AANR Committee Meeting

37th PARLIAMENT, 1st SESSION

Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

EVIDENCE

CONTENTS

Tuesday, March 12, 2002

¹

1540

The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.))

Mr. Dhaliwal

The Chair

Mr. Dhaliwal

¹

1545

¹

1550

¹

1555

The Chair

Mr. David Chatters (Athabasca, Canadian Alliance)

Mr. Dhaliwal

º

1600

Mr. David Chatters

M. Dhaliwal

The Chair

Mr. Serge Cardin (Sherbrooke, BQ)

º

1605

M. Dhaliwal

The Chair

Mr. Gerald Keddy (South Shore, PC/DR Coalition)

º

1610

Mr. Dhaliwal

Mr. Gerald Keddy

M. Dhaliwal

Mr. Keddy

The Chair

Mr. Gerald Keddy

The Chair

Mr. Guy St-Julien (Abitibi--Baie-James--Nunavik, Lib.)

º

1615

M. Dhaliwal

Mr. Guy St-Julien

M. Dhaliwal

Mr. Guy St-Julien

M. Dhaliwal

The Chair

Mr. David Chatters

º

1620

Mr. Dhaliwal

Mr. David Chatters

Mr. Dhaliwal

Mr. David Chatters

Mr. Dhaliwal

Mr. David Chatters

M. Dhaliwal

The Chair

Mr. Binet

º

1625

M. Dhaliwal

Mr. Gérard Binet

The Chair

M. Dhaliwal

The Chair

M. Dhaliwal

Mr. Herb Dhaliwal

º

1630

Mr. Serge Cardin

M. Dhaliwal

Mr. Serge Cardin

M. Dhaliwal

The Chair

Mr. Larry Bagnell (Yukon, Lib.)

Mr. Dhaliwal

º

1635

Mr. Larry Bagnell

Mr. Peter Harrison (Deputy Minister, Department of Natural Resources)

Mr. Dhaliwal

Mr. Peter Harrison

The Chair

Mr. Gerald Keddy

Mr. Dhaliwal

º

1640

Mr. Gerald Keddy

M. Dhaliwal

The Chair

Mr. John Finlay (Oxford (Lib.))

Mr. Dhaliwal

º

1645

Mr. Finlay

The Chair

Mr. David Chatters

Mr. Dhaliwal

Mr. David Chatters

Mr. Dhaliwal

Mr. David Chatters

Mr. Dhaliwal

Ms. Karetak-Lindell

º

1650

M. Dhaliwal

The Chair

Mr. Serge Cardin

M. Dhaliwal

º

1655

The Chair

Mr. John Godfrey (Don Valley West, Lib.)

M. Dhaliwal

»

1700

The Chair

M. Dhaliwal

The Chair

Mr. Gerald Keddy

M. Dhaliwal

The Chair

»

1705

Mr. Herb Dhaliwal

Mr. Jim Farrell (Director, Industry Division, Department of Natural Resources)

The Chair

Mr. Guy St-Julien

M. Dhaliwal

The Chair

M. Dhaliwal

»

1710

The Chair

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CANADA

Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

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NUMBER 044

l

1st SESSION

l

37th PARLIAMENT

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EVIDENCE

Tuesday, March 12, 2002

[Recorded by Electronic Apparatus]

¹  (1540)  

[English]

    The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.)): Order. Thank you very much, all. The meeting can go until 5:10 if we need the time.

    I would like to welcome... I was going to say a new minister, but he's simply the new Minister of Natural Resources. He's certainly not a new minister.

    We thank you, sir, for agreeing to be with us. I know your style is to participate in such meetings and to share with committee members at every opportunity when we feel the need to invite you.

    Before proceeding to the presentation by Minister Dhaliwal and questions from members of the committee, I'd like to welcome a colleague of ours, Mr. Hasan Ozgobek. He's a member of Parliament in Bülent Ecevit's Democratic Left Party, of the three-party governing coalition. He is a member of the Turkish Grand National Assembly foreign affairs committee, and he is especially interested in Canadian affairs.

    I'd like you to welcome our colleague.

    Some hon. members: Hear, hear!

    The Chair: As a special offer, I have invited him to sit with us and to feel part of our undertaking.

    Mr. Minister, I invite you to make a presentation. This committee is very rigid on time. That's my way of saying “Don't talk long so that they talk less”. When we get to question period, the first round will be five minutes, and that's five minutes for questions and answers. If my colleagues take five minutes to ask their questions, we won't be able to benefit from the answers. That's how strict we are.

    The rules now being clear, we invite you to make a presentation of 20 minutes or thereabouts.

    Hon. Herb Dhaliwal (Minister of Natural Resources, Lib.): Thank you very much, Mr. Chairman.

    Let me also welcome the member of Parliament from Turkey. I could probably spend an hour and a half on my recent trip to Turkey--my family and I had a wonderful trip there just last year--but I think we'll leave that to another time.

    I want to thank you and the members for inviting me today. As you noted, Mr. Chairman, I'm new to this job. There are benefits and disadvantages to getting a minister so new to this job. You're able to bring forward some of your agenda items, and the members'. However, before I am able to get through all my briefings, as a new minister I sometimes may not be able to give you the clear and crisp answers or the details that I would want to. I certainly want to say that I'm available to come back at any time you feel it's important.

    The Chair: We accept that and we understand.

    Mr. Herb Dhaliwal: Okay.

    I appreciate the opportunity to meet with you so early in my mandate, not only to share my thoughts on the natural resources portfolio and some of the challenges and opportunities we face, but also to hear about issues of interest and concern to you, Mr. Chairman, and to all the members.

    This is my first appearance before the committee, and I certainly look forward to working with you. I hope to come before you again in the near future to discuss my department's main estimates, but after only a short time on this job, I can tell you this: as Minister of Natural Resources, I fully intend to play a leading role in helping to improve the quality of life of Canadians through sustainable development and use of our natural resources.

    As you know, my department is mandated to take an integrated approach to enhance the responsible development of Canada's energy resources--our minerals and metals, our land base, and our forests--an approach that ensures that we address social, environmental, and economic considerations so that future generations of Canadians will benefit from our rich resource heritage.

    I am proud of the economic performance of Canada's natural resource industries. Together, the industries that fall within my department's mandate account for $106 billion, or 12%, of our total gross domestic product. They're responsible for more than one-third of our export sales. These industries directly employ almost 1 million Canadians and are the lifeblood of more than 650 rural, remote, northern, and aboriginal communities across Canada.

    Improving the quality of life of Canadians through sustainable resource development and use delivers on our government priorities of creating a world-leading economy; innovation; a clean, healthy environment; a more inclusive society with strong and safe communities; and an enhanced Canadian voice in the world.

    My department has a central role to play in pursuing these goals. We provide leading-edge science and technology information and knowledge to Canada's resource industries and other stakeholders. For example, my department provides and interprets vital geoscience information and knowledge, including assessment of energy and mineral resource potential.

    In partnership with industry and academia, our job is to deliver the policies and innovations needed to maintain Canada's competitive position in global markets, all the while adhering to the principles of sustainable development.

    The past year has seen a renewed focus on energy in North American markets. We have before us some unique opportunities. The demand for energy continues to rise in the United States and in Canada. Canada plays a key role as America's most reliable supplier of all forms of energy.

    Anticipated energy market reforms in Mexico, combined with a growing Mexican economy, will also lead to new opportunities for Canadian energy companies in the country.

    I know the topic of continental energy markets is of interest to this committee. This is not a new phenomenon. These markets have been a growing reality since the Canada-U.S. and North American free trade agreements were put in place. Over the past decade, Canada's exports of oil and gas to the U.S. have more than doubled, and there is increased two-way trade in electricity. Our bilateral relationship with Mexico is also flourishing.

    This increased trade has led some to surmise that we are discussing some sort of common continental energy policy with the U.S. and Mexico. Let me assure you, we are not. Canada has its own energy policy, a policy that works very well. It was founded on transparent and competitive markets and on NAFTA.

    Canada's energy policy has helped fuel growth in the energy industry, growth that has spurred the entire economy. We have no reason to alter Canada's energy policy. It doesn't make good sense to do so. However, we do want continental energy markets to function better, with improved regulatory compatibility, predictability, and consistency. We are working with the U.S. and Mexico both bilaterally and trilaterally to achieve this. We want to open and expand our energy trade with the U.S. and Mexico while ensuring that each country's sovereignty, ways of pursuing economic and social goals, and priorities are fully respected.

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    Hand in hand with our commitment to expand continental energy markets, we also want to work with the U.S. and Mexico to address the climate change challenge. There are many opportunities for international cooperation to improve energy efficiency and through R and D to encourage the development and use of cleaner energy options. We want to take full advantage of them.

    Let me be very clear on this. Climate change is a primary concern for Canada and the world. If we don't respond, the consequences for the global community will be huge. It is essential that the world find common ground and that we work in unison, not at cross-purposes.

    Obviously some important details have to be worked out before Canada makes a decision on the ratification of the Kyoto Protocol. We must be confident we can reach our target and that the cost of meeting our target is reasonable and fair. I have said before, it makes no sense to sign a contract before we understand its full impact. Canada's support for the Kyoto process hasn't wavered. However, any decision on ratification will be undertaken only after full consultations with the provinces and the territories, industry, and other stakeholders and will be based on a sound analysis of the implications of the protocol for Canada.

    But we don't need to wait for the agreement to go into effect to take action. We are in fact acting now and have been acting for more than a decade. In the past two years alone, Canada has invested $1.5 billion towards climate change solutions. We've targeted key economic sectors and promoted smarter energy use and increased energy efficiency. We're putting money into R and D and breaking new ground in climate change technologies.

    We're also encouraging the development and use of cleaner energy options. Canada's natural gas and clean, renewable hydroelectric resources already contribute. At the same time, we need to greatly accelerate the development and uptake of fuel cells, and other emerging, renewable energy technologies such as wind and solar power. Carbon dioxide capture and storage technologies will also be part of the solution.

    Canada has been collaborating on these issues for some time with both the U.S. and Mexico. We will continue this work in the future. We want to deepen cooperation, identify joint or trilateral research opportunities, and develop continental standards where applicable. The importance our government places on this work is a reflection of our commitment to international engagement on climate change, including, most strategically, our largest trading partner, the United States.

    Last month, President Bush outlined the American plan to reduce greenhouse gas emissions. While it contained some good steps, we have some concerns with the U.S. plan, including the lack of a clear target for greenhouse gas emission reductions. Our government continues to believe that the long-term interests of the United States and all nations will be best served by U.S. participation in the Kyoto Protocol.

    Climate change is a global challenge that requires a global solution. Internationally, we must continue working to get the framework right. Some questions remain unanswered, including for Canada the recognition of cleaner energy exports. Canada exports cleaner energy such as natural gas and electricity to the U.S., where it often substitutes for more greenhouse-gas-intensive energy. We want to continue and increase this trade to help provide much needed energy security to the U.S., but this will make it more difficult for Canada to meet its Kyoto commitment.

    In the ten years between 1990 and 1999, one third of Canada's increase in greenhouse gas emissions was due to expanded oil and gas exports. The natural gas and electricity come from Canada, but the environmental benefits occur elsewhere. The bottom line is that global emissions are lower because of Canadian exports. So we need to find a way to encourage and recognize the trade and use of cleaner energy. Producing and exporting countries like Canada should not be unfairly penalized.

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    Unless this issue is addressed, Kyoto could actually discourage the export of cleaner energy and encourage the use of more carbon-intensive fuels. A growing body of work is examining the implications of energy trade, as we make the transition to a more sustainable global energy economy. I'm confident these studies will make a very useful contribution to international trade climate discussions.

    I welcome any ideas the committee may have on how we can turn the climate change challenge in particular and issues for renewable energy into real opportunities. One thing we must accept is that Canada will have to adapt to a world in which the climate is changing. The impacts of climate change are already being felt in some parts of the country. Adapting to climate change will be a significant challenge in itself and will require engagement from all levels of government.

    Climate change and continental energy markets are important issues for my department, but I am acutely aware that we have other pressing issues to deal with.

    Canada needs to resolve the softwood lumber dispute with the U.S. and continue to push for broader global recognition of our sustainable forestry practices. We are working with other countries to implement the UN Forum on Forests plan of action and on the development of an international legal framework for forests.

    Canada is also seeking endorsement for a global dialogue through which governments can explore how the sustainable development of mining and metals can better contribute to economic growth and poverty alleviation around the world. I'm working with my officials, industry, and other partners to have these issues included on the agenda of the World Summit on Sustainable Development in South Africa later this year.

    I'm personally committed to finding ways to strengthen aboriginal participation in the resource sector. The development of the Ekati and Diavik diamond mines in the Northwest Territories and the strategies being implemented by oilsands companies to promote aboriginal economic opportunities are shining examples of how this can be achieved. We must build on these successes, as new resource projects are developed in the north and elsewhere.

    I also believe that as a key driver of innovation in Canada's economy, the natural resources sector will have a vital role to play in developing and participating in the government's innovation strategy. The energy, minerals and metals, forestry, geoscience, and geomatics industries must be fully and effectively engaged in our innovation strategy and consultation process. I will make sure that happens.

    I'd like to make one final point. My remarks today have focused on the Government of Canada's commitment to sustainable resource development. But I recognize and appreciate the important role the provinces and territories play in creating the necessary conditions for resource investment and development and protecting the environment. I look forward to working cooperatively with my provincial and territorial colleagues on issues of national importance.

    In closing, let me say again that I would welcome a return engagement with the committee, once I become more familiar with the many issues and opportunities facing our natural resource sector.

    Thank you very much for listening. I'll be happy to answer any questions.

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    The Chair: Thank you very much, Mr. Minister.

    I will not be asking questions; I'll just make a comment at the beginning. This committee, as everyone knows, is a joint committee, and Indian Affairs and Northern Development have indicated to us they will have three or four pieces of legislation for us before summer. In all fairness to the Natural Resources side, if there is legislation coming at any time, we would appreciate knowing as soon as possible, so we can plan ahead of time and give your department the time you deserve.

    The minister this afternoon has brought with him, to assist in answering questions of members, Mr. David Oulton, Ms. Sue Kirby, Mr. Peter Harrison, and Ric Cameron. Welcome, and thank you very much for appearing here today.

    We will have five-minute rounds, question and answer total.

    Mr. Chatters.

    Mr. David Chatters (Athabasca, Canadian Alliance) Thank you, Mr. Chair.

    Thank you for coming before the committee, Mr. Minister, and once again, congratulations on your new appointment.

    I take particular note of a phrase that seems to be a favourite of yours. I've heard it several times now, although in somewhat different form, I'll grant you. Today you said it makes no sense to sign a contract before we understand it. I believe the last time I heard this phrase, you said you would never sign a contract before you knew the real costs of the contract. Substantially, both are the same, but there may be some subtle differences there.

    I think all Canadians would really love to have some help from the government in understanding the real cost--the full costs--of implementing Kyoto. I have before me a document from the finance department that would specifically indicate they have done a lot of work on the economic impacts of Kyoto, and you said in your comments as well that you've been working for some time on the issue.

    Your government--your department and other departments--seems to have in its possession figures and facts on the cost of Kyoto. Yet you continually dismiss facts and figures put forward by other groups--industry and the Canadian Manufacturers' Association. Why won't your government release the facts and figures they have on the cost of Kyoto to the Canadian public, so that they can understand and get engaged in this dialogue?

    Mr. Herb Dhaliwal: First of all, I want to congratulate Mr. Chatters as the critic for the opposition, and I look forward to working with you.

    As to the quote I've given before, you're actually correct in that I wouldn't sign a contract unless I knew the cost. I think it just makes good sense. My view is the same. It hasn't changed on this.

    Kyoto is a very complex challenge for the world. There's a huge political and scientific consensus that climate change is a real problem for the world, and the world has to come together. It can't be done by any one country; it can only be done by a global action by everybody.

    The Kyoto Protocol was signed by 186 countries. You will recognize that this is a huge problem for the world and a challenge we all must deal with. There is not only scientific proof, but also, if you go up to the north where there's a huge impact, you can tell. If you fly with some of the pilots, they'll tell you of the huge receding they see of the glaciers and how visible--

º  (1600)  

    Mr. David Chatters: I'm sorry to interrupt, Mr. Minister, but I don't dispute all of those things. I want an answer to my question.

    Mr. Herb Dhaliwal: And I'm going to give you a full answer on this, because I want to make sure I covered the area.

    What we've said is that we want to ensure we have consultations with the provinces, with the territories, with industry, with the stakeholders. That's exactly what we're doing. We hope in the near future to put forward a plan that talks about and details a cost. Go back to the provinces, because we need a Team Canada approach on this. We need the provinces and industry onboard to make sure we can meet the targets we set out.

    Yes, those costs will be there. Of course, you know the costs change depending on your assumptions. Do you assume that we get credit for cleaner energy exports? That changes the costs. What about the international credit emissions? If you assume that those will be available, that changes the costs. What about domestic emissions? How is that going to affect them? How much of your program is going to be target measures?

    To determine the costs, you have to look at what the assumptions are. What we want to do is make sure we have a comprehensive plan. There are no deadlines for us to meet. We want to make sure we do it right and have a plan that the federal government, the provincial government, the territories, and industry have had a good opportunity to review before we make that final decision on ratification.

    We have to be clear on that. There's a climate change secretariat that works with the provinces, territories, and industry to bring all that information together to make sure we have a good plan--the right plan--and we look at all the assumptions. So that is coming. We won't be making decisions until we have all the data and all the information on the table.

    The Chair: Thank you. That's five minutes.

    To my colleagues, you notice how Mr. Chatters managed his five minutes? I encourage you to do that.

    Monsieur Cardin.

[Translation]

    Mr. Serge Cardin (Sherbrooke, BQ): Thank you, Mr. Chairman.

    Welcome, Minister and congratulations. Welcome also to senior officials from your department. As you know, politicians come and go, but public servants and bureaucrats never die.

    You stated earlier that you had been briefed. I don't know whether you personally have some ideas to share with us concerning the environment and what climate change means to you, your children and the general public. I don't know if the briefing changed your mind or pointed you in a different direction. However, in your presentation, you listed a number of positive actions. Clearly, it's difficult to oppose your noble stand on this issue.

    However, I was caught off guard somewhat by something I read on page 7 of your submission:

One thing we must accept is that Canada will have to adapt to a world in which the climate is changing - already the impacts of climate change are being felt in some parts of the country. Adapting to climate change will be a significant challenge in itself, and will require engagement from all levels of government.

    I get the feeling that your are almost admitting defeat when you say we will need to adapt to climate change rather than take concrete action, as you initially had us believe you would do, and invest, perhaps even heavily, in renewable energy sources. I'm curious to know what kind of funding has been allocated to this, particularly since I have already done an analysis and concluded that the federal government is realizing a net surplus of somewhere in the order of $5 billion to $6 billion on gas and fuel taxes, after taking into account its involvement in the transportation sector.

    If such large sums of money are involved, shouldn't this automatically... You note at some point in your presentation that economic development is a priority concern. In this global economy, shouldn't our fundamental priority be a commitment to enhancing air quality and the lives of human beings?

    For instance, your department is responsible for the mining industry. Several decades ago, working conditions in the mines were terrible. Improvements were made, albeit at a cost, but the mines are still in operation.

    Today, you're maintaining that there are costs associated with the Kyoto Protocol and with the actions to be taken in the area of climate change. Wouldn't it be better to adopt a positive approach and bring in without further delay environmental standards for greenhouse gas emissions? There is tremendous potential for savings in this area in terms of exporting these technologies.

    I'd appreciate hearing your views on the subject.

º  (1605)  

[English]

    Mr. Herb Dhaliwal: First of all, if I had the power to change climate change, I'd do it tomorrow, Monsieur Cardin. I got into politics because I wanted to make sure we built a better quality of life for our children. Part of what we can do is to make sure we don't take away from their opportunities in the future and their quality of life.

    Canada's greenhouse gas emissions are 2%, when you compare it to the world. Our neighbour, the United States, has a 25% response for greenhouse gas emissions. In the overall context, Canada can play a role, but it needs to be a global action. It's only bringing it down to a stable level. We're already seeing there are climatic changes occurring.

    I don't think I've given up and said we have a problem. I think we're realistic that there are already changes. We have to adapt to it. I'm sure, as a global community, if we can reverse what has happened, we would all want to do it.

    I think my comments were, yes, we want to do it. The Government of Canada has already shown its huge commitment to dealing with climate change. We've committed $1.5 billion, for example, for things you talk about, such as renewable energy, and $260 million to encourage wind energy so we can reduce climate change.

    Climate change is here because we have 6 billion people and we burn fossil fuels. It's the reality of it. We all recognize the serious problem. The federal government has taken leadership on making changes already and in making a huge commitment.

    In Kyoto, we need to make sure that we have a clear understanding of the costs, the impacts on the different regions of the country, and that we have a clear plan. We want to include the provinces, the industries, and Canadians. This has to be an action plan that we all support and are willing to play a part in. It is going to affect our future generations. We have to also include other nations because it's a global issue.

    The Chair: Thank you.

    Mr. Keddy.

    Mr. Gerald Keddy (South Shore, PC/DR Coalition): Thank you, Mr. Chairman.

    I'd like to welcome the minister to the committee as well. Congratulations on the new portfolio.

    If I could, I'd like to ask shorter questions and have shorter answers. I'll try to keep my part down and you try to keep your part down.

    A couple of times in your speech and in reference to the line of questioning my colleagues took with the Kyoto Protocol and the sustainable development questions.... Last year your government passed Bill C-4, which at the time was supposed to create a foundation for sustainable development. As I'm sure you are aware, this was supposed to introduce and support expensive and maybe leading-edge technology that would lead to cleaner air and reduction of greenhouse gas emissions, yet the foundation is still not up and running.

    It's been almost a year now. I think it was introduced into the House in March of last year. There's been no funding set aside for it. Are you including those dollars when you talk about the $1.5 billion you've set aside? Those dollars aren't being spent yet. So far it's only a promise.

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    Mr. Herb Dhaliwal: We're very committed to the $100 million, but I guess it took more time to create the foundation and get it up and working than was originally anticipated. I'm confident that it will be working and that funds will be put into practice. This is a foundation that requires a board to be set up, and I understand it will be at arm's length. It will be operating, and this is part of the overall funding for Kyoto. The $1.5 billion, I understand, is included in that.

    Mr. Gerald Keddy: Thank you. I still have some major difficulties with the foundation, the way it was set up and the fact that I don't really think it is arm's length. There's not enough accountability built into that. Maybe that could be revisited, since the money hasn't been allocated yet.

    Several times you also spoke about cooperation with other colleagues in cabinet and cooperation with other players, both governmental and non-governmental, across this country. Certainly on the east coast, in particular in Nova Scotia, where we have the Canada-Nova Scotia Offshore Accord set up, in real dollars, for every dollar of revenue generated out of Nova Scotia's offshore, 81¢ goes to the federal government and 19¢ goes to the Province of Nova Scotia. Nova Scotia is looking for a better deal. I realize we're not going to move heaven and earth here in a minute, but would it be something you would support and be willing to discuss with the Premier of Nova Scotia and try to find other avenues to promote it?

    Mr. Herb Dhaliwal: My understanding is that this is in the privy of the Minister of Finance.

    Mr. Gerald Keddy: Absolutely.

    Mr. Herb Dhaliwal: It's not in the privy of the natural resource minister. It's something you would really have to take up with him. I've not been involved in any discussions about this, but I'll certainly make a note of your concern and pass it on to my colleague.

    Mr. Gerald Keddy: I'd appreciate that.

    Do I have time for another question?

    The Chair: You have a minute and a half.

    Mr. Gerald Keddy: Oh, I'm doing okay.

    The Chair: I'm the highest paid timekeeper in Ottawa.

    Some hon. members: Oh, oh!

    Mr. Gerald Keddy: I have another question on cooperation. I'm sure many of my colleagues as well have been meeting with the delegation from the Northwest Territories, who are seeking to promote a number of issues that will develop the north--certainly help further develop the diamond industry and further develop the gas and oil exploration that's going on there. In order to do that, the Northwest Territories, with only 18,000 people to tax, obviously can't gather all their revenue from their own people.

    Through your department and your colleague's department, the Department of Indian Affairs and Northern Development, they need some infrastructure funding immediately, to the tune of at least $200 million to start and an additional $150 million, for a total of $350 million. That's not a lot of money to probably put their economy up and running, to establish the infrastructure to do the types of development they would do. Again, it's a cooperative thing. Would you be willing to talk to your colleague in Indian Affairs? I'm sure you would be, but those are issues we need help on.

    The Chair: And that is how long a minute and a half is.

    Mr. St-Julien.

[Translation]

    Mr. Guy St-Julien (Abitibi--Baie-James--Nunavik, Lib.): Thank you, Mr. Chairman.

    Welcome, Minister and congratulations on your appointment. However, there is work to be done in the field, particularly in the case of resource regions. The mining industry in Canada has been in the grip of a prolonged economic downturn for the past three years and the situation is expected to persist for two more years. Base and precious metals reserves in Canada have declined. The long-term repercussions for Canada's mining industry are serious.

    Could you explain to us why most of the jobs, and hence the budget, for the minerals and metals sector is concentrated in the National Capital Region rather than in the actual mining regions? Your department's overall operating budget is in the neighbourhood of $638 million. Yet, only $39 million has been allocated to the mining sector. Of this total amount, $34 million is concentrated in Ottawa, with the remaining $5 million going to resource regions in other provinces. The Vancouver area alone has been allocated $184,000. Why haven't the resources regions been allocated more funding?

º  (1615)  

[English]

    Mr. Herb Dhaliwal: I don't know if I can answer that specifically, but let me say there are a lot of expenditures we make that the mine industry benefits from. It may not be clearly on the mining line. For example, I've learned recently, being a minister, that all the geological surveying we do is extremely important for the mining industry to help them determine where they should be looking for certain minerals. We also have these geographically targeted initiatives. In those areas where we feel there are opportunities, we may target the spending of more money on geological surveys.

    I didn't realize, and I don't think Canadians realize, how important geological surveying is for the industry. The industry doesn't have the funds to do mining all over Canada, so they need the base information and the foundation to be able to make decisions. For example--this goes back to the north question as well--because of the work we've done at Natural Resources, De Beers has followed the glacier tracks, and they figure there is more opportunity for gold mining in the north, so they've signed up ten million hectares of land on Baffin Island to look for more diamonds. Part of the reason they were able to assess that was because of information provided by Natural Resources Canada.

    So although it may not be on the line, there's a lot of work we do in other areas that is extremely beneficial for the mining sector. But as to the more specific, that's something I'll look at.

[Translation]

    Mr. Guy St-Julien: Moving on to a completely different subject, Minister, I would like to talk about grants and contributions.

    Last year, you allocated $80 million to the energy sector, $16 million to the forestry sector and $13 million to other sectors. However, the mining sector received nothing. Why was that? I'm talking here about grants and contributions. I'm not just talking about geology and the like. The department covers a range of sectors.

[English]

    Mr. Herb Dhaliwal: Maybe there aren't grants and contributions, but what we've done recently to help the mines is introduce the flow-through shares in the budget, which has been a huge benefactor to the mining industry. So there's something the Government of Canada is spending that helps to promote mining. In British Columbia, the mining industry said the combined investment tax credit--B.C. and the federal government--is 30%, which is helping.

[Translation]

    Mr. Guy St-Julien: However, Finance handles flow-through shares. Tax credits are issued by the Department of Finance, not by your department. I'm sorry, but this has nothing to do with Natural Resources. You have been misinformed by your officials. They should be telling you that programs have been abolished and that the department has withdrawn from resource regions. That's what officials should be telling you. We want the real story.

[English]

    Mr. Herb Dhaliwal: I'm not aware of what the history on grants and contributions is and whether this is something that should be looked at. I certainly will make a note of that and find out what they were, whether we've eliminated or reduced them, and why, and examine them and compare them to all the other things we do. I think that's why it's important to have me here at the beginning, so I can ask those questions on the grants and contributions.

    There have been programs in government at large, but the mining industry has told me that this tax credit, which they requested, on flow-through shares is having an important impact on mining. And it's through Finance. What we want to do is encourage mining. We want to make sure we provide the information so that they can be successful.

    One of the things I told the mining community when I spoke to them yesterday at the PDAC conference is that we need to look at how we can improve the regulatory system to streamline it and look at any duplication or overlap that may exist so we can once again encourage mining in Canada.

    But you're right, one of the other things is that depressed metal prices have caused less mining to happen in Canada.

    The Chair: Thank you.

    Mr. Chatters.

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

    Mr. Minister, I find your comments on climate change and on Kyoto to be contradictory to those of your colleagues, to say the least. You presented your idea that you will come up with a plan and that it will have detailed cost analysis and figures, and you'll consult with industry, provinces, and stakeholders.

    Yet it seems to me worth asking, when the Prime Minister and your colleagues in cabinet say “We will sign Kyoto; without question we're committed to sign Kyoto”, what's the use of having consultations with industry and the provinces and stakeholders if you intend to sign it come hell or high water anyway?

º  (1620)  

    Mr. Herb Dhaliwal: I don't think anybody in government says “Come hell or high water, we'll ratify”. We have signed the Kyoto Protocol and now the analysis is done. We all believe in the principle. I mean, 180 countries have signed the Kyoto Protocol because they believe there has to be global action on climate warming.

    Mr. David Chatters: The Prime Minister and the environment minister said “We will sign”.

    Mr. Herb Dhaliwal: I think what they have said is--

    Mr. David Chatters: “We will sign.”

    Mr. Herb Dhaliwal: --“We intend to, but we want to do all the analysis”--

    Mr. David Chatters: That isn't what--

    Mr. Herb Dhaliwal: --“We want to have all the data.”

    I think we're pretty clear and are very consistent that we want to make sure we've got all the data on the table and have done the consultations before that decision is made.

    Mr. David Chatters: I hope your position is the government's position, I'll say that.

    My second question is this. In the nine years I've been here, the two previous ministers of your department have been quite clear that they saw their role as Minister of Natural Resources to be as the spokesperson for natural resource industries within the cabinet. Do you see that as your role, as Minister of Natural Resources, or is it somewhat different?

    Mr. Herb Dhaliwal: Of course, I want to make sure we have the development of our natural resources in a sustainable way. I'm very supportive of it. We have to do what's right for the country and the long-term interest of further generations.

    We can't do things blindly. It's why, for things like Kyoto, I very much believe we have to play a strong international role in making sure we do the right things. We have to know the cost to the country, the impacts, and the impacts on the regions. We have to make an informed and sound decision.

    Mr. David Chatters: Are you suggesting the natural resource industries aren't in favour of sustainable development and aren't concerned about the environment?

    Mr. Herb Dhaliwal: No. I think they are very much involved. In fact, some of the work many of them have done is exemplary. For example, Shell Oil is well known for their work in reducing greenhouse gas emissions.

    No. I think they do a superb job. They've always said that they support it, that they want to do whatever they can on climate change and play their role.

    In terms of Kyoto, we have to have all of the facts. We have to have all of the information. We have to go into this with our eyes open and have a clear understanding of the impact.

    My role will be to ensure, of course, with the interests of natural resources and their concerns, that my colleagues are very much aware of the concerns. It's very important that I articulate for them some of the concerns they have.

    For example, competitiveness is an important concern they have. If we ratify it but the U.S. doesn't ratify it, what is the impact on competition? These are issues we have to make sure we deal with.

    The Chair: Thank you.

    I should have mentioned this is a four-minute round. The next one will be a three-minute round.

    Monsieur Binet, quatre minutes.

[Translation]

    Mr. Gérard Binet (Frontenac--Mégantic, Lib.): Good day, Mr. Dhaliwal. I'm delighted to welcome you here today as Minister of Aboriginal Affairs and Natural Resources. There are no aboriginals in my region, but I am happy to welcome you as the Minister of Natural Resources because my region is rich in minerals. Although there are no longer any open-pit gold mines, we do have copper and chromium mines, however, along with lumber and sawmills.

    The Thetford Mine region is home to several asbestos mines. I want to tell you a little about chrysotile, an asbestos fibre that poses a minimal health risk. Canada has been defending the use of chrysotile on the international scene since 1985. However, there is no policy in place regarding the use of this asbestos fibre here in Canada. Odd that we defend its use internationally, but not domestically. We have a slight problem with this position. Through Mr. Boudria, we have made a request which I hope will be met.

    My question for you is as follows: Does the Canadian government require of industries that produce natural or mineral products... Let me give you an example. We've been mining asbestos in our part of the country for the past 125 years. There have been stoppages in production and 25 per cent of the time, the focus has turned to magnesium and other resources. However, no one used to give any thought to research and development. Today, things are beginning to change.

    Is the Canadian government demanding that the industry consider a second, third, fourth and if necessary perhaps even a fifth value added component? At the same time, we realize the provincial government also has certain obligations in this matter, since it owns the natural resources. However, does the federal government have any specific requirements in place?

º  (1625)  

[English]

    Mr. Herb Dhaliwal: I assume you're referring to the asbestos aspect of it?

[Translation]

    Mr. Gérard Binet: No. I'm talking about everything connected with the minerals sector. For example, when gold is mined, is the industry required by the government to come up with a second, third or fourth value added component? In the case of certain minerals, it's more complicated. Does the government have certain requirements or, as happened in the case of asbestos, the resource is mined for 125 years, the tailings are left behind and someone takes off with the profits...? We're left to deal with the fallout. The sector once employed 3,400 people. The Quebec government stepped in to clean up the asbestos mines. This was supposed to result in the creation of 1,000 jobs. Today, however, the industry employs 1,000 at most and these workers are on the job only six months of the year.

    Does the Canadian government have a policy in place requiring the industry to consider a second, third or fourth processing state? If not, I'd like it to give the matter some thought.

[English]

    The Chair: Thirty seconds.

    Mr. Herb Dhaliwal: First of all, I know that in government generally we're always working toward that value-added, whether it's in forestry or mining. In all those areas there's always encouragement to have value-added here, because that's where you create the jobs in processing and manufacturing.

    With regard to the specifics of mining, I don't think we have a program to provide direct funding. I may be corrected by my deputy minister. I'm not aware of it.

    But I do have a mandate to develop new markets for our industries. Let me give you an example in another area where we're working to find new markets, and that is softwood lumber. We announced $5.3 million for the Canada-China wood product development so that we can diversify our opportunities in wood products. The industry is throwing in $5 million. It's $10 million so that we can try to create new markets for our wood industry. I do have a mandate for that, but not specifically for value-added, although I think it's something we try to do in every field.

    The Chair: Thank you.

    Monsieur Cardin.

[Translation]

    Mr. Serge Cardin: Mr. Minister, on page 3 of your submission, you take pains to reassure us that a continental energy policy is not in the cards. However, there may be some unspoken agreements in place. Take, for example, natural gas. I get the impression the federal government is willing to issue to the United States a license to extract natural gas from Sable Island in Nova Scotia in exchange for greenhouse gas credits. The fact is, the government is unwilling to guarantee natural gas supplies to New Brunswick and Eastern Quebec through the Gazoduc Cartier pipeline project.

    Could you tell me if you intend to support the Gazoduc Cartier project?

[English]

    Mr. Herb Dhaliwal: The government position on the building of pipelines is that we don't subsidize them. It's driven by the market. The market will decide where the pipelines are built. They'll determine it based on the demands and the markets that exist. There is an opportunity for those companies that feel they don't have access to that gas to make application to the National Energy Board. There have been cases in the past where that has been done. But I don't think that as a government we should be determining where pipelines should be built and subsidizing natural gas. It should be determined by the industry. It has always been that way when we've built thousands of miles of pipelines throughout this country. It's the industry that will have to make the decision on that.

º  (1630)  

[Translation]

    Mr. Serge Cardin: I'm sorry to hear you say that the market should be driven by industry and by companies and that the government has no desire to subsidize pipeline construction or interfere with the decisions of the National Energy Board. However, in this particular instance, Gazoduc Cartier confirmed to us that it was willing to finance the construction of the pipeline. In other words, the private sector was willing to invest in this venture.

    As for the relationship between the government and the National Energy Board, ultimately the politicians are the ones who determine policy parameters. The NEB abides by these policy parameters or directions. Without directly influencing the NEB, the government can nevertheless dictate certain policies so that Canada and the provinces, notably Quebec, can prosper and reduce greenhouse gas emission levels.

[English]

    Mr. Herb Dhaliwal: I don't believe this government should have a policy either to subsidize pipelines or to tell companies where they should build their pipelines. They would have to look at the economics and determine whether there are big enough markets for them to justify building pipelines. Whether it's a pipeline in the north or in other areas, I don't think we should be doing that.

    Maybe I don't understand the question clearly.

[Translation]

    Mr. Serge Cardin: No, because in the example I gave you, the private sector was prepared to invest in the construction of the pipeline. The problem is the government's policies and relationship with the National Energy Board. The policy is to focus strictly on exports of natural gas, not on helping Canadians.

[English]

    Mr. Herb Dhaliwal: The NEB is an arm's-length organization. I certainly would make note of what your comments are, but I couldn't as minister interfere with their decisions as to when applications are made to build pipelines. It's something they would determine.

    Maybe you could give me a more specific question in writing and I'll try to respond. Maybe I'm not clear on the answer.

    I presume you're talking about the Gaz Métropolitain wanting to build a pipeline up to Quebec, as opposed to a pipeline going south, and the decisions the private sector has to make as to what's economical in terms of the cost and all the other factors they have to put in. They would have to determine that, and then they would have to apply through the NEB. If they have the finances in place and they want to build a pipeline, the NEB would have to review it. I don't know enough about it, but if you like, I could give you a more detailed response to your question in a letter.

    The Chair: Thank you. Merci.

    Mr. Bagnell.

    Mr. Larry Bagnell (Yukon, Lib.): Thank you, and thank you for attending, Minister. I'm glad you raised the northern pipeline issue, because the day before yesterday the Senate made a great decision for us in the Yukon: that the Alaska gas would indeed come down the Alaska Highway. So people in the Mackenzie Delta are working hard too. It looks like there are two pipelines very close to ready to go. I assume that as regulators there is the Northern Pipeline Agency for the Alaska route and the Natural Energy Board maybe for the Mackenzie Valley route. I'm assuming the federal government will be ready to do the regulation so that we can get these two lines into production soon.

    Mr. Herb Dhaliwal: First of all, as you've said, Larry, Congress has passed a bill that says they will not accept what they refer to as an over-the-top line and they would encourage the Alaska pipeline. We're looking forward to companies making application for either the Mackenzie Delta or the Alaska Highway one.

    There seems to be conflicting information. Some of the producers said not too long ago that it's too costly and they don't think at this time it's economical for them. Of course, maybe these changes may affect them. We don't know, but as of yet we don't have a formal application to the NEB for either the Mackenzie Delta or the Alaska project.

    We need to make sure we have a regulatory process that is efficient, one that avoids any multi-jurisdictional evaluation, and we need a common evaluation and assessment. We have to make sure we have the capacity as a government to deal with any application and requirements of our many different departments. And we're working to ensure that this does happen so that when applications come in they can be appropriately dealt with and they can be built, if the economics are there, in an efficient time and in a cost-effective way, without compromising the environmental requirements.

º  (1635)  

    Mr. Larry Bagnell: My second question is for Peter. This is a standard question that we ask all deputies. As you know, one of the ways every department is supposed to look at every new legislation and program is through the rural lens. This is in order to understand how it will affect people such as those in my riding, which is very rural. I was wondering if you could give any comments on how that's had an effect on any recent legislation or programs coming from your department.

    Mr. Peter Harrison (Deputy Minister, Department of Natural Resources): Thank you.

    Mr. Herb Dhaliwal: Before Peter answers that question, I might just say that we have a minister in cabinet responsible for rural development. One of his responsibilities is to see that any legislation or any policy that does come through goes through the rural lens. He has an opportunity to come to cabinet and say “This has to be done for the rural community”. So we have that sensitivity to rural issues. That's the purpose of creating this new job, minister of rural development. We're certainly aware of this, and issues that come forward are taken into consideration when any policy or any legislation comes through. That's the responsibility of the minister of rural development, Andy Mitchell, and he reviews it.

    I don't know if you want to add anything more to that, Peter.

    Mr. Peter Harrison: May I?

    Mr. Herb Dhaliwal: Sure.

    Mr. Peter Harrison: The thing I would add, Mr. Chairman, is that the mandate is not only for rural but for remote, and the department consistently reviews whatever is going forward in terms of how those particular takes on things are important to the minister. I think it's fair to say that given the geographic distribution of resources across the country, east to west, as well as in the north, this has traditionally been an important part of the way in which we do business in our department. We continue to do so in support of the minister.

    The Chair: Mr. Keddy.

    Mr. Gerald Keddy: Thank you, Mr. Chairman.

    On Mr. Bagnell's question on the Alaskan Highway route for the pipeline coming out of the north slope of Alaska, it's my understanding that this application has been approved for a number of years, the foothills route, and that the environment assessments are ready to go. It has been completed, not just ready to go.

    The fact that it has passed the Senate hearings in the States and has reached approval and the funding and environmental part of it in the U.S., on the U.S. side, on the Alaska side, there should be nothing on the Canadian side to hold it up. That route could be started without jeopardizing the Mackenzie Valley route, which may come into effect in the future.

    The issue with the Mackenzie Valley route is that the environmental assessments aren't done, and there are a number of land claims still to be settled and aboriginal partnerships to be worked out.

    Mr. Herb Dhaliwal: My understanding--and I might need Peter's help here--is that we signed a treaty called the Northern Pipeline Act, which approved a pipeline to be built along the highway, by the foothills. This was done in the 1970s.

    Of course, the dynamics have changed. If there is a new pipeline built, we don't know whether it would take the same route or whether the size of the pipeline will be different. All those factors will have to be looked at, of course. I don't think we're going to get exactly the same application that was originally there. The circumstances will be changed, and there will be different requirements.

    So until an application comes in, we wouldn't be able to make a decision, but I would think the requirements of the 1970s would be much different from the requirements of the 1990s for the pipeline builders and what they need to build. It wouldn't be exactly the same application that appeared in the 1970s.

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

º  (1640)  

    Mr. Gerald Keddy: I would tend to disagree that the requirements are not significantly different. There seems to be some opposition on the part of government to stay out of the debate, and it seemed to me, at least, as an opposition member, that you're favouring one route over another. You have one route that has passed the environmental assessments, that has the legislation in place, that could begin tomorrow, in essence, and I would think it's something that, as a new minister, you should take a very serious look at.

    I have another question, on treated lumber. It's an issue that we've been ignoring in the House and at committee as well, but certainly chromated copper arsenate has been used for a number of years to treat lumber. It's a billion-dollar-plus industry in Canada. It's under serious difficulties with the Department of Health and the Department of the Environment. A lot of leaching of arsenic out of the product is occurring. There are other treatments available. Is this something you're going to look at, certainly in the near future? I think the industry is feeling very threatened at this time.

    Mr. Herb Dhaliwal: First of all, let me comment on the government position and be very clear. Our position is neutral. This is the same position as the American administration has. There was a different view in Congress, and perhaps the Senate will have a final vote on that, but the position of both the Canadian and the American governments is that we have a neutral position on the pipeline. It's the private sector that will determine which pipeline will be built and when it will be built.

    A voice: Just slide off neutral into first gear and you'll be all set.

    Mr. Herb Dhaliwal: So they will make that decision.

    The Chair: Mr. Finlay.

    Mr. John Finlay (Oxford (Lib.)): Thank you, Mr. Chairman.

    Thank you, Mr. Minister. I want to go back to page 3. If I recall, Mr. Cardin has touched on this. You talk about the North American Free Trade Agreement we've put into place:

Over the past decade Canada's exports of oil and natural gas to the U.S. have more than doubled, and there is increased two-way trade in electricity. Our bilateral relationship with Mexico is also flourishing.

    Then in the next paragraph you say it has led some of us to suggest you're discussing a continental energy policy with the U.S.A. and Mexico, and you say: “Let me assure you, we are not.” My question is, why not? How does the electricity get to Mexico? It goes through the grid from the U.S. to Mexico. How does the two-way trade in electricity work now between the U.S. and Canada? We put it out of Churchill Falls and run it through Quebec and send it down into New England, and they probably do the same from the Columbia River or somewhere else

    Why don't we call a spade a spade and get on with it? It's founded on transparent and competitive markets and on NAFTA. We have no reason to alter Canadian energy policy. It doesn't make good business sense to do so. However, we do want continental markets to function better. Well, if they're going to function better you have to improve the regulatory compatibility--you've said that--the predictability, and the consistency. Now, if that isn't all part of a continental energy policy, I'll eat my shirt.

    Yet you say “...while ensuring each country's sovereignty, ways of pursuing economic and social goals, and priorities are fully respected”. Impossible. We need to respect our sovereignty, absolutely. To suggest we don't have to give a little of it up and they don't have to give a little of it up to get this kind of cooperation I think is just not in the cards, and I'd like your comment on that.

    Mr. Herb Dhaliwal: I think, first of all, if you've seen the huge growth that's happened in exports of energy products, it obviously shows that the structures in place have worked and are working well, because the private sector is able to export natural gas, oil, electricity, and we've done extremely well. If you look at the charts, it just goes up.

    The structure is there. We're doing very well. There are things we need to improve on. We need to improve through better grid systems. We need to make sure, for example, the electricity standards in the U.S. are compatible with ours to make it easier to trade the electricity. What we're saying is the structures are in place right now through NAFTA, and we can sell and buy energy back and forth, but there are some areas we need to improve on. That's what this working group is about: how we can improve some of those areas, electricity standards being one of them; how we can ensure that FERC, the regulatory agency in the States, will be fair to Canadians who want to export electricity or other energy products.

    Is the grid system compatible to having an exchange? In some areas it's very good. In Quebec and in B.C. there's a very good grid system that interconnects with the U.S. Are there things we can improve? In the States themselves they have a lot of interstate grid system problems that impede movement of electricity. In these areas we can do more work in an interprovincial grid system as well.

    So, yes, we have a very good structure in place. It's doing very well. We've been able to access their markets extremely well, but there are areas we can improve on without changing the existing structures or taking major policy decisions involving a continental policy.

º  (1645)  

    Mr. John Finlay: Thank you, Mr. Chairman.

    The Chair: Mr. Chatters, for a three-minute round.

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

    A few weeks ago I attended an energy conference here in Ottawa that you in fact spoke at, Mr. Minister, and some of your officials here today attended.

    I learned at that conference that when the Kyoto commitment is plugged into Environment Canada's modelling computers, it makes no discernible difference to climate change. In fact, the 25% reduction that would be required to meet our Kyoto commitment would have to in fact be a 75% reduction in emissions to mitigate the climate change.

    Given that, and your reference many times to the consultations and wanting to do what is right, and acknowledging that there will be costs to Kyoto, I would ask you what if what is right is not to ratify the Kyoto agreement?

    Mr. Herb Dhaliwal: That's why I've said we need to have all the facts on the table. We need to have the data. We need to have this look and to consult. In the end, the decision has not been made yet. That's why we need all this information: to make sure we take a decision on a sound basis.

    Mr. David Chatters: The decision would be not to ratify? If the information you're gathering indicates it's not the right thing to do, will Canada not ratify?

    Mr. Herb Dhaliwal: We certainly want to, but we want to make sure we have all the facts on the table, all the costs, and all the things that will help us to make a sound decision on whether we, as a country, want to ratify or not. Until we have it, until we understand those things, no decision will be made.

    We don't have any deadlines we want to add. Obviously, we want to make it in a reasonable time. Even not making a decision creates uncertainty for the business world. I think once we have all the information on the table, we have to make the decision.

    Are we going to ratify or not? Are our targets reasonable? All those things will be discussed. I think once we have the information, we should make it.

    If we don't make it and continue, it also creates uncertainty for the business community. A lot of them don't want to make investments until they have a clear understanding of how the ratification of Kyoto will affect them and what policies the government will put in place.

    Mr. David Chatters: I couldn't agree with you more on all of it. What if the right thing is not to ratify? Will the government not ratify Kyoto?

    Mr. Herb Dhaliwal: What we'll say is, the government will do the right thing.

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

    The Chair: Ms. Karetak-Lindell.

    Ms. Nancy Karetak-Lindell (Nunavut, Lib.): Thank you. I was very encouraged by your one sentence on page 6 that says we need to find a way to encourage and recognize the trade and use of cleaner energy.

    I'm sure, from your trip to Iqaluit, you saw that most of the communities are still getting their electricity and heat from diesel fuel. When we hear about natural gas or other cleaner energy, of course we want to be part of the cleaner air solution. We are also the recipients of most of the pollution that we did not make. We're very interested in cleaner energy and climate change. The Arctic is very much feeling the effects of all the planet changes. It's where, unfortunately, most of the effects are being felt.

    I want to see what direction your department is going in, as far as trying to help the territories take advantage of cleaner energy. I'd like to add that photovoltaics are being tried out in some schools. I do see some signs of Natural Resources working up there. We see them as very few and far between pilot projects right now.

º  (1650)  

    Mr. Herb Dhaliwal: Thank you very much for the question.

    The north can really see the climate change that's happening. It has had a huge impact up there. If you talk to people from the north, and visit the north, they can tell you about the change that's happening. It's the area that is most affected.

    Within the $1.5 billion action plan we have, there are programs to encourage communities to take advantage of it.

    I'll give you an example, and maybe Ric can give you other examples. One example is the $260 million to encourage the use of wind energy. This is an area, I think, in the north where there are tremendous opportunities. The $260 million is to encourage investment in wind energy.

    There's a proposal now up in northern British Columbia by a European company, ABB, that is looking to invest $1 billion in wind energy. They're now doing a study on the operatives for it.

    Within the action plan we have, there are opportunities for communities and northern communities, to take advantage of it so they can play an important role. I know they're extremely aware of the situation. They're affected on a regular basis.

    I don't know, Ric, if you can add anything more.

    Mr. Ric Cameron (Assistant Deputy Minister, Energy Sector, Department of Natural Resources): I don't think so.

    Mr. Herb Dhaliwal: Okay.

    The Chair: There will be closing remarks. I will invite you to add anything you and your department heads wish.

    Monsieur Cardin.

[Translation]

    Mr. Serge Cardin: Thank you, Mr. Chairman. I'll try to be quick, since this will likely be my last chance to speak.

    Earlier, you stated that you were pleased to see exports on the rise and to see the Canadian economy benefit from this state of affairs. On the one hand, you have invested substantially in concrete actions to reduce greenhouse gas emission levels. On the other hand, you are seeking additional appropriations. When it comes to environmental matters, global vision is needed, along with specific actions at the regional or local level. Exporting is a profitable undertaking. However, the United States consumes tremendous quantities of fossil fuels and produces even higher levels of greenhouse gas emissions. We also sell natural gas to that nation and now, the government is seeking new appropriations.

    In light of these facts, could you share with me first your opinion of the appropriations system which one day might result in the creation of a stock market of sorts and the possibility of buying pollution shares?

    Secondly, do you think we should be pleased about selling more energy to the United States so that it can increase pollution levels even more? At some point, shouldn't we be halting sales of hazardous products? The police are trying to curb sales of dangerous products.

    My questions relate to all of this, that is appropriations and sales to the United States. Clearly, if the United States maintains its current level of consumption, within a relatively short period of time, we will need anywhere from three to five planet Earths to meet the demand. It's vital that we move to protect the planet.

[English]

    Mr. Herb Dhaliwal: First of all, Canadian exports of natural gas to the U.S. reduce overall greenhouse gas emissions because they displace, in most cases, coal-burning plants that produce electricity. So when we send natural gas to the U.S., they burn the natural gas instead of coal. We help, in the global formula, reduce greenhouse gas emissions. But in Canada there's the cost to produce that and send it down the pipeline, and there are energy costs, so we have the cost, in terms of greenhouse gas emissions.

    We should get credits for cleaner energy exports to the U.S., because in the global scheme of things we're helping reduce greenhouse gas emissions in the U.S. We should not be burdened with the cost of it without getting credit for the benefit that occurs. That's why the Prime Minister and the government say it's absolutely essential that we get credit for greenhouse gas emissions.

    If you're talking about international credit, that is seen as another opportunity for us as a country to look at. For example, we could probably spend a million dollars in Bangladesh and have a bigger impact on the global situation in reducing greenhouse gas emissions, as opposed to spending it here. That's why we also have to keep that door open, in terms of international trade credits, or working with the underdeveloped countries in the world to reduce their greenhouse gas emissions.

    The cost is sometimes difficult because it depends on your assumptions about buying international trade emissions credits--what they'll be, how much they will cost--and joint programs with other countries to reduce greenhouse gas emissions. What will the proportion of each of these measures be?

    There are the targeted measures, where we spend $260 million to look at taking the opportunity of wind energy. The issue of domestic trade emissions assumes that if you have a market model, you'll spend a dollar reducing greenhouse gas emissions where you get the most bang for the dollar, by trading these domestically--and international trade emissions.

º  (1655)  

    The Chair: Thank you. Mr. Godfrey.

    Mr. John Godfrey (Don Valley West, Lib.): I just want to follow up on what Mr. Finlay and Mr. Cardin had to say. First of all, it does seem to me that it's ridiculous to say we don't have a continental energy policy with the United States and Mexico when clearly we do have one, which is based on markets and NAFTA. That's the policy, and it's a pretty tough policy because you can't go doing different things.

    Secondly, every time we have this department here, I'm reminded that we're dealing with the Department of Natural Contradictions or the Department of Sucking and Blowing.

    Some hon. members: Oh, oh!

    Mr. John Godfrey: You have a whole issue... Page 3 is full of doubling exports, growth in the energy industry, no reason to alter it, expanding our energy trade. Page 6 notes the cost of doing all that. The whole country's increase in greenhouse gas emissions between 1990 and 1999 was due to expanding, growing, blah blah blah. Right? You can't actually have it both ways. You can't be both in favour of reducing greenhouse gases and in favour of improving climate change while increasing by one-third the amount of output so that you can glory in your growth passage.

    I'm having a bit of a problem understanding the internal contradictions here. It certainly came out a year ago when your predecessor was confronted with the Cheney energy plan. We had nothing to go back to them with in terms of what we were doing to constrain our own demand. The whole country, it seems to me, is in massive contradiction with itself because we're both consumers and big-time producers of greenhouse gases. I don't know whether you can resolve this contradiction, but it's certainly pretty evident in the presentation.

    Mr. Herb Dhaliwal: First of all, let me say that in terms of your comments on a continental energy policy, I think there was a view among the provinces that we were trying to create a new structure other than the existing structure. My point is that we have NAFTA and existing structures that allow the flow of energy products across our nations. Through the discussions, through this working group that was created, the goal is not to create new structures but to look at areas where we can improve those opportunities.

    Is there a contradiction in terms of us producing natural gas or tar sand and exporting it?

    Mr. John Godfrey: More, more.

    Mr. Herb Dhaliwal: Sure, as a nation we can say that every time we sell oil from the tar sand, we have to produce a lot of greenhouse gas emissions to produce it to sell to the Americans. Do we say we want to stop economic development or stop selling natural gas because we can reduce the greenhouse gas emissions by doing that? If the Americans would then stop their economic activity, we might be able to reduce greenhouse gas emissions, but I bet they will just buy more oil from someone else or they'll buy more natural gas from someone else. Are we really going to reduce the overall global greenhouse emissions in the global community? I would think we're probably not going to.

    But there are things we can do. Conservation, yes, we can look at that. We can do a lot in technology. That's where we think we can work with the Americans. There are technologies, for example, in coal-burning plants. There's a huge opportunity and there's a lot of hope that through technologies we can reduce the greenhouse gas emission from coal-fired plants. Really, if you look around the world, most countries produce their energy through the burning of coal. This is a tremendous cause.

    We need to invest in technologies to reduce greenhouse gas emissions. We need to look at conservation, and this is what I was telling the president of Enbridge. I said it would be great if everybody had computer-controlled thermostats so that if there's no one at home from 9 to 5, you can turn the thermostat down by three degrees and have it come up at 3 o'clock, two hours before you get home. At 10 o'clock at night, you could reduce your thermostat by two or three degrees and it shuts off, but at 5 in the morning, it goes back up. We need to invest in technologies so that conservation kicks in, and we need the private sector to be involved in that.

    There are solutions to reducing greenhouse gas emissions, but we're going to have to make sure we all work together--private sector, governments, and individuals--to reduce greenhouse gas emissions.

»  (1700)  

    The Chair: Mr. Keddy.

    Mr. Herb Dhaliwal: I'm sorry. I've answered for a little longer than the time I had.

    The Chair: After three minutes we don't pay attention.

    Mr. Gerald Keddy: Thank you, Mr. Chairman.

    I'd ask for some clarification. I certainly don't require it now, but perhaps you can get back to me and to the rest of the committee members as well.

    I suspect that, if you look, in many instances a lot of the natural gas we're producing and then selling south of the border is actually not replacing coal-fired generation. I think you'll find coal-fired generation is actually increasing in the U.S. rather than decreasing, especially on the east coast. I think you'll find that some of the natural gas we're shipping down there is replacing nuclear-produced electricity, which is certainly not a contributor to greenhouse gases. I'd just like to find this out for certain. Perhaps you could get back to us.

    I'm not trying to move away from Kyoto. It is an important issue and there have been a lot of questions asked on it, but I'd like to go back again to the treated wood problem because it's a huge one. It's a big industry in Canada that's seriously threatened. The solution we use now with chromated copper arsenate has been phased out in Europe and in the United States and been replaced by another solution. Yet in Canada, we've failed to find a replacement product. No replacement product has been approved at this time, at least not to my knowledge.

    So we're jeopardizing foreign sales, we have a continuing health risk for Canadians, and we haven't found the solution. I think it's important and an issue that's going to come back to haunt us very quickly unless we find an alternative. Where are you and where is your department on the alternative and getting it licensed?

    Mr. Herb Dhaliwal: I know about the issue and what's happened in the States. What I don't know is if there are alternatives, either approved or otherwise, to treat it, or what other things can be done to treat the wood or to manufacture it in other ways, allowing us to make sure we don't lose our existing markets. I would presume this is a problem for both us and the United States, and probably other countries as well. I presume alternatives are being looked at.

    I don't know if Irwin or maybe one of the others has a response to this.

    The Chair: It may be a question directed to Health Canada. Its position is that it's still safe.

»  (1705)  

    Mr. Herb Dhaliwal: Okay. We have someone who perhaps can give you a better response than I can on this--Jim.

    Mr. Jim Farrell (Director, Industry Division, Department of Natural Resources): I'm Jim Farrell, the director of the industry and trade division with the Canadian Forest Service of NRCan.

    The issue is actively under discussion with the industry, as well as with PMRA, the Pest Management Regulatory Agency, who has the regulatory authority to govern these sorts of compounds and their applications.

    In terms of an alternative, Forintek, a forest products research organization in Canada, has been undertaking research for the last couple of years. Borate shows some promise. It's a little pricier than CCA and at this particular stage in the research is not quite as effective, but it is well advanced in terms of research. Much of the research is undertaken collaboratively with the U.S., as you've said. It's a U.S. issue as well.

    Those discussions are going on right now with the PMRA as well as with the industry.

[Translation]

    The Chair: You have two minutes, Mr. St-Julien.

    Mr. Guy St-Julien: Thank you, Mr. Chairman.

    Further to your earlier comments, I did some quick checking, since I don't usually carry everything with me. As of December 13, 2001 and over a three- year period, that is from 1999 to 2002, Abitibi--Témiscamingue--James Bay received a total of $1.4 million from your department, out of a total budget of Can$2 billion for such things as geological mapping, aerial geophysical surveys and assessments of specific potential geoscientific minerals. I'm talking about the whole region.

    When I think about regions in Northern Ontario, even the region that is home to the chairman of the committee, to regions in Northern Quebec and in Northern British Colombia...We're in the process of shutting down resource regions. However, I'm confident that you will find solutions to help out the mining sector in all of Canada's resource regions, because I know you're a minister of action.

    Let me ask you the following question: Within the next year, will you put forward new solutions to help out resource regions?

[English]

    Mr. Herb Dhaliwal: I've said both publicly and otherwise that I want to ensure we create jobs and opportunity in the natural resource area. I was recently in South Africa at the Indaba conference promoting some of the opportunities that exist here to some of the biggest mining companies in the world and encouraging them to look at Canada for investment. I can tell you that people from other countries have said that Canada has some of the best technical people in the world. They are employed all over the world, because they're so good.

    We have to make sure that we do encourage mining. We have different problems in different areas of the country. The uncertainty is a problem for mining companies with regard to the metal prices. In British Columbia the claims issue creates an uncertainty for mining and not getting tenure on the land.

    I'm going to do everything I can to get investment into Canada and also to look for new markets and new investment opportunities for Canada. If there are new markets around the world for natural resources, we should be looking at them and developing them. I know how important this is, particularly for rural areas in our country. We have to make sure we do everything we can to encourage investment and to look for new markets around the world.

    The Chair: Thank you very much.

    Thank you very much, colleagues, for excellent questions.

    To our colleague from Turkey, as you might have noticed, the questions from the government side are not easier than the questions from the opposition side, and that's the way we like it.

    Mr. Minister, thank you very much. Some may question the fairness of our inviting you so early in your new position. We will give you the reason we have done that. It's because your predecessor was not able to find the time to accommodate the committee before Christmas and you are in fact fulfilling his responsibility from that time. We apologize for doing it so early, but that is the reason we did it. In the future we'll be more courteous. We appreciate your answers. I know they were frank and helpful. We will enjoy working with you again.

    If you or your colleagues have closing remarks, we invite you to make them now.

    Mr. Herb Dhaliwal: Mr. Chairman, let me say that I look forward to working with all the members. I don't have all the answers, but some of you may have good ideas you want to share with me. I invite you to do that. I think a lot of members of Parliament come up with good ideas, and we can put them into action.

    Whenever you feel we can improve on what we're doing, I'll be happy to sit down and talk to you and see what we can do. I believe we can work with MPs to improve what we do at Natural Resources. This should be a cooperative relationship, and I hope we can cooperate to look at the challenges we face. There are some tough issues we have to deal with, but I think that together we can succeed.

    I'm looking forward to working with all the members and looking at some of the special issues that affect your regions of the country. One thing you learn in crossing our country is that because it is so vast, an issue in one part of the country is quite different from an issue in another part of the country. We have to be sensitive and willing to learn from sitting down and talking with people from across the country.

    I really look forward to working with all of you and seeing how we can do a better job at Natural Resources. I know our officials are also looking forward to the same opportunity.

    Thank you very much. Merci beaucoup.

»  (1710)  

    The Chair: Thank you very much. Merci beaucoup.

    The meeting is adjourned.