Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 10, Evidence - March 27, 2003
OTTAWA, Thursday, March 27, 2003
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 9:04 a.m. to examine and report on emerging issues related to its mandate (implementation of Kyoto).
Senator Mira Spivak (Deputy Chairman) in the Chair.
[English]
The Deputy Chairman: This morning we have with us Mr. Bramley, who is with the Pembina Institute for Appropriate Development.
Please begin, Mr. Bramley.
Mr. Matthew Bramley, Director, Climate Change, Pembina Institute for Appropriate Development: Thank you very much for the invitation.
I believe everyone has a copy of my presentation, which I will take you through. I will speak briefly to three areas: first, some broad concerns regarding Kyoto implementation in Canada; second, a comparison study that we undertook between policies in Canada and the United States; and third, the one-ton challenge, which I know you are interested in particularly.
The third slide is a summary of the origin of Canada's greenhouse gas emissions. The pie chart on the left-hand side shows sources of emissions by percentage in the year 2000. That is from Canada's national greenhouse gas inventory. I will not go into any details on this; it is for reference purposes only.
The chart on the right-hand side shows the growth in emissions over the decade of the 1990s from those various sources. Although it is not directly apparent, emissions from individuals and families in Canada represent about 20 per cent or 22 per cent — and it does depend a bit on how you define it — of total greenhouse gas emissions.
When we come to the one-ton challenge, we are talking about something that affects between one fifth and one quarter at most of our national emissions. The biggest sources are industry and electricity production. It is not explicitly marked unfortunately, but it is about two thirds of the road vehicles part and about half of the buildings part. It is, perhaps, a quarter or a third of the electricity part.
On the following slide, I have produced a summary of the federal climate change plan for Canada. Again, that is just there for reference. It shows how the federal government is proposing to close the so-called Kyoto gap, which is the difference between business-as-usual projected greenhouse gas emissions in 2010 and the Kyoto target. That is a gap of 240 megatons of carbon dioxide equivalent per year. The graphic shows how the federal government has proposed to close that gap, with 96 megatons of reductions from industry and electricity, for example, and so on down the graphic. I will not talk about that in any more detail now, but that is there for your reference as well.
With respect to my first area of concern — some broad concerns about Kyoto implementation — I will talk briefly about the next four slides. On the first one, I will talk for a moment about the proposed covenants and emissions trading system for large industrial emitters, which includes electricity generators. We are talking about roughly half of Canada's greenhouse gas emissions. This is by far the largest element in the federal Kyoto plan, and arguably it is the element that runs the largest risk of failure. We feel that there are four key considerations that are important in trying to ensure the success of this particular piece, this single largest piece of the Kyoto implementation plan.
The proposal is to negotiate greenhouse gas covenants with large industrial emitters. The government has indicated that it wants to have in place a regulatory or financial backstop to ensure that emitters will actually engage in meaningful negotiations. That backstop must be announced soon, and it must be punitive, to ensure that the large emitters will come to the table and that it will be possible for the government to negotiate reductions amounting to this 55 megatons that is targeted.
A second key point is that it is proposed under this system to grant so-called offset credits for emission reductions achieved outside the large industrial emitter sector. Those credits would be sold to large emitters, who could then use them towards meeting their targets. The real risk here is that you get a double counting. In other words, if you grant a credit for activities that are supposed to be elsewhere in the plan, that credit simply becomes part of the 55 megatons for large emitters and you do not get any megaton reductions outside the 55. That is a real risk to the rest of the plan, in fact, depending on how that offset system is implemented.
When the issue of reductions from large emitters is discussed, people always talk about the 55 megatons, which the government says it wants to get from these covenants, but we must not forget that the federal plan also includes a further 41 megatons that are supposed to be secured from large emitters. It will be important to ensure that those additional 41 megatons are actually secured, that this total of 96 from large industrial emitters — and I remind you again that they represent roughly half of our national emissions — is actually achieved and that we do not forget about the 41 and just concentrate on the 55.
A final key point on this part of the federal plan, the covenants and emissions trading system, is that the federal government is proposing to cast the targets that it is to negotiate with large emitters in terms of greenhouse gas emissions intensity, that is to say, emissions divided by production, emissions per unit production. The risk here is that if production turns out to be higher than expected then fewer greenhouse gas reductions will be achieved. In the covenants that will be signed, there should be built-in provisions to adjust within some limits these emissions intensity targets, in case production turns out to be higher than expected.
Turning to the next slide, the targeted measures portion of the federal implementation plan, here we are talking about transportation, buildings, agriculture, landfills, and so on.
An important point is that voluntary measures, that is to say, information programs, education, research and development, do have a role to play. However, experience has shown clearly that on their own they are likely to have only a marginal impact on emissions. It will be essential for all governments in Canada to be implementing regulated standards, meaningful financial incentives or disincentives and making major investments in public infrastructure like public transit. Without regulatory approaches, meaningful incentives or disincentives and direct government investments in infrastructure, we will not likely meet the emission reductions that are targeted in the plan.
In the past, Canada has relied on voluntary measures, and clearly the result has been that our emissions have risen rapidly. During the 1990s, they rose by 20 per cent.
There is another broad concern about the implementation plan related to the purchase of international emissions units through the so-called Kyoto mechanisms. The federal government has often stated its intention to close the majority of the Kyoto gap through actions in Canada. In other words, it would, at most, resort to purchases of international units for half the Kyoto gap. In fact, in the plan it is somewhat less than half. It is important that the government stick to this commitment, because there are a number of problems with international emissions units. I have mentioned four here.
Many of these international greenhouse gas units that will be available for Canada to use towards its Kyoto compliance may not actually correspondent to genuine greenhouse-gas reductions. I will not explain that further, but I can answer questions about that later.
When one resorts to purchases of international units rather than making emission reductions in Canada, one loses the co-benefits that can be had from reducing greenhouse gas emissions in Canada. I am talking about co-benefits in terms of reduction of other air pollutants that cause poor urban air quality. Most greenhouse gas reductions are achieved through reducing use of fossil fuels, which also reduces greenhouse gas emissions and the pollutants that contribute to smog, for example. If you resort to international purchases, you do not get benefits of the reductions of those regional air pollutants.
Relying on international purchases rather than domestic action will not help Canada to follow the path to long-term de-carbonization of the economy. In the long term, we need to obtain low greenhouse gas and carbon economy. We have been slow in getting started on that. Further reliance on international purchases rather than domestic action will continue to slow the transition in which we must become engaged.
It can be expected that environmental NGOs and others will be scrutinizing closely the purchases that will be made both by government and private industry of international emissions units. They will be pressing for the highest quality units to be purchased.
I have a final slide on the broader concerns of the implementation process. It is important to stress that the ratification of Kyoto was only a first step. There is now a need for continued strong government leadership as we move into implementation.
With regard to that, the National Climate Change Secretariat has an important role to play. Up to now it has played mainly a facilitation role. If the National Climate Change Secretariat were given heightened responsibility and the mandate for Kyoto implementation, and were moved to the Privy Council Office, it would provide the centralized leadership that could ensure effective and prompt implementation. It is no secret that there has been a certain amount of interdepartmental squabbling over climate change implementation over the past many years. That cannot be allowed to continue if we are to move ahead effectively with implementation. That would be one solution to that problem.
Additionally, the Privy Council Office is the department that handles federal-provincial relations, which will be an important element of Kyoto implementation because of the important role of the provinces. Provinces have jurisdiction, or share jurisdiction, over many sources of greenhouse gas emissions.
Speaking perhaps with self-interest, it is important to ensure that environmental organizations are involved in a meaningful way in the implementation process. The "Climate Change Plan for Canada'' talks a great deal about the need for ongoing consultations, but to date we have not seen any evidence of that. Environmental organizations have a key role to play, not only through their expertise but also through helping to ensure public buy-in for implementation plans.
In terms of comparing Canada with the U.S., we published a study on this topic in May of last year. I think you have that study; if not, a copy of it can be downloaded from our Web site.
We looked at the most important policies for reducing greenhouse gas emissions that have been implemented by governments, both at the federal and the state and provincial levels, in the U.S. and in Canada. There were nine different categories of such policies.
To ensure a fair comparison, we restricted ourselves to states with populations in excess of 1 million. We looked at the five largest greenhouse gas emitting provinces in Canada, which corresponds roughly to provinces with populations over 1 million. We found that the U.S. leads Canada in terms of implementation of such policies in every area we examined. At the very least, the two countries were equal. In every area, we found the U.S. jurisdictions to be ahead of anything that had been done in Canada. There are a few examples on the slide, and there are many more in the report.
Three states in the U.S. are now explicitly regulating carbon dioxide emissions from power plants — Oregon, New Hampshire and Massachusetts. There are 15 states in the U.S. with renewable portfolio standards, requiring electricity retailers to source a minimum percentage of their sales from low-impact renewable resources. There has been for a number of years a federal production tax credit in the U.S. for wind energy production. Belatedly, Canada implemented a wind power production incentive in the 2001 budget, but it is significantly below the incentive level offered in the U.S. for many years. It is no surprise that the U.S. is far ahead of us, even on a per capita basis in wind energy implementation.
There are some 20 states in the U.S. with public benefits funds. These funds are financed through a small charge on electricity sales. The charge is typically in the range of one tenth of a cent per kilowatt-hour. It is a small charge, but it constitutes significant funds. These funds are used by states to support renewable energy programs and consumer efficiency programs, in particular. There are legal requirements on electricity utilities to undertake programs that help consumers be more efficient and, therefore, consume less electricity.
I understand that you visited California recently. Undoubtedly, you are aware of the recent legislation that that state has passed on greenhouse gas emissions from vehicles, legislation that will lead to improved fuel efficiency standards for vehicles beyond the weak standards that prevail at the federal level.
The U.S., perhaps surprisingly, has a much higher level of capital investment in public transit. In 2000, the total capital investment in public transit in Canada was less than Can. $1 billion. In the New York City urban area alone, investment in public transit was well over U.S. $2 billion.
Another interesting example at the federal level in the U.S. is the capture of landfill gas from large landfills. This is about 3 per cent of Canada's greenhouse gas emissions. Capture of gas has been mandatory at most landfills in the U.S. for many years. In Canada, there are some provinces that require it; many provinces do not.
There was one lessen from this study that was particularly relevant during the debate about whether Canada should ratify Kyoto. There were those who said that, given that the Bush administration had withdrawn from Kyoto, if the U.S. is doing nothing it would be dangerous for Canada to get too far ahead of the U.S. That argument does not hold because we are actually behind the U.S. at the moment.
It is hoped that with Kyoto implementation we will overtake them again, but right now we are behind.
The final part of this presentation will speak to the one-ton challenge. On the slide entitled "The One-Tonne Challenge,'' there is a pie chart showing where personal greenhouse emissions come from in Canada. It is always a bit of a debate as to exactly how you define personal emissions. The way I have done it, it adds up to 5.4 tons per capita in Canada. I have included all passenger, air and road transportation. Although some of that is related to business travel, it is an area where individuals can have quite an influence about choices that are made. Transportation represents more than half of the total. The other parts relate to energy use in building, whether it be space or water heating, appliances and lighting. As you know, the federal government has issued a challenge to individuals to cut this per capita average from roughly 5 tons to roughly 4 tons per year.
I will make the same point that I made earlier with regard to the targeted measures. Information and education programs are very important. They will prepare the ground. However, on their own, realistically, they will only have a marginal impact on emissions. Canada's experience with voluntary approaches to dealing with greenhouse gas emissions over the past several years shows clearly that you have to go beyond voluntary measures to have a significant impact on greenhouse gas emissions or to make them significantly below business as usual, which is what we have to do under Kyoto. This means that regulatory approaches will have to be used, as well as meaningful financial incentives and possibly disincentives. Those are the things that will really change behaviour to the extent needed.
It is important to bear in mind that the producers of the greenhouse gas emitting products that consumers buy share some responsibility here. One good example would be cars and trucks, where producers could, fairly easily, using existing technology, dramatically improve the fuel efficiency of new vehicles sold in Canada. The result would be that individuals would have correspondingly lower greenhouse gas emissions. Indeed, an important element in the federal Kyoto plan is to seek a 25 per cent improvement in new vehicle fuel efficiency. This is an example of what can be done towards meeting the one-ton challenge, through actions required of producers of products and not necessarily the consumers. It is a mistake to imagine that all the burden and responsibility must be on the consumers. There is also an important shared responsibility by producers.
Another example would be buildings. Yes, consumers can demand that newly constructed housing be built to R- 2000 standards; however, realistically, until provincial building codes require those kinds of standards the vast majority of buildings will be built to a lower standard. This is another example where, for a greenhouse-emitting product, in this case a house or a building of some kind, a requirement made on the producer likely will have a bigger impact than trying to persuade the purchaser to choose a product with a lower impact.
A further example is electricity. In most parts of Canada, consumers of electricity do not have much of a choice in the sources of electricity that they purchase. Here is an example where there can be requirements on electricity producers, with renewable portfolio standards, to require electricity retailers to source their electricity from lower- emitting or zero-emitting sources.
Having said all that, when consumers are asked to make changes themselves as opposed to changes being made on the producer side, realistically, you will need meaningful financial incentives. An example of this would be for building retrofits. The federal government wants to retrofit 25 per cent of all residential and commercial buildings in Canada. It will require some significant financial incentives to change current behaviour. Before saying there has to be a vast increase in public spending, financial incentives can be structured in a way that is revenue neutral. An example that is often discussed in the area of vehicle fuel efficiency is the fee-bate concept, where you levy a fee on inefficient vehicles but provide a rebate on more efficient vehicles. That way there is no actual net change to government revenues. I want to add that note of caution. When I talk about financial incentives, it does not necessarily have to mean an increase in public spending.
I would now be pleased to answer questions.
Senator Finnerty: The one-ton challenge is part of the climate change plan for Canada. Every Canadian has been asked to voluntarily reduce annual GHG emissions by 1 ton, from an average of 5 tons per year to 4 tons per year. In your presentation, you state that producers of GHG-emitting products should make the reductions because of their greater knowledge of the technical possibilities of reduction, as well as being better organized and therefore, presumably, able to make improvements at a lower cost. Nevertheless, producers have no control over how their products are used. An example would be excessive idling or leaving appliances on when they are not in use. How can we get Canadians to change the way they use GHG-emitting products as opposed to changing the products they use?
Mr. Bramley: I agree with your implication that it is a shared responsibility. There must be action by producers, action that will have to be required by regulation in many cases. However, there is no doubt that even if a consumer buys a fuel-efficient vehicle the consumer can use the vehicle in an unwise or inappropriate way. There will have to be action on both sides. Idling is an example, and a number of municipalities in Canada have anti-idling bylaws. There can be a regulatory approach there.
Senator Finnerty: Where is that?
Mr. Bramley: I understand there is an anti-idling bylaw in Montreal. I do not remember offhand, but I have heard of other municipalities doing this as well. Enforcement is an issue. They may not be well enforced, or even enforced at all. I do not want to give the impression that regulatory approaches are needed everywhere. There is certainly a role for information programs. There has been a recent controversy about the gadget that starts an automobile remotely, where an individual lets the car run for a half hour or more before getting into it. Clearly, there is need for major education regarding issues like that.
The main point I was trying to make is that, yes, there is a role for information and education programs, but they will not, on their own, close the gap to the extent that it needs to be closed.
Senator Christensen: On the issue of educating the public, we did that back in the 1980s. It is public demand on the industry rather than putting penalties on the industry that will make industry meet the demands of the public. If I want to buy a car with low emissions, that is the car I will buy; if a car dealer does not have the car for me, I will go to someone else. It is the same with any product. It used to be that no one was interested in wood stoves that did not have catalytic combusters. As that particular product became more efficient, the dealerships that had those were the ones that were selling them. Public demand on the producer created the changes, and then all other producers, because they wanted to sell, came up to it. There must be some requirements on the producer as well. It would be better, however, for government to create a good awareness program for Canadians who will make those demands.
Mr. Bramley: I agree with you that there needs to be good awareness, but I do not think awareness on its own will get you nearly far enough. Perhaps an example to cite would be green power. In a number of provinces in Canada now, consumers can choose to pay extra to buy green power, which is electricity produced from low-impact, renewable resources.
Green power marketing has had some success, but my understanding is that it is not reaching more than about 1 per cent of consumers. Perhaps the marketing could be done better, but most people who are experts in renewable energy say that that kind of marketing approach will only get you so far. To get up to the level of 10 per cent impacts of renewable energy that some European countries are planning to achieve, you need things like renewable portfolio standards, where a requirement is placed on the producer and/or tax credits, which is used in the U.S. I cited that as an example earlier.
Marketing and awareness can get you along the road, but experience shows that it does not get you far enough along to the targets that we need to meet under Kyoto.
Senator Christensen: Awareness would also help to money as well. You would save money in the long term.
Mr. Bramley: We have a Web site called www.climatechangesolutions.com. The main message is to reduce emissions and save money. We have been participating in an information awareness approach. Awareness is definitely important; however, it is not enough on its own.
The use of certain appliances is another example. It is accepted that governments regulate minimum efficiency standards for energy-using appliances. As technology improves, there comes a point where there is no longer any excuse to be selling an appliance that uses energy wastefully when it is perfectly practical to produce an efficient appliance.
The producers know technology and their products. They are well organized and well resourced. It makes sense to say, "Producers, this is the minimum standard of the products that you should be producing,'' especially when the technology is available.
Senator Sibbeston: I come from the Northwest Territories, where the issue of climate change or pollution seems far removed from our reality. Our country is still quite pristine and vast. I often have difficulty understanding how driving a car or burning wood adds to the gas emissions.
At the same time, I have been in cities where a haze has hung above the city. It all adds up. I can see that it has a detrimental effect.
Would you say that the science in the area of climate change is simply emerging and still at an elementary stage? I am seeing people having difficulty in quantifying things.
The government says it will retrofit 25 per cent of their buildings, to contribute significantly to the entire issue. What about the efforts and the machinery that are there to produce that 25 per cent? Are these sorts of things taken into consideration?
Is it really a quantifiable science? Are scientists misleading us somewhat in putting figures to things, when in reality these figures are not realistic?
Mr. Bramley: The science of climate change has received intense attention and has experienced an intense level of activity for roughly 10 ten years now. A highly respected international science assessment body, the Intergovernmental Panel on Climate Change, was established in 1988 by the United Nations Environment Programme and the World Meteorological Organization. That panel produced three major assessment reports, in 1990, 1995 and 2001, assessing the state of knowledge of climate change science. There is an overwhelming consensus amongst professional climate scientists that emissions from human activities are now a dominant influence on the climate. The work of that body projects that if greenhouse gas emissions continue to rise over the current century, according to a variety of scenarios, global average temperatures will increase by between the 1.4 and 5.8 degrees Celsius by the year 2100.
That is a strong scientific consensus. Those findings have been endorsed by the national science academies of 18 countries, including Canada, the U.K. and the U.S.
There is not really a significant debate about the human influence on climate change now. It is a debate that someone sees portrayed artificially in some media reports, but among climate scientists there is not a significant debate on that any longer.
Indeed, one of the key findings of the science is that regions close to the poles, particularly in the northern hemisphere, are projected to suffer the largest and most rapid climate change. One often hears people from northern Canada speaking of evidence of climate change that they can already see around them. There have been studies in the McKenzie Basin documenting clearly the evidence of rapid warming over the past century. That is projected to accelerate if we do not get emissions under control.
Regarding the last part of the question on retrofits, we do have good figures on the amount of emissions of greenhouse gases linked to energy use in buildings. Retrofitting buildings is a very attractive way to reduce emissions — as a previous question implied, one can save money by doing so. When you reduce energy use, the initial capital investment is generally paid back quickly through savings in energy costs.
The government has fairly aggressive targets in its plans to retrofit buildings to realize that savings. It is an attractive, low-cost way of reducing emissions.
It is also a way of involving a large proportion of the population in action to address climate change. It has an attraction from the perspective of getting people involved, as well.
Senator Christensen: I have a comment regarding the efficiency of retrofits. I was in the energy conservation business in the 1980s. We did a total retrofit on our home in 1991. We increased the insulation by 50 per cent. We changed all the windows to triple-glazed. We reduced many of the northern light windows. I would say that we reduced the surface of windows by about one third.
I did a comparison this year on the nine years previous to that retrofit and the nine years following that retrofit. We saved approximately 325 litres per year on average. We have had warmer winters since that time. The house is quieter, cleaner and draft free. I would still have done it because of the comfort, but the actual cost recovery was not that great.
Mr. Bramley: Obviously, individual experiences will depend on individual circumstances. As part of the national climate change process, there was a body established called the "Buildings Issue Table,'' which produced reports on the potential for Canada to take measures to reduce emissions from buildings. That report contains cost estimates per ton of greenhouse gases reduced. There were many measures in that report that are negative-cost measures. Many experts on building retrofits will tell you that, on average, there are many money-saving measures that can be taken in buildings.
Senator Eyton: Mr. Bramley, thank you for your presentation. I should say, very quickly, that I have not accepted the arguments behind Kyoto, and I oppose Kyoto. On the other hand, I fully accept that there are benefits coming out of it and the initiatives that you are talking about and that we are trying to consider. I get there, but from a different route, but I am supportive of many of the initiatives that you are talking about.
Can you tell me a little bit more about Pembina? I have received material from the institute for many years now, and I have seen the one little one-paragraph description, but can you tell me how it was founded, how it is funded today and its outreach across the country?
Mr. Bramley: The Pembina Institute was founded in 1986, I believe. I have worked for it for four years, so I am not completely clear on all the ancient history. It was founded in Drayton Valley, Alberta, following a major industrial accident, which was the initial instigation for a group of citizens to set up what was initially a voluntary, environmental, non-profit organization. We have grown over the years. We currently have approximately 35 staff, with three major offices, one still in Drayton Valley, Alberta, one in Calgary and one in Ottawa. Our sources of funding are quite diverse. We have some foundation funding, as well as some individual donors. Some of our specific projects are funded by the federal government; others are funded by provincial governments. We also provide advisory services to corporations, municipalities and governments. It is a bit of a mixed bag. We are a bit of a hybrid between a traditional, environmental, non-profit organization and a consulting organization. We are not for profit, but we do provide advisory services that provide us with a source of income that allows us to make ends meet.
Senator Eyton: Would your budget run about $5 million per year, or something like that?
Mr. Bramley: I think it is more in the region of $2 million per year.
Senator Eyton: You have an efficient use of personnel, then.
Your presentation referred to the one-ton challenge. One of your slides related to the individual contributions that can be made against the current emissions; another referred to the program itself.
How does that individual effort and measure fit into all of that? There is, as you have pointed out, a great risk of double counting. I can understand perfectly pages 3 and 4. They are a little hard to read, but I understand the calculation. It seems to me that if individuals are embarking on the challenge and doing what they can they should know that it has impacts on the transportation segment here or the building segment there. To that extent, how do you avoid the double counting?
For example, if a manufacturer provides a more efficient water heater, does the individual buying it get the credit, or does the manufacturer get the credit? Where does that fall? Can you explain how the one-ton challenge fits into the graphs on pages 3 and 4?
Mr. Bramley: That is an excellent question, but I do not have the answer because the plan, as you have noticed, does not actually define what emissions from individuals are. It is not clear from the plan exactly how the federal government intends to define individual emissions. The federal government has not quantified where that one-ton reduction per capita fits in and how much of it is transportation and how much of it is building. The answer to the question may be buried in some of the number crunching that underlies the federal plan, but I do not have a precise answer.
You are right that the deductions related to the one-ton challenge will fall partly in transportation and partly in buildings, and partly in the industry and electricity section. If we are talking about reduction in energy use in the home that results in lower electricity production, you can get an emission reduction from electricity producers as well, so it will be spread over those areas. Very roughly speaking, given that half of personal emissions, in the way that I have defined them on the second-last slide, come from transportation, one could expect roughly half of the one-ton challenge to be met in that area, and roughly half in actions and buildings, but I cannot give a precise answer to that.
Senator Eyton: Might it be better on page 4 to have a separate segment for the individual contribution, so that all of us can get together and say we did our bit and then look to the other guys for their share?
Mr. Bramley: I agree that the federal government needs to define exactly what it means by "individual emissions.'' Different definitions could be used, and the quantification that could be used to ascertain whether 1 ton is achieved or not should be made clear. Perhaps you might want to ask the federal officials who are working on this for more details, but I understand that the federal government will be undertaking a public outreach program where presumably they will be a bit clearer about what exactly is meant.
Senator Christensen: Have you looked at Great Britain, for example, to see how they set up their process for counting carbon emissions, to do a comparison?
Mr. Bramley: Their process for counting carbon emissions regarding individual actions?
Senator Christensen: As Senator Eyton is saying, how do we keep track and avoid double counting? What is the process? You are saying it is not clear. I am asking if you have looked at other jurisdictions such as Great Britain to see how they are doing it.
Mr. Bramley: In terms of Canada's compliance with Kyoto, there can be no double counting, because Canada's compliance is judged according to our national greenhouse inventory, and that is compiled in a rigorous way that excludes any double counting. The double counting comes in, if you do make progress in reducing emissions, in how you attribute that progress to different sets of action. It is an attribution issue.
In the U.K., I am familiar with some of the measures that have been implemented for Kyoto implementation. There is, for example, already a greenhouse gas emissions trading system, a renewable portfolio standard, a requirement on electricity producers to improve the efficiency of consumers, and so on. I do not know what mechanisms have been put in place to exclude double counting in attribution, but I am the first to agree that there are many risks of double counting in the federal implementation plan. I was emphasizing the risks particularly with regard to the large industrial emitters, but it is an area where there will have to be a lot of diligence.
I did not answer the previous question fully about who would get the credit, because that is the same question about attribution. The answer is that questions of credit only really matter when there is a formal emissions trading system — when the credit is actually a piece of paper that has monetary value and is traded in an emissions trading system. It becomes especially important in an emissions trading system to ensure that there is no double counting. That really kills any emission trading system. If it is it a case of somebody selling a more efficient appliance and whether it is the seller of the appliance or the user of the appliance that gets credit, that is a question that needs to be answered, but it is not utterly critical to get the answer because there will be no piece of paper that will be tradable. There will be no tradable credit granted for those activities. At least that appears to be the case, according to the current plans.
Senator Eyton: I have one more question on the national plan, the government change plan. There is a reference of 10 per cent of new electricity capacity from low-impact renewables, and you echo that in the last page of your presentation by referring to electricity renewable portfolio standards. What part can or should nuclear power play in that?
Mr. Bramley: Nuclear power has not been very much discussed in the years of discussions that we have had now through the national climate change process. My understanding of that is that many people regard nuclear as an uneconomic option. Obviously, there have been bad experiences from an economic perspective in Ontario and in the U.K. Clearly, there is a major obstacle of public acceptance.
For that reason, certainly, environmental organizations are uncomfortable with any proposal to increase nuclear capacity, given the issues of waste management, the risk of major accidents, and so on. Likewise, environmental organizations do not regard large hydro as a low-impact alternative to fossil fuel generation of energy because of the other environmental and social impacts from large hydro projects.
Therefore, large hydro and nuclear together are not generally considered low-impact alternatives when it comes to reducing greenhouse gas emissions.
Senator Eyton: That seems to me to be inconsistent. If the target is clean electricity and clean power, superimposing other objectives on that seems to be wrong.
On nuclear power, I should also say that from a green field circumstance or situation, it is undoubtedly very costly and uncertain and not often politically palatable. However, the marginal costs of existing facilities are by far the cheapest alternative available. Your reference as to cost of power is generally right, but not with respect to existing facilities that can produce power.
Mr. Bramley: One must always take into account the full impact. It is somewhat artificial to say, "Today, we are only talking about greenhouse gases, so we do not have to worry about any other potential environmental impacts from a particular technology.'' Certainly, in the environmental assessment process, one must take into account the full range of impacts. Certainly, as an environmental organization, we would do that.
Senator Eyton: I can superimpose many other objectives as well, and I would never get anywhere.
Senator Milne: Many of the issues and the solutions that you have suggested are not in the federal field. They are matters that are controlled by the provinces or, particularly, in the matter of transit, issues that are controlled by municipalities. As far as I can see, about the only input that the federal government has into rapid transit is through infrastructure funding.
What is the best approach to mass transit to get people out of their cars? I know the City of Ottawa has taken the bus route. The City of Toronto has taken the subway and the rapid transit route and is now considering rapid transit bus lanes. What would you suggest, and how do you think the federal government could have an impact on that?
Mr. Bramley: I certainly agree that the feds can have an impact through infrastructure investment. In the U.S., there has been a long-term commitment to funding public transit, which we have not had in Canada.
Senator Milne: Which is the best route to go — bus, rapid transit, train service?
Mr. Bramley: I have not looked into that question enough to give a definitive answer. Obviously, cost is a key consideration, as well as the cost effectiveness of getting reductions in environmental impacts for the money spent.
However, another consideration is consumer convenience. In Canada, we do have reasonable public transit services in many cities, but not enough people use them, in many cases, because they are not perceived to be sufficiently convenient and attractive. The choice between a bus service that might bog down in congestion and a train service that does not have that problem is obvious. Anybody who has used urban rail services knows how fast and convenient they can be. That would be an objective if your goal is to get a large number of people using that service.
Senator Milne: How can we encourage building standards, which are in the provincial domain? That is, how do we encourage the province to legislate a requirement for R-2000 in new buildings? It seems to me that would be a major improvement.
Mr. Bramley: You are right. I am not a constitutional expert, but my understanding is that provinces currently regulate that area. I do not know that there would be any mechanism that governments could use to regulate in that area if provinces fail to act. Maybe that is something that should be looked into. We are highlighting here the need for provinces to be participating actively and cooperatively in the implementation of Kyoto in Canada.
One problem is that the federal government will be held responsible for Kyoto compliance internationally. How do you get jurisdictions, which do not have direct responsibility, to undertake nonetheless the actions needed? Federal- provincial negotiations will be a key issue.
Senator Eyton: With respect to getting cooperation, you referred in your brief to taking the responsibility to the PCO and moving it up in the federal government. I would have thought that would be negative in dealing with the provinces and municipalities. My reaction is that that might not be the right way to do it. How can Pembina, others and we generate a grassroots municipal and provincial initiative that will come to meet the federal initiative? It will not happen from on high. There will be immense resistance to different initiatives that come from here that tend to be transported to the provinces and municipalities. It just will not work. I suspect that giving it to an office like the PCO office will not help in that regard. Can you comment?
Mr. Bramley: Well, the proposal to give responsibility for execution of these measures to the Climate Change Secretariat and house that in the PCO is an attempt to ensure that somebody in the federal government is responsible for ensuring implementation.
Currently, I understand that Environment Canada and Natural Resources Canada have co-responsibility, and it is no secret that those two departments do not always see eye to eye on these issues. I think the sustainable development commissioner has highlighted this problem in two reports. I believe there was one in 1998 and an update a year or two ago from the federal environment commissioner, pointing out how the federal structure for implementing climate change measures was sub-optimal. Work needs to be done there to centralize and clarify responsibility for implementation.
Regarding the participating municipalities and provinces, many municipalities are eager, willing and engaged regarding action to reduce greenhouse gas emissions. The Federation of Canadian Municipalities has been very proactive. Many large municipalities as well as smaller ones have adopted goals of greenhouse gas reduction and action plans, and there is quite a buzz of activity at that level.
Indeed, a number of provinces are also eager to act. I know the Government of Quebec recently held parliamentary hearings and has issued a discussion document that outlines four different options for reducing Quebec's greenhouse gas emissions either to 6 per cent below the 1990 level or to equality with the 1990 level.
Manitoba has also been quite active and issued action plans.
The Province of Alberta has issued a climate change action plan, which is not consistent with the Kyoto target, but it does show clear acceptance that a problem needs to be addressed and a willingness to implement a series of measures to start reducing emissions. There is already a lot of willingness at the provincial level.
I do not have a specific proposal as to how to repair some of the lack of trust that developed between the provinces and the federal government regarding climate change over the past year.
Senator Eyton: That is also true with every other subject.
Senator Milne: That is a constant tension between the different levels of government.
The best federal tool to affect the provinces may be our tax code. Give them dollars for doing the right thing and take them away if they are not.
To change the subject a bit, I wish to talk about carbon sinks. Are we getting false credit or reduction in carbon sinks, or do they actually contribute? What is the best kind of carbon sink? Have you done any studies on slow- growing trees versus fast-growing crops, and so on?
Mr. Bramley: We have done some thinking on sinks. As I am sure you are aware, Canada has secured the possibility of getting credits for sinks for its Kyoto compliance. There is no doubt that sinks exist, scientifically speaking. There are biological processes that remove carbon dioxide from the atmosphere. The biggest problem with the credits that Canada has secured for sinks internationally is that it will get credit for business-as-usual activities that create sinks.
When Canada's compliance with regard to Kyoto emissions is evaluated, you can compare our emissions in 2008-12 with our emissions in 1990. You compare like with like. With forestry sinks, Canada will not make have to make any comparison with 1990 sinks; it will just look at those links during the 2008-12 period. It is basically a fudge that Canada has secured to make its job easier.
The other big concern with sinks is permanence. Greenhouse gas emissions involve a transfer of carbon from the Earth's crust into the atmosphere. A sink takes carbon from the earth's atmosphere; however, rather than putting it back in the crust it puts in the biosphere where it is secured in a somewhat less secure matter. Carbon in the Earth's crust can stay there for millions of years without worry. However, if it is put into the biosphere, you can easily cut down the tree or perturb the actual soil and the carbon goes back into the atmosphere again. We have a concern about considering sinks to be equivalent to reductions. They are not equivalent, because of that permanence issue.
You asked whether or not there were good and bad sinks. With regard to forestry, obviously there is a whole range of environmental concerns. We would be keen to see that projects that Canada engages in to store additional carbon in forests are consistent with other environmental values in the forests, such as preserving biodiversity, et cetera. There is a whole range of environmental issues there.
There is some work being done. Pollution Probe has had a series of workshops to look at the issue of forest carbon management and how that can be done in a more acceptable way. There might be information there.
Senator Milne: Do you know if anyone has done work on agricultural sinks? As I was saying, that would be a case of fast-growing crops versus slow-growing trees. Many fast-growing crops, such as corn, are then used as mulch, which eventually breaks down and goes into the soil.
Mr. Bramley: I do not have detailed information about agricultural sinks, but I do know that the federal government is counting on 10 megatons, towards closing the Kyoto gap, from enhanced carbon storage in agricultural soils. There is much work being done to see how that can be done and how that can be accelerated. However, I do not have specific information about it. From an environmental aspect, we have this concern about permanence and how to ensure that any credit Canada gets now for these activities is reflective of a permanent change, rather than a temporary storage of carbon that will go back into the atmosphere.
Senator Milne: There is another area that I am quite sure no one has thought to look at, namely, new subdivisions. Many of them are situated on a farm field. There is one in the area where I live. A farm field has no trees on it whatsoever; in new subdivisions, the first thing they do is plant trees. The urban forest cover is increasing greatly as our cities expand.
Mr. Bramley: I have seen numbers from carbon sequestration from urban forests and the numbers are very small. Yes, there is an aesthetic benefit, but the number of trees is quite small compared to the number of trees in a productive forest.
Regarding urban development, however, you raised an important issue. Urban development is something that, if done in the wrong way, prepares the ground for much higher greenhouse emissions, particularly from transportation, over the long term. That is an area where, for example, some provincial governments have begun to issue guidelines to municipalities on integrating energy use considerations into urban development planning. That is an important issue.
Senator Christensen: Have you done any calculations or considerations on the carbon that is locked in the North in the permafrost and what effects global warming will have in melting that permafrost and releasing all that carbon?
Mr. Bramley: I do not have numbers on that. However, I know that that is an issue of considerable concern.
Senator Christensen: It is huge.
Mr. Bramley: It is potentially a huge problem. I really cannot give a detailed answer.
Senator Christensen: The other question that I have concerns international emission units. They may not correspond to the genuine reductions that are anticipated as a result of that. Can you elaborate on how this is possible and what can be done to prevent this from happening?
Mr. Bramley: There are two main sources of this problem. There are three emissions trading programs under the Kyoto Protocol. One of them, whose official title is simply International Emissions Trading, is the trading of portions of a country's quota of allowed emissions under Kyoto. The example is often cited of Russia, whose Kyoto target is actually considerably above where their emissions are expected to be during the Kyoto period. They will have a surplus of their emissions quota to sell to a country like Canada. This is referred to as hot air. The reason Russia has this surplus has nothing to do with action to address climate change. It is simply because its economy collapsed when the Soviet Union disintegrated. If Canada relies on those units to meet its target, we are not really getting any environmental benefit out of that.
Having said that, the federal government has said many times that it will only consider buying such units if they are conditional on the money being invested in Russia into environmental projects, which may be a better solution.
The other big concern with international units is through another mechanism. One of the other two mechanisms of trading under Kyoto is called the Clean Development Mechanism. This is where Canada would invest, for example, in emission reduction projects in developing countries and get credits for the amount by which those projects reduce emissions below what they would have been otherwise. The difficulty here is defining what they would have been otherwise. It is called the baseline for the project.
There appears to be a great risk that credits will be granted under this Clean Development Mechanism for projects that might have happened anyway, without Kyoto — in other words, granting credits for activities that might well have happened in any case. Canada will then get a credit that it can use towards its Kyoto target. The overall effect is that you have actually increased global emissions, you have not reduced them. Canada is actually a representative on the executive board of the Clean Development Mechanism. It has some say in what the rules will be for how this operates. We have a lot of concern that the rules will be too lax and open a loophole for getting credit for things that would have happened anyway.
Senator Merchant: Referring to the proportion that the individual will have to contribute toward these greenhouse savings, have you thought about how the burden will fall on individuals? Will it penalize those who can least afford it? You talked about building better appliances and better cars. Will people who drive older cars be penalized by, perhaps, increasing the costs of their vehicle licences? Many of these measures will fall disproportionately on those who can least afford it. What are your comments on that?
Mr. Bramley: To begin with, the measures that apply to consumers would not necessarily be punitive. In fact, that is not the approach that I advocated.
If regulations were used to require manufacturers and builders to create more efficient products or appliances, then one could argue that this will raise the cost of those products. In most cases, the idea is that the technology is already available at a low cost to improve efficiency. Thus, there would not necessarily be significant increases in the costs of products.
In the case of financial incentives, you would see the government providing monetary rewards for efforts such as the retrofitting of buildings. I gave the example of a fee-bate, a rebate that goes to the purchaser of an efficient vehicle, and that of a fee that is imposed on the purchaser of a less efficient vehicle. I do not see that as having an effect on low- income people, because they tend to buy smaller vehicles, which are less expensive and more efficient. If there are examples of disproportionate effects on incomes, there could be exemptions considered. I do not think the intention is to create a burden on low-income people.
Senator Merchant: Before an individual can quality to receive the rebate, he or she would need money to buy the vehicle in the first place. Will the burden be disproportionate?
Mr. Bramley: To take the example of the vehicle, if a fee-bate measure were used, it would actually cost less to purchase an efficient vehicle. There is no issue of having to pay more now and getting some back later. Hopefully, it would be implemented in a transparent way that makes the vehicle cost less.
Senator Merchant: I know that, but people would then be required to buy a different vehicle or a different stove. Most people will not purchase a new vehicle, say, if they do not need one. They may choose to keep vehicles, stoves, et cetera, for 10 years. They may not be ready to buy new cars, even if it is more economic to buy a more efficient new car than to buy a less efficient one.
Mr. Bramley: No one, to my knowledge, is saying that people will be required to replace an old product and buy a new one. When we talk about vehicle efficiency standards, we are talking about new vehicles with a more efficient range.
Senator Merchant: I understand that, but I wonder how we will meet that standard of 1 ton per person, because it is to happen within six years. There is a limitation on the time.
Senator Milne: I have a supplementary question on this. I believe that Senator Merchant has a good point. Poor people do not buy new cars; they buy used cars that are less efficient. To my knowledge, having priced my way around the car market fairly recently, the energy-efficient cars that we should be buying are extremely expensive. It will take a long time to ever make that money back.
Mr. Bramley: That is where things such as transit become important.
Senator Buchanan: I wish to talk about federal-provincial relationships. We have come a long way in the last year. In most provinces, there are codes that adhere to national codes for such things as electricity, safety and fire. Those are, for the most part, all national standard codes that have been adopted by the provinces, at least the ones I know of. However, there is the problem of efficient homes — the R-2000 homes. There is no national standard in most of the provinces that you must adhere to.
For the most part, politicians are practical, reasonable and realistic people. You agree with that, do you not?
Mr. Bramley: Of course, I agree.
Senator Buchanan: The problem is that when you impose that kind of national standard on the country and on each province there will be a cost factor. The sad thing about it is that that cost factor ends up with the person building or buying the home. Who is blamed? The provincial government is blamed because that is where the directive came from and not the federal government. You must understand federal-provincial relationships and who is to blame as far as the public is concerned.
In respect of the three-stage explicit on the regulation of CO2, in Nova Scotia 80 per cent of our electricity is generated from coal. We have been able to eradicate sulphur dioxide in most of our plants by fluidized bed and washing methods, et cetera, but not CO2. It is difficult to reduce or eliminate CO2 from coal-burning plants. I do not understand why they would be regulating CO2 in the State of New Hampshire because most of their power is nuclear, from the Seabrook Nuclear Plant. I do not think they have coal burners in Oregon, do they?
Mr. Bramley: I believe that New Hampshire has three coal-fired plants.
Senator Buchanan: I did not know that.
Mr. Bramley: In Oregon, they are using natural gas. The regulated standard is such that any energy facility must reduce its CO2 emissions per unit of production down to a level that is 17 per cent lower than the best performing natural gas plant in the country. Essentially, plants have to purchase greenhouse gas offsets to meet the regulated standard.
Senator Buchanan: I mention that because through the 1980s there was a lengthy argument and discussion between the governors of New Hampshire and Massachusetts about Seabrook and about nuclear power plants in general.
CO2 creates a difficult situation. In Nova Scotia, we generate, as I said, 80 per cent of our electricity from coal. We jealously protected our right to do that over the years because it is 100 per cent our indigenous coal. Now, that has changed. We do not generate any electricity from our indigenous coal. Rather, we buy it from the U.S. and, in some cases, from Columbia and others in South America. We would like to get out of that, but the problem is cost. What would you do with consumers who already pay fairly high electricity rates when you say to them, "All right, we will now discontinue coal and we will have wind power''?
We generate less than 1 per cent of our power in two very small wind power stations currently. They are experimental, and the cost is incredibly high. We do not have many areas where you can generate electricity from wind. Forget wind power.
Solar power is very expensive. You cannot do that because of the cost to the consumer.
We are having much electricity generated from natural gas. However, who will pay for the cost of getting that natural gas to our power plants in Cape Breton? It is very costly to dig the trenches to move it. Once it is there, who will pay the cost to convert all those 900-1000 megawatt plants from coal to natural gas? You come down again to the cost.
We will not do nuclear generation in Nova Scotia because, again, the testing and economics that has been done show that it will cost significantly.
You get into a real conundrum. What will you do? Continue to burn coal and continue to generate CO2, because to eradicate CO2 will be costly, as I understand it. I do not know the technology of doing it, but I understand that it is very expensive to convert if most of our power has been generated from coal.
Mr. Bramley: The first and most important answer is to stop looking at the end of the pipe, which is where the CO2 comes out, and look at the source of the problem, which is the consumption of the electricity. There is a tremendous amount of progress that can be made in reducing it.
Senator Buchanan: Is that realistic?
Mr. Bramley: Absolutely. Canada is a very wasteful user of energy, in general. There are tremendous gains that can be made, as we have talked about, from having more efficient buildings and appliances.
The U.S., again, has provided some examples here with the public benefits funds that require utilities to spend on demand side management. There are programs that focus on the consumer, to help them use less energy in the home. There is a tremendous amount of progress that can be made there.
Senator Buchanan: Who pays for that?
Mr. Bramley: In many cases, it is a zero or even negative cost approach due to the savings. When you use less energy, you are spending less money.
Senator Buchanan: You are talking about the utilities spending this money. Where will they get the money? They have to get it from the consumer. The consumer pays from his or her pocketbook.
Mr. Bramley: For the public benefit funds in the U.S., a small charge is levied on electricity sales on a per-kilowatt- hour basis. That constitutes a fund that the utilities are mandated to spend on programs that help consumers use energy more efficiently.
As a result of this process, consumers are using less electricity. In many cases, they will actually pay themselves back from this wires charge through reduced consumption. You can actually close that loop.
The Deputy Chairman: If I could interrupt for a minute, the public utilities in California have integrated resource management. The utilities deliver the program. When they had a different administration do it, it did not work. They are now returning to the utility-based program.
There is also a renewal package, which has had fantastic results. They have had a significant reduction. They have made $1 billion in the last few years. The California program is very successful.
Senator Buchanan: You must appreciate another thing, however. You are talking about the state of California, which has a population the same as Canada. We are talking about small provinces such as Nova Scotia, which has about 1 million people. New Brunswick has about 800,000 people. There is a big difference between those provinces and California.
You must also take a look at the economics of it. In California, those big utilities will spend 10 per cent or whatever figure the witness has mentioned.
The Deputy Chairman: One tenth of a cent.
Senator Milne: I want to interject here, because I heard Mr. Bramley say 10 per cent as well. We should know the exact figure.
Mr. Bramley: I said one tenth of a cent.
Senator Buchanan: I thought that you had said 10 per cent.
Senator Milne: It is one tenth of a cent.
Mr. Bramley: I wish to answer the second part of the question, which was about wind power.
It is not fair to dismiss wind power the way in which you seem to be. I gave the example of the Government of Alberta that announced a matter of days ago that it has renegotiated and signed new long-term power contracts that will actually save the government money on the power that it purchases for its operations. Ninety or 95 per cent of the new power is coming from low-impact renewable sources, including wind and biomass from wood waste.
The Government of Alberta is setting a great example. From 2005 onwards, the Government of Alberta will be sourcing the vast majority of its power from low-impact renewable resources and saving money in the process.
Senator Buchanan: It might work in Alberta, but we have two areas in Nova Scotia where you can generate electricity with wind. It is very costly.
The Deputy Chairman: Thank you very much for your presentation. It has been most interesting, as you can tell from the many questions. We could probably spend another hour but, unfortunately, we must vacate the room.
The committee adjourned.