Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No. 8 - Evidence - May 10, 2016
OTTAWA, Tuesday, May 10, 2016
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:40 p.m., to continue its study on the effects of transitioning to a low carbon economy.
Senator Paul J. Massicotte (Chair) in the chair.
[Translation]
Senator Massicotte: My name is Paul Massicotte. I represent the province of Quebec in the Senate. As deputy chair of the committee, I welcome you all to the Standing Senate Committee on Energy, the Environment and Natural Resources. I am sitting in for the Chair of the committee, Senator Neufeld, who send his regrets that he could not be here this week.
I would also like to welcome the members of the public here in the room as well as those watching on television. I would like to remind you that these that committee meetings are open to the public and that they can also be seen via webcast at www.sen.parl.gc.ca. You will also find information about the schedule of the meeting and about the witnesses on the website under Senate committees. I would now ask the senators around the table to introduce themselves.
[English]
Senator MacDonald: Michael MacDonald, Nova Scotia.
[Translation]
Senator Ringuette: Good evening, my name is Senator Pierrette Ringuette, from New Brunswick.
Senator Seidman: Good evening, my name is Senator Judith Seidman, from Montreal, Quebec.
Senator Mockler: Good evening, my name is Senator Percy Mockler, from New Brunswick.
[English]
Senator Johnson: Janis Johnson, Manitoba.
[Translation]
Senator Massicotte: I would also like to introduce our staff, beginning with the clerk, Marcy Zlotnick, and our two Library of Parliament analysts, Sam Banks and Marc LeBlanc.
Today marks the eighth meeting in our study on the effects of transitioning to a low carbon economy. This transition is required to meet the Government of Canada's announced targets for greenhouse gas emission reductions. I am pleased to welcome our witnesses for today's meeting. With us in the room, we have Mike Cleland, Senior Fellow, University of Ottawa, appearing as an individual. Joining us by videoconference from Alberta is Andrew Leach, Associate Professor, Alberta School of Business, University of Alberta, also appearing as an individual. We also welcome by videoconference from the HEC in Montreal, Pierre-Olivier Pineau, Professor, Chair in Energy Sector Management.
I see that the witnesses today have appeared before our committee previously. We are pleased to welcome you once more. I invite you to make your opening statements. Afterwards, we will move to a period of questions. I would like to introduce a motion, given that that Mr. Cleland's speech is in English only. The document has been sent to translation. I ask for your permission to circulate the English version.
Senator Mockler: I propose that we listen to the speech in English as we wait for the French translation of the document that we will be receiving shortly.
Senator Massicotte: Is everyone agreed? Yes. Mr. Cleland, the floor is yours.
[English]
Mike Cleland, Senior Fellow, University of Ottawa, as an individual: Thank you very much, Mr. Chair, and thank you for that. The important thing I will refer to is the charts with my presentation.
Thank you for the opportunity to speak with you on this important matter.
The comments I make today are on my own. I'm here as an individual, but I do have two affiliations that lie behind my comments. One is Senior Fellow with the University of Ottawa, but I am also chair of the board of directors of the Canadian Energy Research Institute, or CERI. CERI staff assisted me in assembling my remarks.
I want to offer four perspectives. First, focusing initially on electricity makes a great deal of sense for reasons I will expand on in a minute.
Second, it's vital to keep electricity in context, both with respect to the size of the challenge to meet a 30 per cent or more reduction economy-wide by 2030 and with respect to the role that electricity plays in the energy mix.
Third, creating zero carbon electricity will not be cheap, easy or quick, and 2030 is closer than we think.
Finally, I want to make some comments on the challenges of what have come to be called "deep electrification,'' which would involve a huge increase or expansion of the power system.
To the first point, we all know that Canada has a very low greenhouse-gas power system. What is important for the future is the range of options for reducing further, of which there are many, albeit different in different regions. These make electricity emissions more susceptible to reduction than other sectors, underscoring why electricity is a good place to start.
The most important point for the long run concerns the notion that the elimination of many sources of distributed combustion in vehicles, buildings and industry by conversion to electricity may, and I emphasize "may,'' be the most cost-effective, long-term path to a very low-carbon economy. Of course, a low-emissions power sector would then become the foundation.
So much for the good news.
The bad news is that the challenge remains very large. Chart 1 shows Canada's actual emissions trajectory over the past three decades projected out to 2030 set against our major commitments in Kyoto, Copenhagen and notionally in Paris. A certain pattern begins to emerge.
Start with the baseline. What far too many people took into account in the 1990s is that GHG emissions are not like a conventional pollutant but are deeply embedded in the economy and society, pervasive, tied to virtually every activity we undertake and driven by capital stock that is often very long lived, including buildings and even the design of our communities. Our lack of success in meeting Kyoto and Copenhagen reflects this lapse of awareness and common sense.
The underlying trajectory is slowing from an average of almost 2 per cent annually in the 1990s to something closer to 1 per cent over much of the past decade, and that helps. We saw a big downtick after 2008, but that was a one-time event driven by a deep recession and the conversion of the Ontario coal fleet.
Against that, in successive commitments Canada has proposed to abruptly reverse that trajectory from 1 to 2 per cent growth to declines of 4.1 and 1.2 per cent annually in Kyoto and Copenhagen respectively, and if we adopt 30 per cent for Paris, the corresponding number is 3.1 per cent.
My point here is as simple as it is unwelcome. The probability that we will meet that 2030 target under anything short of a major economic downturn or a crash program of infrastructure replacement is almost zero. The question is whether that matters. Perhaps our real objective should be to steadily push that baseline trajectory toward decline and eventually accelerate a decline that's sustainable over the long term.
It's also important to keep in mind that the role electricity plays in our basket of end-use energy sources is actually fairly small. Chart 2 shows that electricity makes up just over 20 per cent of our national energy package. On emissions, it is less, around 10 per cent. In other words, a low GHG power sector is of critical importance, but it is a long way from there to a low GHG economy.
My third point is that even getting to low-carbon electricity will be hard work. This, of course, is the core of your immediate work program, and you will hear from many witnesses far more expert than I as to the details, but it may be helpful to think of the key questions that need to be asked.
The critical one is: How far should we go and how fast? As I implied a minute ago, 2030 is just a date. The real issue is a sustainable trajectory over the long run.
It is possible to move quickly, as Ontario showed with its power sector. Whether that was wise is a matter for debate. In any event, what may be of interest is what it actually cost to do that, what is the implicit carbon price flowing from that policy, what it will cost Ontario consumers into the future and whether the extraordinary levels of subsidy embedded in the Ontario programs were good public policy. It might be interesting to compare different cost profiles when a generation plant is retired when fully depreciated versus accelerated retirement and what global GHG gain one approach achieves versus the other.
It is important to reflect on how long it takes to get things done and the many perils that lie in front of any big project. You might want to look at the progress with a few power projects and assess what was or will be the ultimate time elapsed from planning to delivered power, all that with the short 14 years from now to 2030 firmly in mind.
It's important to reflect on the fact that energy systems, and especially power systems, are complex and subject to any number of unplanned consequences when changes are made. This is especially true in cases of real-time balancing of systems based on intermittent renewables. It's probably even truer in the case of distributed systems based on multiple local resources. There is good potential for use of local resources to create systems that are more resilient and efficient but also vastly more complicated and subject to any number of unpleasant surprises that might arise from over-hasty action. Make haste slowly, one might argue.
Most of the technologies needed for a low GHG power system exist, most are commercial and costs have come down a great deal from when the climate debate began in the 1990s. The big exception is utility scale storage, where it will be interesting to consider how fast the technology might evolve and how feasible big storage projects might be. Like it or not, system balancing may continue to rest for many years on a fleet of natural gas turbines.
Every power generation technology brings its own environmental consequences. Renewables are inherently land intensive, and they can have big effects on habitat and other resources. At the scale of change needed not only to replace existing plant but to grow the system to meet future needs, especially in the case where the other 80 per cent of the energy needs are electrified, the environmental consequences are far from trivial.
It is also important to reflect on the consequences for transmission systems. Systems based on resources far from load centres have certain vulnerabilities, including vulnerability to a changing climate. Reliability and resilience, of course, are the sine qua non of energy systems, and we should be thinking carefully about what new configurations could mean.
Then there is the matter of public support. Every project, especially big ones with large footprints and more especially ones requiring new transmission, will require the most careful process of public engagement. My colleagues and I at the University of Ottawa have been involved in research examining how best to secure public confidence in approval processes. No one really knows the answer, and there isn't any right one except case by case, but we can say with some confidence that approval processes will inevitably be more costly, risky and, keeping 2030 in mind, much longer.
My fourth point concerns the further electrification of the economy. Recall that even completely eliminating emissions from the power sector would move us only a fraction of the way to the 2030 target, about one third of the way, in rough terms, leaving us well short in 2030 and with an even bigger challenge to 2050 and beyond.
So what is the potential for further electrification? One example I can cite is something my colleagues at CERI have done some work on looking at how various hydropower options could displace GHG emissions from the oil sands, as illustrated in Map 1 and Chart 3.
A few things are worth noting. First, there are a wide variety of options in Western Canada, and, second, a wide range of costs. Compared to a base case of power source through on-site co-generation, the various options come at incremental costs from $20 to $100 a megawatt hour. As shown on Chart 4, the GHG emission abatement costs of all options on a carbon-equivalent basis are much higher than any carbon tax currently in existence, although if the comparison is to a base case of displaced coal generation, all of them look much more attractive.
One area that seems to have attracted a great deal of attention is the transportation sector, but as we go down this particular road, we should be mindful of certain realities. First, the big growth area for transportation emissions is long distance and heavy-duty freight, which in most cases is not amenable to electrification. Second, reports of the death of the internal combustion engine are much exaggerated or at least premature. It is quite likely that efficiency gains in both engines and the vehicles they power, including hybrid technologies, will lead the way on emission reductions. Alternate fuels, including natural gas and possibly biofuels, will also make contributions. In any event, on electric vehicles, Canada will be a technology follower, as the big markets and the big vehicle-making countries shape the future.
Finally, I want to leave you with a caution on the use of electricity for heat, either in buildings or industrial sectors. In a recent report from the Council of Canadian Academies, to which I contributed as an expert panel member, we concluded that, over the long run, as buildings achieve extremely high efficiency levels, electricity for space heat will become a viable option. Those sorts of buildings are still rare and will continue to be rare for some time to come. Electric heat in conventional buildings would be achieved only at a carbon-price equivalent that would be economically unwise, to say the least.
In conclusion, let me add one critical point, again consistent with the report of the Council of Canadian Academies. Even small steps towards the 2030 target will be hard to make without stringent compulsory policy, and that means either pricing, as with carbon tax, or some form of regulation, with or without cap-and-trade.
The B.C. — and soon Alberta — carbon taxes are good steps in the right direction to place those jurisdictions near the front of the world pack in terms of weighted effort, but as you delve into the problem, it will become apparent that $30 a tonne is well short of the weighted effort that might get us to 30 per cent below 2005 by 2030.
A carbon price would also need to be accompanied by many more regulatory actions than we have so far been willing to ask Canadians to stomach and much more spending than taxpayers may be willingly to support. Also, don't forget how much of the time from now to 2030 could be absorbed by just putting regulations and spending programs in place, far less implementing them. Finally, a hurried patchwork of uncoordinated federal and provincial actions would be much less efficient than a well-coordinated effort, and coordination takes time.
The weight of action needed to hit the notional 2030 target would put us well in front of most other countries in the world. It is not obvious that our weight of action can or should be much greater than other countries when the effect on world emissions would be, at best, negligible, especially when the chance of meeting the 2030 target is remote. The critical question to my mind in terms of how Canada stacks up in the world is not where we are on the 2030 target but whether our weight of effort is comparable to the leaders, whether it is credible in the context of our resource-based and still hydro-carbon-dependent economy and whether it is consistent with moving to a sustainable, long-term emissions trajectory.
Canada's climate policy since 1990 has been marked by great over-reach in terms of targets and almost equal under- reach in terms of action. If your study can get us focused on action that is physically, economically and politically practical instead of yet another out-of-reach target, then you will have made a great contribution.
Andrew Leach, Associate Professor, Alberta School of Business, University of Alberta, as an individual: Thank you for inviting me today. It is a pleasure to speak to you.
I would like to speak to you about each of the four areas of the mandate of your study. I think I'm reasonably well- positioned now to comment on these aspects, in particular given my recent role as chair of the Alberta government's climate leadership panel, although please interpret my remarks as being those only of an individual and not reflective of the work of that panel or of the Government of Alberta's position on these topics.
With respect to the first element of your mandate, which is the impact of transitioning to a low-carbon economy, I would like to flag what I think is the most important question for Canadian households and businesses, which is whether we're preparing for a transition that is in line with the transition of other nations. Mr. Cleland already highlighted this, but policies that push Canada toward a lower carbon footprint are likely to be significantly more costly to our economy — and, in parallel, less effective at mitigating climate change — if they are not matched by similar policies in other jurisdictions. These policies would simply serve to shift emissions to other jurisdictions, not reduce them.
While you think about the cost of what we call "emissions leakage impacts'' as being relatively low, on average, for the Canadian economy, it's important to note that there are very distinct regional and local distributions of these impacts that are obscured by using averages. Recent work of the Canada's Ecofiscal Commission showed, in particular, that there were disproportionate impacts in Alberta and Saskatchewan from stringent policies as a result of their industries being more exposed to trade and more of that trade being in emissions-intensive industry outputs than other Canadian provinces.
I would like to highlight for you and for Canadian that, yes, that is true if we're only looking at provincial averages, but within each province there will also be regional impacts and sub-provincial-level impacts that mirror those distributional impacts at the national level. I'll draw on Sarnia as one example where the local economy is dependent on industries that would, by any standard, be considered emissions-intensive in trade-exposed petroleum refining and petro-chem. While Ontario may itself show up as having limited scope for impact due to trade exposure, some of its regions will certainly feel those effects.
The second piece I'd like to speak to on the transition of the global economy is also something that Mr. Cleland spoke to earlier — how we judge credible policies. For me, the standard by which we should look at this question, whether for Alberta or the country, is whether we're looking at imposing policies here that, if imposed in other jurisdictions across the world, would lead to the accomplishment of global goals, whether that is a goal like the 2- degrees Celsius goal or a more aggressive like 1.5 degrees Celsius.
There are a couple of pieces of that I think are worth unpacking, so let me try to do that. The first thing we want to look at when comparing policies is to be careful that we're looking at incremental measures imposed here and elsewhere for the purposes of addressing climate change. We don't want to look specifically at policies that have already been in place, where we've changed the labels or where we're replacing existing policies with new policies under the guise of acting on climate change. We actually want to look economy-wide at the incremental actions we have taken to address this policy problem.
The second piece of that statement is the question of whether we base our analysis on the stringency of the policies or the achieved or potentially achievable emissions reductions associated with the imposition of those policies. While the effect of policies imposed globally is easy to measure, the question of which targets every individual country should achieve is really a much more difficult question to land on an exact answer because it involves significantly more than economics, emissions and energy modelling. It gets into questions of morals, ethics and global distribution, which are more challenging, although we can't completely avoid them.
The example that I've drawn your attention to is work like the International Energy Agency's 450 parts per million scenario, which asks the question: What policies would need to be imposed globally to achieve that goal? With the policies we recommended for implementation in Alberta, our focal point was always to say, can we look to studies like that and come up with a rationale that says: If the world implemented these policies, would we get on track to meeting global goals? While the carbon price imposed for Alberta is not quite as high as would be necessary to accomplish those goals, other measures like the significant reduction in methane emissions as well as the phase-out of coal-fired power would contribute significantly to meeting global goals if those measures were implemented globally.
The next part of your mandate asks the question about the most viable way to get there. There's an easy out for an economist, which is to say that you need to price carbon. Unfortunately, we've used that a lot as a little bit of a panacea for two reasons. One, we've used it as a proxy for stringent policy. When someone says you should price carbon, they often mean to put a stringent price or a higher price on carbon than we already have, et cetera. It's important to remember that just pricing carbon doesn't really imply stringency at all. The other important thing to remember is that carbon pricing is not a panacea from even the standard economist's point of view because there are many cases where carbon pricing alone either will not transmit a price signal to consumers or it will interact negatively with other policies already existing in the economy.
Mr. Cleland has already talked extensively about electricity, so I won't talk too much about that, but I do want to talk a little about oil and gas, because there you have a two-part problem. One is how to reduce emissions from our oil and gas sector domestically, but the more important one is how to prepare our oil and gas sector to compete for market share in a carbon-constrained world. That speaks to some of the debate that we have heard about reserves being left in the ground, et cetera/ It is essentially an unavoidable consequence of stringent global greenhouse gas policy that some physical resources will not be produced. Probably many of them wouldn't be produced simply due to market forces regardless.
In Canada, we should be concerned about not just what the emissions from our production are but whether we are positioned in terms of low-cost resources and low emissions resources to compete for global market share. That means designing policies that encourage development of the lowest emissions resources, not just all resources all the time.
I want to skip a little bit ahead, because I'm conscious of time. The last part of your mandate talks about using case studies from other jurisdictions. I want to speak a little bit to our experience with that in Alberta to give you a word of caution. I'll use an example for that since it is on the topic of case studies.
During our deliberations, the U.K.'s climate committee released a report that showed, in their words, unequivocally that the use of renewable energy complementarily with natural gas power presented a lower cost source of electricity for the U.K. That report, although informative from a U.K. perspective, doesn't add as much to discussion in Canada for a very simple reason: Their analysis was done using $9 per gigajoule natural gas prices. Natural gas prices today are approximately 75 cents in Alberta. When you take analysis done for the circumstances of one jurisdiction, you cannot necessarily apply it to others. The gas price is but one example. You may also have differences in market structure or in the availability of alternatives, or even simply exchange rate effects that make one study less applicable in another jurisdiction than it would otherwise be.
Your mandate asks you to consider areas of concern. I think I'd echo Mr. Cleland's final comment. Since I started working on this topic, and I expect we'll all agree, Canadian prime ministers from Chrétien to Martin to Harper and now Trudeau have been essentially in strong agreement on the setting of very ambitious targets. Where each of them has fallen aside so far has been in the setting of policies that match those targets or even the setting of expectations for Canadians on the stringency of policies required to meet those targets.
Yes, we have carbon pricing in place in many provinces and in Alberta; however the modelling is very clear: The $15 to $30 per tonne carbon prices and the other policies we have in place will not get us to our 2030 targets. They won't get us close. We need to not necessarily just start talking not only about more stringent policies but also about no longer talking as much about targets. As Mr. Cleland echoed, let's start talking about what our policies are and how they stack up to other jurisdictions and get policies in place in Canada that meet the credibility test: If they were applied globally, would they allow the world to meet global goals?
Thank you very much for your work on this important topic and for the opportunity to speak to you today.
Pierre-Olivier Pineau, Professor, Chair in Energy Sector Management, HEC Montréal: Thank you for inviting me. My presentation will basically cover three major points.
First, I will argue that transitioning to a low-carbon economy can make Canada richer, especially in the electricity sector. Second, current habits and social inertia are the main obstacles, not technology or cost. Third, I will conclude by saying that the same argument I'm making for electricity can also be used in transportation, building sectors and agriculture.
In the electricity sector in Canada, we have a big divide. There are many ways to divide provinces across Canada, and one is their access to hydro-electricity. As you know, three provinces, Quebec, Manitoba and B.C., have lots of hydro, and they have low prices and higher consumption. Indeed, because it's hydro, they have extremely low greenhouse gas emissions in these province. At the other end of the spectrum, four provinces, Alberta, Saskatchewan, New Brunswick and Nova Scotia, have relatively little hydro, much higher prices, usually lower electricity consumption and significant greenhouse gases from these sectors.
For example, in Alberta and Saskatchewan, 20 per cent of their emissions come from the electricity sector. In Quebec, B.C. and Manitoba, that percentage was close to zero. In New Brunswick and Nova Scotia, more than 30 per cent of their total greenhouse gas emissions come from the electricity sector. Ontario is distinct because they have hydro, but they have a very costly nuclear system that basically drives consumption at a low level. Because it's nuclear and hydro, the emission level is very low.
This divide in electricity production across the country is extremely inefficient because the system has been built so that hydro provinces mostly serve themselves and do not trade their hydroelectricity with other provinces. They sell to themselves at a discounted price, which is based on production cost. Why is this inefficient? Well, you all remember the National Energy Program that was basically selling oil in Canada at a lower price than the international market price. Of course, everyone was against that inefficient policy because you decrease revenues for producers and encourage consumption in the location where you have access to this low-cost energy. This is exactly what's happening with hydroelectricity across Canada.
These gifted provinces with huge amounts of hydro power over-consume the hydro power. This creates overreliance on thermal generation in the non-hydro provinces. The systems benefit of hydro power that can basically be used for balancing intermittent generation with a hydro reservoir cannot be shared equally across Canada because wind balancing in Quebec is done for Quebec and not for Ontario. Ontario cannot benefit from the balancing that could be made in Quebec for wind.
It's the same thing with Alberta and British Columbia. The hydro reservoirs in B.C. cannot be used for wind balancing in Alberta. All these benefits of hydro systems are not shared, and that's beyond the fact that energy in these hydro provinces isn't shared.
Basically, reforming the electricity sector would be not only beneficial from an environmental perspective, but also for Quebec, Manitoba and B.C. producers, who would bring in greater revenues and decrease the cost of electricity in the importing provinces.
Last week Don Wharton from TransAlta Corporation appeared before your committee. He basically said that if you connect Manitoba Hydro to Alberta and add a carbon price, you would depress the price in Alberta. Producers in non-hydro provinces know very well that if you interconnect the provinces, it's a threat for their own market because it will have a negative impact on prices. That means prices will go down in these provinces because of the imports. You could have a huge impact on price by increasing these imports.
Of course, the impact would be increasing the price in the exporting provinces. That's part of the explanation for why we don't move towards such a system. It's because consumers in Quebec, B.C. and Manitoba don't want to see these higher prices. There's a very easy political explanation for why we don't see such system, but, from an economic perspective, the higher prices faced by consumers in hydro provinces would be more than offset by the increased profits that the producer would make. That's Hydro-Québec, Manitoba Hydro and BC Hydro. There would be a net economic gain by improving trade across provinces, and that would lower greenhouse gas emissions. I've written papers about that. I can forward to you the academic papers in peer-reviewed journals illustrating these gains. There are real economic gains, and that would move all Canada toward a lower carbon electricity sector.
So why don't we change? Why don't we move toward such a system? It's not because of technology or cost because, in this case, costs are negative. Canada would be richer by moving towards a lower greenhouse gas emission sector. While there's huge political resistance, of course, as I mentioned already, by consumers in hydro provinces, producers in non-hydro provinces also resist such change. So you can think of TransAlta Corporation, in Alberta, that wouldn't be pleased to see cheaper imports coming in. In Ontario, you have the nuclear lobby that's also very strong and resists having more imports from Quebec. Although, if you look at the numbers for nuclear refurbishment in Ontario, they aren't low, and Hydro-Québec would be extremely pleased to be able to sell the same energy, with the same reliability, at a lower price than what Ontarians will pay for nuclear refurbishment.
Of course, politicians, in the end, see that the cost of the fight for such reform isn't worth the price because they have short-term mandates, and, in to these fights against their own consumers and against producers in other provinces, when they make a calculation, they just say, "Well, we won't do these kinds of changes.''
I'm already in my second part, saying that the main obstacle is habits and social inertia. Even when we change and try to improve the existing system — you can think of smart meters. When you implement these smart meters, they are very seldom used for managing the load. They are used for meter reading, remote meter readings, and then also to sometimes convey a price signal. There is very little load management.
If you look at electricity usage, there's a lot that can be done in electricity usage to have more flexible loads and intermittent loads. If we think of intermittent loads that could be shut down without any impact on the consumers, you can think of water heaters and even refrigerators or freezers. They store heat or cold, and you can shut them down for maybe an hour or two without a big impact on the user, and that would be very good for the system because, if you have an intermittent production and you can, at the same time, shut down some load with the smart meters, then you are better able to balance your load with your production.
This isn't done for many reasons. Distributors don't always have the incentives to manage load in a very efficient way. Why? Because distributors are paid on what they are investing in the system. From a distributor perspective, they have an incentive to invest in the system, in a peak load that is quite high, so that they receive a regulated return on their investment. You see a blockage here in terms of distributors not implementing the load management that is technologically available just because of regulatory issues and lack of a live incentive.
These habits are very hard to change because consumers are happy to stay with their current habits. They are not really willing to have more technology, but all that would happen, basically, if these changes were made is to make them more cost effective. You would be able to do this load management in a much more efficient way, and you could follow an intermittent production with wind, for example, in a much easier way. In addition to that, if you link it with a hydro province, then, basically you can benefit from the balancing of hydro power reservoirs, and this can be done in a much more efficient way.
Let me just conclude that there are similar arguments that could be made in the transportation sector, in the building sector and in agriculture.
If you look at the transportation sector, there's been an increase in emissions, over the last 25 years, of 32 per cent in this sector. Where do Canadians spend their money when they buy a car? When you look at the numbers, Canadians buy record numbers of cars. They spend record amounts of money not on cars, actually, but on light trucks. So, basically, at this point in time in history, we have Canadians spending more and more money on light trucks, meaning that they are willing to pay more to be able to consume more gas at the gas station because they like their truck.
I have nothing against trucks, and I know they're comfortable, but in terms of public policy and household debt, they're not really the wisest path. Basically, having regulation or extra fees on light trucks would help Canadians control their own debt. That would basically mean that they would spend less on cars, and that would reduce emissions because they would buy smaller cars that would be simply emitting less greenhouse gas.
In freight transportation, which Mr. Cleland said was a big increase that couldn't be electrified, there's something that Canadians haven't realized. There's one technology that can be 10 times more efficient than heavy trucks to transport the same tonne of freight over one kilometre. It's called rail. Rail transportation is basically using one tenth of the energy for moving one tonne of freight over one kilometre, and there hasn't been any major investment in rail corridors across Canada. Most of the growth in terms of heavy freight transportation has been in heavy trucks, and that is not the most efficient way of transporting material across Canada or across North America.
I if the government was implementing policies to have more rail and implementing policies to have these rail corridors developed, we could shift very quickly, within five to ten years, maybe 50 per cent of heavy long distance freight to rail and have one-tenth of the energy cost. In terms of actual financial cost, rail is not more expensive than trucks. Yes, there would be some adaptation in terms of logistics, but you would basically see gains in efficiency over the whole system.
When we talk about buildings and 20 per cent increase in greenhouse gas emissions over the past 20 years, if you talk to companies that are managing energy within buildings, they will all tell you that you can make significant gains by just having a proactive energy management system within your building, which most corporations don't have. By having stricter regulation and more energy management within buildings, you can reduce your energy consumption in these buildings by 15 or 20 per cent, and that would be in the short run. Of course, in the mid- to long-run, you should do deep renovation and have a stricter building code for new buildings.
It is not true that we cannot do anything with the current building stocks. There are many things we can do. There could be incentives, and these are usually efficient ways of reducing energy consumption in buildings. People don't do that because it's not their top priority. Energy being so cheap in Canada and doing this kind of renovation or adaptation being psychologically costly, people usually resist doing the renovation within their building. They'd much rather renovate their kitchen or bathroom, which makes it look much nicer and is easier to sell within their family and for investors, but in terms of energy efficiency, these big investments are not economically sensible. There could be many gains made in the building sectors.
My last example would be the agricultural sector, where emissions have grown by 28 per cent in the last 25 years. The agricultural sector is a sector that you all know is heavily subsidized. The OECD, every year or every two years, releases numbers on how much subsidy is provided to the agricultural sector. This is a sector that we subsidize, and it's a sector where we, with different types of subsidies, reduce the price of production. This is basically leading to an over- consumption of food in our society. We subsidize agricultural production, which basically emits a significant share of our emissions. It doesn't emit CO2. It emits more methane and N2O, which are the second and the third-largest greenhouse gases in the world in terms of climate change.
We are living in a time where every physician will say that we need to have a more balanced diet. We suffer from obesity. We keep subsidizing the agricultural sector, which is a strong source, 10 per cent, of greenhouse gas emissions in Canada. Again, we have a sector where we are subsidizing emissions in Canada. Reducing these subsidies would basically reduce greenhouse gases and make Canada stronger because we would stop wasting taxpayers' money on subsidized production.
Of course, I'm well aware of the political challenges that are behind what I'm saying, but the main message I want to convey to your panel is that the main obstacles are not costs. They are not technology. They are inertia and the lack of political courage to basically implement reforms that would make Canada richer and also reduce greenhouse gases. It would not totally bring us to a zero greenhouse gas emission economy, but we would take the first steps, and we could well achieve the 30 per cent reduction that we are aiming at for 2030, and that would be with an economic gain for Canadians.
Thank you very much for your attention.
Deputy Chair: We're going to proceed to questions. We'll start with Senator Seidman.
Senator Seidman: Thank you very much for your presentations.
Mr. Cleland, you said in your presentation that there is the matter of public support and that you and your colleagues at the University of Ottawa have been involved in research examining how best to secure public confidence in approval processes.
With reference to that, I'll ask you about, beyond how best to secure confidence and approval processes, the whole area of educating Canadians in this new project that we're about to undertake, which clearly has an impact and ultimately likely an impact on Canadians' pocketbooks. A recent article in Policy Magazine titled Reducing Carbon: Are Canadians Willing to Pay for their Good Intentions found that while most Canadians are in agreement with the action that's needed to combat climate change and reduce carbon emissions, they're not prepared to pay for it. In fact, climate change was only indicated as a top priority by 6 per cent of Canadians.
Please give us the benefit of your research in trying to understand how we're going to bring Canadians along.
Mr. Cleland: If I may, I'll take a run at that. It's a big topic. You mentioned education and informing Canadians. I would say that's an important part of the puzzle. It has to be something that we spend some time on.
It starts with the availability of information with respect to energy. Frankly, that's an area where Canada could invest and has been a bit of a laggard. In the area of publicly available information on energy, by world standards, Canada doesn't do particularly well. It's probably something we should pay some attention to. But we shouldn't expect too much from that.
The evidence, and again you asked about our research, is pretty compelling that many things stand in the way of people changing their behaviour or, for that matter, changing their attitudes, even when given more information or having access to other sorts of explanations. We all have our various biases that we bring to the table, and those tend to trump even the best-intentioned efforts at education and information.
The short answer is that we need to do more there. It will help to move things along, but I don't think we should expect it to make a dramatic difference under any imaginable scenario.
Senator Seidman: You say, though, that your research looks at how best to secure public confidence in approval processes. Could you enlighten us a bit on that?
Mr. Cleland: In the work we've done, let me just tell you briefly where we stand. We just issued an interim report on that project about three or four weeks ago, which you can access. We are now in the process of doing six case studies. We're doing a deep dive into six different communities, looking at six different projects, and it remains to be seen what comes out of that.
In the interim report, we reflect on four basic essential conditions. First, the process of approval, which includes the work of the proponent, has to start with a thorough understanding of the context, the community in which they're working. In a sense, that sounds obvious, but it hasn't been obvious in many cases in the past. You have to go in and understand the community and understand the particular needs of that community, how it's structured and how familiar it is, for example, with the kinds of development you're talking about.
Second is getting at interests and values. What are the things that people really value? What are the cultural things that are not necessarily negotiable, and being careful to not try to negotiate things that aren't negotiable while at the same time identifying things that may be?
Third is information. As I say, it's a basic and a need.
Fourth is engagement — having people actually involved in the decision process early and throughout the decision process as, if you will, committed stakeholders in the sorts of projects that we're talking about.
Senator Seidman: I don't know if Mr. Leach or Mr. Pineau might have some further comment on this. Mr. Pineau, you talked about the inertia of governments, but we may have inertia in the people as well. If you have anything to add, I would appreciate it as well.
Mr. Pineau: It is true that there is a lot of inertia in people's behaviour, but it's not a question of their willingness to pay. I would make the parallel with quitting smoking. You know, people keep smoking not because there's a cost barrier to stop smoking but because it's hard. There's a behavioural cost to changing your behaviour; and this is what we're facing. The government, in terms of smoking, has informed people, has taxed cigarettes, and has made some regulations. There could be some inertia broken by having a price signal, some regulation to limit, and information to explain why we're doing this.
I think those are the key elements. It's not only a matter of putting a price on carbon; it's also a matter of promoting and regulating what can be done and what cannot be done, keeping in mind that we need to have the freedom of choice. Some things should be discouraged, especially in terms of energy efficiency in appliances or in buildings. You can have some regulations to make some improvements because sometimes price signals will not always work, and then inform the population.
When you buy a house, it's quite difficult to know the exact energy consumption of the house. European countries have made much progress in terms of energy information on buildings. It basically makes it clear to buyers how much energy consumption and cost the house will use.
There's a lot of work to do, but we need to have a positive message. Some items may cost more, but overall, we will get richer as a society and be more efficient. We will have less congestion on our roads and more compact cities. That will increase the efficiency of the whole society.
Senator Johnson: Mr. Leach, you've done some incredible work as the chair of the Alberta climate change leadership panel. Among your recommendations, eliminating all GHG emissions from coal-fired electricity and replacing their capacity with at least two-thirds renewables by 2030 was identified as the most doable. Nevertheless, of course, it will not be easy. What will the mix of renewable component look like and what are the prospects for importing hydro power from B.C.?
Mr. Leach: Those are two really good questions. On the first question about what the mix of renewables will look like, in the near term, most of the evidence suggests that the lowest cost additions will be wind. We recommended to the government that they impose a policy that was technologically neutral. If you impose that type of policy, then wind in the near term will have a significant cost and lead-time advantage over some other technologies.
As you move further into the time frame of 2030, then a few other elements become important: First, the decline of the cost of solar will get you different results depending on your assumptions there, and, second, the conversion of existing coal-fired plants to biomass has some potential, and there are a lot of people working on it. We have not seen it work yet at a cost that would be competitive with natural gas, but on that kind of timeline, there is the opportunity for some improvements, both in feedstock costs and the technology to use that.
In terms of BC Hydro, in the way our market functions in Alberta, it's another potential competitor into the market. I would echo some of the concerns that Mr. Pineau brought up in terms of how it fits in. The answer will depend on which side of the fence you're on. If you're looking at it as a consumer in the Province of Alberta, having more competitors in your market is almost unconditionally better. However, if you are looking at it from the point of view of a producer or of a potential investor in other renewable energy technologies — and this is where it's not just renewables versus coal or gas — but if you're the potential investor in a new wind plant in Alberta, you would want to know the degree to which new imported power will enter the market because it changes your potential revenues as a producer in that market.
Senator Johnson: I have a question for each of you. I also congratulate Mr. Cleland on being the Canadian Energy Person of the Year. Is an award given every year?
Mr. Cleland: The Energy Council of Canada has that, so thank you.
Senator Johnson: Do you believe that expanding interprovincial trade of electricity so that provinces endowed with hydro resources — I come from the Province of Manitoba, so this is of particular interest and concern to us, as we now have a brand-new board of hydro; it completely changed in the last week — can displace fossil-fuel generation in adjacent provinces as a vital component of a pan-Canadian strategy to meet climate change? What are the obstacles to interprovincial electricity trade? How can the federal government encourage interprovincial trade of electricity?
Mr. Cleland: This is obviously Mr. Pineau's area much more than mine, but maybe I will just give a bit of additional perspective that might not entirely agree with him.
The question to my mind, since greenhouse gases are a global issue, is what is the most cost-effective way for Canadian hydroelectric power to displace greenhouse gas emissions in any adjacent market?
As it turns out, we're well connected to markets to the south, whether it's from B.C., Manitoba or Quebec. It may well be that the more cost-effective option could be displacing power generated from fossil fuels in the U.S. That doesn't show up in Canada's numbers, but the planet doesn't care about Canada's numbers. So that's one important perspective.
That said, Canada would be better off if we had more open electricity markets and freer trade. That would contribute to a cleaner electricity system.
Senator Johnson: Freer trade is the interesting piece here.
Mr. Cleland: Freer trade isn't something we're good at in this country.
Mr. Pineau: It's extremely difficult to achieve increased electricity trade across Canada. I agree with Mike Cleland that looking at the U.S. is actually an option that Canadian provinces already do and are increasingly looking at. But if there were a federal strategy, and if there were a clear willingness to help provinces, especially the Maritimes, where you see Nova Scotia and New Brunswick — they have a huge share of their production that is thermal-based, which are very important emissions. In Nova Scotia, 44 per cent of their total emissions are coming from the electricity sector. Instead of promoting a more rational Quebec, New Brunswick, Nova Scotia link, the federal government is promoting a very expensive and not-yet-completed link through Labrador and Newfoundland to Nova Scotia.
There would be a need to document and have more discussions and studies on what would be the benefits to Canadians. Then the federal government could help in funding or providing some support for the most cost-effective transmission links across Canada, or with the States, knowing that, in the long run, that will make us richer because we'll be able to sell more hydroelectricity.
Another point that needs to be emphasized is that we need to reform pricing in the hydro provinces. Quebec consumers pay such a low price for electricity that it is ridiculous. Consumers in Quebec are not inclined to do all the energy-efficiency efforts they should. Hydroelectricity is lost in my basement, heating my basement where no one lives. This is the case for so many houses across Quebec. Because electricity prices are low, people don't manage energy within their houses. There needs to be a price reform in the hydro provinces to raise the price.
That is basically money that will flow through Hydro Quebec to the government, and it can be reinvested in the economy, raising the efficiency of the economy. All of that needs to be better explained to consumers and producers, and the federal government needs to put in place the incentives and study what key links should be constructed to increase trade where it is most cost-efficient.
Senator Johnson: Did you see where Germany had so much renewable energy on Sunday that it had to pay people to use it?
Mr. Pineau: That's what's happening in Ontario. At night in Ontario, you have negative electricity prices, and Hydro Quebec is making money by just importing electricity from Ontario — being paid for importing electricity. That's a consequence of not being able to better balance load with production and not being able to store electricity in reservoirs when it could be.
Senator MacDonald: I look at these emission targets, and I think you can respond to this — Kyoto, Copenhagen and the Paris one. A bunch of politicians get together with a bunch of cameras and make a bunch of pronouncements. A year later, they mean nothing and are not enforceable. This weekend, I spent time online looking at charts of coproduction and co-usage around the world — China — water flows, wind blows. We're trying to make an impact nationally and internationally. The usage of coal alone in the world has gone through the roof.
How can we realistically make an impact internationally when it seems to me that we have to wreck our economy to make even an impact nationally? I just don't understand. It seems like everyone is operating in a silo around the world. I look at what's going on in Europe, and you were just talking about paying people to use excess energy that's being produced.
I look at the percentage of energy produced by wind and solar in different countries. It's infinitesimal. It's hardly on the charts, but we're paying a fortune to do this and paying a fortune in subsidies to do it. As Canadians, are we running down this ramp too quickly? Should we slow down a bit?
Mr. Pineau mentioned rail. I think we're missing the boat on rail. Not only will we make progress if we got traffic off the roads and put it on rail, but it would make the roads safer and the roads would last longer too. I think the rail argument is a good one.
On the other hand, when it comes to renewables, I'm increasingly skeptical that many of the politicians know what they're doing.
Mr. Leach: Let me jump in on that. The coal question is an important one, and it's one we wrestled with a lot in Alberta. Simply put: You're right. One of the biggest issues globally is the ability to phase the global economy off coal.
Canada's role in terms of emissions is small, but for Canada to say to other jurisdictions — China and India — that what we need is for you to get off coal, but us in our wealthier state with better access to alternatives, we're not prepared to do that, but we'd like you to do it to solve this global problem, that is not a tenable position; in the same way we would not ask that in other areas of collective action, such as military intervention or anything like that. We would say we're prepared to do what we can, given our circumstances, and that may be more than other countries can do. We want to lead by example.
On the coal question, you highlighted it well. But you're correct that we have gone forward in a lot of cases and made statements on targets without being forthright about the policies that would be required to meet them, and that's what I was trying to emphasize in my comments. Let's have a conversation about policies. Let's say this is what we're prepared to do as a government and compare it to the actions of other jurisdictions.
Mr. Pineau: None of my remarks were in favour of renewable, and I've never said I wanted more renewable in the energy system. All of my propositions basically said that we should better manage our energy, electricity and transportation systems, and that we could make money out of that, by mostly reducing consumption because we are big energy consumers in Canada.
The first efforts should be to reducing our consumption and having a more rational and optimal approach to energy consumption. It is not to add more wind or solar for our priority. I agree with you that we failed by having the priority on more wind or solar energy in the system.
Mr. Cleland: Three quick points: Renewables are a very small part of the puzzle worldwide, but it is growing very fast and costs are coming down, so unquestionably I would say renewables will take a bigger share of the puzzle in the future. Still, there's a long way to go.
In terms of other countries in the world, for all the brouhaha around Rio, Kyoto, Copenhagen or various other places, including Paris, countries for the most part will act in their own self-interest. One thing to think about is we're seeing countries reducing subsidies for fuel. It's a good thing. They need to do that for fiscal reasons, and that will be positive. Lots of these countries have air quality problems that will drive them, if they're smart, to think about ways of reducing fossil fuel consumption both in transportation and probably coal-fired generations, so I would look to what their self-interest will drive them to do.
In terms of Canada, should we be slowing down? I don't think so. We should be adjusting our expectations so that our targets make more sense, but in terms of action, we could do quite a bit more than we have done to date, and we could do it without harming our economy.
Senator Patterson: I'd like to thank the witnesses. I thought they helped us write our report. They were all right on topic with our mandate, and I found the submissions very useful.
Mr. Pineau really got my attention with his dramatic recommendations about weaning Canadians off trucks, stop subsidizing agriculture, moving freight from trucks to rail and balancing hydro across Canada. They are very exciting ideas.
Mr. Pineau, I think you said you know there are political implications, but surely you have thought of that. How do you think we can promote these seemingly very rational ideas? How we can recommend they be promoted?
Under the Constitution, Canada has somewhat not widely used powers with respect to peace, order and good government. Do you see the federal government taking a lead here? And, of course, there is talk of a national energy strategy. Could you make some comments?
Mr. Pineau: As a university professor, it's easy for me to talk about rational solutions. I'm not in charge of implementing them and I'm not running for any constituency, so it's easier. Still, I think there would be some ways to sell that to citizens and voters across Canada.
Clearly voters sometimes think that if there is an additional cost somewhere, or if there is a price increase, it's at their loss. We have to explain that basically they can adjust in terms of electricity prices and food consumption, and all the additional money that is saved, because if you cut subsidies in the agricultural sector you save money somewhere, that money can flow back to citizens in other ways.
Instead of investing that in farms that are, in other ways, polluting the land, because there is a lot of pollution in farms, by reducing the intensity of agriculture, you help the environment, you save money, and that money can be invested in other programs.
It's a matter of explaining that these policies will make us richer as a collectivity, as country, and that the money will flow back for services that people want to have — education, leisure, more access to nature. If we can explain that through different ways, voters can join the movement and support such policies. Of course, it requires some leadership. The federal government has to take some leadership and talk to provinces. Provinces have to understand they would all benefit from such policies.
I would specifically advocate for more information, sharing the information and saying to voters that they will benefit from such policies that would reduce greenhouse gases and increase our wealth.
Senator Patterson: Maybe our report can do that.
Mr. Cleland, you said it was good that our committee was looking at electricity. You said that the hurried patchwork of uncoordinated provincial and federal actions should be replaced with a well-coordinated effort. We heard from the Canadian Electricity Association that they would like to assemble stakeholders and governments and take the lead in talking about a national strategy for electricity. Would that seem to be a good vehicle for having this dialogue that you're suggesting, or have you thoughts about how we get to a more coordinated, efficient approach?
Mr. Cleland: Senator, I have worked in public policy in Canada for several decades, and I'm not optimistic that we're going to get a lot more coordination no matter what we do. It's tough for a variety of reasons.
There are things we can do that would be more effective; for example, a better-coordinated approach to carbon pricing would be an obvious thing to do. We've seen that that's got a long way to go, but that's certainly one thing I would give consideration to.
Better coordination of our respective power systems might be a good idea. But one place where I might part company with my colleagues from the Canadian Electricity Association is a widespread conversation on just electricity is probably not a very good idea. I go back to my point that electricity is about 21 per cent of our total energy package right now and 10 per cent of our emissions.
If we want to get at greenhouse gas emissions, we need to talk about the whole energy system and think about how electricity fits in that system now and how it might fit in that system going into the future, and where it could be a very bad idea to rush towards electrification of some parts of the economy.
Senator Mockler: Senator Patterson touched a bit on the question of 20 per cent versus 10 per cent, but I don't want to embark on a debate with the honourable three witnesses because it depends who you talk to.
Mr. Cleland, there are a lot of gloomy reports that misrepresent Canada's environmental performance. If you talk to the Conference Board of Canada, they have their picture. If you talk to the Fraser Institute, they have their picture. When I look at how they make their presentation, it's based on air pollution, waste, fresh water management and climate change.
Then the question to be posed is: What about Fred and Martha, the taxpayers of Canada? What programs will the government put in place to help the most vulnerable? We still have challenges, and you said it so well in your comments that our power sector is of critical importance, but it is a long way from there to a low-GHG economy.
Mr. Cleland: Senator, let me focus on your question about helping the most vulnerable because I think you're putting your finger on something that's important in this transition we're talking about. We've talked and Professor Leach I think talked about the potential impact on trade-exposed and carbon-intensive industries, and that's one kind of most vulnerable.
But the other kind is consumers, low-income consumers, who, faced with significant increases in their energy costs, will suffer real harm. That's where something like a carbon tax with appropriate recycling options is potentially a very good idea. You can do things, as B.C. has done, to mitigate the impact on low-income consumers by recycling those tax receipts.
It's sometimes rough justice. There is no perfect solution, but you can find ways of mitigating the impact on the most vulnerable.
Senator Mockler: I know that B.C. is a North American leader in this because they have a program that's revenue neutral. How would that fit in your concept going forward?
Mr. Cleland: Revenue neutral is one of those terms that has many, many meanings, so I'm not sure it gets us very far. The key thing is how you recycle those dollars. There is a good argument for putting some of those dollars into technology development, for example. Is that revenue neutral? I don't know. But there is, I would say, a more compelling argument for, first of all, worrying about vulnerable consumers, and second, worrying about transitional assistance for carbon-intensive and trade-exposed industries. After that, general reductions in income taxes probably makes a lot of sense.
[Translation]
Senator Mockler: Professor Pineau, you said that we should be moving to rail transportation.
[English]
If that's the case, what's your comment on pipelines?
The Deputy Chair: That's a very logical question.
Mr. Pineau: Pipelines are naturally important from a production perspective. The oil has to be transported to markets, and pipelines are the best option in Canada. In the Canadian context, pipelines are just the best option.
The pipeline debate is off track with respect to consumption. Some people oppose pipelines or oppose the oil sands, but they don't realize that it will do nothing to their consumption and to the fact that Canadians all across Canada buy record numbers of light trucks, and these light trucks will be fuelled by Canadian oil or with Saudi Arabian oil if it doesn't come from the West. I have nothing against pipelines, and there are definitely part of the transportation system that we need.
The Deputy Chair: Senator Mockler will be very happy with that answer.
Senator MacDonald: I have just one comment, Professor Pineau. I have a great deal of sympathy for your position on moving stuff from heavy truck to rail. I'm not sure if Canadians will want punitive measures against the purchase of light trucks. That might be a harder one to sell.
I have two quick questions about electricity. I would like for you to expand a bit on those areas in which you think we should be tentative when it comes to using electricity as our power source; and second, could you give us a bit of an explanation. My understanding, just as a layman, is that the farther you transport electricity, the more loss you have. In a perfect world, we'd have 100 per cent hydro with no damage on the front end, but that's not the perfect world. Realistically, what parts of this country can get their power mostly from hydro? We know Quebec can.
The Deputy Chair: Your question is addressed to who?
Senator MacDonald: Mostly to Mr. Cleland, I think.
Mr. Cleland: To the last point, I'm sure Professor Pineau can answer the question better as to where, but we know where the hydro resources are in Canada. As he correctly points out, they are largely in — well, I would add Newfoundland to the other three that he has mentioned. There are hydro resources throughout the country, but in terms of the future expansion of the power system, there are limits and there are real limits in terms of environmental impacts and realer limits yet in terms of public acceptance, and that's something we have to take into account.
In terms of where we might go in terms of electrification, the most obvious place is the urban transportation system where electric vehicles look like they're coming on, but I would be careful about forcing that. We are not going to be the drivers of that. The U.S. and Japan and China and a few other countries will drive that.
Let's put the right carbon prices in place and maybe some other regulations to nudge things in the right direction and see where that gets us. I still think, as I said, there are an awful lot of other transportation options that will probably beat electricity for some time to come.
Where I would not go is into buildings in a big hurry, not at the level of today's energy efficiency; and as to industrial and agricultural use, let the prices drive where they go. It's too variable; it's too diverse. Forcing it is a really bad idea.
Senator MacDonald: As a comment, going through all this stuff the last number of months, it would seem to me when electricity is not perhaps the option — I think of heavy trucks, train, ferries, power to the North. It would seem that although it's not green, the best option would be conversion from diesel and natural gas wherever you can do it.
Mr. Cleland: I'm not sure what the current economics of that are, but yes, that has been looked at, and there has been some progress on that in terms of LNG for long-distance transport. The rail system has definitely looked at that, as have ferry systems. To the best of my knowledge, those are pretty reasonably economic propositions. They don't get you to zero GHGs, but they get you progress.
Senator MacDonald: It's hard to get government incentives for these things.
Mr. Cleland: Government is being asked to give incentives to do an awful lot of things, and we know from all sorts of experience with incentive programs that they are inefficient. Work that I have done in the past on energy efficiency progress, for example, shows that what's called the free ridership — in other words, effectively the wasted money in the program — can be anywhere from 30 to 70 per cent, so you want to be careful. Programs sometimes can be useful but they're not very efficient, and governments are constrained. Where you should put in incentive programs is something that you should think about very carefully.
The Deputy Chair: Thank you very much to all three of you. Thank you, Mr. Leach.
[Translation]
Thank you very much, Mr. Pineau.
[English]
Thank you, Mr. Cleland. I think your advice and discussion was very useful. It was very much to the point of our mandate.
Thank you very much to you all. It was an excellent meeting. The meeting is adjourned.
(The committee adjourned.)