Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 12, Evidence - April 10, 2003
OTTAWA, Thursday, April 10, 2003
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:00 a.m. to examine and report on emerging issues related to its mandate (implementation of Kyoto); and to give consideration to Bill C-2, to establish a process for assessing the environmental and socio-economic effects of certain activities in Yukon.
Senator Tommy Banks (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we have two items on our agenda today.
With respect to the first agenda item, we have with us the Honourable David Anderson, Minister of the Environment, Mr. Alan Nymark, Deputy Minister of Environment Canada and Ms. Norine Smith, Assistant Deputy Minister, Policy and Communications. We are delighted to invite you all back to speak to us again.
Mr. Minister, I believe you have some opening comments. I would invite you to proceed.
Hon. David Anderson, P.C., M.P., Minister of the Environment: Honourable senators, it is certainly a pleasure for me to be before you again today to discuss climate change implementation. I genuinely appreciate — indeed, the government as a whole appreciates — the attention that your committee and the Senate are giving to what I consider to be the most important environmental challenge facing the world today.
Our government came to office in 1993 with a Red Book commitment to reduce greenhouse gas emissions. Ever since, we have been investing in climate change actions. This is a global problem that cannot be dealt with except on the international level, and we firmly believe that, by working with other nations, we can successfully address the challenge.
You will recall that, in December of last year, we ratified the Kyoto Protocol after extensive debate. We drew on years of consultations with other levels of government, particularly the provinces and territories, and partners that we have in business, in the non-governmental sector and among many experts to create a climate change plan for Canada. You have been discussing the implementation of that plan.
My time with you is brief, so I shall structure my remarks into three key themes and conclude with some notes on initial steps on implementation. The first is commitment, the second is technology and innovation, and the third is partnerships.
[Translation]
First, commitment. The Climate Change Plan is the cornerstone of this government's commitment to making a global contribution to addressing climate change. The Budget 2003 investment of $2 billion over five years brings our total investment in climate change action since 1997 to $3.7 billion. This is in addition to a number of other measures in this Budget designed to complement our actions on climate change. There is no doubt that the government is well- positioned to put the Plan in motion.
[English]
Budget 2003 allows us to increase our support by $300 million for research and development activities that are funded now through the Canadian Foundation for Climate and Atmospheric Sciences and through the Canada Foundation for Sustainable Development Technology. We have, in addition, earmarked another $200 million to further investments in long-term climate change technologies. These investments of $500 million will help drive our creativity and support our desire to do other things smarter, more efficiently and effectively.
For the remaining $1.5 billion of the $2 billion, the budget notes that we will consider all of the possibilities: renewable and alternative energy technologies like wind power and ethanol, building and housing energy-efficiency retrofits, increased vehicle fuel efficiency, and many others.
We are also mobilizing the instruments of government to meet the climate change challenge. To reflect the increased strategic importance of climate change to the country, government programs — particularly those in the Industry portfolio of my colleague, Allan Rock, such as Technology Partnerships Canada — the granting councils and the regional development agencies have been asked to report on how their contribution to Canada's climate change objectives can be improved within their existing resource levels.
Our comprehensive strategy for tackling climate change also includes integrating our actions with our urban agenda. We realize that global competitive advantage in the future will be measured by liveable cities, a clean environment and sustainability.
[Translation]
The next point I would like to address is technology and innovation. I have often said that addressing climate change should not be viewed as a burden, but an opportunity. In this sense, reducing our greenhouse gas emissions is clearly part of an opportunities agenda. Technology and innovation will play an important role in helping reduce greenhouse gas emissions. The Plan recognizes that existing technology, yet unused to its full potential, can help us get to our target. For instance, the 25 per cent vehicle fuel efficiency improvement that we are seeking in our Plan can be achieved with existing technology.
[English]
Our plan also recognizes that we need to develop, demonstrate and commercialize some new technologies that will help to put Canada on a higher carbon-efficiency path that we need to achieve for the long term.
In that instance, as an example, I think that new work on CO2 capture and storage is key to allowing Canadians to further exploit the wealth of our oil sands while we also reduce our emissions. The burgeoning international market for more carbon-efficient technologies means that avant-garde Canadian companies have new exports markets.
Many Canadian companies are in the area of engineering services, brokerage, construction, and renewable energy, and they see these opportunities. For example, new technologies developed by the government that capture methane emissions from coal beds have the potential to generate some $250 million in sales for Canadian manufacturers and to bring home international credits as well.
These are the tip of the iceberg. The global market for climate-change related technology is said to be in the trillions over the next 20 years.
The third point I wish to address, partnerships, is perhaps the most important. Climate change is an extremely complex issue. Obviously, it is a global issue. We, in Canada, need all segments of Canadian society to contribute. We need to work with our partners and to understand their priorities. Also, we need to ensure that Canada's corporate sector is engaged in working hand in hand with us to implement the plan.
As of today, not all provinces, territories and other possible partners are in the same place and ready to go. Therefore, implementation will not be a simple process by any means. It will require patience, information and much effort. This inclusive process means that it will take time to roll out the entire climate change plan.
It makes sense that some measures laid out in the plan should be put in place by the federal government almost immediately. An example would be enhancing public information programs so that we can make the best environmental choices. I am interested in cooperating with partners to put in place an electricity-labelling scheme that will show the environmental impacts of different electricity-generation sources. I also want to work with partners to put a vehicle-labelling system in place, similar to the Energy Star1 appliances, that will provide information on the carbon burden from different vehicles.
Other measures, such as improving the energy efficiency of new homes and buildings, will take time to develop with our provincial partners. Clearly, they have responsibility for building codes, and things of that ilk, which are not in the federal domain.
We will use mechanisms for funding partnerships to be responsive to diverse provincial and territorial interests. It will not be one size fits all.
Our provincial and territorial partners are also addressing climate change. I should like to stress that. Perhaps some of the media attention over the past few months has indicated a different situation, but our provincial and territorial partners are energetically addressing climate change. They are developing strategies in their jurisdictions, and they are implementing emission-reduction measures.
The federal plan builds on those efforts. It suggests ways to stimulate further action, and it makes clear the willingness of the Canadian government to help with implementation whether in the federal domain or elsewhere within the country.
One way to do this is through bilateral agreements with the provinces and territories. Our results thus far on this front are very encouraging. Every province that the federal government has met with since January — and it has met with five — has agreed that bilateral agreements hold promise, and they have looked favourably on them. The bilateral agreements that we work out will reflect, in essence, a shared vision for climate change action. They are the first steps to evolving the federal-provincial/territorial relationship on this very important file.
[Translation]
The Canadian government will be results-oriented, pursuing the actions that provide the most cost-effective means of reducing our greenhouse gas emissions while also taking into careful consideration other criteria such as overall funding leveraging and environmental and public policy co-benefits.
Our extensive work with industry resulted in addressing some of their important concerns, reflected in the Plan.
[English]
With large industrial emitters, we are developing an approach that involves covenants, a regulatory or financial backstop and emission-intensity targets that total 55 megatons in reductions — mega being million, 55 million tons. There will be flexibility through access to emissions trading, including domestic offsets and international permits.
Another aspect of partnership is the partnership that we want to have with Canadian society at large. The plan contains measures to support and enable actions by individual Canadians and challenges every Canadian to reduce personal emissions. An average reduction of 1 ton per person is within reach and would eliminate some 31 million tons of emissions.
I hope that the honourable senators will be actively engaged with the public in this challenge as we move from public outreach to a more active social-marketing campaign to try to elicit the long-term behavioural change that lies as the route of achieving sustainability.
One of the problems of the heavy coverage of discussions with provinces and industries such as oil and gas is the psychological tendency on the part of individuals to say that it is beyond them, that it is too big, that it is up to the government, to major industry. We have to ensure that the contribution of the individual Canadian is understood, and the opportunity is not lost because of the emphasis on major emitters.
I will tell you some of the initial steps. Let me take, for example, renewable energy in which the committee is very interested. I applaud you for that interest.
There is great promise in the future of renewable energy sources. We have enormous potential in this country with respect to new sources of renewable energy — for example, wind power, geothermal energy, and biomass. We can also make use of solar and tidal energy and develop the clean production of hydrogen. We are on our way already. In comparison with other energy sources, the overall total may not be large; nevertheless, it is substantial in terms of particular areas when considered individually.
The government has been supporting wind power. We have been supporting the increased use of ethanol and biodiesel. The new budget adds changes that favour the use of ethanol or methanol in blended diesel fuel, as well as biodiesel. Our government has provided essential support for the development of the fuel cell and hydrogen. The budget extends tax incentives for businesses and institutions to use renewable and alternative energy.
On last December 17, when I deposited the instruments of ratification on the Kyoto Protocol by Canada at the United Nations, it was 10 years almost to the day of Canada's ratification of the United Nations Framework Convention on Climate Change, which Prime Minister Brian Mulroney signed in Rio de Janeiro at the Rio conference of more than 10 years ago. In fact, Prime Minister Brian Mulroney ratified the convention on December 4, 1992.
This means that Canada is now committed in the long term to stabilizing concentrations of greenhouse gases in the atmosphere at a level that will prevent any dangerous disturbance of the climate system by humans. That was the commitment of the Canadian government taken by Prime Minister Mulroney in 1992. In other words, the Kyoto Protocol is one of the first steps towards the long-term objectives set out in that United Nations convention.
What does that mean for Canada? We have not fully thought that out yet. Most of the discussion in Canada since Kyoto has revolved around how to reach the Kyoto target of minus 6 per cent by 2008-12. Those discussions led to the Climate Change Plan for Canada.
Senators, I challenge you to think of where we should be in 2050 in order to be well on the way of ceasing to harm the climate with our emissions. Yes, we have focused on 2008-12. However, Prime Minister Mulroney and the government of 10 years ago made clear that this would not be the end of the exercise. We had to look forward. The objective is to stabilize concentrations of greenhouse gases at a level that will prevent dangerous disturbance to the climate system. It is beyond a simple figure of 6 per cent less by 2008 to 2012.
What should our economy look like in order to provide the standard of living and quality of community life that Canadians of tomorrow will expect? How will we generate our future wealth while being friendly with the climate over the next century, rather than just over the next decade? Though these are questions that have seldom been raised in Canada, particularly as we have focused on the next decade in the debate on Kyoto, others have done so.
Iceland, for example, has already set the objective of being the first country in the world in the hydrogen economy. It intends to produce its hydrogen locally, from its renewable resources. Icelanders know that it will take 50 years, perhaps, to get there; however, they will invest and develop systematically to do so. In other words, they have a 50-year plan.
The United Kingdom is also advanced in this respect. In June 2000, their Royal Commission on Environmental Pollution identified what the long-term objective of the United Nations convention might mean for the United Kingdom by the horizon time of 2050. By then, the United Kingdom would need to have reduced its greenhouse gas emissions by 60 per cent from its current level.
In a speech on February 24 last, Prime Minister Tony Blair said, in part, the following: ``For Britain, we will agree to the Royal Commission's target of a 60 per cent reduction in emissions by 2050.'' That speech came just before the release of an energy white paper that outlines Britain's energy strategy for the next 50 years. The British white paper identifies how it plans to go about this, primarily by achieving maximum energy efficiency and massive development of renewable energy resources. The Blair government also designs policies and sets programs and institutions in a structured way, not just to comply with the Kyoto target in 2012, but also to build the foundation and set the path towards decarbonizing the British economy in the long run.
Prime Minister Blair added: ``We need a concerted international effort. As a first step, we are working intensively with our European partners to agree to the 60 per cent target for the EU as a whole.'' He will be seeking a EU commitment to policies that will demonstrate how this can be achieved. I fully expect that the Europeans will engage on that path.
I mentioned that we have yet to start thinking along those lines here in Canada. That is the key missing piece in our national debate and an area where your committee, honourable senators, can make a very important contribution.
In 2005, at the conference of Parties 11, international discussion will start on the commitment, beyond 2012, for the second Kyoto period. The U.K. will be in a good position to define the next target and further coherent steps towards 2050. Here in Canada, we have yet to start answering the questions that I raised a moment ago about our long-term future and how it should look. Clearly, our answer will be different than the United Kingdom's, in order to reflect our own reality. However, it is clear that, by 2050, Canada will also need to have made a drastic turnaround. We will also have to become a leader in the production and consumption of clean energy. There is great promise in renewable energy resources in the future of energy efficiency.
Let me quickly suggest where we should be in 2050 and how to identify the best targets for the second and third periods in a way that is most beneficial to ensuring a prosperous future for our children's children, based on natural resources. Those are questions where we can look to the British experience and the experience of other countries and work out for Canada something approaching that 1 per cent a year. That is the rough figure that Mr. Blair has set for Great Britain and which he is encouraging for the Europeans. We have different circumstances, honourable senators. We have an economy growing at a much different rate and in a different way than the Europeans. We also have a population growing in a different way and at a different rate than most of the European countries, some of which are now in population decline. There are clearly major differences. However, these are the issues that will have to be addressed and the targets that have been set out are some that we should consider for ourselves, adjusted for the special circumstances.
In addition, we are a major exporting nation of energy. The United Kingdom is also an exporter at the present time, but will not be very shortly. There again is a major difference that we would have to work into our equation of what we expect in the future. Nevertheless, I think there is plenty of opportunity for consideration of the long-term path as well as the short term.
Those are questions that I trust will be of interest to you. In fact, let me assure you that your views would be most valuable and provide a most needed perspective in helping Canada do its share to stop negatively affecting the global climate. The views would be most helpful from now through early to mid-2004, in other words, our preparatory period before the discussions that start in 2005. Because the international discussions will be in 2005, we obviously must do the preparation beforehand. Your deliberations will be very helpful in that regard. Too often, I find myself immersed in the immediate. Perhaps a Senate committee is a very appropriate body to take a longer term, more balanced view of where we should be going over the decades.
The Chairman: Thank you, Mr. Minister, very much.
I hope that you, Mr. Nymark and Ms. Smith, will accept questions honourable senators may have. However, before we do so, I should like to ask you, Mr. Minister, to expand on the question you have raised about post-2012.
We have thought about that and we have argued, although you have far more experience in this than we do, that Kyoto is just one of the first steps in the direction that we must go. However, as you also said, it is difficult to get folks to understand. It is difficult for me and for most of us to understand, given the impenetrable odds that have been placed before us in meeting the first step, let alone talking about the second and the third steps and reductions that are far deeper than the ones towards which we now aim.
In order for people to do something, we must believe that it is doable. You mentioned that people are looking at this sort of impenetrable wall and thinking that governments and big companies must have to do that, that there is not much an ordinary person can do. Convincing people of the possibilities of doing these things, from the standpoint of what each of us as individuals has to do, is a tough row to hoe just at the moment. Is there any insight, beyond what you have said, that you can help us with in that respect? What would you say to the average person on the street who is boggled by what we are asking him to do with Kyoto, never mind the steps after that?
Mr. Anderson: You are quite correct. We have this problem related to the macro approaches that we have taken on the government-to-government and big-industry-to-government levels. That has discouraged some people. We have started to do some advertising, which indicates clearly what an individual can do. We have also tried to tie this in with what we would describe as co-benefits, that is, the improved health that would come from walking and more frequent use of bicycles and less use of private automobiles. Benefits can come from reducing congestion within cities by using public transit. An effort is required to condition people, to show that this is beneficial to them in an individual sense, that it is not just a cost or an imposition on their lifestyle.
In addition, the general trend of the last few months has been, I would say, helpful. We have seen the end, to a very large degree, of the federal-provincial-territorial bickering that marked the fall. I am looking at a column by Paul Sullivan, a western columnist from Alberta in The Globe and Mail of yesterday, in which he pointed out that he has changed his position:
There was a time when I was swept up in your —
That is, Mr. Klein's.
— anti-Kyoto rhetoric and called on Ottawa not to ratify the accord. But that was parochial mind-shrink. I was wrong, and so are you.
That was in yesterday's paper.
We are seeing people come around to more realistic figures. You will recall that within your own province there was some talk of the cost of Kyoto being up to $12 per barrel of oil. Suncor has announced major investments in the oil sands, and they expect the extra cost to be 27 cents per barrel. There is a difference between $12 and 27 cents. We are getting into the realm of more realistic debate and out of the realm of the purple prose of past months.
I should add that people are also beginning to understand better that there really were not such basic, country- shaking differences between ourselves and Alberta and other provinces last fall.
An article about Mr. Taylor — who is the Alberta environment minister — in The Edmonton Journal on the 10th of this month talked about Mr. Taylor's views on climate change. The article says that neither government — that is, the federal government and the Alberta government — suggests it is backing down, that they apparently seem to be singing from the same page. Clearly, there is recognition that we were not that far apart. Much of this was, I think, the press and media, who like seeing controversy and encouraging controversy, as do we politicians at times. I do not think it was quite as fundamental as some have suggested.
There is a much better climate in which to put forward a constructive approach. Furthermore, there is also recognition that achieving our target will be much more likely than some people thought last fall. Very few are saying that it will be impossible. Most are saying that it will be difficult, but they are moving into the column that ultimately will be, ``That was surprising; it did not hurt as much as we thought, if it hurt at all.''
I see opportunities now for working with the provinces. I have no wish to suggest here that we were right and they were wrong. I am simply saying that the dispute was exaggerated. I believe that currently we are into a very good climate for opportunities to work together. This was not a Confederation-shaking issue. It was not at all that type of issue. There were some differences basically as to whether we would write the booklet that came out as the plan, or whether we would attempt to have 14 people write the booklet. I should say 28, because as well as the federal and provincial environment ministers, we had the federal and provincial energy ministers. Having 28 people write a document is rarely successful. Perhaps the only example of successful committee writing is the Anglican prayer book of 1549. Since then, it has not happened. We wrote the book, the plan, and there was a dispute over that. Since then, in substance, there have not been the differences that perhaps were exaggerated.
I am an optimist, at least in this regard. I am not altogether sure I am an optimist in terms of achieving the 2050 targets that Mr. Blair has talked about, but I am an definitely an optimist in reaching the first Kyoto period targets.
Senator Spivak: Thank you very much, minister, for giving us this vision. Our committee was just in California. What impressed me was the role the utilities there play in terms of delivering to consumers the opportunity for efficiency and conservation. In fact, the figures that we saw show that, despite an increase in population, et cetera, their emissions had gone down, and they credit the consumer, in about six months, for getting them out of the debacle they were in.
We heard from the electric utilities here. They told us that business as usual is a 40 per cent increase in their emissions. It looks like about 50 per cent of the country's consumers have an opportunity, through Power Smart programs in British Columbia and in Manitoba. What about the rest who are not in that? Do you have any plans to make that change very quickly? That would deliver a big bang for the buck.
Mr. Anderson: You are absolutely correct, senator, in your analysis of California. When he came into office, President Bush declared energy to be a major objective. His energy plan was so critical, but it sank without a trace. California's consumers did a great deal more than the United States federal government in getting that country out of its problems. They are still suing B.C. Hydro for millions of dollars, of course, for overcharging them, but we will leave that aside.
The opportunities in Canada are substantial. They are driven by the energy Crown corporations, generally speaking — there are some changes in the Crown corporation structures, but let us call them Crown corporations, the hydro companies of the various provinces — mainly because they see massive investment to increase supply.
Up to now, all we have done is increase supply and average the price. Even if the new dam in British Columbia produced hydro at higher prices than they were selling it for, it did not matter. They simply averaged over the earlier cheaper dams and hydro developments and kept on pouring out power. They also, by law, were required to provide power to everyone. They were not able to distinguish between old customers and new. They had a number of restrictions on them that required constant increase in supply. They are doing a tremendous job.
Let me give you one example that shows how provinces and utilities are sometimes ahead of the federal government. The federal building in Vancouver that houses my department and DFO, two environment departments, both of which I have been minister of, was built by Public Works. Mr. Bell, the chairman of the board of B.C. Hydro, and I were at a meeting. At that meeting, he said to me: ``Could we help you on energy savings?'' I said, ``Sure,'' not thinking they would make major improvements, because, after all, we the federal government had the same objectives.
B.C. Hydro made dramatic improvements for us. Environment Canada and DFO were told by B.C. Hydro how to save money. I asked why it was that we put up a building that was not the absolute state of the art on this. I was told that the government originally had planned to build it 10 years ago, that the plans were on the shelf and that we pulled them off and went ahead. Hence, the building was years out of sync. B.C. Hydro made dramatic improvements, and let me say that I am very grateful to them for doing that.
Very few hydro companies have excess capacity. They are all looking at new expansion in facilities, and it is very expensive. They all see it to their advantage and in their interest to encourage conservation. We simply will support that. We do not think we can do as well as they are doing — and the example I gave you shows exactly why I think that they are probably in the forefront, rather than us. However, if there are any measures they come up with that they would like our assistance with we would be very interested. So much can be done on the conservation side, so quickly.
That is where we will meet our short-term target of 2008-12. We will be doing everything we can to cooperate with them. The experience of California is available to us. We do have good links. Much of the energy use in California is Canadian-sourced. Of the natural gas used in California, 30 per cent comes from Canada, specifically British Columbia and Alberta. We provided a significant amount of peak power for California from the British Columbia hydro facilities.
I once asked why it was possible for B.C. Hydro to have $300 million owing and not worry about it. The chairman at the time shrugged, and said: ``We make $50 million every weekend from California sales.'' He did not worry about the debt owing. The matter of the debt is still before the courts.
We have a significant opportunity of obtaining the experience of California and the American utilities. There are many organizations that link up such corporations. We will be as supportive as we possibly can. However, we are respectful of the provincial jurisdiction and we will be working with them, rather than trying to work out some national plan that somebody may feel would be imposed on them.
Senator Spivak: In regard to your initiative with The Home Depot — where people will be encouraged to bring in old lawnmowers — am I correct that there is no such plan as yet for marine engines but that there will be?
Mr. Anderson: There could well be, yes.
Senator Spivak: There is a problem that has come to my attention. The corporate averaging strategy in the United States will mean that here anything that is EPA-approved will be okay. That leads to the possibility that we could be approving polluting engines through that kind of system. All that would be required is an EPA stamp; they have corporate averaging, we do not. I am sure you are aware of that. In addition, Canadians tend to buy cheaper engines. That is perhaps a problem with the EPA stamp in this country and not the corporate averaging. Would you comment on that?
Mr. Anderson: I will comment only to say, thank you for bringing that to my attention. We do sometimes have differences with the EPA and with other regulatory agencies at the state level. It is always our desire to have a standard system, particularly when a product is sold anywhere in North America under free trade.
Senator Spivak: The problem is that there is a possibility that EPA-standard engines may be just the same old polluting ones, and not be subject to the stricter standards that the Americans have under corporate averaging.
Mr. Anderson: Honourable senators, if it turns out that we have a complication of that nature, we would try to work out another system. Our preference is always to not duplicate the EPA where it is possible to avoid that.
Senator Spivak: Will you also look at marine engines, turning the old ones in for an incentive, perhaps, for all those two-stroke engines that are out there?
Mr. Anderson: We do not have a plan, that I know of, for the retirement of old outboard engines. The new four- stroke engines are so remarkably efficient and lighter than they were 10 years ago when they first came out. I give credit to Honda for pioneering this work. The upgraded two-stroke engines of today are so much different from the outboard motor of a few years ago.
I hope that everyone from cottager associations around lakes will encourage boaters to understand that there has been a large technological improvement. New engines are so much better for the environment.
Senator Spivak: However, there are 50,000 of the old engines around, just with PWCs.
Senator Milne: Mr. Minister, you spoke of large industrial emitters and developing an approach that involves emission intensity targets. It seems that ``emission intensity'' is a fudge term. It may well involve them reducing — if we are on this slippery slope of increasing emissions — after 50 years up there bringing it down a certain amount, but never actually reducing the total amount of emissions. That is probably what we should be doing.
Is industry not tackling the intensity issue? Generally, industrial processes are greener now than they were 30 years ago. Are our emissions higher or lower now, on a GDP basis?
I believe they are lower, but that will still mean a total increase in emissions. If you are talking about dollars of GDP, it is coming down, but the total is still going up. What can we do to tackle the actual bottom-line figure here?
Mr. Anderson: Senator, the premises of your question are absolutely correct. Industrial processes are improving dramatically. As a quick example, the car of today, generally speaking, is built with half the energy that would be used to build an equivalent vehicle 12 years ago.
Senator Milne: However, many more cars are being built.
Mr. Anderson: That is one reason we excluded the automotive sector from the group of large emitters. There is that improvement. Also, you are quite correct in saying that per dollar of GDP the energy intensity has dramatically improved.
Ours has been one of the most successful economies over the last few years. That is an objective that has clearly been out there. Our total economy has grown. Therefore, reducing energy intensity requires something more, if we are ever to achieve that improvement in the atmosphere. The atmosphere is finite, after all. Energy intensity improvements are not necessarily the final answer.
Senator Milne: We do not have an answer, do we?
Mr. Anderson: There must be a cap. As long as there is a cap and energy intensity, so that the energy intensity level is working towards an enforceable target, then that is very important. That is, after all, how you achieve that in a growth economy. If we were in an economy in decline, or an economy that is static — and some of the European economies are virtually static — you would not have the same concern over energy intensity. A cap would relate more directly to what you are doing. Certainly, for us, a cap is critical.
Since we have had so much energy in Canada, energy intensity has never had quite the same importance as it might if we were in a European nation that depended entirely on imports.
We have tended to be a trifle more casual about energy intensity. I appreciate — and think it is very important — the Alberta emphasis on energy efficiency. However, your point is that, without a cap, we will not achieve our goals; and that is important. The two things must go together, certainly in our economy, which is a growth economy.
Senator Milne: This committee has discussed in some detail the One-Tonne Challenge and seeking ways to encourage individual Canadians to meet that challenge.
An easy way to meet that challenge would be to take public transit — as the ads on television constantly remind us. In that case, who gets to count the energy saving? Is it the individual who has left his or her car at home and taken public transit, or is it the transit system that is moving more people more efficiently? How do you prevent double counting in this sort of a situation?
Mr. Anderson: There will undoubtedly be rough counting, let us call it, as we sort out what could be 100 per cent one way or 100 per cent the other. There will have to be some rough, ballpark analysis. Individuals definitely need to have the count done for them. We have to have some opportunities of rewarding individuals with recognition for their good work, and one hopes we will reward them in other ways as well, albeit minor, perhaps. We want to give clear indications of our support for what they are doing as individuals.
Yes, the transit companies will nevertheless claim it to be their victory. We may have to split the difference, to avoid major double counting.
We have a reasonably good system of calculating energy efficiency and also greenhouse gas emissions. We do not have a major problem with calculating emission reductions. We think it can be done with adequate precision. Extending this a little further, we believe that internationally it will not be too difficult to have a reasonably accurate system. No accounting system is ever perfect, but it will certainly be good enough for this purpose.
Mr. Alan Nymark, Deputy Minister, Environment Canada: With regard to the difference between counting and crediting, we do not envisage individuals getting credit in the sense of being able to trade reductions that they have made individually into, for example, the large emitter system. We do not see the individual reductions as offsets to large industrial emitters.
Second, whether you look at it from the point of view of counting or crediting of the 31-megaton challenge that has been issued, 24 megatons are accounted for within the targeted measures. As we pursue the individual targeted measures in the plan, the counting will be done by those who are doing the targeted measures, not by those who will possibly be using them, such as consumers.
The Chairman: Mr. Anderson, you referred to $1.5 billion for various purposes. Are you contemplating, in respect of the support and recognition you were talking about for individual Canadians, direct consumer subsidy or incentive to achieve some of those goals?
Mr. Anderson: I certainly am. A clear way to indicate government encouragement is to ensure people have a few extra dollars in their pockets, even if the amount is small. This is a matter of debate. I will give you the classic example of the tax credit for the bus pass, which, I must say, I would like to see. It is true that some who suggest this is not the way to go say that the $100 million this would cost the tax system in Canada will not result in increased bus ridership, that transit ridership will not increase because people get a credit and thus reduce, let us say, the price of their pass by half. It may be true that it is not that flexible a system and ridership will not increase dramatically because the pass becomes cheaper. On the other hand, it sends a message that society values those who use public transit. This debate is currently ongoing among those who say that if you have $100 million you should spend it on actually reducing emissions and those who say that since we are in a period of substantial tax cuts anyway does it really matter if we give $100 million to people who use the bus if we achieve the other purpose of showing that society values their use of public transit.
In addition, we have potential fee-bates — rebates for vehicles that are low in emissions — or possibly changes at the provincial level in licensing of vehicles so that they are licensed by weight or horsepower. In that way, there is more emphasis on using more economical vehicles from the point of view of energy use and efficiency.
We are looking at many of those programs and the debate is on that hard-nosed question of whether it really reduces emissions or whether the people who are buying vehicles will not be influenced by the price being reduced $1,000 or $2,000, as the case may be. The debate is on, but we definitely need it for the purpose of showing that the One-Tonne Challenge is very achievable and that we value the individual's contribution.
Senator Christensen: I appreciate your comments with regard to 2050. I myself will probably be carbon-emitting by that time.
It is very important that we do look at the long term because Kyoto is not a flavour of the month. It is something that we will have to live with forever as we go forward and as countries like China become more industrialized. We will have to be able to build on that which we put in place now, continuing to put more savings into our economies.
Have any monitoring systems been put in place to track the carbons that are being emitted in the North as a result of global warming and the melting of the permafrost? There is a huge carbon sink up there. We do not want to save one place but have huge emissions in another.
Mr. Anderson: There is enormous potential emission from our permafrost, which is melting. It is now frozen and thus in the bank with regard to emissions. However, when that becomes liquid, as it will for much longer periods of the year, and indeed in some cases unstable to the point where it will remain liquid, we will have a much greater emissions problem than we currently have. It is one example of the instability in the system and of how things get worse because of earlier problems.
We are monitoring that, mostly at the academic level. Ms. Smith may know more about government measures.
That is a major concern, as well as the other macro northern issue, which is that the melting of ice means that heat is no longer reflected. It is absorbed by dark water instead of being reflected by white snow or ice. That is another instability element that could tip and make things much worse rather than potentially getting better.
Those are two major concerns with respect to climate change in the North that are quite divorced from impact on individuals and people who live there.
Ms. Smith, do you know of any government measures dealing with permafrost?
Ms. Norine Smith, Assistant Deputy Minister, Policy and Communications, Environment Canada: I can confirm that it is part of the Canadian scientific effort as well as the global scientific effort to better understand the trajectory we are on with respect to climate change. I do not know any of the details of specific projects. We could find out more for you if you would like us to follow up on that.
Implied in your question was whether this was part of the reporting of Canada's emissions through our inventory reporting to the United Nations. It is not. Nonetheless, it is an important part of the bigger global picture and it is being monitored.
Senator Christensen: I should think it would be not only in Canada but also around the world. If we are counting emissions, reductions and all of that, it is one of the equations that must be factored in. Are we winning or losing? If we are losing, why is that?
I have a question about ethanol. Why are we not making more progress on getting ethanol? It seems to be a situation of low hanging fruit that can be brought on quickly, as well as ethanol from grains as opposed to cellulose, which is down the road as far as technology goes. The United States seems to be making great strides there but we are not. Can you comment on that?
Mr. Anderson: In the plan, we put the target on having 35 per cent of our vehicle fuel stream being 10 per cent ethanol. Putting the two figures together, you get 3.5 per cent of our total gasoline stream being ethanol, not hydrocarbon. That is our objective and we will achieve that.
There are a number of factors in terms of scale of plant operation, location of plant, ability to transport ethanol in a cost-effective way, and tax measures needed to achieve this. These are all being worked on by Natural Resources, in fact, not by us. These are the aspects that they deal with. Certainly, the objective is clear: 3.5 per cent of the total fuel stream for vehicles will be ethanol.
In addition, I did say a word or two about biodiesel as well, which is similar in the sense that it would also dilute the hydrocarbon fuel stream on the diesel side.
That is our objective, which we will achieve. We have not quite figured out the exact mechanisms for achieving it, however. The issue of the potential of the cellulosic wood-based brush and scrub-based ethanol as opposed to the grain based or corn based is an argument, which, again, is going back and forward somewhat. There are different technologies, and one is that the cellulosic is not as well developed.
We will certainly have it; that is our objective. However, we have put it in perspective. The conservation side is still the largest opportunity. Substitution of ethanol for hydrocarbon is certainly desirable, but it is part of a mix. It is not, in itself, the magic key or silver bullet.
Senator Milne: As a follow-up to that, it seems to me that there is a simple way to encourage the use of ethanol and that is to build more ethanol plants and ensure that it is more readily available to the average consumer.
Mr. Anderson: Absolutely. There is no question that it is not there because of transportation issues. Where the plants — there will have to be more than one — should be located is an important factor. The dilemma of getting in too quickly is that we do not want to put a plant in a place where, in five years, it shows that we have added to the cost of using ethanol and thus discouraged its use.
Senator Milne: There are farmers who are quite ready and willing to start investing in ethanol production but they cannot get money from banks. Agricultural enterprise finds it difficult to borrow money. Banks will not loan to them.
Mr. Anderson: Certainly the farming community is strongly in favour of this, both the corn and the grain or the wheat and other grains that might be used in the West. You are quite correct that we have major allies in this. Once again, this brings onside a large group of people and an important component of our overall industry that are enthusiastic supporters of the wider goal of climate change because they are involved in part of the picture. Our farm community is ingenious at finding ways of improving their operations in terms of climate change. They are changing the way they conduct agriculture. They are using fewer fuels, less diesel. They are doing things differently, and this is positive.
Senator Milne: They certainly are, but the banks have not yet got the message.
Mr. Anderson: I would hesitate to comment before a Senate committee on banks. Mr. Manley might wrap my knuckles.
The Chairman: Since we are talking about ethanol, I will ask a question that Senator Kenny would ask, if he were here.
The government needs to set a good example. Supply and demand, and the example that could be set in that way, could be a snowball effect. In this city specifically, there are a great many government vehicles, probably a higher proportion than in most places. There are, within five kilometres of the place that we now sit, two service stations that sell ethanol gasoline. They straddle highway number 417. There is one on either side.
If all government vehicles, chauffeur driven, cars, trucks, and the like that burn gasoline, were obliged in some way to use ethanol gasoline, one can imagine a situation developing in which a number of other service stations would wake up one Thursday morning saying, ``What has happened to all my government business?'' The answer would be, ``They have all gone down the street because they are buying ethanol gasoline.'' One can easily imagine the snowball effect from that because the retailer will phone his supplier and say, ``Get me some ethanol gasoline. It is important that I sell it.'' That would not only produce good effects, but also it would show us to lead by example.
Is there something that can be done about that, do you suppose?
Mr. Anderson: Yes, there is. That is a direction from my colleagues, the President of the Treasury Board and the Minister of Public Works. The two of them, together, are responsible for fleet acquisitions and fleet maintenance. I had a most interesting meeting with the fleet managers of the federal vehicle fleet. They were telling me about the 43 different requirements they have to meet before they can possibly purchase a vehicle, and the concerns with respect to fuel efficiency and use of alternative fuels, ethanol, are not high enough on the list, in their view, for them to override some of the other factors. We are working with them and we expect to have a program that will be substantially improved.
I can report to senators that when I was last here I said we had a 100 per cent improvement in ministerial vehicles when Stephen Owen got a hybrid vehicle so that made two of us. I can again report we have a 50 per cent improvement since my last visit here because now we have Elinor Caplan with a hybrid vehicle, so we now have three hybrid vehicles in the cabinet fleet. That, of course, is only a small percentage of what we should have; however, I am hopeful, and I will continue to report to you success with my colleagues.
The Chairman: With respect to the use by government vehicles of ethanol fuel in Ottawa, in particular, and elsewhere, we will be following that closely and looking for that to be raised as a priority on a priority list of fleet managers. We cannot imagine an impediment to that.
Mr. Anderson: No, you are quite right. We have about 85 or 90 hybrid vehicles in the total federal fleet. The Department of National Defence and the RCMP have been good in the purchase and use of them. The Royal Canadian Mounted Police find this vehicle to be effective. It is not for use in pursuit; however, it is an effective vehicle in many other applications. If that is the case, it sends a message to the public; and if other government departments do the same thing, the message is there.
You are absolutely right. One is the owner of the gasoline retailing station, but also it is simply leading by example, which we must do.
The Chairman: We must.
Senator Finnerty: During an April 1 appearance before the committee in the other place, the Deputy Minister of the Environment referred to the fact that two ministers responsible for the climate change portfolio, Environment and Natural Resources, will now report this file to a recently established ad hoc cabinet committee, which is chaired by another minister, the Minister of Agriculture. Does this arrangement not just complicate the issue of who is in charge of the Kyoto Protocol?
Mr. Anderson: Governing Canada is a complicated issue.
The deputy minister correctly described the joint effort of the Minister of Natural Resources and myself. We are jointly responsible and we do report to a committee of cabinet chaired by the Minister of Agriculture. All that is perfectly correct. It is not, in theoretical terms, the most streamlined system.
However, cabinet ministers occasionally become a little too involved in their own departments. They tend sometimes to forget that there are horizontal issues that affect all departments. Every cabinet minister complains from time to time that other cabinet ministers do not pay enough attention to their department and issues. Therefore, for a horizontal issue one must encourage every other department that might be involved to take part.
You have mentioned the Minister of Agriculture. We have already talked about the contributions that agriculture can make to climate change. It is important to get these other ministers involved, rather than have a command and control situation.
We are having remarkable success in cooperating together. It is not just Agriculture, Natural Resources and Environment. We also have Industry, which I have mentioned in my presentation. I mentioned Public Works and the President of the Treasury Board. I mentioned Finance indirectly with respect to taxation policy. There is a wide range of opportunities, and only if they are all looking for the opportunities within their departments will we achieve in a more successful fashion the goals that we have. The structure may appear to be a bit top-heavy sometimes to some, but I do not think it is necessarily fundamentally the wrong approach. We want to have these people involved as committee members taking part in the climate change challenge. It is it not simply an environmental issue.
As Senator Christensen mentioned, there are northern issues that are important. Clearly, the Minister of Indian Affairs and Northern Development is involved as well. There are many departments that have to recognize this as a primary issue for them. It cannot be done simply by the Prime Minister announcing that this is an objective of the government, as he has, and then saying that one minister will handle it. There must be a team approach.
Senator Finnerty: You said that you have met with five provinces that seem to be cooperating. What will be the success rate for the rest of the provinces, do you think?
Mr. Anderson: It simply means that we have not yet consulted them. I will ask the deputy minister, Mr. Alan Nymark, to further comment on these discussions. This is with respect to the bilateral agreements. Pretty well every province we have discussed it with so far is favourably disposed. Perhaps Mr. Nymark can tell us about those discussions.
Mr. Nymark: We have undertaken those discussions for two purposes. First, it is easier on a bilateral basis to get into the depth of understanding the priorities on a provincial basis. Because we want to partner with them, we want to ensure that we really do understand their priorities and where they would like to partner with us. We are deepening our understanding of provincial priorities and, therefore, we are proceeding on a bilateral basis.
Second, we are offering the opportunity to provincial governments to enter into an understanding with us to align the priorities of provincial governments with federal initiatives so that we can get the greatest momentum out of any particular program or effort that is undertaken. It is no more complicated than that. We are encouraged that so far it is now up to six.
We were in Newfoundland last week. This is at the officials level, so we will see how it proceeds. However, we are encouraged. There is a spirit of pragmatism, of getting on with the job and looking for ways of real partnership and collaboration on the ground so that we can make some things move this year.
The Chairman: Can you tell us which are the other five provinces?
Mr. Nymark: The others are Manitoba, Quebec and the Atlantic provinces. Tomorrow, we will be in Ontario, and then we are heading west to Vancouver and then up North. We are doing them as quickly as possible and we hope to complete them within a few weeks.
Senator Buchanan: This committee is extremely interesting. Minister, as I hear more and more about Kyoto — and Senator Spivak knows this — I am slowly moving to your way of thinking about it. It is incredible. Actually, it started with your speech in Vancouver at the environment conference last year.
I did not know much about the home energy efficiency program until one of your people, Neil MacLeod, explained it. Because he has a good Scottish name, I figured that he must be right. I have already made arrangements that you will pay me $150 to have my home tested. Also, there is the use of alternative fuel for heating, such as natural gas, which we now have in Nova Scotia.
There is now the lawn mower program. That is interesting. I did not know anything about that program until Senator Spivak told me about it. I have two old lawn mowers. Do you think I could get $200 instead of $100? I am Scotch, you know.
Over my 13 years as premier, we worked very hard and assiduously with the oil companies and the federal government departments to ensure that oil and gas would be developed and produced offshore Nova Scotia. I signed two agreements, one in 1982 with Prime Minister Trudeau and one in 1986 with Prime Minister Mulroney. They were the first in Canada; we were ahead of Newfoundland. They have worked extremely well. I am hoping that Premier John Hamm will get the Crown share section that we put in that agreement.
You should know, as a member of cabinet, that the Crown share section of the Nova Scotia agreement was put in the agreement after negotiations with a man by the name of Jean Chrétien, who was the Minister of Energy at the time.
Mr. Anderson: Another good Scot!
Senator Buchanan: Yes. I wanted to put that in as an aside. As a result of the agreements and everything else that has happened — and how many of you know this? — the first oil that flowed offshore Nova Scotia was the first on the Atlantic Ocean side of North America, north and south of the border. It did not last that long, but at least we did pump oil. In 1999, the first natural gas came ashore and we are now developing a bit in excess of 500 million cubic feet a day.
I am bringing all is this up because of Kyoto. Last January, the president of EnCana, in a speech to the Halifax Regional Board of Trade, said that if the federal government signed Kyoto it might slow down development offshore Nova Scotia and Newfoundland. Unfortunately, that has occurred. At the time, the Offshore/Onshore Technologies Association of Nova Scotia agreed, along with our Department of Natural Resources and petroleum directorate people, that there might be a slowdown because of Kyoto. I found it difficult to follow the reasoning, but it had something to do with investment in the West and, therefore, less investment in offshore Nova Scotia.
There has been a slowdown, as you may know. EnCana has announced that it will not proceed with Deep Panuke, and El Paso has deferred a new pipeline because of concerns about the lack of gas due to the slowdowns offshore. I think it probably has been happening, or quite possibly happening, as a result of the additional cost of exploration and perhaps the reduction in what they thought was the probable volumes of natural gas offshore.
As minister, have you heard these concerns, and do you think there is any validity to the concerns that Kyoto has anything to do with this?
Mr. Anderson: Thank you very much for that question. First, let me answer directly and say that the cost of exploration has been very high. Deep Panuke simply did not produce as expected. Clearly, there is not the gas to put in a new pipeline. Despite quite a lot of money spent on preparatory work, El Paso has reduced its operations. I think they are still keeping the people in Halifax.
Senator Buchanan: A lot of their engineering people have transferred to other companies.
Mr. Anderson: Yes. Basically, this is an issue of cost and lack of gas. This has very little to do with Kyoto. At the present time, in the short term, gas is the fuel of choice from a Kyoto point of view when it substitutes for either coal or oil. In a sense, Kyoto has promoted the use of gas. The concern over climate change has promoted the use of gas.
I do not think it has had any real effect, other than that, for a period, there was some psychological effect throughout the industry. This was the period when they were exaggerating or imagining worse scenarios than actually were the case. Now there is recognition that the impact is not that great.
True, if you are coming to an investment decision, it is very much six of one, a half dozen of the other, and very small differences can tip it one way or the other. On the East Coast, looking closely for this, I have not seen any clear indication that Kyoto has influenced any of those investment decisions.
EnCana was the one that worried me the most, because Mr. Morgan has frequently talked about it.
Senator Buchanan: He made a speech in Halifax.
Mr. Anderson: That is correct. However, when it came down to the real decision, it was based on lack of success of the drilling program and cost of the drilling program. I would think that is the case. Certainly, if I find out anything else, I will let you know. Right now, I do not have it.
On a lighter topic, senator, as you are the former premier of Nova Scotia, I will give you the book, How the Scots Invented the Modern World, by Professor Herman, and you will be confirmed in your view that people of Nova Scotia and Scottish background are definitely in the forefront of all human development. The Scottish Enlightenment was a much-overlooked period in Western history, but it is a very important part.
The Chairman: If the Scots established modern society and the Irish saved Western civilization, there is not much left for anybody else.
Minister, I know you cannot answer this question definitively, but there is a condition precedent to the application of Kyoto and to the implementation and the coming into effect of Kyoto. At the moment, it is hinging on the question of whether Russia will become a ratified signatory. I gather, so far as we know, they have not yet.
What will happen in the event that that does not occur? One hopes that it will, because I think that everyone would like this to proceed as the first step toward what we have to do. However, what will Canada's position be if Russia does not come on and Kyoto, therefore, does not come into force and effect as an obligation? Will we find something else? Will we undertake some new agreement? It would be sad to get as far down the road as we have and not continue. What is the prognosis there?
Mr. Anderson: I entirely agree with the concern you have expressed. It would be very sad. It has taken many years to get to where we are today.
In the situation that you described, if Russia did not ratify, we would have to go back and rework the agreement until we found adequate international support. I do not think, however, we will be faced with that problem. The Russians have indicated they will ratify. President Putin has made that clear; the minister has made that clear; the Duma has passed a resolution indicating that that is the way they are likely to go. However, it has not happened yet, so it is always possible something could intervene.
If that did occur — and I am getting into the hypothetical here, which is dangerous ground — we would continue with our targets and do the best we could. It would be much easier if we had the international system in effect. However, the problem will not go away because the Russians do not ratify the Kyoto agreement. In 50 years or 100 years, it still will be a problem for future generations.
The problem that Senator Gustafson described in Northern Canada will not be affected by the ratification of Russia or not. We will have to continue in the efforts to deal with the issue of climate change even if the vehicle gets derailed — that is, the vehicle we are using at the moment, the Kyoto agreement.
I do not want to speculate further than that. I think the Russians will sign. I have no reason to suspect they will not.
I see a fair number of Russians, and they are always fascinated by Canada. They have worked out the Europeans; but Canada is a North American country with a lot of connection with the United States, so we are a bit of a puzzle to them as to what we will do and how we will approach this. They have always shown great interest.
We also share many energy similarities with Russia — a lot of energy and long pipeline systems, long transportation systems. They also try hard to sell in Western Europe; and now they are proposing a major pipeline to China with a spur to transport gas to Japan through the Sea of Japan.
They see some of their problems as being similar to ours. They see our technology as, in some instances, superior to what they currently have, and they are interested in our technology. Therefore, we see a lot of the Russians, and I have no indication that they will not ratify. I have every expectation that they will. However, it is not guaranteed.
The Chairman: You mentioned earlier the Energy Star1 system, which has been in place for some time now. That is the system that identifies, for example, large domestic appliances as being energy efficient.
We have expressed concern in the past that this program does not seem to be efficacious. We would prefer a situation in which a consumer would come to an appliance store and, if there were not an Energy Star1 sign on the window and if the salespeople did not know what they were talking about, the consumer would go elsewhere. However, that does not seem to have happened. In fact, many consumers seem not to care or be prepared to spend that additional money in the short term to save a lot of money in the long term.
You mentioned that you would base some aspects of the 25 per cent improvement that we hope to see in automotive engines on the Energy Star1 program. Can you give us a little more comfort than we presently have with respect to the usefulness and effectiveness of the program so far?
Mr. Anderson: I cannot, really. However, the more information you provide, the better off you are. There will be journalists who will pick up this aspect; salesmen will use it as a selling point for a stove or fridge or, indeed, a vehicle.
Having said that, it is true that it is not the only factor. Maybe the extra burner on the stove will appeal to the purchaser more than the EnerGuide figure. However, providing information does help. If the information is not there, the criticism is very quick.
I do not know many people who can give the gas mileage of their car based on EPA or Department of Transport figures. I can state the gas mileage for the Prius, because people ask me that time after time. I get a warped view, because I have an unusual vehicle. People do know what they paid at the pump. ``I paid $45 to fill up my vehicle. That is outrageous.'' I ask, ``What size is the tank?'' They do not know. The other common question is this: ``How many times a month do you fill up your tank.'' Most people can give me that answer quickly.
I agree with you. It is not the deciding factor in many instances. It is certainly helpful to provide that information, and it is cheap. It would not cost much to put that number on a sticker somewhere.
We should be looking at things like a gauge on every vehicle that shows gas mileage clearly. It varies dramatically, depending on the automobile. I have such a gauge on my car. There is a little bar that goes up and down, depending on consumption. It does not take long to realize that if you accelerate slowly you save gas. There is another dial on my car that indicates kilometrage over the previous 100 kilometres. It shows the fuel used per kilometre. This is instructive to me. If that little gauge were on the ordinary car, truck and S.U.V, people would drive differently, which would save 10 percent — triple what we expect with ethanol.
There could be simple things that would improve the consciousness of the public. Certainly, the sticker cannot hurt.
Senator Spivak: It was suggested by one of our witnesses that there might be more uptake if the Energy Star1 appliances were GST free. Much of the information that we have heard indicates that incentives work much better. An incentive goes a long way.
Mr. Anderson: Senator Spivak constantly encourages me to get in trouble with the Minister of Finance.
Senator Spivak: That is right.
Mr. Anderson: Let me say that you are absolutely right. There are real opportunities for reductions and the use of the tax system to encourage energy savings. You suggested one particular way. There are many others.
I will state as a fact, without my views one way or the other, that the Finance Department is extremely protective of GST.
Senator Spivak: I am sure. You know all the stories about the fee-bates and stores that advertise ``GST free.'' Stores absorb the cost to attract customers.
Mr. Anderson: We have to look at the financial opportunities through the tax system. It has been used for many purposes. We have many examples of using the tax system for a social objective. The tobacco tax is the most obvious example of discouraging consumption through a tax system. You also encourage smuggling, but that is another story.
We must spend some time determining what we can do to green up the tax system. I expect that to be a factor over the next one or two years. The person who will give you chapter and verse in technicolour is the Minister of Finance when you call him as a witness. I am sure he would be delighted to do that.
The Chairman: We will tell him you suggested that.
Mr. Anderson: I am sure that Mr. Manley would like to come. I have had positive discussions with him in this regard.
Using the tax system is not to be undertaken lightly. There are many calls on him to use the tax system for a variety of purposes. It will take a fair amount of public discussion, and again, the discussion of this committee will be a very important factor.
The Chairman: He will remind us that tax forgiveness on one side is exactly the same thing as writing a cheque. There is no difference.
Mr. Anderson: Yes, he certainly may. The cheque is more visible.
Senator Milne: I would just point out two things. The tax system is the most efficient tool in existence for social change. Dollars work. In this case, the consumers would do all the technical work for you.
If you are going to put stickers on cars, I would suggest a very simple system rather than fuel efficiency for the car. Devise a star system. Five stars could be given for the most efficient car, and none for the clunkers. Advertise that. It certainly is very easy to implement. Any dealer can put a sticker on a car.
Mr. Anderson: Senator Milne, you are absolutely right. We can work out a simple system. Your premise, as I am sure Senator Buchanan would agree, comes from that great Scottish economist Adam Smith. People respond very well to financial incentives, and that is the best way to achieve goals. I could not disagree at all with either approach that you suggested.
The Chairman: Mr. Dhaliwal and his officials were here several days ago. They presented the idea of gaining considerable efficiencies by getting rid of old appliances and by providing incentives do so. When some of our members were travelling elsewhere, they saw good examples of considerable savings in energy use having been made in that way. ``Bring us your old refrigerator, and we will give you 50 bucks.''
Many people have old refrigerators in the basement, commonly called the ``beer fridge.'' Has any thought been given to encouraging people to get rid of those old, mostly inefficient appliances?
Mr. Anderson: Yes, there has. I am not sure if my staff can help me on this. It would be mostly through the involvement of Natural Resources.
It is certainly true that the modern fridge is far more efficient. The last one that we threw out was so old that it had a sticker from the first campaign of Mr. Trudeau on the side of it. Fridges last a long time. You mention the beer fridge in the basement.
Much progress could be made that way. I cannot give you that information now, but I will try to get it from Natural Resources for you.
The Chairman: We heard of one thing recently with which I was entirely unfamiliar but am given to understand has become fairly common in countries other than Canada. Home-owners obtain a ground source heat pump.
There is an initial cost when one is building or retrofitting a house. However, in the long term, it pays off enormously and directly, not only in terms of dollars, but also with respect to the environment. That makes eminent sense in the framework in which we have heard it.
Has the government given any thought to incentives in that respect? From the standpoint of public relations, has the government considered making folks aware of it?
People are less aware than they could be of the Energy Star1 system. I do not think most people have heard of the energy heat pump. Apparently, they are the most marvellous things since sliced bread. Can you tell us something about that?
Mr. Anderson: I can suggest a witness who can. He has one himself and would encourage the media to crowd this room when he comes to speak. The former finance minister has that system for heating and, I think, cooling as well. He is a great enthusiast and keen environmentalist, as you know from his time as critic for our party. He has installed such a system and knows all the ins and outs of ownership and costs of such a system. Speaking more generally, in a policy sense, that is not our department. It would presumably be Natural Resources or Industry Canada.
Mr. Nymark: It is Natural Resources Canada, which is why they were speaking about it the other day. They have quite a range of programming that, in a financial sense, are sunsetting programs.
The Climate Change Plan for Canada mentioned a number of these programs. I expect that they will be bringing forward a business case for renewal, extension or modification of a number of these programs to ministers this spring. They can then get the effectiveness of the programming and the cost-effectiveness on a per-ton basis arrayed across programs, so that we can look more systematically at where we would get the biggest bang for our buck in further programming in these areas.
The Chairman: We will be following that with great interest. I heard from a psychologist a little while ago, who wrote an article about this subject, that he just does not believe, having spoken to lots of Canadians, that we will succeed in getting people out of their cars, to put it colloquially. He says we should concentrate, rather than convincing people who now drive to use public transit, on getting them to drive better, use better fuels, better vehicles and the like. He sees a cultural impossibility, in respect of convincing North Americans really to eschew the automobile.
Have you thought about that? In respect of your long-term concentration, do you think that we have to move away from admonishing Canadians to use public transit towards what you have done, by setting the good example of driving a Prius?
Mr. Anderson: The psychologist you were talking about has a very good point. When public transit people come to me and say, ``If you give us more money, your problem would be solved,'' I quickly respond that having more buses on the road and a higher frequency of service would not necessarily result in a real increase in ridership. An empty bus going through the streets of any city in Canada is simply adding to the problem.
The Chairman: Or a subway going through a low-density residential area.
Mr. Anderson: This person to whom you were speaking has an important point. That said, examples in larger cities such as London, New York or elsewhere suggest that public transit becomes the obvious choice under certain circumstances. That is when the inconvenience of private vehicles becomes too high. The municipal and provincial authorities will have to face up to this issue, and we will have to face up to it, in terms of our support for infrastructure programs.
If we continue to add public transit, add extra lanes for private vehicles, provide parking and X, Y or Z, we are simply adding to everybody's costs. This may be what your psychologist was thinking about, but there has to be a bit of a push as well as a pull. The push, if I can describe it that way, is inconvenience. When people understand that the bus is zipping past them because it is driving in the lane that has diamonds or that their colleagues who are taking public transit are arriving home earlier, getting places a lot faster, they may change their minds.
However, public transit has to be made convenient. The magic of a car is that it takes you directly from one point to another. The bus route does not always take you to your exact destination point, or does not always pick you up exactly in front of your office. There is also the factor of having to wait for the bus. With a car, you get into it and you start moving. Psychologically, it is a good point; however, I think that there are some inexorable factors pushing people to recognize that the private vehicle is not the future. It may be cost, straight inconvenience or time.
I remember riding my bicycle to downtown Victoria. It only took me 20 minutes. I could get home five minutes faster, because I did not mind if I was more sweaty arriving at home than at the office. I got my exercise. If I had taken my car, I probably would have driven to the rec centre and done 40 or 45 minutes of exercise. I got 45 minutes longer out of my day by riding my bicycle. You suddenly realize these things. The day suddenly does not have 24 hours; it has 24 hours and 45 minutes if you use your time effectively. I had never thought of that advantage before.
The Chairman: Another good example from you, minister.
Senator Finnerty: I am thinking of the some of the states and cities where there are lanes not only for buses and taxis but also for carpooling. It seems to work very well. We may want to look at having one fast lane, for those who carpool.
Mr. Anderson: That is exactly it. If we can figure out ways where it is clearly more convenient and more attractive, people will use it. Of course, there are people who get around this by inflating life-size balloons that look like people and putting a hat on them, to make it look like a person. It certainly amused hitchhikers who got a ride from people with balloon people in the back seat.
There are other ways of doing it, and making it more convenient is obviously the key, as you suggested, senator.
Senator Finnerty: In some cities, they would need four hitchhikers or a whole car of balloons.
Senator Milne: Incentives are one thing; however, as long as most people are living in cities and suburbs designed around the car, and as long as most cities in Canada do not allow infill construction, the numbers will never be there to make public transit a viable answer.
Mr. Anderson: Senator, you are dead right. Expenditures in public transit in areas that you have described are a high-cost way of achieving climate change goals. The authorities dispute this, and the argument goes back and forth, but the climate change money we have will not achieve its goals by simply subsidizing public transit, as it currently exists. There must be planning at the municipal level that bears this in mind and makes public transit the logical choice and the efficient system. You are absolutely right. Public transit is not the magic bullet unless other things are done. Then, it could be a major contributor.
The Chairman: You have been generous with your time, Minister Anderson, Mr. Nymark and Ms. Smith. Thank you for your answers, and we will be following up with more questions, as we get further on in our study.
We are now joined by the Minister of Indian and Northern Affairs, whose bailiwick Bill C-2 falls into, Mr. Robert Nault, by Mr. John Bailey, the negotiator who has had a great deal to do with this bill, and by Mr. David Cox, Counsel for Comprehensive Claims and Northern Affairs/Self-Government and Strategic Direction.
Good morning, minister and gentlemen. Thank you for being with us this morning. Minister, I think you may have something to tell us about this bill. We invite you to do that before we proceed with our questions.
The Honourable Robert D. Nault, Minister of Indian Affairs and Northern Development: Mr. Chairman, this morning, I should like to make some prepared remarks and then obviously, as always, leave an opportunity for questions later.
I thank you for this opportunity to meet with you today. As you know, I am here today with officials to provide an overview of Bill C-2, the proposed Yukon Environmental and Socio-economic Assessment Act. I will be pleased to answer any questions that you may have. I appreciate, as always, the opportunity to say a few words about the bill before we get started.
Let me begin by emphasizing that we have brought forward this legislation, first and foremost, to fulfil an obligation of the Crown under the Yukon umbrella final agreement. This agreement came into force in February 1995 and set out the framework for the completion of individual Yukon First Nation comprehensive land claims. It also established requirements for a number of territory-wide resource management processes. Among these is a specific obligation for the government to introduce legislation to implement a new development assessment process for the Yukon.
Our response to the report of the Royal Commission on Aboriginal Peoples — that report is entitled ``Gathering Strength: Canada's Aboriginal Action Plan'' — sets out a path for building a renewed partnership with First Nations, Inuit, Metis and their governments. One of the most fundamental policy statements in ``Gathering Strength'' is that the Government of Canada intends to honour treaties and Aboriginal people, including modern-day treaties that take the form of comprehensive land claim settlement agreements. Our government takes its land claim obligations very seriously, and we have demonstrated this on a number of occasions.
Fulfilling our obligation to enact this legislation will clearly demonstrate to Yukon First Nations this government's commitment not only to negotiating comprehensive land claim and self-government agreements but to effectively — and I think this is the key word this morning — implement them.
The requirement for development assessment legislation is a key component of the umbrella final agreement for First Nations because it will give them a meaningful role in assessments of all projects that may affect their lands or people and create a process that will provide them with advice on development projects under their jurisdiction. This will help First Nations to provide effective governance for their lands and people, which will, in turn, benefit all Yukon residents and, indeed, all Canadians.
While this bill represents the fulfilment of a key Yukon land claim commitment, it is also much more than that. The assessment process provided for in this bill has been designed to encourage sustainable development in the Yukon. By ``sustainable development,'' I mean the kind of development that meets the needs of the present without compromising the ability of future generations to meet their own needs. This principle is one developed by the World Commission on Environment and Development, better known as the Brundtland Commission, and has been widely accepted across Canada.
Encouraging orderly and responsible sustainable development in the Yukon, as elsewhere, depends on a process for project assessment under which potential effects of a project on the environment and people in the area are carefully considered before a project is allowed to proceed. It depends on providing a climate for potential developers where there is consistency and certainty in the assessment rules, and it depends on eliminating unnecessary project approval process duplication. We have achieved these objectives in this bill.
First, and perhaps most important, the proposed Yukon Environmental and Socio-economic Assessment Act will provide for a single project assessment process for all of the territory. With 14 individual Yukon First Nations and the federal and territorial governments, we faced a situation where there may have been as many as 16 different environmental assessment processes applicable in the Yukon. This would have created a substantial barrier to orderly sustainable development due to potential process overlap and duplication.
Bill C-2 provides for a single, consistently applied process applicable to all Yukon lands under First Nation, federal or territorial jurisdiction. This means that a potential developer will face the same assessment process, with the same rules, regardless of where the development is proposed.
Projects that may straddle lands in different jurisdictions will only be subjected to a single assessment. This will not only avoid undue complexity that could discourage development in the territory but will also act to encourage additional regulatory cooperation among jurisdictions, providing even more encouragement for sustainable development and helping all governments in the territory serve their constituents more effectively.
In addition to a single assessment process applicable throughout the Yukon, this bill also has several specific provisions designed to avoid duplication and to provide additional certainty for proponents of projects, First Nations and others with an interest in developing or development assessments.
Like many resource management boards created under land claim agreements or legislation, the Yukon Environmental and Socio-economic Assessment Board provided for under this bill will be responsible for developing procedural rules that will dictate the detailed manner in which assessments will be conducted. Rather than merely providing the board with rule-making authority, we have taken the additional step of requiring it to make binding procedural rules regarding several specific areas that are key in order that the process provides certainty and is efficient and timely. We have included many of these rule requirements in response to concerns from industry and conservation groups who wanted to be confident that the board would address particular issues.
For example, the board must establish time frames within which all assessment activities must be conducted. They must also make rules laying out the required form and content of project proposals and clear mechanisms for public involvement in assessments. The bill also lays out requirements in assessments as well as opportunities to provide for public and interest group involvement in the development of these rules so that the board can ensure that it best serves the interests in the territory.
There is a provision in the bill to allow for a regulation that will outline timeframes within which a First Nation, federal or territorial government must generate their decisions following receipt of assessment recommendations. Again, this provides for a high degree of process efficiency and timeliness and ensures that projects do not languish for years in the assessment process.
There are some who feel that we have not been prescriptive enough in the bill and still allow the board too much authority in the development of these assessment procedural rules. They would have us provide in the proposed legislation the smallest details of how the assessors will conduct their business. This is neither feasible nor appropriate for a statute and I believe does not indicate trust in those Yukoners who will form the membership of this board.
Based on long experience with co-management boards in the Yukon, such as the Yukon Territorial Water Board and the Yukon Surface Rights Board, I have tremendous faith in the good judgment and good common sense of Yukon residents, and I am confident that the Government of Yukon and Council of Yukon First Nations will nominate qualified board members who will serve all interests fairly and effectively.
I should like to close with a few comments about the process that we used to develop this bill. The umbrella final agreement provided that legislation would be introduced to implement a new development assessment process for the Yukon by February 14, 1997. We are well past that date now, as honourable senators will notice, but for good reason. Rather than rush to complete legislation that would ultimately prove inadequate, we took the time necessary to work through the drafting process in close collaboration with the Government of Yukon and Yukon First Nations represented by the Council of Yukon First Nations and with extensive input from interest groups and the public.
Honourable senators should know that several drafts were circulated and discussed among First Nations and Government of Yukon and that two drafts were the focus of extensive public and interest group consultations.
Three territory-wide community tours, public meetings, workshops and mailouts were all part of the consultation process. An Internet Web site was established and maintained to provide updated information on the development of the proposed legislation. Several meetings were held with individual First Nations, the Inuvialuit, municipalities, industry representatives and environment groups. All comments and suggestions received through these consultations were given careful consideration and many resulted in changes being made to the draft.
Bill C-2 is the result of this extensive consultation and collaboration. Though some may not be aware of it, we owe many provisions in this bill to those who took the time and trouble to review the drafts and provide us with constructive suggestions.
This bill represents the completion of a major land claim commitment for the Government of Canada. This proposed legislation is an important piece that, along with the devolution of resource management responsibility to the territorial government and the settlement of comprehensive land claim agreements across the Yukon, will ensure that First Nation people and other residents of that territory are the key players in resource management decisions in the future.
Bill C-2 will provide the Yukon with a valuable tool to encourage responsible, sustainable development in the territory for many years to come.
Bill C-2 is a good bill for the Yukon and a good bill for Canada. Today, I am asking for the support of honourable senators to make this new process a reality.
Thank you for your attention, honourable senators, and I welcome any questions to myself or my colleagues who are here with me with the objective of ensuring that we proceed as quickly as we can to enact a piece of proposed legislation that is extremely important for the Yukon and its people.
Senator Finnerty: Minister, if there is a disagreement about whether or not there is a conflict or inconsistency between this proposed legislation and the final agreement, will the courts have to resolve the matter?
Mr. John Bailey, Negotiator, Resource Strategies, Department of Indian Affairs and Northern Development: Honourable senators, if there were any challenge on whether or not the legislation was consistent with the final agreement, then that matter could be addressed through the courts, yes.
When we were developing the proposed legislation, and Mr. Cox will perhaps speak to this in more detail, our legal counsel ensured that we were developing legislation that was consistent with this agreement and any other agreements that applied.
Mr. David Cox, Counsel, Comprehensive Claims and Northern Affairs/Self-Government and Strategic Direction, Department of Indian Affairs and Northern Development: Honourable senators, I would reinforce the suggestion that, if one were to challenge the bill, that would be one of the arguments on which someone might come forward. However, we feel confident that they would not be successful on that basis.
Senator Milne: Minister, I understand that there is a requirement in this bill that refers to making a declaration to require the assessment of a listed activity that had been exempted. I understand that before that declaration can be made, all the parties, namely the First Nations, federal, provincial, territorial or any body having any kind of decision- making authority over the project, must be required to consent to the declaration.
What is the rationale for requiring that consent for all of the different parties? That seems to make the process more complicated.
In your opinion, will this requirement limit the instances in which this declaratory power might be used?
Mr. Bailey: As background about the declaration provisions, the purpose of the provisions was that we did not want to have the net cast too widely with respect to what projects would have to be assessed under this process. However, there are occasions when lower-level activities that may not regularly have much impact may have impact in certain circumstances.
We wanted to provide for the opportunity for the government or governments that were responsible for that activity to raise that activity to a level of a project requiring assessment.
We wanted to ensure also that this could not be done in an arbitrary way. There are a number of restrictions about when the declaration could be done if it were in a sensitive area, for example. We also wanted to ensure that all governments that have responsibility, if there were a shared jurisdiction, would agree to elevate the matter to that level if there were an extraordinary circumstance. We wanted to ensure that all of the responsible governments had some say before a matter was subject to assessment.
Senator Milne: When a federal minister or a territorial or a First Nations group makes a request for a panel review, the requesting party is required to indicate whether that review is a public review or some other kind of review. What other reviews are envisaged, private or secret? I become concerned when they talk about ``other kinds of review.''
Is the requesting party's specification for the kind of review binding on the board, or can the board decide that it should not be public and should be some other form of review?
Mr. Bailey: First, that provision is taken directly from the land claim in terms of what the request can constitute. They can request either a public review or another form of review, and that has been interpreted to mean that it can speak to the ``publicness'' of the review. There is that sort of opportunity where there may not be public hearings in the regular sense, yet, regardless of the nature of the request, any assessment must provide opportunities for the public to know what is going on and to have input into the assessment process; there just may not be public hearings in the same sense if the requester so suggests.
Senator Milne: I am concerned about heritage resources. The 1993 umbrella final agreement requires consideration of whether heritage resources might be significantly adversely affected, but that requirement is not set out in clause 42 of this bill.
Can you explain why it is not? Has it been deliberately removed? I am very concerned because there are many heritage resources in the Yukon.
Mr. Bailey: It actually is included but in not as direct a way as you may wish it to be. The definition of ``socio- economic effects'' includes effects on heritage resources, so when we talk about adverse socio-economic effects it includes adverse effects on heritage resources. It is actually included, but in a broader context.
Senator Milne: It has not been highlighted at all that it has been included.
Mr. Bailey: We believed that that was an inappropriate inclusion in what a socio-economic effect would be, so it has been put in with those. It would be included and there would have to be a requirement to look at adverse effects on heritage resources along with other socio-economic impacts that there may be on people, spiritual sites and that sort of thing. It is included, although it is not directly mentioned. It is incorporated by including that in the definition of ``socio-economic effects.''
Senator Milne: Are you sure that they will be adequately protected that way?
Mr. Bailey: Whether we were specific about naming it or including it in the definition and requiring the broad broader socio-economic effects to be considered, the result would be the same — they would have to be given the same level of consideration.
Senator Milne: It sounds to me as though the whole process began in 1993, which is a long time ago, and 1997 was also a long time ago. It sounds as though a lot of the work must have been done under the ministry of Ron Irwin. Did it finally take you, Mr. Nault, to bring it on?
Mr. Nault: I would not take the credit for that. More precisely, it was Yukoners themselves who wanted to take the time necessary to move in this direction. The umbrella final agreement triggers a process between Yukon First Nations and ourselves. As I said earlier, a number of different processes will need to be put in place, and this is one of the more important ones in the scheme of things.
Some senators may not be aware that this process started under the Prime Minister when he was the minister of northern development. That is how long we have been at what we call an evolution of our territorial governments. Therefore, it goes even further back than Minister Irwin.
As in any discussion about process, for the sake of the discussion we are having this morning there are many ways you can approach it. We have consistently argued as a government that the best process is to give as much power as possible to the territorial and First Nation governments to run their own affairs. That has always been our position, as well as not being too prescriptive, or as least prescriptive as possible.
We could add a lot more to this bill if we liked. We could be so prescriptive as to detail every single thing you would want them to look at. However, as I said in my remarks, I do not believe that is the right approach to take in developing a federation, so we have left it to Yukoners to develop those strategies themselves. In your questioning, you have already addressed a number of specific areas that you could interpret or change in different ways, but we believe that it is best left to Yukoners themselves.
I wanted to make that point because I know that some people like to be very prescriptive. As a matter of fact, you may know that the mining association sent me a letter requesting a certain clarification. We made that clarification because we thought it was a little ambiguous. I understand, however, that they are now looking for more clarification, even though they think it is a good bill. Of course, it follows suit that the environmentalists would be arguing from the same perspective. Balance is probably the best approach to take in this regard.
Senator Milne: I assure you that that was not a planted question.
Mr. Nault: I do not answer planted questions.
The Chairman: Continuing on the question of process, Mr. Minister, if I were a First Nation, a territorial government or a developer, or all three who had undertaken to do something, I would be very concerned about the length of time that the process for approval might take. You said in your opening remarks that there is a provision in the bill that will allow for regulation that will outline time frames. There is a difference between ``allow,'' ``prescribe,'' ``demand'' and ``require.'' Is it any of the above or is it ``allow''? In what circumstance do you think that might become more clear, or more prescriptive, to use your word?
Mr. Nault: It is a requirement that must be accomplished by the board. If not met, those requirements will be left to the minister to resolve. We are continuously requested by the different territories to intervene in the process and procedures a board would follow if legislation is not in place. In particular, we have run across that in Nunavut quite often.
This legislation is an attempt to ensure that the minister does not have to intervene in process, and ``process,'' for the sake of this debate, means that they will lay down procedural rules that will govern the timelines and the framework of those decisions that will have to be made.
I will leave it to Mr. Bailey to give you the details of that, but that certainly is the requirement of this bill.
The Chairman: Is it a requirement rather than a possibility, Mr. Bailey?
Mr. Bailey: There are two different sorts of timelines provided for: There are those for the conduct of assessments —
The Chairman: I am talking about the decision on an assessment.
Mr. Bailey: Yes, and the rule making deals with conduct of assessments.
With respect to the regulation that would govern how long decision makers have, it is a regulation that is allowed for. However, I can tell the committee today that work has been ongoing on some background on that regulation and it is intended that that would be in place at the time the legislation comes fully into force.
The Chairman: A project developer could be assured by the state of affairs under what would become an act if this bill passes that, after an assessment has taken place, the decision on how to react to that assessment will be made by the competent authority, be it the First Nation, the territorial government or the federal government. Will this proposed act require that those competent authorities respond to the assessment recommendation within a specified time?
Mr. Bailey: That is what the regulation would provide for. As I said, that regulation has been in development for some time. We have used draft contents of such a regulation in our consultations on the draft legislation a couple of times, once in 1998 and once in 2001. It certainly is the intent that the regulation requiring those decisions to be made within a specific period of time would be in place once this proposed legislation is in force.
Senator Spivak: I am curious as to why the non-derogation clause is not in here. Are you now on to the new policy with non-derogation clauses?
Mr. Nault: There has been a discussion, of course, of non-derogation throughout Parliament, both in the House of Commons and the Senate. As a government, we have been looking at it with the potential of making decisions on how we would want to proceed. What seems to be the safest route is not to have a non-derogation clause, because of the fact that Aboriginal rights and treaty rights are protected under section 35. We keep getting into this discussion as to whether or not it is a flag. Does it give further strength to section 35 or does it weaken section 35? For the sake of moving forward without ever having been given some jurisprudence on this file from the courts, the protection already exists and we do not need to put the flags in there.
Do we intend to change that? I cannot speak for the Minister of Justice, but it has been my view that for all intents and purposes we do not need non-derogation clauses in any bills, even though members of Parliament, both in the House and in the Senate, seem to think that it is a good idea. I have always been one who has not seen the need for them in this regard.
Senator Spivak: There are many bills that contain this clause, and they will have to be removed, but do we not yet know what the government policy is?
Mr. Bailey: To follow up on some of the minister's comments, the whole idea of non-derogation did come up about seven years ago in discussions with First Nations in the Yukon, and whether this bill would include such a provision. At the time, and still to this day, the First Nations of the Yukon did not feel that such a provision was required.
Senator Christensen: I know that we met with the Council for Yukon First Nations here on a number of occasions and they were very clear that they did not want that in this particular bill. When it has been in a bill, usually it was at the request of a First Nation. In this case, they were clear that they did not want it in there.
Senator Spivak: Would you explain the connection between this and the Canadian Environmental Assessment Act, in clause 6. The Canadian Environmental Assessment Act will not apply in the Yukon but this is not an absolute exclusionary rule. It is difficult to determine which projects will be subject to an assessment under the CEAA. Could you clarify that?
Mr. Bailey: Yes, I could. Effectively, the Canadian Environmental Assessment Act will no longer apply to the vast majority of projects in the Yukon, once this is in force. If there were a project that did not require assessment under this new process but that required assessment under the Canadian Environmental Assessment Act, it would have application.
That having been said, our objective is to ensure that this process assesses all those things so that we minimize the ongoing application of CEAA in order that we do not have too many processes active in the territory.
The second circumstance where CEAA may apply is at a panel level, and that is specifically intended for larger projects that may be transboundary in nature, where the ongoing application of CEAA is required in order that we have a process that can have application in British Columbia, Yukon, Alberta and so on. This proposed act would not be able to govern activities or deal with activities in those areas. That is why we have the reference to activities that require a National Energy Board authorization, because those are transboundary in nature, such as a Yukon gas pipeline.
Senator Spivak: What was your thinking here? What does this do? Was your thinking that you had to have a faster process, or what? How will it affect the future?
Mr. Nault: If you recall in my opening comments, I suggested that we are moving towards provincial-like authorities in the territories — that is what the evolution is intended to be about. If we follow that continuum, this is like a provincial piece of environmental legislation and process. Unless it is transboundary, where it would be considered to be of federal jurisdiction, then this legislation would be the legislation used for all those different projects, versus the transboundary ones that CEAA would be more likely to be involved.
That is no different from any other province, and that will be the same for every territory by the time we are concluded with our evolutionary work.
Senator Spivak: Are you stating specifically that CEAA does not apply to provinces when they have their own environmental legislation?
Mr. Nault: No, that is not what I meant. I meant that it only applies to certain activities within the province. Provinces have their own environmental legislation, their own environmental laws. They do not necessarily end up being duplications and resulting in longevity of a process that is not necessary. That is really the necessity of putting this piece of legislation forward.
We could have come forward with a series of boards for each First Nation. Legally speaking, we could have done that as a federal government because that is our jurisdiction and, frankly, our legal obligation. This was an agreement by First Nations and Yukoners to put in a process that would not only meet the needs of sustainable development, but also of course develop an economy.
Senator Spivak: I am curious as to what the legal implications of this might be. Are you are saying that there is not a different interpretation for this than for any province in terms of the CEAA? There has been legislation about the application of provincial and federal environmental responsibilities.
Mr. Nault: We like to clarify very clearly in federal legislation that certain parts of the Yukon's environmental and economic processes are within this jurisdiction that we are talking about. CEAA, yes, does have a role to play right across the country and includes the territorial governments.
I hope I am not giving you the signal legally that CEAA does not apply because it does in certain instances. I will let my lawyer tell you how he sees it.
Senator Spivak: It would be interesting to have a clear legal opinion.
Mr. Cox: Because there was an attempt to coordinate potential for those environmental assessment boards with the federal regime, the opportunity was taken to ensure that there was not duplication where duplication was not warranted. It in no way has ousted the application of federal environmental assessment. In fact, it has in some respects replaced it, but where there is good reason to ensure that there is coordination, for example, projects that cross boundaries, CEAA will continue to apply.
If you think about it in terms of the federal-provincial split, that is where it becomes relevant that there be a federal system, or a system that would apply in two different jurisdictions.
Senator Spivak: Let us take, for example, a huge forestry project, and there are all the triggers like navigable waters and fish, et cetera. Are you suggesting that it will apply in the Yukon, or it will not? Am I making myself clear?
Mr. Cox: Yes.
Senator Spivak: We know that in many provinces the environmental assessment legislation is more honoured in the breach than in the observance. In my own province of Manitoba, there is an environmental assessment of a little bridge but not of a huge project involving territory with many lakes, fish and migratory birds. The federal government did not step in there. I do not know what the current situation is.
Senator Buchanan: That does not apply in Nova Scotia, by the way.
Mr. Nault: No, the fish keep on swimming, Senator Buchanan.
I understand what you are getting at. As you know, we just transferred provincial-like powers on management of resources to Yukon as of April 1.
Senator Spivak: That was done way back for the Manitoba and the West.
Mr. Nault: Keep in mind that that means the Yukon government will have jurisdiction and responsibility for forests and mining. Let us start with that. The federal government still maintains responsibilities for fisheries. Therefore, if there is a project that may have a major impact on fish and their habitat, it may trigger CEAA. That will depend on the magnitude of the project.
Senator Spivak: Is that at the minister's discretion?
Mr. Nault: If you mean the Minister of the Environment, yes, there is a process for him to assess, if someone applies for an environmental assessment under CEAA, whether the habitat damage, or whatever, on a project should trigger his involvement. That is the same whether it is in the provinces or the territory, in this case. You will recall, to use the example of the debate we had a number of years ago in Alberta, the Old Man River Dam. Do you recall that one?
Senator Spivak: I remember that one very well.
Mr. Nault: It involved a big debate about federal versus provincial jurisdiction. There are occasions when we can end up in a discussion like that. There is no process that is foolproof, I suppose, but the intent here is to have projects, in the lion's share, managed by Bill C-2, the bill in front of you.
Senator Spivak: I will have to look at the bill more carefully. I am not really concerned about the fact that this is occurring in Yukon, where devolution is taking place. I am concerned about the specific exclusions where CEAA does not apply, whereas, in the end, the federal and the provincial governments share jurisdiction over the environment. It is not all specified, even though it might be specified through certain powers that exist already in the federal government, and through the assessment act. However, we have the situation in British Columbia right now where the province is ignoring watershed rules — and it is not just British Columbia — and other similar rules, and the federal government is not stepping in. My fear is that this trend will be accentuated. I just raise it here.
Mr. Cox: The activities that are currently triggering assessments under CEAA are reflected under this bill as well. Just to be clear, this is covering territorial triggers, if you like, federal triggers and, ultimately, First Nations triggers.
The Chairman: There are listed activities that can be exempted from examination under this bill. Can you tell us how, why and where that might happen?
Section 48(2) of this bill indicates that if a listed activity that has been exempted is required to have an assessment done, it requires that all three jurisdictions of government unanimously agree. In other words, it is an implied veto. Does that not mean that in those circumstances it is less likely to happen? Does that not create a bit of a logjam that might get in the way of something?
First, I need to understand more clearly than I do what the exemption of a listed activity would be and why.
Mr. Bailey: To give you an example, the regulation that would work with clauses 47 and 48 would require something like timber cutting, which would be an activity that could be caught as a project. Exempt from assessment would be a timber-cutting project of less than 500 cubic metres.
If you were applying to cut 400 cubic metres of timber, you would be exempt from this process. You would just go and get your permit. It would not be subject to an assessment under this process. There tend to be thresholds below which there is generally considered not to be much concern for potential environmental or socio-economic impact.
The Chairman: Would these be very small projects?
Mr. Bailey: That is correct. Again, we based many of those thresholds on current thresholds that are included in the Canadian Environmental Assessment Act and its application. We are essentially maintaining that same standard of which sorts of activities are caught and which are exempt.
With respect to the declaration provisions, if that same applicant who wanted to cut 400 cubic metres of timber went in for his or her application to the Yukon government and there were concerns because the application was in a sensitive area, such a caribou calving area, the territorial government could declare or elevate that activity to the level where an assessment would be required, because of the special circumstances involving it being in a sensitive area. Again, they are guided in when they would make that sort of declaration. The circumstances would involve something that is proposed in a sensitive area or where there might be some cumulative effects. If there were a large number of 200-cubic-metre proposals in one area, the territorial government might be concerned about the cumulative effect.
If a small, 400-cubic-metre proposal cut across a First Nations boundary and a Yukon boundary, before the proposal could be elevated to a level where it would require assessment, there would have to be agreement that they both felt it warranted being elevated to that level.
If one of them did not agree, then it would not be elevated to a project, the permit could just be issued and the proponent could go ahead with the activity.
Therefore, if there is disagreement, it will not stymie development or stymie the issuance of permits. What would stymie it would be to elevate it, requiring that that smaller activity would require an assessment.
I hope that was clear.
The Chairman: It is clear. It also leads to a concern. If I were cutting timber and wanted to avoid an assessment, suppose that rather than saying I want to cut 5,000 cubic metres of timber I say that I will cut 10 lots of 500 cubic meters of timber. If one of the three levels demurs from the requirement that that aggregate undertaking be assessed, then it would not be assessed.
I am not looking for a bogeyman under the bed here. I am sure there is a provision somewhere where the minister could just step in and say that that will not happen.
Mr. Nault: It is even simpler than that. At present, in Yukon we are working on a forestry land-use planning process that will end up with a land-use process being very similar to what the provincial governments have now, which in essence will not allow for an individual to come in — unless it is a individual person and not a company. Companies will have to apply through the regular forestry regulation that we are working on now and that we have been involved in for the last year and a half, which Yukon will present itself, so that we can protect our forest and these events cannot happen.
What we are referring to is an individual who can get a permit, not a company itself. That company will have to follow the stricter application of the forestry management structure that we have in place.
Senator Christensen: Thank you, Mr. Minister, for being here. Many of my questions — and I have a number of them — are to help lay a base both for the senators here and for questions that I know we will be asked and issues that will be coming forward to us as we hear different witnesses before us on this particular bill.
First, I submitted two presentations — one from the Yukon Chamber of Mines and one from the Yukon Placer Mining Association — that raised a number of questions. Were you able to answer those?
Mr. Nault: I have not seen them yet.
Senator Christensen: I would ask that, when you do see them, the answers be filed with the committee.
Mr. Nault: Yes, I can do that for you.
Senator Christensen: Could you or your staff lay out the three levels of the assessment process that the board will be dealing with? There are six different regions within the Yukon, and I know people have concerns about why they are in these regions, why there are not more or less of them, et cetera. Briefly, could you tell us about the three levels of assessment that a proponent would go to if they were looking for licensing on a project?
Mr. Bailey: The three levels begin at the lowest level, with a designated office evaluation. Those offices will be in communities around the territory, in the six regions that you mentioned. They are expected to deal with the vast majority of projects, which are generally the smaller, more routine projects in an area. Those assessments will be done at a local level by staff in those communities; and again, they will tend to be the more straightforward assessments.
The second level of assessment is called, in the draft legislation, an executive committee screening. The executive committee is a small portion of the board that conducts assessments on bigger projects. For example, a hardrock mine would come directly to the board, and would be screened initially by that executive committee. They would either, if they felt they could, generate some recommendations from that higher-level assessment or create a panel to look at it in more detail.
I just referred to the third type of assessment — the panel review — which is the most complex one. It would involve hearings and witnesses and so on, and be a much more detailed process.
Senator Christensen: Would it be the panel review that would trigger a CEAA assessment?
Mr. Bailey: It would not necessarily trigger one. If a decision is made to hold a panel, if there is a transboundary element to the project, the executive committee is required to either ask the Minister of Environment if he or she would like to enter into a joint arrangement or refer the whole project to the Minister of the Environment to deal with under the CEAA.
The reason we have that communication is that the objective was to make sure that any project, if it is all or partly in the Yukon, would be subject to only one panel review process. Therefore, we have a number of these potential joint arrangements.
Senator Christensen: There seems to be some concern in the development community about the capacity problem — that the board may not be able to meet the workload that is coming before it. Could you outline what you see as the administration of that board? For both the main board and its offices in six regions, what sort of technical staff are we looking at to create and manage this process?
Mr. Nault: I will give you the general sense of how we are proposing to proceed, and then I can give you more specifics. What we have been doing — and what we consider that we will continue to do — is putting together our understanding of what the work plan potentially will be for that particular year, and the costs associated around it. We have enough experience now that we know what it costs to do certain panels in the territories and in the provinces. Then we put together the cost estimate and the budget, and we submit the budget to the board. The board then has a secretariat, and it goes from there.
We will learn from experience, I guess. Where we first set up those boards in the Northwest Territories, for example, I do not think that anyone contemplated the magnitude of work and the costs associated with it today, versus when the boards were set up under land claim agreements.
I say that to indicate that the government will be looking at the budgets on a yearly basis, with the objective of having those boards operate efficiently, with the capacity to do their job properly. We do not know that at the start; it depends on the projects. To put it in context, if we were to build a pipeline, that would be a very different process and, potentially, this board could have a role to play. Even though it may be considered to be the National Energy Board and CEAA, there may be some interest in them working collectively and collaboratively. I know a lot of technical work will be done on what we think it will cost, but I do not think we can precisely predict that from day to day or year to year.
Senator Christensen: You mentioned a similar board that was set up and has been operating in the Northwest Territories. I know that there were problems with that. Have those problems been reflected and weeded out in looking at this piece of legislation?
Mr. Nault: I would like to think so. However, I think that is why senators like yourself and others will help us to ensure that we have the capacity and the financial resources. For example, just last year, we started to increase the honorariums for board members, because they were so low in the North that nobody wanted to be on the board. You lost money if you worked for them, even on a part-time basis, because of the standard of living and the cost of living in the North. We changed that last year so that we could be competitive with other agencies across the nation. That cost was a little over $2.5 million, I think, to the federal government for the boards.
That is a small example of why it is not easy to answer that question for you, until we get some experience down the road. We do have some understanding of where we want to proceed.
Let me get Mr. Bailey to give you a sense of what is going on behind the scenes. There are some triggers, as you know, with this bill. We expect that you will pass it in the not-too-distant future, so we will have to move fairly quickly after that.
Mr. Bailey: To say a couple of things about capacity, there has been quite a bit of work done over the past three years on implementation of this legislation when it is passed. A good part of that has been trying to estimate work levels — what sort of technical expertise is needed to handle the expected workload. The work level has been estimated through historical records — looking at busy years for development in the territories and then trying to estimate what the workload would be and how many people would be required in terms of professional assessment officers in the various community designated offices.
The budgeting that has been done thus far is to provide adequate staffing in all those offices, to handle the expected workload, building in some flexibility to move resources and people around if the workload changes. Similarly, the board is expected to have strong technical support, in terms of assessment and perhaps in some specialized areas like mining, engineering, water and so on. These people would be appended to the board, and also available to those satellite offices on a case-by-case basis. That is how it is being developed now, in terms of budgeting and planning for the implementation.
Senator Christensen: What jurisdiction does the board have now over existing projects? Can it recommend changes? Can it cancel projects that were underway prior to this legislation coming into effect?
Mr. Bailey: The board cannot cancel anything. The board would only have jurisdiction over an existing project if such a request were made by the government responsible for the project. For example, if there were a mine that was under federal jurisdiction, the federal government might make a request that there be an assessment of that project.
Senator Christensen: That would trigger it?
Mr. Bailey: It has to be requested. It is not something the board would do on its own.
Senator Christensen: The Yukon First Nation has not yet signed their agreement. What protection is there, in this proposed legislation, for those First Nations, of lands that have been set aside and are part of their negotiating process? What protection do they have in this act for their lands?
Mr. Bailey: Prior to their claims being settled, this process allows them more involvement in any assessment of activities within their area. In addition to that, if there is a government authorization involved within a traditional territory, let us say the Nisga'a as an example, that government is required to consult before it issues its decision in response to recommendations. They have extra protection in that they have consultation prior to a government even issuing a decision document under this process, let alone issuing a permit for timber cutting, mining or whatever.
In terms of the interim protections for those lands that have interim protection currently, that remains through the withdrawal orders that have been issued for those potential lands. This process has no effect on those. With respect to a regulator or a government issuing permits, there are certain areas where they would be unable to issue permits regardless of the results of assessment because of those withdrawal orders that would not provide for it.
Senator Christensen: Those withdrawal areas are still under the jurisdiction of the Government of Canada?
Mr. Bailey: They have been withdrawn through Order in Council, yes.
Senator Christensen: If there were any project proposed in those areas, they cannot proceed until that settlement is made.
What input did Yukon First Nations, who do not recognize the UFA in the development of this bill, have in the process of negotiating the final conditions of this bill?
Mr. Bailey: As the minister mentioned, we did work on that collaboratively primarily with the Council of Yukon First Nations. All of the drafts of this bill that we provide to the Yukon Council of First Nations to review were also provided to those First Nations that the council does not represent. We offer, and have had, a number of bilateral discussions with the two Kaska First Nations, Laird River and Ross River, and also, the Kwanlin Dun Nahani in Whitehorse. The Kwanlin Dun wrote to us.
The chief said that the CYFM would represent them on this file, and they withdraw that authority later. We then began bilateral discussions with them. They received the same number of drafts and the same opportunities for comment as all other First Nations in the territory.
Having said that, I will tell you that they did not avail themselves of those opportunities as often as the Council of Yukon First Nations, but they were provided with the same number of opportunities to review drafts of the bill and provide comments.
Senator Christensen: The opportunity was there; whether they took it was their decision, correct?
Mr. Bailey: That is right.
Senator Christensen: There has also been criticism from municipalities and First Nations that live outside Yukon but that have lands within Yukon, such as the Tetlin Gwitch'in and the McKenzie. They feel they should have a seat on that board. Can you comment on that?
Mr. Nault: It is our position that the territorial government represents the municipalities. Therefore, the seats on the board will be for the territory, Yukon First Nations and us, of course, as developing the strategy. This is similar to legislation across the country, provincially or otherwise. Municipalities are a creation of territorial or provincial legislation, and they are represented by that government of the day.
Obviously, there is always an issue of overlap of land claims of First Nations that have traditional territory that is part of the Yukon, but the population lives in another jurisdiction. It has always been the position that they are represented in some fashion within their own territory on these boards but still can make presentation to the boards. That is how we present it.
Senator Christensen: If there were a project on those lands over which they have jurisdiction, they would be the body that would have to make the decision on whether that project went ahead. Is that not correct?
Mr. Nault: Could you give us a precise example?
Senator Christensen: The Tetlin Gwitch'in in the Mackenzie Valley Delta manage lands in the Yukon. If there were a project on that land, would they be the governing body that would make that decision. Is that correct?
Mr. Bailey: If it were on their land, they would make the decision. They have fee simple lands in the Yukon. They make the decision.
Mr. Nault: You meant that they have fee simple land?
Senator Christensen: Yes.
Mr. Nault: I thought there was something that I had not known. I thought you were talking about a land claim.
Senator Christensen: No, the fee simple land.
The Chairman: Before you leave that, let me ensure that I understand. In the Peel River area, they have not simply land to which they have rights, but it is fee simple land. That is the case?
Mr. Nault: Yes.
The Chairman: In that case, they would, by definition in the bill, become a decision making body for a project on that land. Is that correct?
Mr. Bailey: If they have something to authorize, such as issuing permits, it would be a decision by them.
Senator Christensen: Draft regulations were circulated during consultation on this bill, and those regulations were criticized as being inconsistent and contradictory and that triggers were set at too low a level in many cases. Will all these concerns be addressed when the final regulations are formulated? It is the regulations that are really scaring many people.
Mr. Nault: When you say that the triggers are too low, have you an example of that so we would know precisely what people mean by that?
Senator Christensen: I do not have an example. However, when reading some of the transcripts and background papers, I noted the criticism that the triggers were too low in different projects. They wanted higher in order to do more without being assessed.
Mr. Bailey: There are two points here that might be helpful.
First, in terms of the regulations and their development, we did have draft contents of what we hoped to be in those regulations out in 1998. We got some feedback then, and some improvements were made.
They went out again in 2001, and we received more suggestions about how we might improve them. It is an ongoing process to try to get those completed. There have been improvements because we share the objective of not having the regulations be ambiguous. We all want them to be clear about what is caught and what is not.
The concerns regarding the thresholds under which activities come in has been raised by the British Columbia and Yukon Chamber of Mines with relation to what are called class 2 mining-land-use regulation permits. Some of the thresholds of activities that need those permits are lower than for a territorial land use permit. They feel that there is some inequity in that they would have to have things assessed whereas someone with a territorial land use permit would not.
They have had some responses and discussion on those points, some of which was with me. Some met with the minister about one year ago. Our understanding, because I have not heard back from them following some correspondence I sent, was that they seem to understand the response and why it was being cast that way. It is only recently that we are hearing that there may be some lingering concerns with those issues.
Senator Christensen: The cost of assessments and the provision of funding for interveners has become an important part of the assessment process, but the proposed legislation is silent on the topic, except where the government asks for a policy type of assessment.
Can you comment on the cost to the proponent? Through the whole bill, there is a lot of silence on what happens to the proponent, who is, after all, the person most affected by this whole thing.
Mr. Bailey: As far as the cost of conducting the assessment, that is a charge on the government. As the minister pointed out earlier, there will be annual budgets submitted by the board on its own behalf and that of the various offices that the minister will consider and approve.
The costs of the assessments will be a charge on government. There will not be a fee, if that is the concern.
Senator Christensen: Will the proponent not be required to provide a fair amount of background information and study on the particular project in his application?
Mr. Bailey: There certainly would be. That is the case now. When is proponent proposes to do something that will be subject to assessment or regulatory consideration, they are asked to provide a fair amount of information, so that a regulator can decide whether or not to issue a permit. A proponent will be required to provide that sort of information, so that assessors can get an idea on whether or not there will be impacts.
Senator Christensen: That would be part of the rules and procedures that the board would draw up in the 18 months before it becomes active, is that correct?
Mr. Bailey: Yes. They will set out the information requirements and what constitutes a complete proposal for a project to be assessed.
Senator Christensen: That process, as I understand it, is public, so there is a lot of input into how the rules and regulations and bylaws of that board are made. Is that correct? Industry and everyone else still have a good kick at the can before those are finalized.
Mr. Bailey: There is a requirement when they make the rules that they must publish them in the Gazette and publish notice of them in a widely distributed periodical, like the Yukon News or the Whitehorse Star. People would then be aware of them at least 60 days before they are finalized and would be able to have some input. That is the requirement in the bill.
Having been involved in developing rules for the water board, a lot of consultation takes place before you come up with something to finalize. As the minister said in his opening remarks, I think that we can expect that sort of approach by a board that would be nominated or appointed under this process as well.
Senator Christensen: It is important that this be emphasized, so that people realize that this is not the end. There are a lot of areas in which they do still have a lot of input and can effect change.
Those are all my questions.
Mr. Minister, I will have to apologize. My staff has informed me that the questions were answered and did come to my office. I have them and I shall, in fact, file them with the board.
Mr. Nault: I feel much better. I usually am fairly prompt.
The Chairman: Thank you gentlemen, for giving us your time so generously.
I hope you will agree that, if we have questions for you later, as we always do after you leave, you will respond to them by mail. We may invite you back to talk to us again, as we see how it is being implemented.
In the meantime, thank you very much for being with us this morning.
The committee adjourned.