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Standing Committee on Environment and Sustainable Development



Monday, December 11, 2006

[Recorded by Electronic Apparatus]



     I call the meeting to order.
    Of course, as you all know, we have the Minister of the Environment here. We would like to welcome the minister, and of course we remind all members that we do have a CEPA meeting this afternoon from 3:30 to 5:30 p.m.
    Minister, would you like to begin? I believe you have a presentation, and then we'll go to our round of questions with the members.
    Sounds good. Thank you, Mr. Chair.
    Thank you for inviting me back. As you all know, I'm here to respond directly to a motion that was tabled by the honourable Nathan Cullen.
    Order, please.
    I would ask that the cameras be turned off, please, gentlemen, before the minister begins.
    Now we can begin.
    Minister Ambrose.
    Thank you, Mr. Chair.
    I'm pleased to be here, and I'm looking forward to sharing a constructive dialogue, both here and also in our new legislative committee dealing with Canada's Clean Air Act.
    Again, I'm here specifically to deal with a motion that was tabled by Nathan Cullen, to clarify some of my previous points when appearing in front of this committee, and to take questions from you. I have to say that I appreciate the chance to bring some context to the work of this committee and indeed some much needed honesty and clarification to Canadians about how the previous governments spent some of our taxpayer dollars on the environment. I would also like to discuss the progress that was actually made and discuss why our government feels strongly about moving forward towards setting new targets.


    I am very pleased to be here, and I want to say that I'm looking forward to sharing in a constructive dialogue around the actions Canada's new government is taking to improve the health of Canadians and our environment.
    I have to say that I appreciate the chance to bring some context to the work of this committee, and indeed, some much-needed honesty to Canadians around how previous governments have spent taxpayers' dollars on the environment, what little progress was actually made and why our government is now stepping forward to get things done.


    I would like to take this opportunity today to speak directly to the motion tabled by my honourable colleague, Mr. Cullen.
    When our government assumed office less than a year ago, it soon became clear to us that measures being pursued by the previous governments to address climate change were insufficient.
    This is not a political observation. This is a statement of fact. Years after signing and ratifying the Kyoto Protocol, and despite having spent or committed billions of dollars of taxpayers' money, the previous government had still not implemented a domestic plan to address climate change.
    On the trust of Canadians, previous governments spent--and spent liberally--but delivered precious little in return. In fact, the sole outcomes were soaring greenhouse gas emissions--35% above Canada's Kyoto target--and a divisive politicized debate that Canada's new government is determined to move beyond.
    The absence of any coordination or implementation of legitimate measures by previous governments to address climate change is indisputable. That is confirmed by the Commissioner for Environment and Sustainable Development, who, in her most recent report, stated that:
A lack of central ownership, clearly defined departmental responsibilities, integrated strategies and ongoing evaluation systems all point to problems in the government's management of the climate change initiative.


    And she continued as follows:
    On the whole, the Liberal government's response to climate change is not a good story. On the government-wide level, our audits revealed inadequate leadership, planning and performance. It has not been effective in meeting and deciding on many of the key areas of control. Change is needed.


    The environment commissioner reported that:
On the whole, the Liberal government's response to climate change is not a good story. At a government-wide level, our audits revealed inadequate leadership, planning, and performance. ... It has not been effective in leading and deciding on many of the key areas under its control. Change is needed.
    The commissioner's messages are important to keep in mind as we move forward as a government to achieve meaningful results on this file. We must create an accountability framework that for the first time in this country will oversee all climate change programs across governments, ensuring Canada's first ever coherent approach. To that end, I've also asked the President of the Treasury Board to have the Auditor General audit all climate change spending across government.
    Indeed, the commissioner's observations are reaffirmed as we examine Mr. Cullen's motion and consider just what Canadians and our environment received in return for all the taxpayers' money that previous governments spent so freely.
    I believe we have a table to outline the international programs, which we are going to be discussing. Could the clerk please hand them out at this time, in order to help take you through my points in the discussion?
    It's important to take you through what the previous government spent, or planned to spend, internationally in four main areas, and how, if at all, that spending has helped Canada toward achieving our Kyoto target: the Clean Development Mechanism and Joint Implementation Office; the Canada climate change development fund; the multilateral World Bank carbon fund and their proposed climate fund.
    The Clean Development Mechanism and Joint Implementation Office within the Department of Foreign Affairs and International Trade was allocated a total budget of $25 million between 2001 and 2006. Tax dollars invested through Canada's CDM office were intended to support the development of an international market for carbon credits and eventual Canadian private sector participation in that market.
    The Government of Canada will neither receive credits for this investment nor move closer to our Kyoto target. Instead, a modest portion of this investment facilitates the purchase of international carbon credits for private sector companies, not for the government. At this point, we have no clear indication of how many international credits have been, or will be, generated by the money we invested. CDM is a project-based market mechanism that is intended to provide Canadian companies with a means to access markets and investment opportunities and to stimulate development and marketing of Canadian technology companies.
    Based on our support for market-based mechanisms and on the urgency for Canada to engage in projects and programs that directly count towards achieving our Kyoto target, I continue to believe that this program demands strict oversight, and taxpayers' dollars should not be used to facilitate the purchase or generation of international credits for private sector entities. If taxpayers' money is involved, the objective of the program must be clear, and it would be my opinion that we should ask for third-party verification of emissions reductions. We must focus our investments on government-led projects that could count towards our Kyoto target.
    The Canada climate change development fund, or the CCCDF, was designed to also help address the causes and effects of climate change in developing countries. The program focused on four main areas: adaptation to climate change, greenhouse gas reduction through the transfer of technologies, carbon sequestration, and building capacity in developing countries.
    On this fourth area of focus, the fund specifically emphasized capacity-building assistance for development countries.
    When the previous government established this fund, credit generation or purchase was still an option internationally. It wasn't until 2001 that parties to the UNFCC agreed that public funding for these projects should not result in diversion of official development assistance, and that it should be separate from and not counted towards the financial obligations of parties.
    The line between international climate change policy and official development assistance begins to blur. In 2004, the OECD's development assistance committee decided that the value of any certified emission reductions or credits from these kinds of projects should be deducted from our official development agency reporting, and some countries have stated since that they intend to do that. It is not the intention of our government to use official development assistance funding to replace our efforts to invest in projects that generate reductions in greenhouse gas emissions or count towards our Kyoto targets.
    This program was budgeted $110 million from 2000 to 2001. This money was mainly disbursed for grants to Canadian companies or organizations called Canadian executing agencies as proponents of these international projects. The program also allowed these companies or organizations to keep up to 12% of this public investment for overhead costs. These projects did not result in any verifiable emissions reductions to date. Therefore, the investments in this program did not result in any certified emissions reductions credits, and therefore also will not count towards our Kyoto target. Instead, they will count for our official development assistance through CIDA.


    We believe that clarity needs to be brought to this issue. We believe funding for ODA, for official development assistance, is crucial, but must be based on the policy priorities identified through our ongoing work with developing countries.
    Canada also invested in the World Bank's carbon funds. The objectives of these emissions trading pilot projects are to generate experience in project implementation, facilitate the transfer of technology, and provide a stream of Kyoto greenhouse gas reduction credits to fund investors in the 2008-2012 period. Through this investment, the Government of Canada purchased an estimated 2.6 million tonnes of greenhouse gas reduction credits. These were called “learning by doing” projects. They will, between 2008 and 2012, deliver an estimated 2.6 million tonnes of international credits, representing a mere 1% of the reductions necessary to meet Canada's Kyoto target.
    We're obliged here to consider the facts: $160 million of Canadian taxpayers' money was spent--on what? It was spent on our international climate change programs. In return, 1% of our Kyoto target has been achieved.



    We are obliged to consider the facts: $160 million of Canadian taxpayers' money spent. And, in return, 1% of our Kyoto target achieved.


    The previous government also planned to spend $1 billion over five years to manage the climate fund, otherwise known as the Canada Emission Reduction Incentives Agency. This fund was not an investment vehicle, but solely a purchasing vehicle for credits. It was also planned that this fund would grow to cost taxpayers about $5 billion for the purchase of further credits.
    It became obvious to our government, as we tried to piece this information from various relevant departments together in a coherent fashion, that there was no clear policy framework tying these initiatives together or accounting for results to help meet our Kyoto target.
    It spoke truth to that which the Commissioner of the Environment and Sustainable Development observed: the previous government did not have an across-the-government coherent approach.
    I'd like to address the second part of the motion in terms of my previous comments on the estimate provided by my department on the cost impact if Canada were to meet its Kyoto target entirely through regulatory action.
    The analysis shows that making the reductions required by the Kyoto Protocol, which amount to nearly one-third of our projected total emissions in 2010, through domestic regulatory action alone could have a crippling effect on the Canadian economy. Of course, this kind of analysis is complex, and there will always be debate about specific numbers, but it gives a clear picture of the magnitude of impacts that consumers would face.
    It is estimated that we could see increases in electricity prices of about 15% in Atlantic Canada, 40% in British Columbia, 65% in Ontario, and between 150% and 200% in Alberta and Saskatchewan. That means between a doubling and a tripling of prices in Alberta and Saskatchewan. Natural gas prices could increase by over 300% in Alberta and by 130% in Ontario. As for our oil industry, there is a possibility that we could move from being a net exporter of oil to a net importer, as production costs soared and facilities closed in response to the punitive regulation that would be required.
    I'll also emphasize that this would be a best-case scenario, were emissions reductions of this magnitude even feasible and achieved in the least costly way.
    In the real world, the emissions reductions needed in Canada to achieve the Kyoto target are not technically feasible in that timeframe. This is why we need new targets and a new Kyoto framework, and this is the opportunity before us.


    That is why we need new targets and a new Kyoto framework. This is the opportunity before us.


    Let's move now to the impact of Canada's Clean Air Act, or Bill C-30, on reducing greenhouse gases.
    You're familiar with our notice of intent, where Canada's government said we will regulate both air pollution and greenhouse gases, with targets for the short, medium, and long term. By spring 2007, our government will announce ambitious short-term targets for air pollution and greenhouse gases, with sector-by-sector regulations that will come into force starting as early as 2010. As you know, for the medium term, which is 2020 to 2025, we will implement intensity targets that will lead to absolute reductions in emissions and thus support the establishment of a fixed cap on emissions.
    Our government also committed to a long-term target of absolute reductions in greenhouse gases by up to 65% from 2003 levels by 2050. We've asked again the National Round Table on the Environment and the Economy for advice on specific targets to be selected, and also scenarios of how the targets would be achievable in Canada.
    Let me tell you, then, what the long-term target means in terms of emissions reductions. Based on what Canada's greenhouse gas emissions are projected to be in 2050 in a business as usual scenario, this 65% reduction target would reduce our emissions by about 1,435 megatonnes. This is a reduction of almost twice our current total greenhouse gas emissions. A 65% reduction from our 1990 emissions level, which I know is of interest to some of you, would require an emission reduction of 1,485 megatonnes from business as usual.
    Some have also called for a long-term target of 80% reduction. This would reduce emissions by 1,575 megatonnes, which is actually only about 10% more than the emission reductions we would see under the 65% target based on 2003 emissions that was put forward or recommended by the national round table.
    In its June 21, 2006, report entitled Advice on a Long-term Strategy on Energy and Climate Change, as you know, the National Round Table on the Environment and the Economy provided a possible scenario on how a 60% reduction from 2003 emissions levels might be achieved. The key elements of this scenario include increasing energy efficiency and carbon capture and storage, cogeneration, and increased use of renewable energy. These, I would suggest, are the issues we should be discussing and debating today.
    By spring of 2007, our objective is to have finalized discussions on a number of important issues, including our short-term reduction targets for both air pollutants and greenhouse gases, the proposed compliance options associated with those regulations, reporting requirements, and timelines.
    As you know, the previous government intended to spend some $10 billion on this proposed climate change plan. Here's what Canadian taxpayers might have received for their money. I'll quote from a recent C.D. Howe Institute report written by Professor Mark Jaccard, who heads the energy and research group in the School of Resource and Environmental Management at Simon Fraser University.
     He found that the previous government's proposed climate change measures would have cost Canada $12 billion by 2012, with much of that money being spent outside of Canada.
    Professor Jaccard estimated that the previous government's proposed measures might have reduced emissions by only 175 megatonnes, which is far short of the almost 300 megatonnes we need to meet our Kyoto target.
    Professor Jaccard also concluded that if the previous government's plan were to have been implemented for the long term, Canadian taxpayers would have spent “at least $80 billion over the next 35 years” without reducing greenhouse gases below our current levels.
    What is needed today is a new Kyoto framework with a strong and accountable domestic vision. The key difference in Canada's new government's approach is our recognition—and this speaks to the other part of the motion—of the need to take coordinated action on air pollutants and greenhouse gases. It only makes sense because most sources of air pollutants are also the sources of greenhouse gases. This will be the first time the federal government takes this kind of coordinated action.
    The issue is not smog before greenhouse gases or the reverse, and the issue is not air pollution versus climate change. Both of these issues are of concern to Canadians and both impact upon their health and their environment. The right course of action is to tackle both in a coordinated and efficient action to deliver results for Canadians. By taking that kind of coordinated approach to both types of emissions—a new Kyoto framework, coupled with Canada's Clean Air Act—we will drive solutions to get the greatest results for our effort.
    For the first time we will have an integrated, nationally consistent approach focused on mandatory regulations that will achieve significant reductions in emissions from all major industry sectors. We also need a new global approach to addressing climate change, one with achievable targets that maximizes global participation.


     Currently, as you know, under the Kyoto Protocol, countries with targets account for less than 30% of global emissions, and this percentage will only continue to decline in the coming years as the emissions of developing countries rise.
    Contrary to what you may have seen or heard in the media, this work is beginning to take shape globally, and Canada is participating. In Nairobi, as you know, I led the Canadian delegation to the twelfth conference of the parties to the climate change convention and second meeting of the parties to the Kyoto Protocol.
    Canada worked very intensively and successfully with many other countries on initiatives that will help set the scene for a better global approach to climate change in the post-2012 period, and for Canada, this approach must be one that includes broader participation, maximizes the use of technologies and market mechanisms, and takes the country's national circumstances into consideration.
    Of the key issues that were taken up in Nairobi, four related to the future of international cooperation on climate change, and Canada secured the results we wanted to enable us to continue to participate in Kyoto. On each of these issues, Canada's negotiators were actively and constructively engaged, based on the positions laid out in our public submissions.
    As you know, an extensive work program to inform consideration of our future commitments post-2012 was developed. Canada agreed to this rigorous work program and will undertake our work with diligence.
    On the review of the Kyoto Protocol, agreement was reached to conduct a review in December 2008. All industrialized countries, the African countries, the small island states, and several Latin American countries supported the launching of this review so we can move forward with the knowledge of what worked and what didn't work in the next phase of Kyoto.
    Canada has consistently stated that more countries need to take on targets or Kyoto will fail. On the issue of the review of procedures for countries taking on commitments, agreement was reached to hold a workshop in May 2007.
    As president, I took on the responsibility for moving this issue forward personally. The support of the EU, South Africa, and Russia were key to assuring Canada was able to push for progress on this front, and I am pleased that the question of how countries can voluntarily take on commitments under the protocol will now be formally taken up within the process.
    These are all important issues for all countries, but they were a high priority specifically in Nairobi.
    I would note that this was a consensus-based approach. If we were trying to “push global warming off the international agenda”, we could have easily blocked consensus on any of these issues, but we did not. On the contrary, the conference was considered a success because of the results achieved on these key issues and the Canadian delegation's crucial role.



    Canada's new government is charting a fundamentally new and more productive course on the environment.


    Our government is charting a fundamentally new and more productive course on the environment. We are taking, as you know, action on both air pollution and greenhouse gases to protect the health of Canadians and our environment. We're replacing the previous government's unenforceable voluntary approaches with tough mandatory regulations, and we're focusing on achieving clear, measurable, and realistic results in Canada. We are working through the United Nations process to develop a more effective and inclusive global approach to addressing climate change, one that will build on the lessons learned from the current Kyoto and one that maximizes new technologies and mechanisms for reducing greenhouse gases.


    We believe this domestic and international approach is the right one for Canada—now and over the long-term. It is an approach that will ensure that Canadians and their children enjoy a healthy environment in the years to come.


    We believe this kind of domestic and international approach is the right one for Canada, now and over the long term. It's an approach that will ensure that Canadians and their children enjoy a healthy environment in the years to come.
    Merci. Thank you. I'm pleased to take any questions related to the motion before us.
    Thank you very much.
    I would ask the members to try to watch their time judiciously. I know you will be sharing. I will try to keep it as tight as I can.
    There will be ten minutes for the first round, beginning with Mr. Godfrey and Mr. Scarpaleggia.


    I would like to start by saying, Mr. Chairman, that I find it quite incredible that a minister of the Crown would submit documents that are not in both languages. It is really quite astounding.


    I am trying to sort out, Minister, your explanation of the testimony you gave to us last time. Am I right in summarizing it in the following way: that you were confused when you last appeared about the way in which the clean development mechanism works and that it was wrong for you to say that the previous government had spent over $100 million to purchase credit internationally, that what we were talking about instead was international development assistance, but none of it was tied to the clean development mechanism?
    I just want that on the record.
     Depending on which program you're looking at, some of the projects laid the groundwork for clean development mechanism projects. Others were through the clean development mechanism itself.
    But the examples you quoted, which added up to $100 million, were not tied into the clean development mechanism.
    That's not necessarily the case. Some of the ones I listed that are part of the CCCDF program laid the foundation for the clean development mechanism. They're in the list, referred to as CDM in brackets. Again, I can assure you that there are a number of these international programs. All of them have different policy priorities. Why I brought these to bear is for you to understand that some of them resulted in the purchase of international credits or emission reduction credits that benefited Canada in the sense that they will help the government reach its Kyoto target. Others benefited the private sector in terms of us facilitating, through the use of taxpayers' money, the purchase of credits for private sector companies. We unfortunately will not get any credit for that as a government, so we will not be any closer to reaching our target. After the $160 million spent, we are 1% closer to our target.
    It's actually important for you to recognize that these are the only verifiable emissions reductions that we have found across government. This is how much closer we are to our Kyoto target. It's 2.6 million megatonnes, or 1%. That's where we are today.


    But you did misspeak yourself in lumping together things that you said were under the clean development mechanism but are clearly not.
    Let me ask you about the clean development mechanism. Are you in favour of it or not? When you were last here, you suggested that you didn't want to be involved in the purchase of international credits, yet when you were in Nairobi you said you were open to having Canada invest in the clean development mechanism. Are you open to that or not?
    What I've stated clearly is that the clean development mechanism is a market-based mechanism that can be used for private sector entities to be able to purchase or invest in third world country projects for emission reductions. What I believe is necessary is that if the government is going to facilitate these kinds of projects, we should make sure we have oversight, that there is third-party verification that there are emissions reductions happening. If taxpayer money is involved, there should absolutely be third-party verification. I would rather see the government invest taxpayers' money directly in projects that will result in verifiable emissions reductions and therefore help us toward our Kyoto target.
    So you are now in favour, in fact, of the clean development mechanism being used to purchase verifiable credits abroad where conditions warrant. Is that a fair summary?
    Yes. As I said, the problem is that we don't have, to date, any verification that the money invested resulted in—
    We're talking about the current clean development mechanism, which has a whole verification process.
    As I said, I'm talking about investments to date. We don't have any amount right now of verifiable reductions in terms of helping Canada get closer to our Kyoto target. I think that's what Canada's interest should be, in terms of the government, if we're investing the taxpayers' dollar. If the private sector wants to use the market-based mechanism, which is what it's obviously hoped to be used for in the long term—and as you know, one of the things we discussed in Nairobi was ensuring that there is third–party verification when any of the international mechanisms are used—it's good for the government so that we know we're getting verifiable emissions reductions for our tax dollars. It's also good for the companies so that they have certainty and trust in the process they're interested in using, if they are interested.
    As a final question, you said you needed a new target for Kyoto. What are the new short-term targets for Canada, up to 2012, for greenhouse gas reductions?
    As you know, it's one of the things we're doing right now. We're working intensively with all industry sectors across the country. We hope to have our short-term targets, both for air pollutants and greenhouse gases, in place early in the new year. Again, I invite the committee, working through this committee or through the Clean Air Act committee, to bring forward witnesses and ask them questions on what would be achievable in terms of meeting, by 2012, a target for emissions reductions. It's key to Canada that we move forward.
    I know you've had a number of people in front of you who talked about scenarios about how we could potentially meet the present Kyoto target. Many of those have stated to you that it would involve a great deal of taxpayer money being spent overseas. You know there hasn't been a domestic action plan in place in terms of mandatory reductions. We need to move there and we need to set—
    Limiters were to be mandatory—
    That was never implemented.
     —in 2008.
    You need to confront the record that we're 1% closer. We have to move past this debate and set new targets, set a new framework for Kyoto, and move forward.
    Mr. Scarpaleggia, you have three and a half minutes, please.
    Thank you, Mr. Chair.
    I'd like to talk a bit about conservatism. It seems to me, Mr. Chair, that a real conservative believes in building on what has come before. In other words, a real conservative believes there is some good, although perhaps not perfection—


    You're not calling me a liberal, are you?
    No, and I'm not calling you a conservative either.
    There is some good, but not perfection, in what others have done before. A neo-conservative, on the other hand, it seems to me, likes to wipe the slate clean and start all over. A neo-conservative is not particularly interested in what might have been good in what others have done before and is not interested in studying what has come before.
    My question for the minister is this. Why did her government cut both mitigation programs and adaptation programs created by the previous government without a proper review of these programs? As a matter of fact, I believe she admitted, when she was before another committee, in an exchange with Senator Grant Mitchell, that there has never been a comprehensive audit or review of climate change programs. Why, then, would she cut programs like EnerGuide or the Canadian Climate Impacts and Adaptation Research Network, which was doing valuable work in the area of how we can adapt to protect our freshwater resources from the effects of climate change, without really knowing if there was anything good in those programs? Both were very popular, especially EnerGuide. Was that an ideological decision? Was that a neo-conservative decision? It obviously wasn't a conservative decision.
    I won't get into debating philosophy with you, but I do appreciate the opportunity to clarify the comments made. I've spoken to the Commissioner of the Environment about this as well, and I have also, as I said, subsequently spoken to the President of the Treasury Board about this.
    There were a number of programs that were across the government, but there was no coherent policy framework around climate change. Every—
    But I would suggest, if I may, Minister, that they are not mutually exclusive. A program can be good—
    If I could just answer your question—
    Mr. Scarpaleggia, direct your comments through the chair, please.
    Just let me answer your question. I'd be happy to.
    Every program that was terminated by our government went through a review, but there are programs—for instance, the ones I have just discussed with you today and that you asked me to come forward about—that have never undergone a review. The Commissioner of the Environment personally said to me that it would be helpful if there were a comprehensive review of all climate change programs across government. That has never been done, but no program was cut without a review. That is why I've asked the President of the Treasury Board to take a look at and audit all of the program spending across government that was done in the climate change program.
    We are also working toward putting in place an accountability framework so that we have policy direction and policy alignment across government. A number of departments, as you know, deal with climate change, including the Canadian International Development Agency, Foreign Affairs, NRCan, and Environment Canada. There needs to be an accountability framework across all of the spending, and there also needs to be some policy coherence moving forward. We've already started to do that work, and I think that is the responsible thing to do.
    Mr. Chair, I would submit that nobody is against coordination and accountability. What I am saying is that you can have a program that is good even if it doesn't exist within the most perfectly coordinated system. What I'd like to know is what was wrong with the EnerGuide program.
    Mr. Scarpaleggia, we are past your time. Possibly we'll get the answer to your question as we go along here.
    Mr. Bigras.


    Thank you very much, Mr. Chairman.
    Welcome, Minister. Last week, you stated at a Senate committee that industry is not the only one that will have to make an effort to fight climate change, that consumers would have to do their part as well.
    In addition to this statement there was the one made by your colleague the Minister of Finance in his presentation of the economic update a few weeks ago. On page 75 of the update, he says that any regulations regarding climate change would have to ensure that no industry would have to assume undue costs.
    When I read your statement of intent when Bill C-30 was tabled I was forced to notice that you chose to calculate emissions according to their intensity.
    In light of your statement last week, in light of the economic statement of the Minister of Finance, and in light of your choice of intensity of emissions rather than the absolute value, and in light of your statement of intent, would you not agree that you have actually bowed to the oil industry and have decided to spare it in the context of the climate change program? In other words, have you not shown a lack of political courage by choosing emissions intensity, which could avoid undue costs for the oil industry, as the Minister of Finance stated on page 75 of his economic update?


     First, to address the issue of consumer participation, absolutely there needs to be a balance of efforts. Industry and government will not be able to solve this issue alone. Consumers will need to participate more. There's a great role for government to play in that, and we have every intention to help consumers make those kinds of choices. But again, it also gets down to individual responsibility and how people make choices in their own homes.
    In terms of intensity targets, as you know, the oil sector is one of the largest emitters of greenhouse gases, and this is a serious concern for the government. I'm fully aware of that.
    You also know that at this point it's not technologically feasible for us to make the kinds of emissions reductions that we would like to short term without bringing on stream the important technology we need, like carbon capture and storage in the oil sector, to make those kinds of total emissions reductions.
    So those are the kinds of conversations we need to have. We expect all sectors to make environmental gains, and clearly the oil sector is one of the largest emitters. I believe the environment commissioner stated that the oil sector and transportation sector together make up 78% of the greenhouse gases. We're fully aware of that. We have every intention of ensuring that the oil and gas sector, along with every other sector, makes contributions to reduce their greenhouse gases, and the important thing we need to do that is to start having a conversation about the technology necessary to do that.



    I have another question for you. Your colleague, the Minister of Industry, Mr. Bernier, stated on November 14 of this year that your notice of intention was something that has never been seen before. He said and I quote:
    This has never been seen before, and this is just the beginning.

    Never has the Canadian government gone so far in its efforts to fight GHGs and smog.
    In addition, to demonstrate that you are a proactive government, we announced that starting on December 1, the new models of motorcycles sold in Canada will have to comply with new, stringent standards on pollution.
    How can you explain that the vision of the future developed by your government is based on exemplary regulations not for the large industrial emitters, but rather for the manufacturers of motorcycles sold in Canada?
    Does this not prove that your efforts are slow and do not target the real polluters—namely, the oil industry and the large industrial emitters?


    We have to focus on all polluters, and there are a number of regulations that have been coming on line for the last number of years by which we are trying to regulate, and we are regulating, things like ATVs and large construction equipment. All of the transportation initiatives we're taking to regulate greenhouse gases and air pollution are crucial.
    The next step is to tackle industry emissions, and I would say to you that the plan that was in place previously, particularly the framework around the plan, was what I would call an easy ride for industry. It's my intention and the intention of this government to make sure we have a framework in place to reduce industry emissions in a way that will show substantial emissions reductions, particularly over the long term, moving to the kind of technology we need to make absolute reductions.
    So no one is going to get a free ride, not from the transportation sector when we look at things like ATVs, motorcycles, and large construction equipment, and particularly not industry. And I would suggest to you that they're all ready to come to the table to make efforts to help reduce air pollution and greenhouse gases.


    I would like to ask you another question about the clean development mechanisms.
    You have said two things this morning. First, that we need to facilitate projects such as those put forward in the context of the clean development mechanisms. Finally, a third-party audit is required to assess the effectiveness of this mechanism provided for under the Kyoto Protocol. So you are telling us today that you are blowing hot and cold.
    If you continue to have confidence in the clean development mechanisms, assuming that you hope that there will be a third-party audit, of course, how can you explain that Canada is the worst country internationally as regards its contribution to clean development mechanisms?
    Could you tell the committee how far behind Canada is in its payments to the international community, to the bodies that manage the clean development mechanisms?
    How much does Canada owe, and how does it rank compared to other countries as regards its contributions to these mechanisms?



     As you know, Canada is on track to meet all of our obligations related to the funding of these kinds of mechanisms.
    Again, I will continue to say that in terms of using the clean development mechanism as a market-based mechanism for private sector—


    How much does Canada owe? It has probably received a bill. We need to be clear on this.


    My understanding is that Canada does not owe anything, that we are paid up for all of our obligations under the Kyoto Protocol, that we're meeting all of our obligations. That's what my international department has told me. That's what the Department of Foreign Affairs has indicated. The only thing we're not on track to meeting, in terms of our Kyoto obligations, is our Kyoto target.
    But the other thing that needs to happen is that we need to have an actual framework in place in terms of domestic regulations so that private sector companies have a reason to start to invest in this clean development mechanism as well. So it goes hand in hand. That's why we need to set short-term targets, so that we can move forward.
    But again, if I had a choice between using public money to help private corporations facilitate the purchase of international credits or using public funds to invest in projects where we see verifiable emissions reductions to help further our Kyoto target, I would choose the latter for obvious reasons. Right now, with all of these programs, we've reached 1% of our Kyoto target.


    Does Canada intend to live up to the $1.5 million commitment made by the previous government for the funding of the clean development mechanism, and does it intend to pay this money to fund the mechanism? That is the money to which I am referring, Minister.
    Are you telling me that Canada is up-to-date in its payments?


    Yes. My understanding is that it has, and that is funding for the operational side of the Clean Development Mechanism and Joint Implementation Office, through the Department of Foreign Affairs. It's operational. As we speak, there are private sector companies that deal with this program and this office through the Department of Foreign Affairs. That is the information given to me by the Department of Foreign Affairs and this office. If there are any officials here who would like to state differently....
    That's the information that has been given to me.
    Can you identify yourself, please?
    This is David McGovern, my associate deputy minister of international programming.
    I'm pleased the minister has just promoted me. I'm the assistant deputy minister, but if she wants to—
    Thanks, Minister.
    You have about five seconds.
    Mr. Bigras is referring to money that was pledged in Montreal to facilitate the administration of the CDM in the UNFCCC. The department has prepared a proposal for the minister, but it's still under consideration. We haven't actually reached the minister's desk yet.
    Thank you very much.
    We will go on, please, to Mr. Cullen.
    Thank you, Mr. Chair.
    That clarification is helpful, because under the UN's own document, $1.5 million is still outstanding. Canada hasn't come forward with this.
    Frankly, I'm a bit concerned, Minister. In the last meeting you had with this committee, some of the information that has been since clarified was, at best, inaccurate. I'm increasingly concerned in terms of the briefings you're getting on some of the critical issues. If Canada is standing on the world stage and we are committed to something like this mechanism and still owing a bill of $1.5 million, by far and away more than any other country owes, it's a worrisome statement to the world community.
    Your leader and party have made strong words towards our international commitments. The term “we don't cut and run on our international commitment” has often been made by your leader in the House and in other places. When you say that we are staying within the Kyoto framework yet not meeting the targets, if Kyoto is not about meeting the targets, then what is it about, other than a set of meetings?
    The whole point of the initiative is to reduce the impact we're having on climate change. You yourself have said this is a grave and serious issue. Yet to make a statement in Nairobi and here in Canada, almost misleading Canadians to believe we're staying in a framework but not meeting the central piece of that framework, is intellectually dishonest at best. I don't understand how you can square that circle.


     I guess we square that circle the same way as the other fifteen countries that are in the same challenging position Canada is in. We enter this with what's left over from the last government. One percent of our Kyoto target has been achieved with no domestic plan in place. We've been working very aggressively over the last number of months to put in place new targets and a new framework, one that does not subsidize industry. That was a major concern I had with the last framework--the amount of taxpayers' money that would be subsidizing large industry. I think industry should take on the costs of those kinds of reductions themselves.
    To clarify on the $1.5 million, I have always stated that we would meet all of our Kyoto obligations. We have honestly said to the international community the first time that I met with them back in May that we are not on track. We knew that when we took over government, and the previous government knew that before they left. To continue this divisive debate on whether or not the target can be've had witness after witness come before you to tell you the only way to meet this target is to spend billions and billions of dollars overseas. If the NDP, the Liberals, and the Bloc believe that this is the best Canada can do to bring forward a framework to stay within Kyoto, to make emissions reductions, and to work with our international partners, that's a sad story. We can do a lot better than that.
    Allow me just to understand, then, because when your government made the decision under some assessment and calculations that we could not make our targets, it seemed it would be incumbent upon you to set another target in that moment. Clearly you have the historical knowledge from all the departments. The election did not turn over all those people. The knowledge was in the offices. To be nine or ten months down the road and still not have those targets for Canada to understand--
    Mr. Cullen, have you taken a look at the plan that was on the table? Have you looked at the analysis of the plan, which includes billions of dollars of spending overseas? There are Canadian companies right here in Canada that need our support.
    Having been so recently in these chairs, Minister, you know that I will be posing the questions today. When you were in Nairobi and stood on the world stage and announced Canada's long- and medium-term targets, you neglected to mention that the baseline was suddenly moved to 2003. Now--
    That's not true. We have adopted--
    I spoke to a minister from Denmark, the Minister for the Environment, who had a meeting with you that very evening. She was perplexed as to why we were being so hard on you. I asked her if the minister had mentioned to her that Canada has unilaterally moved our baseline to 2003, which no other country in the world has done. Do you think that's fair?
    Nathan, that's not true. If you look at my remarks, I talked about the good advice that we received from the National Round Table on the Environment and the Economy, which is the opportunity for Canada, in a reachable and technologically feasible way, to make up to a 65% reduction based on a 2003 level.
    Why move the baseline, though? I don't understand that.
    This was the recommendation that we looked at from the national round table. Why, Nathan? It was because it wasn't set--
    The entire world is using 1990.
    It was because it wasn't set arbitrarily and it wasn't set politically; it was widely researched by the national round table with environmentalists and leading industry officials. Again, that's what's in our overarching notice of intent. We are still talking to--and I'm surprised that you don't know this--and still in negotiations with industry on what baseline to adopt, whether it's 1990, 2003, or 2001. There are advantages and disadvantages to all of them.
    I'm sure there are.
    Minister, I will be running out of time. I have a remaining question for you. Does your government support the continued rapid expansion of the oil sands in northern Alberta?
    I'll tell you how I feel as the Minister of the Environment and as an Albertan. I'm very concerned, both from an infrastructure perspective and from an environmental perspective, about the pace of development.
    Why do you continue to subsidize it then?
    As you well know, we do not subsidize the oil industry, but I would ask you why you put forward subsidies for the auto sector as one of your demands for the support of the Clean Air Act.
    An accelerated cost allowance for the oil sector does encourage that development to move faster. That was the reason it was put in. It is taxpayer money that you keep referring to; it is going into the most profitable sector in the country right now to encourage them to do more, while all the while your government proclaims it wants to reduce emissions. You have set intensity targets--which are not going to cut it, frankly; you must go to a hard cap. You have encouraged the companies to go out and actually do more damage to the environment. You're the only Minister of the Environment perhaps in the world who has brought forward a doomsday scenario about meeting our Kyoto targets, the only environment minister who has stood up and said every industry will shut down and doom will befall us, when all the other countries are talking about the reverse--that if we don't act, these are the serious economic consequences. I don't understand how you can do that.


     The other environment ministers whom you refer to do not face the fact that we have before us an unachievable target. The international community even recognizes that, when they find out that we're 35% above our target and that we've made a 1% move in that direction.
    What we need is targets, as quickly as possible, with a framework that is achievable and that gives maximum opportunities for the development of Canadian technology, not investment outside of Canada—
    So why cut more than $1 billion in climate change funding for programs that were acting in Canada, if your stated goal is to achieve reductions? The first move you did was to cut more than 22 programs.
    As you know, in our budget we put $2 billion towards the development of climate change—programming and regulations—and as you can well imagine, all of that money will be used, and it will actually be more money than has ever been spent before on this important environmental issue.
    Again, I would ask you to get past this debate about whether or not we can reach our Kyoto target. Michael Ignatieff recognized it. The new leader of the Liberal Party at one point recognized it, but then changed his tune. People around the world recognize that Canada is in a challenging place, more challenging than the other fifteen countries are in that are also not on track to meet their target. If we continue with this debate, we are not going to come to an agreement on targets. Industry needs targets as soon as possible, and that's why we're working—hopefully together—to set those targets and a new framework by January. To continue this debate is fruitless.
     I think it might be you promoting this debate. I haven't actually raised it as such.
    Minister Lunn, Minister Strahl, and you yourself made a commitment to the biofuels industry to have a meeting early in the fall to consider what the programming would be to increase the use of biofuels in Canada—not just the announcement.
    That meeting has never happened. Why not?
    We're working on the regulatory framework around it. As you well know, right now under CEPA we don't have the regulatory authority we need to blend fuels in the most effective and efficient manner to regulate both ethanol and biodiesel. I'd ask all of you again to help pass the Clean Air Act so that we can move forward with a national regulation for ethanol and biodiesel in this country and start to engage, like all of our other trading partners, in a bioenergy strategy for the country. We need those regulatory authorities, and the amendments to CEPA that are involved in Canada's Clean Air Act, to be able to do that.
    Again, in terms of a framework that we're trying to put forward, we'd like to see potentially the opportunity for industry to have a trading system. Canada's Clean Air Act provides the amendments for CEPA to have an efficient and effective trading system. If we don't pass those amendments and get Canada's Clean Air Act through, we won't be able to do the kinds of things we need in this country to have a modern emissions reduction and trading system.
    But that very trading system has said that the Canadian government must involve itself in that trading system in order for it to work.
    But you've said you'll set up the framework and let it be, while the trading system has said you must involve yourselves in the purchase of credits in order to stabilize.
    No, no, no.
    Government is responsible for setting up the regulations and identifying the allocation of trading permits, but no government needs to purchase those permits on behalf of the private sector, which is—
    That's not what's being suggested.
    No. There's no need for taxpayer money to be involved. That's what was suggested by the last government.
    They were wrong on many counts on this file. There's no argument there.
    The Canada Reduction Emissions Agency was exactly that.
    We are going to go on to Mr. Warawa, please.
    Thank you, Minister, for being here today.
    I'll be sharing my ten minutes, with Mr. Vellacott first and then with Mr. Watson. I'll take the first three or four minutes.
    I want to congratulate you first of all for your announcement last week regarding the chemical management plan and also the hydrogen buses—further evidence that the government is actively doing things—and also the past announcements on enhancing and encouraging the use of public transit, on prevention of release of over ten tonnes of mercury, and also encouraging the promotion of renewable ethanol and biodiesel fuels, and also reducing the sulphur content in fuels.
    I want to ask you some questions about your visit to Kenya, to Nairobi. I heard a number of wonderful things that resulted from that.
    Minister, can you share with the committee your views on why working with the UN process, such as your recent conference in Nairobi, was so important?


    As you know, there are two separate groups with which we work, one within the conference of the parties, and there's also the meeting of the parties to the Kyoto Protocol.
    We've said a number of times that the number of members within the Kyoto Protocol has to expand, because as you know at this point, the number of countries with targets for emissions reductions only account for 30%. As you know, emissions in countries such as India, China, and the developing world are rising, so countries such as Canada will have even less impact, in terms of reducing global warming.
    There were a number of things that happened—I spoke to a few of them today—that allowed Canada to secure success and consensus, as a group moving forward, that allowed Canada to feel confident about staying within the Kyoto Protocol. And we saw that there is going to be movement towards expanding this discussion and learning from mistakes made.
    There was a consensus on a full review of the Kyoto Protocol for 2008. There was also a consensus that we move forward with looking at how we can get more countries to participate. This was a proposal put forward by Russia, which I and the Canadian delegation took forward, and we were able to secure the support of the EU, Russian, and South African delegation to make sure that we are able to discuss this formally.
    This is very important for Canada, because we have said over and over again that these countries can't do it alone. We need to have broader participation, particularly from countries such as the United States, China, and India that do not have targets under the Kyoto Protocol.
    Of course, a review is important, because we need to recognize that there are some things that haven't worked, and to recognize the good things that are happening within the United Nations framework, so that we can build on these and move to a more effective global approach.
    There were obviously a lot of successes and a consensus reached by all the parties involved.
    Minister, Mr. Cullen spoke about intellectual dishonesty. There were a lot of false statements made that Canada was shunned. In fact, we were very well received. You stayed an extra couple of days and signed an MOU regarding conservation.
    Kenya was very happy to have you there. Thank you for being a good example.
    Regarding the comments that Canada was shunned, in fact those were not true.
    As the head of the delegation, you carried out a number of bilateral meetings. Could you tell us about those?
    You are up to about four minutes, just to let you know.
    For obvious reasons, Canada wants to work with our international partners on a lot of the initiatives they're working on. We had meetings with the EU, the U.K., China, India, Korea, the U.S., and New Zealand, and more than anything explained where Canada is at and how we're moving forward, because there was a lot of concern when countries heard that we were 35% above our target. They were concerned about how we were going to move forward.
    They were very assured and happy to see that Canada was putting targets in place. When they found out that we had already put a long-term target in place, Sir Nicholas Stern, in particular, with whom I met about his report, was pleased, because his recommendation was that all countries at the conference take on a mid-century target immediately, so that industry and governments can start thinking very long term about where they're going—that the 2012 targets are not sufficient and we have to move way beyond that.
    Canada has obviously set a target that was recommended by the national round table. It was very widely researched, which was obviously important to our government, because it had the science to back it up. Over the coming months, we're setting the short- and medium-term targets, and a framework to be able to help industry comply with those targets.
    Mr. Vellacott, we have four and a half minutes.
    Minister, you've been very clear—abundantly plain, actually—that Canada's new government will not be spending taxpayer dollars overseas on projects that really don't result in environmental gains or improvements for Canada.
    To clarify and confirm, could you please state your position on international emissions trading again for the record?
     I'll state again that there are international programs Canada participates in that we think are very valuable. But we do believe that if taxpayer money is at play and is being invested, we'd like to see third-party verification of the projects we're investing in. Also, if they are projects that are supposed to show emissions reductions, we want to see that they're verifiable emissions reductions and that they actually help towards us reaching our Kyoto target.
    As I said, so far what we've seen to date is 1%, 2.6 million tonnes, of reductions, which is 1% of our Kyoto target achieved. There are programs like adaptation programs, which we work with other countries on, that may not see direct emissions reductions. But we have verification that these projects are achieving their intended goal, and we support those, and we'll continue to support those. But we will not use taxpayer money to purchase credits in a way that's not showing any verifiable emissions reductions for Canada or helping us get any closer to reaching our Kyoto target.
    The Canada Emission Reduction Incentives Agency that was set up by the former government, which in the last budget was a $1 billion undertaking solely for the purchasing of credits--this was not an investment vehicle, it was a purchasing vehicle--is not something that we will undertake to use.
    To speak to Mr. Cullen's point, it was the intention of the previous government to set up an artificial market for trading by using taxpayer dollars to facilitate the buying and selling of credits both on the international market and the domestic market. We think we can create a viable trading system that's market based, and industry can participate in it obviously, but the government's role is to regulate and identify tradeable units. But we have no reason to be involved in subsidizing a market like that with taxpayers' money. We wouldn't take those kinds of risks with taxpayers' dollars.


    Thank you, Ms. Minister. I've enjoyed listening to your testimony today. Some of our colleagues probably haven't; they've been conducting some media interviews in the committee room while you've been talking, but I found your testimony quite interesting, actually.
    When the public is listening about Kyoto, there are essentially two things we're talking about. First, there's the looming target and timeline, which the environment commissioner herself has rejected. Many witnesses at this table have rejected it as unattainable, set without analysis, and yet the opposition wants to foolishly handcuff us to it, notwithstanding the fact that we've only achieved 1% of our target.
    The second thing we talk about with Kyoto is the international dialogue through the United Nations. So it's entirely consistent to be against the first and yet participate vigorously in the latter. You've told us about working within the UN process. Can you tell us a little bit about why it's important to work through other international fora beyond the Kyoto framework?
    As you know, there are a number of different dialogues that are happening around the world. Canada participates with the G-8. Our chair went to that meeting, the Gleneagles dialogue on climate change. There's also the Asia-Pacific Partnership. One of the interesting things about the Asia-Pacific Partnership is that there are members in the partnership that have taken on, whether they be voluntary or not, some targets for reductions of both air pollution and greenhouse gases, or have shown promise to do that. Those are countries like China, whose environmental record obviously many people around the world are increasingly concerned about.
    What we're seeing from countries like China under the Asia-Pacific Partnership is there's a willingness to come to the table as an equal, which is not the case in the Kyoto Protocol. I think the important thing for Canada to do is to leave the door open and to participate in as many international dialogues as we can so that we can obviously show Canadians that we're actively pursuing the promotion of these kinds of dialogues, but also encouraging our international partners to take on more effective action. Canada has a very onerous target. We know that. It would cost us billions and billions of dollars and international credits to meet that target. But we clearly stated to the international community that we're on-board, that we are working towards getting in place a framework that will show clear domestic action, which will align us with our international partners, and align us with our international policy so that we aren't where we were when we took over, which is at 1% closer to our Kyoto target. After thirteen years, and years after signing the Kyoto Protocol, that's unacceptable to Canadians.
    I hope this committee and Canadians start to focus on the debate that needs to be had in this country, which is what is achievable for Canada, put in place a new Kyoto framework, set emissions reduction targets pronto, as soon as we can, and have that honest dialogue with industry about the important reductions they need to make. I think they're ready for that. They're willing to be at the table to do that. We need to work as a Parliament to make sure we show that we have unity on this issue; otherwise industry will get the best of us, and they will divide and conquer us, and we will end up in the same place we were for the last however many years, without any new targets and without any action to reduce greenhouse gases.


    Thank you very much, Minister, for being here.
    I know some of the members have indicated that they have further questions. If they could send those through the chair, we will get them to you. I'm sure you'd be happy to answer, through the chair, any other questions that might be asked.
    Thank you very much.
    We'll see you at 3:30.
    The meeting is adjourned.