ENVI Committee Report

DISSENTING REPORT FROM THE OFFICIAL OPPOSITION CONSERVATIVE MEMBERS REGARDING THE REPORT ON INTERNATIONAL LEADERSHIP

SUMMARY

The Conservative members of the Standing Committee on Environment and Sustainable Development support a number of the Recommendations presented in the Report, including Recommendation 9 (identifying Canadian non-governmental organizations to access Canadian and international climate finance funds) and Recommendations 16 and 17 (Internationally Transferred Mitigation Outcomes). These are strong Recommendations which pursue greenhouse gas (GHG) emissions reductions in a sustainable and affordable manner within a Canadian context. However, these principles are not reflected in the remainder of the Recommendations, which instead prioritize costly virtue-signaling policies rather than practical, Canadian-centric solutions to a changing climate.

The Conservative members of the Committee raise a special concern with the Report’s bias in favour of carbon taxation as the most prominent tool in reducing GHG emissions. Additionally, the costs associated with many of the Recommendations place unnecessary burdens on Canadian industries, including Canadian small- and medium-sized enterprises, which lead to additional costs for average Canadians. Lastly, the Committee failed to consult with a representative group of international leaders despite its focus being on International Leadership. For these reasons the Conservative members of the Committee are unable to support the Report.

CARBON TAX

The Liberal government frequently lauds its carbon pricing scheme on the international stage. This is evidenced in the Report, which refers to Canada as a “leader in climate science and in carbon pricing.”[1] This undue reliance on the supposed merits of a carbon tax is reflected in the Committee’s decision to champion the carbon tax as the cornerstone of this Report.  Despite testimony from a number of industry witnesses that a carbon tax represented a competitiveness challenge to their viability, the Report still portrays the tax as an essential contribution to GHG emission reductions. The President and Chief Executive Officer of the National Airlines Council of Canada (NACC), while commenting on the effects of the current carbon pricing plan on his industry, clearly testified that “as a market-based measure, the carbon tax is not well suited to commercial aviation in general and is particularly ill-suited in the Canadian context.”[2] However, this is not how NACC’s position is characterized in the Report, which states that “the National Airlines Council of Canada fully supports putting a price on carbon.’”[3] While the NACC did in its statement to the Committee acknowledge the merits of certain carbon pricing models, the Report does not accurately reflect the sum of NACC’s testimony, which is that it believes the current Canadian carbon tax “would exacerbate commercial and emission leakage, curb growth in the visitor economy, and as it is currently slated to be rolled out, would cause significant market distortions.”[4] This is just one example of the mischaracterizations that this Report promotes in presenting the positions of Canadian industry.

The Committee also failed to acknowledge the failure of the British Columbia carbon tax regime to deliver on any of its implied promises. The tax, which has been held up by some as the ideal model of what carbon taxation should look like, was intended to 1) reduce absolute GHG emissions within the province; 2) be capped at $30 per tonne of GHG emissions; and 3) be revenue neutral. None of those objectives have been achieved. Absolute GHG emissions continue to increase in the province, and the original cap of $30 has been exceeded and continues to rise as the tax hits $40 per tonne this year (2019). More concerning is the fact that the tax, which had been promised to be revenue neutral, has now become a cash cow for the current NDP government, which eliminated the revenue neutrality of the carbon tax as one of its first acts after taking power. It is inevitable that carbon tax regimes which purport to be revenue neutral (as is the promise of the federal carbon tax regime) will eventually become sources of government revenues that are spent on the political priorities of the government in power.

Ultimately, the Conservative members cannot agree with the biased conclusions of the Report nor with its uncritical promotion of a carbon tax, and therefore cannot support this Report.

AFFORDABILITY

The Report lacks consideration of the issue of general affordability and of the increasing costs which the Liberal climate change plan will impose on Canadian industries engaged in the international marketplace.

Industries

Recommendations 4 and 5 state that the Government of Canada should permit airlines to purchase offsets and incentivize the development of low GHG emission airline fuels. Both of these recommendations do not accurately reflect the testimony given by the NACC representatives who appeared before the Committee. For instance, Recommendation 4 recommends that the Government of Canada allow airlines to purchase offsets; however, this would be in addition to the carbon tax that airlines are currently subjected to.[5] The NACC had proposed that, instead of paying a carbon tax, Canadian airlines be permitted to opt into the output-based pricing system, which would allow them to contribute to “real carbon reductions through offsets.”[6] That proposal is not reflected in Recommendation 4.

Similarly, the same mischaracterization is reflected in Recommendation 5, which advocates for the incentivization of low GHG emissions airline fuels[7] such as biofuels. However, when NACC testified regarding the use of low-carbon fuel, it supported the incentivization of low-carbon fuel as a by-product of an “alternative plan,”[8] not in addition to the current carbon pricing scheme.

The Report’s mischaracterization of comments made by the NACC will only result in higher costs for this industry without incentivizing the development of real improvements in emissions reductions. The Chief Executive Officer of NACC highlighted how these additional costs affect not only Canadian industry but also the average Canadian. He explained that the carbon tax would undoubtedly result in Canadians paying more and more for flights as the carbon tax increases in 2022, 2026, and 2030.[9]

The Report failed to highlight the work that industries such as the NACC are already doing to lower their emissions, which is keeping the industry competitive and delivering affordable transportation options for Canadian families without the additional burden of a carbon tax.

Taxpayers

The Conservative members of Committee are committed to helping fund climate adaption and mitigation programs in developing and least developed countries, particularly when conducted by Canadian non-governmental organizations. However, the implied costs associated with the recommendations found within the Report will only exacerbate the financial challenges facing the Government and further impair any efforts for the current Government to balance the federal budget.

Recommendations such as 11 and 12 impose even more costs on Canadian taxpayers. Repayable loans are currently an important element of Canada’s international climate change efforts. They create a sustainable way for Canada to aid developing and least developed nations to mitigate and adapt to climate change. However, re-balancing the allocated funding in favour of grants and away from loans imposes new demands on Canada’s fiscal framework at a time when the current Government has no plans to balance the federal budget. We cannot support more government spending without the Government presenting to Canadians a defensible and reasonable plan to return to budgetary balance.

The Report further acknowledges that Canada’s current contribution to the climate finance fund (Green Climate Fund) is about $800 million annually.[10] The Report notes the suggestion of one witness to increase Canada’s contribution up to $4 billion. While Recommendation 12 does not follow up on that increase, it does propose a significant increase to $1.8 billion. Additionally, the Report seems to allude to a regular increase in that support and also mentions increased funding for international aid directed at climate conscious organizations.[11]

We believe the Government must exercise greater caution before embarking upon expensive new foreign climate change programs which worsen Canada’s fiscal situation, have little to no accountability to Canadian taxpayers, and in many cases take up resources that could be better deployed by Canadian non-governmental organizations.

LACK OF CONSULTATION WITH INTERNATIONAL LEADERS

This Report was focused on Clean Growth and Climate Change in Canada: Study on International Leadership. Despite this focus, the Committee did not hear from any international climate change leaders. Over the course of the Study, the Committee heard from 39 witnesses and received five written briefs on topics such as emissions reductions, mitigation and adaption strategies, and climate financing. However, Committee members received limited advice from countries which are recognized as climate leaders.[12]

The Report discusses a number of recommendations for Canada to increase its efforts and commitments on the international stage, but again, direct input from foreign climate change leaders was missing entirely. The Conservative members believe that a robust report would have included advice and contributions from recognized global leaders.

Due to this gap in witness testimony, it is not possible for the Conservative members of the Committee to support the findings of this Report.

RECOMMENDATIONS

In light of the concerns outlined above, the Conservative members of the Committee recommend that the Government:

• - Place a greater emphasis on listening to advice and recommendations given by Canadian industries, especially in regards to affordability, sustainability, and an equitable transition to a low-carbon economy.
• - Remove the federal carbon pricing backstop and leave it to the provinces and territories to implement climate change policies that reflect the unique nature of their economies and jurisdictions.
• - Acknowledge that Canada’s engagement in the global effort to help developing and least developed countries address their climate change challenges must be supported by sound fiscal and budgetary policy here at home.
• - Consider the additional burden that environmental regulations and taxes have on taxpayers and on the competitiveness of Canadian industries.