gold standard because it's so well documented and they need to jump through so many hoops and stuff. So one would think that's an expensive tonne of carbon.

There's lots of data, anecdotal evidence, and experience from other countries in methane capture from landfills, for example, where the price is in the order of $2 a tonne internationally in developing countries--

Mr. James Rajotte: I guess my question is not what you think the price will be. If it's higher than $15 a tonne, it says the government will assume the risk. In what manner will it assume the risk?

Mr. Howard Brown: There are two possibilities, hypothetically, if the price of carbon turned out to be higher than $15. One is that general revenues would pick up the difference. The other is that we'd use general revenues to create incentives for companies to reduce their emissions, and hence their demand for credits. I think you'd need to assess the economics at the time.

Mr. James Rajotte: Okay, thank you.

On page four, under consultations, you state that industry is looking to the Government of Canada to contribute “in terms of positive financial incentives to encourage emissions reductions”.

Can you identify some specific positive financial incentives that you're recommending?

Mr. Howard Brown: I'm not sure I said I was recommending anything. I was just reporting on the kinds of initial comments we've heard from industry. I think many industries would like tax credits or accelerated depreciation. We've certainly heard that many times from industry.

Mr. James Rajotte: I do want to return to who is ultimately in charge and responsible for Kyoto. I think it's a crucial question. Now the deputy minister of environment is indicating before the environment committee that the Minister of Agriculture is in charge of this ad hoc cabinet committee. Frankly, as a parliamentarian I'm very confused about who is in charge of Kyoto, and I think a lot of Canadians are as well. They would like to straighten this out.

There should be one minister who is ultimately in charge of the implementation of the Kyoto protocol. Maybe you can't answer that because it's a question for the minister. That's fine, then I'll ask the respective ministers. But in your view, is there one person who is taking the lead on this issue at the cabinet level? Is it the Privy Council Office, or who is it?

Mr. Howard Brown: I think it's unavoidable that there will have to be specific ministers responsible for specific aspects of the plan. It is simply too large and too cross-cutting. In the case of the large industrial emitters, that responsibility at the ministerial level lies with Mr. Dhaliwal, my minister.

As for the chair of a cabinet committee, with National Defence, for example, any spending proposal, any memorandum to cabinet asking for money, will go to a committee of cabinet that's chaired by another minister. I'm not sure that the cabinet committee system conflicts with ministerial responsibility for specific policy proposals.

Mr. James Rajotte: Then let me ask this in a slightly different way. The large industrial emitters, as you said, would come under Minister Dhaliwal. The measuring of the emissions, as I understand it, would come under Minister Anderson. Is that an acceptable and good way of doing it, or would it be better to have everything under one department and one minister?

» (1715)

Mr. Howard Brown: I can't answer what the best way to do it would be. I think the ultimate responsibility for measurement is still up in the air. I will say that officials meet every Tuesday morning at 8 o'clock to make sure everybody understands what everybody else is doing. Is that perfect? I don't know. It certainly means that communications are good. I work with my colleague at Environment Canada very closely on a bilateral basis outside of that.

I don't at this point see huge problems. I know it's an issue to be managed. I think we all recognize that at the end of the day there's a single taxpayer out there for whom we're working, and we need to cooperate as much as we can to get the job done.

Mr. James Rajotte: Let me then follow up on the decision--I call it the exemption but you clarified that it's a decision--that the emissions of the auto industry were low enough to justify that the industry would not be included with the large industrial emitters.

Who made that decision?

Mr. Howard Brown: The decision was made before I joined, so I can't be 100% certain of that. I believe it was made by the reference group of ministers. But at the official level my deputy, George Anderson, had the ultimate responsibility for it.

Mr. James Rajotte: He had the responsibility for making the decision or recommending this?

Mr. Howard Brown: Yes--as to what defines a large industrial emitter.

Mr. James Rajotte: Under your consultations, you state that industry believes that the 55-megatonne reduction required under the plan is not attainable. I assume you don't agree with their belief--or do you agree with their belief? If you disagree, what do you base your disagreement with industry on?

Mr. Howard Brown: I'm slightly agnostic on that. I think we need to have a better understanding of their basis for saying that. That will be part of the negotiating process through the spring and into the fall. Then, if people tell me they can't meet their part of the target, I'll ask them to demonstrate to me why they can't.

To some extent, their position versus ours may be based on a slightly different understanding of what “attainable” means. I think sometimes that some people in industry have an engineering point of view when they say, “Can I physically reduce my emissions by 15% in a way that adds to my profit?”

My view is a little bit different. I'm asking if they can do that while keeping the cost to an acceptable level. So they're looking to increase profits; I'm asking if they can do it in a way that might take away a little bit from their profits if it meets their climate change goal, or alternatively, if they can do it by buying credits.

Some of the difference may be more apparent than real. It's just a different meaning of “attainable”.

Mr. James Rajotte: My last question is under “Urgent Policy Issues” in your statement. You talk about the need to determine how we define and allocate our emission intensity targets among the various sectors.

Obviously this will be crucially important, but how do we avoid a fight between sectors and companies when it comes to the allocation of burden, especially when you state that industry does not believe the 55-megatonne reduction is attainable? As you just said, there's a difference of opinion there. How do you avoid a fight?

I'll just tell you about a personal experience. I met with two different prominent Canadian companies in one large industry. I went to the first company and they told me they had reduced their CO₂ emissions by 24% since 1997. The second company I met with said they had reduced theirs by 12%. When I said they weren't as good as the first company, they said the first company actually only reduced them by 12%.

You're not only going to get involved in differences over emissions. How do you avoid this jealousy between companies and sectors as you allocate the burden?

Mr. Howard Brown: I think all the industry sectors will be looking very carefully at what we're doing with the industry sector, if they're competitors, and at the kinds of deals other sectors are getting.

What we do needs to be transparent and justifiable. I'm not sure they'll be mad at each other. I suspect many of them will be mad at me, and in some sense a measure of equity will be if they're all equally mad at me at the end of the day.

I don't expect industry to like this. In many cases it's going to cost them, and additional costs are not something business likes.

Thank you.

» (1720)

The Chair: Thank you.

I'd like to thank the witnesses for coming today and helping us understand where we're going with Kyoto. I'm sure we'll have many more meetings on this, because as an industry committee we've been saying it's time to look at the overall plan. We know you're in that process, so I'm sure you'll be requested to come back to give us your final plan that's been negotiated, and so forth.

Thank you very much.

I should advise the members that the meeting set for tomorrow has been cancelled. The minister is in the House because of his bill being scheduled for tomorrow. I didn't want certain members of the department coming; I wanted to have the people who were dealing with it. So we'll reschedule it for another day. I didn't want to have three meetings in one week if it wasn't going to be what we had requested.

So I'll reschedule that meeting. The clerk is now trying to find another date.

Thank you very much. Have a good evening.

The meeting is adjourned.