Mr. Chairman, ladies and gentlemen,
good afternoon. It is my great pleasure to be here today representing
Canadian Council of Chief Executives.
Chair, I will present a brief introductory statement, stick to seven minutes, and then my colleague, John Dillon, and I will be pleased to answer any questions you might have.
As representatives of the Canadian Council of Chief Executives, we're very pleased to address the issue of environmental policy, an issue to which my organization and my fellow CEOs have accorded the highest priority.
I have reviewed Bill , introduced by the leader of the New Democratic Party of Canada, Mr. Jack Layton, and while the sentiments expressed in the bill are noble, I fear that Mr. Layton's approach would divert us from the real task at hand.
The bill would set up a process to legislate a series of greenhouse gas targets from 2015 to 2050, but unfortunately, it provides no clue as to how these targets are to be achieved. It would be comforting to think that a simple act of government could get us to where we need to be, but if the past several years have shown anything, it is that setting ambitious targets is meaningless without the will to act by all segments of society and a solid consensus among all players on what needs to be done.
Now, let there be no doubt that turning around our growing greenhouse gas emissions is going to take time and enormous effort, and there is no silver bullet, nor is there any substitute for practical policies, sound analysis, and meaningful engagement about what changes we actually are prepared to make as businesses, governments, communities, and individual Canadians. We should be realistic about what is required, but also ambitious and creative about the kinds of policies that can make a real difference.
The latest initiative of my council to address the climate change issue was the creation last year of our task force on environmental leadership, which I co-chair along with Richard Evans, the chief executive officer of Rio Tinto Alcan, and Rick George, the chief executive of Suncor Energy. The task force, comprised of 33 chief executives from across Canada and drawn from a wide range of leading industries, forged an unprecedented consensus among Canada's business leaders.
In October of last year, we published what we call a policy declaration, in which we laid out five critical elements for an effective, sustainable, long-term plan, one that we believe will not only be successful in reducing Canadian greenhouse gas emissions but can also make a significant contribution to a global plan. It is called “Clean Growth: Building a Canadian Environmental Superpower”, and I have made copies available for all members of this committee in both official languages.
I was pleased to see that a number of our principles were echoed by the National Round Table on the Environment and Economy in its report last month setting out its recommendations for a climate change plan for Canada.
First and foremost, what the country needs is a more cohesive Canada-wide plan on climate change and air pollution, one that can make the most of the tremendous opportunity that we believe we as Canadians have to foster sustainable economic growth and superior environmental performance.
I want to commend the leadership shown by the Government of Canada in setting challenging greenhouse gas targets for Canadian industry, while at the same time recognizing the need to foster economic growth and technology enhancement.
In addition, a number of provinces have come forward with innovative ideas on how to address this complex issue, but what we lack, however, is sufficient convergence and cohesion around a Canada-wide approach involving all parties in Parliament and all levels of government—federal, provincial, territorial, and municipal. We need one set of targets and timetables for industry and, in our view, greater clarity about responsibility and accountability, in order to make the most effective use of public and private funds.
Such a plan must apply to everyone, and here I underscore the word “everyone”: large and small businesses, consumers, farmers, building owners, and public institutions, all of whom will have to do their part if Canada is to meet its ambitious targets regarding reductions in greenhouse gases.
Another key element of our proposal is to recognize the absolutely fundamental role of technology. There is simply no way to make meaningful reductions in greenhouse gas emissions without massive investments in new technologies. Business leaders in the council see this as a tremendous opportunity, since Canada has the natural resources and the technical, financial, and skills capability to be a leader in next-generation technologies such as clean coal, carbon capture and storage, nuclear, hydro, wind, biofuels, and other alternative energies.
A third element of our paper recognizes the importance of targets as a spur to environmental progress. We support the ultimate goal of achieving a substantial, absolute reduction in emissions of greenhouse gases, both in Canada and globally. At the same time, it is important that any target applied to Canadian industry recognize competitive realities and be set within an overall policy framework that allows profitable firms to increase their investment in new technologies.
A fourth necessity is to ensure that globally we have an effective and long-term plan that commits all major emitting countries to do more to constrain the growth of emissions around the world.
I believe that Canada can be a model to the world in demonstrating how to align public policy to strengthen economic and environmental performance. That brings me to one of the most critical elements of our paper, our policy declaration, and here I note our agreement with the recent report of the national round table.
I believe it's time to establish policy mechanisms around the appropriate pricing of carbon. I would tell the ladies and gentlemen of this committee that my organization said publicly that we supported the idea of putting a price on carbon as early as 1990. Appropriately set price signals encourage both business and consumers to change behaviour, and this can be done through emissions trading or environmental taxation, or some combination of the two.
Business accepts that there is a price to pay for our greenhouse gas emissions, and we have said so for a long time. But we have to be smart about how we design a price mechanism so that it accomplishes our environmental objectives and builds competitive advantage in Canada. Both emissions trading and environmental taxation have their advantages and disadvantages.
Cap and trade schemes have the advantage of a defined limit on emissions, but experience, especially in Europe, suggests there can be significant price volatility and difficult questions about fair allocation and emission rights.
Environmental taxation provides a clearer price signal and can be easier to design and administer. Relying solely on taxation, however, does not guarantee any particular quantity of emissions reductions. Any such tax must not discriminate against any particular sector or region and should be implemented only as part, in our view, of broader tax reform that is revenue-neutral and that aims to enhance our country's economic as well as environmental performance.
Increased revenues from environmental taxation could be offset by reductions in corporate and personal income tax, so that Canada can continue to attract the capital, innovation, and people to foster the technology shift that is critical to tackling climate change.
Governments also will need to think about their spending priorities. A strategy for climate change will require significant new public spending in areas such as public transit, clean energy infrastructure, and development of new technologies. This will require governments to change fundamentally how they spend, not just how they tax. Climate change must not become simply an excuse for governments to tax more and spend more.
Mr. Chairman, putting a price on carbon will mean real and potentially very costly obligations for everyone. There are ways to design our policies so that they do not place unfair burdens on vulnerable regions, sectors, or individuals, but we should not pretend that the cost is insignificant or that the policies need to focus on only driving reductions in Canadian industry.
I'll conclude with this. The reality is that we've been talking about this issue for 20 years, and it's long past time to get on with the job. Business has done a great deal already and is willing to make fundamental changes and the significant new investments that will produce a strong economy and a cleaner environment. We need to have a true Canada-wide consensus on the key policy elements and get everyone, including individual Canadians, pulling in the same direction.
Ladies and gentlemen, members of this committee, the ambition of Canada's business leaders in this regard is truly vast. We have stated, and I will repeat again today, that Canada has the natural resources and the technical, financial, and skills capability to justly aspire to environmental superpower status. I believe that you as parliamentarians have a critical role to play in moving Canada decidedly in this direction.
Thank you for your time and interest. Mr. Dillon and I very much look forward to answering any questions you might have.
Thank you very much indeed.
Good afternoon, ladies and gentlemen.
Thank you for the opportunity to appear before the committee as you deliberate Bill .
The Canadian Gas Association represents natural gas distributors across Canada who deliver gas to around six million customers—individual homes as well as businesses and institutions.
I will touch upon three points in my remarks. I'll give you a brief overview of how we situate in the economy, give you specific comments on Bill , and then wrap up by speaking to the opportunity to move forward and make real, meaningful, and quantifiable reductions in greenhouse gases.
Quickly, around natural gas and the economy, although in most public policy discourse you hear nothing about natural gas, we are a significant part of the economy: 26% of the energy end use—the numbers are in front of you—and something bigger when you look at individual homes for heating and businesses.
It's interesting. When looking at natural gas, as with any other fossil fuel, you look at where our emissions come from. The entire upstream delivery, transmission, and distribution account for a quarter of the emissions for our sector; 75% of the emissions occur at the end-use point, the six million homes and businesses whom we deal with. Our particular part of the emissions is actually fairly insignificant, less than 1%.
So where do we stand as an industry? We do believe in and are committed to being part of the solution to get Canada toward a carbon-lean future, as we would like to call it. We worked on our piece and our own emissions reductions. Our numbers are publicly available. We have reduced our own emissions, and we've been part and parcel of the conversations initially with Natural Resources, and subsequently with Environment Canada, to develop a regulatory framework for large industrial emitters. We think you need that framework. However, we also believe that without turning our attention to the other 50% of the economy, we cannot meet our obligations and our aspirations of actually getting to a carbon-lean future.
So what have we been doing with our customers? In addition to our own operations, we have been working with customers on conserving energy and on a variety of demand-side issues. We have seen progress, with the intensity of use and average use per customer declining in the past decade or so.
In my estimation, we have reached the point where we need to do something more than we have been doing. For the past two, almost three decades since the seventies, we have been focusing on discrete component improvements, meaning higher efficiency standards for discrete appliances and turning our attention to buildings. In our minds, the only way to actually meet the challenge of substantially reduced carbon in the long term is to have an integrated strategy for managing the energy demand in our communities.
I have specific comments on Bill , and then I'll come back to the communities agenda and what I think is lacking in our current perspective and perhaps warrants some attention from you, ladies and gentlemen.
On Bill , we agree with the need for federal leadership. The intent is laudable. We think we need federal signals that we are serious about reducing the carbon footprint of the economy. We'd like to see this issue transcend partisan discourse around whether this is real or not—we'd rather focus our energies collectively on getting ourselves there.
I don't quite think the bill makes the intent. I have a couple of reasons and some general comments.
Legislation is not the place, in our estimation, for this level of detail. The more detail you have of the nature that we see in Bill , the less stable a platform you have for long-term action. Also, we look at the bill and wonder whether it's trying to afford the framework and the authorities where they already exist, and if they already exist, why do we need to set the legislation again?
Although it's not explicitly stated, the bill has definitely the flavour of again focusing on the large industrials alone. I said already that we believe the large industrials need a framework, but we also need a more economy-wide signal and a focus on the other 50%.
With respect to specific issues with the bill, the short-term targets are problematic. The various analyses done by the provinces recently in the National Round Table report would suggest the 2020 target of minus 25% is not actually doable, given where we stand today. Having us revisit the conversation on baselines we've been having for the past 10 years and trying to determine what happened 17 years ago, I think, is a bit of a distraction from focusing on what can be done on moving forward.
Not to repeat myself—but I will repeat myself—we do believe the large final emitters need to have a regulatory framework, but we also do believe that you need to focus on the other 50%. How you turn your attention to the other 50% matters. For the past 15 years, we've focused the discourse in this country entirely on the large final emitters. I'm not encouraged by the level of sophistication I see on the other 50%. We tend to flip-flop between thinking that good thoughts will get us there, or we absolutely need to be draconian and regulate lifestyle. I don't believe either of those are feasible options or ones that we should pursue. There's ample experience and enough evidence to suggest that a systems-integrated approach to our communities is what we need.
We need to look at our energy system as an integral part of the environmental question, not as a problem. The upstream energy sector exists to meet the demand for energy at our communities and businesses. So without focusing on the demand side, we're not going to get very far because that demand, as evidenced by the track record of the past 20 years, will continue to grow. So look at energy and environment as an integral whole; look at the community space.
Municipal governments have done very interesting experiments across Canada. The City of London did a model of an integrated plan versus business as usual. In their estimation, they can achieve up to 55% energy reductions within the community. Not only that, they bring in on-site renewables at a price-competitive range. They take advantage of the existing energy infrastructure, both gas and electric. They bring their on-site renewables. They look at waste in water and harness the energy from that. There are innovative, interesting solutions that need to happen. So why aren't they happening?
We don't have a price signal for carbon throughout the economy, and we need to have a consistent price signal throughout the economy, close enough to the point of consumption so that people who make decisions can see the impact of their choices and their decisions.
We are very encouraged by the recent focus of the National Round Table's report on the other 50% of the economy and would very much support paying a lot more attention to that space. It's an interesting space. It's diffuse. It has a large number of players, and it will require three levels of government working closely with one another, but it's doable. We're seeing examples appearing all across Canada, and we would like to see price signals that would allow us to replicate the demonstrations and actually move along with it.
In conclusion, I repeat that we support the need for an articulated vision and target to reduce the environmental footprint of economic growth, or both of them will deteriorate. Serious action, in our estimation, requires more than, but includes, the regulatory framework for large industries. It needs a price signal for carbon throughout the economy. Policy initiatives should reflect the need for an integrated approach to all our systems: water, waste, energy, land use. Bill , although laudable, falls short of achieving that.
Mr. Chairman, members, and guests, thank you for the opportunity to speak on the economic implications of Bill .
My name is Dave Sawyer. I'm an Ottawa-based economist working on issues of climate policy.
I am here neither to support nor to contend Bill , but rather to discuss the economic implications of the bill.
What are the economic implications of the bill? Well, not surprisingly, it depends. More specifically, it depends on how it's designed and implemented, but since the bill is not specific on this point, and since you have asked me to come here and comment on the possible implications, I basically need to identify a policy package from which to provide some judgments or some information for you. I'll do that now.
The key elements of a policy package that I use and that I think are required to assess any sort of deep GHG reductions like this—i.e., good principles to basically design effective policy for GHG mitigation—include the main points that follow.
First, not surprisingly, to attain substantial reductions in 2020 while minimizing costs, we need economy-wide carbon pricing. This means, as others have said, cap and trade, a carbon tax, or some combination of the two. Recognizing, however, that cap and trade is the dominant policy for large final emitters and that cap and trade is difficult to implement for smaller emitters like you and me—our houses and our cars—the preferred and maybe most expedient approach is to have a revenue-neutral carbon tax for the remaining emissions. While I recognize a carbon tax does not resonate politically, the alternatives have higher costs, and frankly, Canadians may dislike income taxes even more than they dislike carbon taxes.
Second, an effective policy package would provide subsidies to low-emitting technologies such as carbon capture storage and renewables—renewable electricity or renewable transportation fuel. Targeted regulations for buildings, transportation, and other difficult-to-get-at emissions would also be required.
Third, there would be significant financial flows with carbon pricing, and we must decide how these are distributed, or at least I must think about these in my assessment for providing information to you. Some revenue from cap and trade is transferred among industry through trading markets, but some could also accrue to the public through auctioning, because there is value in allocating permits free—significant value, in fact, as the European system is demonstrating. A carbon tax shift could then have income taxes on households reduced or targeted to address adverse competitiveness impacts in disproportionately impacted industries, so there are income effects that carbon revenue can be used to mitigate.
For now, let us look at domestic action only, but later on I will revisit this.
I will also focus on 2020, because if we don't hit the 2020 targets laid out in Bill —or Turning the Corner, for that matter—we'll not likely be able to achieve longer-term targets by mid-century, at least not without significant economic dislocations. Again, the round table talked about this quite a bit, but technology lock-in is the issue where you have high-emitting technology rolling forward if you don't address it early on.
So with this policy package in place—I gave you a vision of a policy package—I now need to specify what the economy and the emissions will look like in 2020. With an economy growing at about 2% annually between now and then, Canada's GDP will grow from current levels of about $1.3 trillion to $1.7 trillion to $1.8 trillion. Again, a somewhat uncertain number, but the economy is growing at some sort of rate around 2% or 2.5%. This growth will then increase emissions by roughly 15% from current levels, from about 750 megatonnes currently to something around 850 to 900 megatonnes. These are publicly available estimates from Natural Resources Canada. This means that to hit the Bill targets of minus 25% below 1990, forecasted emissions will have to drop by about 50% in 2020—drop by 50% in 2020.
This compares to a 34% decrease under Turning the Corner. So we basically can bracket the types of reductions that we as a nation are contemplating in 2020: 34% to 50% below business as usual.
So now to get on to the interesting bits. To assess the economic implications of this stylized policy package, I employed two models that are routinely used to assess mitigation targets. CIMS is an integrated energy and emissions model of the Canadian economy, and it's widely used by governments, industry, and NGOs alike. Complementing CIMS is a model called C-GEEM, which is a macroeconomic model suited to questions of macroeconomic impact in public finance.
What do the models have to say about the costs of these different targets? Essentially, applying an economy-wide carbon price, having subsidies for renewables, having targeted regulations and some smart tax shifting, the models imply carbon prices in the order of about $100 per tonne in 2020 for the Turning the Corner targets and about $200 a tonne for Bill . They are somewhat uncertain numbers, but they give you an idea, a rough range.
Now the question is, what do these numbers mean? The economic impact of these carbon prices on GDP, on growth, could then range between about 0.6% of 2020 GDP for Turning the Corner and 1.2% for Bill . We're looking at basically reductions in future GDP less than the forecast growth rate. So we're not talking about wrecking the economy, although there are some underlying assumptions here about early action, getting moving, and stringent policy. You must also recognize that there is a significant level of uncertainty in these numbers, as there is in all modelling, but this gives you a flavour for what you're looking at.
These conclusions assume efficient policies, and indeed the models can show that a lower target with poorly designed policy could be more expensive than a higher target with efficient carbon pricing. We could go on and on about these numbers, but simply, maybe the more important point is that policy design matters much more than the targets themselves.
So the policy package I have outlined will raise prices, with increases of about 25% in electricity, 15% in petroleum products, and about 10% in natural gas. Again, this is the order of magnitude and the numbers for you to get your head around, what this means, what's the “so what”.
The impact on oil production is not so clear, given the variable of carbon capture and storage. If carbon capture and storage is widely available, the cost impacts on that sector will be much lower. If it's not available, then there are larger, larger hits. Again, poor policy design would change these price impacts entirely.
This national picture masks some sectoral and regional variations. While I can't comment on the regional variation, I can say something about the sectoral impacts. While national GDP impacts seem relatively small, sector output for the energy-intensive sectors will fall, especially in sectors like petroleum refining and coal. The extent of this drop is dependent on what is happening in the rest of the world. If Canada acts more or less in concert with the OECD, the trade impacts will likely not be as large, with drops in exports but also in imports, because prices will be rising for foreign goods.
Still, competitiveness impacts will be real and significant for some segments of the economy, so the smooth macroeconomic picture nationally is not borne out at the sector level. This is not to say, however, that we don't or shouldn't seek reductions from these sectors—you have asked for some specific targets, so you need reductions from all sectors—but rather that we should design complementary policies to address disproportionate income effects; that is, we separate a carbon signal from an income effect.
As for the notion that manufacturing will move to China, I would submit that other factors are also influencing this business decision and probably need some closer scrutiny.
I'd now like to visit the importance of obtaining low-cost reductions internationally. At domestic reductions above 20% below 2020 BAUs—the two targets I mentioned are greater than that—domestic mitigation costs rise exponentially. This means that at the targets contemplated, costs are rising much faster than reductions, so to minimize economic impacts, a strategy to access low-cost international abatement opportunities is probably a good thing, assuming they're real and verifiable.
I'd like to conclude with a short discussion of the cost of inaction, shifting basically from discussion about costs to discussion of what we get, discussion of the benefits. In thinking about designing effective climate policy, at least from an economist's narrow efficiency lens, the economist would prefer cost-effective reductions at a level where the costs and benefits are balanced, but information on the scope and scale of the possible benefits of action is too uncertain to lead to recommending targets that balance costs and benefits, so we're not in a great place.
As a result, our national climate debate continues to be informed by only a conceptual understanding of the benefits of abatement or adaptation, while we have a very acute understanding of the costs. Because of this asymmetry in information, it is likely that we will continue to be locked into a cycle of questioning the appropriateness of action on targets, regardless of their stringency. Indeed, without a balanced view of what we get for what we spend, we will continue to argue about targets, discuss policy options, reveal the associated costs, and ultimately question affordability. I call this “Globe and Mail economics”. This focus on costs and affordability is one-sided and will ultimately lead to poor national outcomes.
Oh, yes—in conclusion, a little more focus on action and a little less on targets would be nice.
Thank you very much, Mr. Chairman.
I would like to start by congratulating you on your briefs. I took the trouble to read the briefs twice, not once, particularly the one from the Canadian Council of Chief Executives, the CCCE. In the seven years that I have been a member of Parliament, I have noted some developments at the CCCE. It recognizes that a price must be put on carbon and it has suggested some ways of doing that—a tax or a market.
Finally, the Council says exactly what the Vice-President and Chief Economist of the Conference Board said on January 31, and the government should be listening: "At the moment, we are behaving as though GHGs could be produced and emitted with no costs whatsoever."
The business community therefore recognizes now that there is a cost involved in greenhouse gas emissions. It cannot yet put a figure on this, but it does recognize that there is a cost.
On page 7 of your brief, you say, Mr. d'Aquino: "When rules do change, governments also must be careful to reward rather than penalize companies that have taken early action."
I understand what you are getting at in your brief, but what does it actually mean? When the result of a climate change plan is to move the reference year from 1990 to 2005, to you really think that this is rewarding companies? I am thinking of the Quebec manufacturing industry, which has reduced its greenhouse gas emissions by 7% in absolute terms since 1990.
Do you not think that we should go back to the 1990 reference year in order not to penalize companies that took early action? We would actually be penalizing companies if we use 2005 emissions as the reference level.
The issues you have raised are very important in our opinion, Mr. Bigras. We acknowledge that the manufacturing sector has been very affected economically, particularly in Ontario and Quebec.
If I may, I would prefer to answer in the language of Shakespeare, rather than in that of Molière.
I just wanted to say that in our view the way we tackle the environmental challenge—and this is what building an environmental superpower involves—means not only that we come at it with a Canada-wide comprehensive policy with long-term objectives that provide clarity to business, but also that at the same time we fundamentally re-examine the tax system, because the magnitude of change that is going to be required and that you are suggesting has already begun to take place is such that under the existing tax system of Canada, we are not going to be able to deal with this issue.
For example, we have said that should governments, or the Government of Canada, or Canada eventually move to some form of carbon tax, it would have to be neutral. What do we mean by that? What we mean is that certain sectors will be hit harder than others. It will mean that the price of carbon will add to the costs of running a business, and therefore we must intelligently revisit the tax system to ensure that there is, at the very least, a neutrality.
I would make a final point on taxation. One of the reasons we are so optimistic about Canada's becoming an environmental superpower is not just that we have the resources and the skills and the talent and the financial capability to do it; it's also because we believe that as a country we can come up with new approaches to public policy—of which taxation is a central point--that will allow industries that already exist to invest in the new technologies. We will not say to them that we're sorry, but they can't compete—they're out—and put people out of work and shut down towns, but we will look to industries that have had a long record of achievement and give them the time and the incentives to be able to retool themselves.
This brings us to why these long-term strategies are so critical. It's because many of the investments have to be made with a 15-, 20-, or 30-year time horizon, and in the case of the oil sands, a 100-year time horizon. That's why we've been calling for policy certainty. That's why we need it.
I sure will. I was just addressing the topic that had brought up.
In terms of this policy crisis that was spoken of by Mr. d'Aquino, maybe it's a lot of political rhetoric—which I am guilty of, at times, maybe by the comments I've just made—but I would think that if we all pulled in that same direction, as you're suggesting, maybe we could start moving forward on this. I think there is a willingness when you deal one on one, but when you get in this political environment, sometimes there are different agendas at work here.
The government has provided a very clear, focused agenda to reduce greenhouse gas emissions by 20% by 2020.
Mr. Sawyer, I have some questions on those numbers. What will that mean in 2020? What will it mean for gasoline prices and whatnot?
So the agenda is ambitious. The notices of intent to regulate were issued. The negotiation and consultation time is almost at the end now. The meat on the bones of that regulatory framework will be seen very soon. I look forward to your analysis on that as we see that policy and those regulations developing.
On , I have asked every one of the group of witnesses so far this question: should it be costed? I asked when he was here, and he said it hadn't been costed. He was hoping the government would cost it. But he suggested that I ask Mr. Matthew Bramley from Pembina, who was also a witness that day. Mr. Bramley also said that they were consulted. Actually, their report—from the David Suzuki Foundation and Pembina—is what Bill C-377 was based on.
So Matthew Bramley said no, and he also was hoping that the government would cost Bill C-377. I also asked Dr. Stone, and he said yes, it should be costed. Every time we've heard from the witnesses—I forget who else there was—we've heard yes, it should be costed.
Mr. Sawyer, you're the first person I've actually heard cost it somewhat. Does there need to be an additional evaluation on the cost of —to put some meat on the bones, so to speak?
Thank you to all. This has been a good panel. I think it's been interestingly balanced.
I have a comment on Turning the Corner, the plan of the government.
Now, the question was put to you, “Was Bill costed?” The question I'd put back to the government is, “Was Turning the Corner costed?” The answer clearly, from Mr. Sawyer's remarks, is no. The only way in which you could achieve Turning the Corner was if emissions were priced at $100 a tonne. The government plan calls for them to be priced at $15 a tonne.
Clearly a factor of six is not a costing; it's a gross error. I just would make that observation.
I think the overall thrust of several of your remarks is that we've been a bit too leisurely in our approach. We haven't gotten our act together, and there are many things we could do. The purpose of Bill is not to provide a full plan that is going to answer what you ask for. It is simply to set an ambitious target that lines us up with the scientific reality of where we are and what we need to do as a planet and as a country.
So let me ask you this. If we accept everything that particularly the Council of Chief Executives has called for, and the Gas Association as well, which is a total plan covering the entire Canadian economy—not the industrial half but the part that deals with the built environment, the transportation sector and the bio-sector, which is agriculture, forestry, urban waste—then surely what we would need as our metaphor is a World War II mobilization of the economy metaphor, not a leisurely 100-year metaphor where we need to get all the targets up in place. We didn't know that in 1940; we just knew we had to win the war. You couldn't know when you would complete the Sarnia rubber plant; you just knew you had to do it.
I guess what I'm saying is that we don't have a complete road map. We do know the direction. We want to win the war on climate change just as much as we wanted to win the war last time.
Don't we really need a plan that covers the whole economy and all parts of the emissions spectrum but that also is far more ambitious, far more urgent than anything we've seen to date?
On the issue of how urgent it is, I can only respond and say that if you take worst-case scenarios, you would say you'd want to be able to do it at least by 2020, but sooner would be better. The reality is that's not going to happen. All you have to do is look at a China that for the last 12 years has exceeded 10% real GDP, after you look at an India that in the last five years has seen growth rates of 7% to 8% to 9%, and then look at the Brazils, the Mexicos, the Indonesias, and on and on you go.
This is one of the reasons I know all of us have wrestled with what I would call the moral argument, that wealthy nations have built their riches, and now, why is it that we should presume the developing countries should pick up the responsibility?
I have a different answer to that question. While I'm very sympathetic to the moral argument that we in the west should consume less and give more room to the developing world to grow faster, I think in fact there is a very different answer to that question.
I visit China on a regular basis. The Chinese will take dramatic action to curtail greenhouse gases and to implement energy efficient technologies. Why? It's not because they want to be good to you or me or to say they're good citizens, but they will do it because they have no choice.
If you have visited China—and I expect you have—you will know that 16 of the 20 most polluted cities in the world happen to be Chinese cities. The majority of Chinese soil is toxic. The majority of Chinese rivers are toxic. These people love their children and grandchildren just as much as we do, and that is one of the reasons, in a number of areas, we're already starting to see startling leaps in technology.
So the issue of whether we should be making room for them and whether they should just simply jump ahead and pay no attention is not going to be relevant, because these people have to live, just the way we do.
But in answer to your question, we will not see stabilization by 2015, and what will that mean? I don't know what it will mean, but to come back to something that—
Thank you, Mr. Chair, and thank you to our witnesses.
I think we're into some very interesting discussion here. I have a number of questions. I'm afraid I'm not going to have enough time to ask them. But I want to start with the targets, because this bill is predominantly about targets.
We've heard that they're scientific targets, reflecting, of course, the IPCC's targets—targets that were assigned, though, interestingly enough, only to developed countries. There was a decision made not to model targets for developing countries, and that decision was not based on scientific considerations—that is, whether there was enough data to quantify them—but on a values judgment. So the discussion about scientific targets in this particular bill has to be questioned on whether they are entirely based on science.
I agree that there is a problem here, but there is a legitimate discussion for policy-makers in this country about what Canadian targets should look like and whether or not we should be putting pressure on developing countries to assume targets. That's based on values decisions, so I think that is an important component of this.
But since we're here about the economics, Mr. Sawyer, every economic modelling is based, of course, on the assumptions you're putting in, and what you put in determines what you're going to get out of your analysis.
I want to ask you a sector-specific question. Have you done any modelling on effects to the auto industry, for example, and would you be prepared to if you haven't?