Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No. 12 - Evidence - September 27, 2016
OTTAWA, Tuesday, September 27, 2016
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:04 p.m. to study the effects of transitioning to a low carbon economy.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I represent the province of British Columbia in the Senate, and I'm chair of this committee.
I would like to welcome honourable senators, any members of the public with us in the room, and viewers all across the country who are watching on television. As a reminder to those watching, these committee hearings are open to the public and are also available via webcast on the www.sen.parl.gc.ca website. You may also find more information on the schedule of witnesses on the website, under Senate Committees. I will now ask senators around the table to introduce themselves. I will begin by introducing Senator Paul Massicotte from Quebec.
Senator MacDonald: Michael MacDonald from Nova Scotia.
[Translation]
Senator Ringuette: Pierrette Ringuette from New Brunswick.
[English]
Senator Patterson: Dennis Patterson from Nunavut.
Senator Seidman: Judith Seidman from Montreal, Quebec.
The Chair: I would also like to introduce our staff, beginning with the clerk, Lynn Gordon, and our two Library of Parliament analysts, Sam Banks and Marc LeBlanc.
Today marks the fifteenth meeting of our study of the effects of transitioning to a low-carbon economy, as required to meet the government's announced targets for greenhouse gas emission reductions. Today, we are looking forward to hearing from two witnesses. From the Association of Canadian Port Authorities, we welcome Wendy Zatylny, President; and Debbie Murray, Director, Policy and Regulatory Affairs. Joining them at the table, representing the Conference Board of Canada, is Louis Thériault, Vice President, Public Policy.
Thank you for joining us. Please proceed with your opening statements, after which we will go to a question-and- answer session. Whoever is first, I'm sure you've decided between the two of you.
Wendy Zatylny, President, Association of Canadian Port Authorities: Good afternoon, honourable senators. Thank you very much for the opportunity to speak to you today and to explain how Canada's 18 port authorities can help Canada to transition to a low-carbon economy and how they are in fact well down the road in doing a lot of that themselves.
As you've noted, Mr. Chair, I have Debbie Murray with me. She is our Director of Policy and Regulatory Affairs, but she also heads up our newly reconstituted environment committee, which brings together all of the environment and operations people from each of the ports. We've been doing some work this summer in that area that we'll be able to talk about.
Just to get everybody on the same page, the 18 Canada Port Authorities really operate at the nexus of environment and the economy and, as part of their mandates, take every effort to protect the environment while safely and efficiently facilitating both commerce and cargo movement. Taken together, we currently move about two thirds of Canada's water-borne cargo. This translates to about $400 billion a year in cargo that comes into and out of Canada's port authorities.
Ports are key players today in our efforts to reduce carbon and protect the environment, and we truly can be powerful partners and enablers in the move to a low-carbon economy. Many of our members, as I mentioned, are reducing carbon and other air emissions through a wide range of initiatives, such as the use of electric vehicles and the provision of shore power to docked vessels. Indeed, the Shore Power program, which has been installed in the ports of Vancouver, Prince Rupert, Halifax and Quebec City, allows vessels to plug into shore-based power and turn off their engines, thereby reducing idle-generated emissions in port.
In other areas, on the land side, for example, the Port of Thunder Bay has installed solar panels to power port operations, while other ports have installed energy-efficient LED lighting and high-efficiency lightbulbs and have conducted energy audits to identify efficiencies and areas for further improvement.
Similarly, ports are also investigating the use of alternate technologies, such as electrified rubber tire gantry cranes, RTGs, to further reduce emissions.
In addition to the carbon reduction efforts, ports are also committed to a wide range of environmental protection practices, ranging from efforts to reduce shore noise and underwater noise to the reduction of light emissions and to various shoreline rehabilitation efforts.
Probably most importantly and most notably, CPAs also participate in the voluntary Green Marine program, which is truly a Canadian success story. It was started here in Canada. It has spread out into the United States. It was initiated by the marine community. Through its high standards, it incents and recognizes leading environmental protection practices by global maritime stakeholders, including ports, ship owners and terminal operators. Seventeen of our 18 members are members of Green Marine and are striving to achieve the highest levels of this recognition. There are five key dimensions that ports are measured on, of which GHGs are probably the most relevant to us here today.
Since the program began, the standards and the ability to meet them have increased steadily over the past decade and this past year, 2015, and the certifications were given out in 2016. This year four of our ports scored the highest level of 5 out of 5 for leading practices in the reduction of GHGs, and 65 per cent of our members scored a 3 or more for their performance on reduction of GHGs.
Just to put it in context, a score of 3 indicates that best practices have been identified and are being implemented, while the 4 indicates leadership, and a 5 indicates the development of new technologies, so new research, new information being garnered here.
That's what we've been doing already. Looking forward, when considering measures to reduce carbon emissions, it really is important, we believe, to recognize the high efficiency of the marine transportation mode. The reality is that marine shipping offers a unique opportunity to achieve significant environmental benefits.
Canada's abundant waterways, combined with a highly experienced and safe marine capacity, provide a significant opportunity for sustainable, low-carbon transportation within an appropriate transportation mix. For example, to give you a sense of what we're talking about, in the Great Lakes the Canadian fleet has invested, since 2008, over $2 billion domestically in vessel capital renewal, including new vessels, re-engineering and scrubbers. These investments collectively reduce energy requirements per tonne-kilometre and reduce emissions overall.
Adding to the high efficiency value proposition of marine is the establishment of the emissions control area, or ECA, on Canada's inland and coastal waters, which has also reduced the contribution by the marine mode to emissions of sulphur oxides and nitrogen oxides, although this I have to say has not been without its challenges given technology constraints and fuel availability, to name a few. These efforts collectively characterize a highly efficient model characterized by ongoing innovation and improvements in efficiency.
It's important to note that ports have been affected by climate changes induced by carbon emissions, and certainly all the ports are faced with adapting to the impacts of climate change, such as extreme and unpredictable weather patterns and varying water levels and ice covers. And we saw that a couple of years ago particularly in the Great Lakes, where they were pretty well almost entirely frozen over, which you don't see often.
These environmental changes have had and will have a significant impact on port infrastructure and accelerate the need for and change the type of maintenance required; indeed, in new technologies now, materials and techniques are being developed for port infrastructure ranging from climate-resilient concrete mixes to innovative pier design.
Canada's port authorities currently have $1.9 billion in legacy infrastructure replacement needs and will require funding for research and to build the resilient, advanced infrastructure required to adapt to future climate change while moving the commodities and products of Canada's low-carbon future.
ACPA is engaging in a number of key intertwined policy discussions that will shape Canada's future and its national transportation future. We are cognizant of the intent of the federal government to reach its renewed national determined contribution of 30 per cent reduction of 2005 carbon levels by 2030, and the intent to backstop a federal- provincial-territorial program.
We believe that ports, through leadership and efficient operations, can be instrumental in helping the government reach this target. ACPA is monitoring the efforts by the International Maritime Organization to develop carbon reduction instruments for the marine mode, including the development of a data collection method for vessel emissions and a carbon price on fuel, and will certainly monitor to ensure that offsets and initiatives already under way by industry, including ports, to reduce carbon are appropriately considered and recognized within the domestic context.
The other primary policy discussion under way regards the future of the national transportation system and started with the review of the Canada Transportation Act and continues with the current consultations. ACPA urges the government and this committee to directly connect this discussion with the discussion on a low-carbon economy. This makes sense given that transportation is fundamental to any future economic success for Canada.
Beyond how ports are affected by the need to adapt to the impacts of climate change and the policy discussions under way, ports can mitigate the impacts of carbon and climate change and help build a low-carbon economy that can protect the environment for future generations. We have a few recommendations on how this can be done.
First, I would like to offer a vision of a low-carbon supply chain in which ports act as hubs and ensure maximum fluidity and efficiency in the transportation chain. Efficient ports, green infrastructure, technology and cargo management data systems such as automatic identification systems, AIS, that track vessel movements and dwell times could facilitate low-carbon, safe and sustainable transportation. This would be a data driven low-carbon supply chain, one that is based on an appropriate and supplementary modal mix. This is an important concept. To get there, ports will certainly require funding assistance to maintain current and develop new infrastructure that is resilient and adaptable to climate change and protects the environment. There were previous federal shared-cost programs that were extremely effective in doing this, especially for the smaller ports in key regions, and these need to be reinstated.
Last, funding for research and for green technologies and supports that enhance efficiency, such as continued implementation of Shore Power, electrification, data management systems and solar energy technology, is critical to building a low-carbon port system.
In conclusion, I hope I have offered a vision for how ports can and frankly already do help Canada transition to a low-carbon economy. Support for an efficient, low-carbon national transportation system that can leverage green and adaptable ports as intermodal hubs is a major way of achieving this vision.
With that, thank you again for the opportunity to speak to you today. We're looking forward to the questions.
Louis Thériault, Vice President, Public Policy, Conference Board of Canada: Thank you, Mr. Chairman, and thank you to the committee for having me today present some of the work the Conference Board has done on the likelihood of meeting Canada's greenhouse gas emission reduction targets.
For the benefit of the committee, the Conference Board is the largest not-for-profit evidence-based research organization in Canada. We're non-partisan. The work we do is largely, in my area in particular, to serve broad public policy questions. This is a major challenge for Canada and a major challenge that needs hard facts and hard evidence to make sure we put the proper policies in place to transition in the best possible way.
The work and the information I'm presenting today are based on a report that was released last year. It's available on our website. It's a 100-page report, and I'll go through some of the highlights with you. I've prepared some notes and slides, and for the notes the slides are referred to. I'll speak to the notes. I won't read my notes directly. I'll talk to the slides, which I believe you have.
If we look at where the greenhouse gas emission growth has come from over the last 20, 25 years, largely transportation and energy production are the main sources. Transportation, in particular, about 80 per cent of the greenhouse gas emissions are coming from the road transportation sector. If we are to meet our greenhouse gas reduction targets, road transportation is central to that agenda.
Let's talk about that in a minute. I have three main areas I'll focus on. Those are the three main points that come up often in the conversation. What I find beneficial is that when we start to do forecasts and some of the number crunching around what these factors mean, it helps put some perspective on the potential of some of the solutions out there.
First, there's a connection between economic activity, population growth and transportation demand and greenhouse gas emissions. We'll talk about that briefly. Of course, we talk about technology, natural gas, LPG, ethanol and electric cars. We'll put that into perspective during the presentation today.
Some of the larger points, getting into the more ambitious target in the Paris agreement around that 80 by 50, so 80 per cent reduction by 2050, something around behavioural and probably more fundamental than what technology can offer today.
Slide 3 shows that there are really two major sources of greenhouse gas emissions when you talk about road transportation; one is the passenger car, and the other is freight, movement of goods.
The first one for passenger cars is driven by the number of kilometres that are driven and population growth. Give or take, population growth in Canada grows by 1 per cent per year. The average travel by people who drive is pretty constant every time — slightly declining, but not much. If we were to gain anything on the passenger side, it's from efficiency gains on the technology and the mix of type of cars we use to move around, for leisure, business, et cetera.
On the freight side, in terms of emissions — and you'll see that in a minute — we started that in 2005 at 73 million megatonnes of CO2 emissions for passenger vehicles. For freight, it's about 53 million, so that gives you a sense of the ratios.
On the freight side, you'll see in a minute it's a much tougher challenge. Some of the attention going forward definitely has to be focused on freight, and you'll get a sense of perspective on that in a minute.
Of course, that's driven by GDP and economic activity, and it turns out that moving goods by truck is quite economical compared to various other modes.
Slide 4 gives you a sense of where we started in 2005. I just mentioned that the total CO2 emissions for road transportation are around 128 million tonnes. The black line on the chart is the GDP. That's the whole point around GDP and economic activity overall and the trend in greenhouse gas emissions. Associating that is really hard, and there's a strong historical around that.
Point number two looks at some of the solutions and technologies that are talked about. You've heard of natural gas and liquefied petroleum gas vehicles, and there has been lots of talk about biofuel. There are all kinds of technicalities around the real potential these alternative fuels offer. There's potential. Some progress can be made on those fronts, but as you'll see in a minute, it's not that much. There is some nuance in terms of the technical feasibility at a large scale when you get into those.
On slide 6 I mention electric cars and fuel cell vehicles. They've been around for a while, and a lot of programs are coming from those technologies. I'll show you on the next slide what we can anticipate the electric car, in particular, to offer as potential to meet our 2030 target and beyond. There's a limit on the market penetration rate for electric vehicles. We've had them for a number of years, but in Canada the penetration rate in terms of new cars sold every year that are electric is under 1 per cent. In places with the highest share of new electric vehicles sold — namely, California and Norway — it's 3 per cent. So to make a really big difference, given the natural cycle of penetration of technologies — and it's no different here than in many other sectors — it takes a long while.
Moving to chart 7, you'll see the details in the report if you're interested, but in a nutshell, what this presents is different scenarios of market penetration rates. So if we moved overnight to electric vehicles making up 3 per cent of all new vehicles sold every year in Canada, it shows what that would look like in terms of the total fleet, and also the contribution to greenhouse gas emission reductions. Other scenarios suppose rates of around 5 and 10 per cent.
The point here is that if we moved overnight to 5 per cent, for example, of all vehicles sold in Canada being electric, by 2030 you would get a one million tonne reduction of the 73 I was talking about. In a nutshell, even with an aggressive penetration rate of electric vehicles, we wouldn't necessarily make a big difference in our greenhouse gas emission reduction profile.
You'll see on slide 8 the really good news story around 2030. For passenger cars, I just made the point that the potential for electric cars in 2030, in this context, is relatively short-term; it is not where the real action is. The real benefit comes from standards and regulations around tailpipe emissions. So the EPA, the Environmental Protection Agency in the United States, sets the standards, and Canada typically adopts them quickly. For passenger cars, up to 2026, there are pretty aggressive reductions in energy efficiency standards that will be imposed on manufacturers, assuming that they achieve them. If you also assume that the light pickup truck and SUV standards are reached, then you get the result you have on slide 9, which is that by 2030 we get about a 40 per cent reduction in our greenhouse gas emissions coming from the passenger car side of road transportation.
That's the good news. Last week the Liberals confirmed the 2030 target — a 30 per cent reduction relative to the 2005 level — in that sector of the economy, which is a really large component and source of greenhouse gas emissions. We will meet it by 2030. The challenge comes after to meet the 80 by 50 goal, and I'll talk about that in the closing slide.
That's the good news. Assuming that the regular standards are met, then we're really on the right track to get there. It won't be easy, of course, because it assumes that the standards are met. But it's been feasible on the passenger side. For light trucks, I think the question mark remains whether that's technically feasible, and there's a lot of literature on that, but the standard exists.
Moving for a minute onto slide 9, on the future of freight transportation, that's much tougher. In fact, by 2030, we will get to 47 megatonnes from 53 megatonnes in 2005, or about a 10 per cent reduction. The reason for that is that the technology on the freight side is not as well developed or established. You'll see in the report that when the technology exists, even if there's an ROI measured by a payback period that makes sense, there's all kinds of resistance for adoption of some of the more fuel-efficient technologies that exist in the heavy truck side of the industry.
There are some barriers on that front that could be tackled. On the technology front, some progress could be made, but in the end even if you were really aggressive in making them the technology of choice, it would still be hard. So there's more progress to be made on that front. The electric agenda for heavy trucks is not as advanced, and the fuel efficiency standards for engines in heavy trucks are far from being as aggressive compared to the passenger side of the sector. In fact, the standards for heavy trucks stop in 2018, so there's no future regulatory standards set to be imposed on engines for heavy trucks. To me, in the report it comes out clearly, but that's the challenge.
In terms of the complete picture, to give you the scoop on the passenger and heavy truck sides, if you put it all together, we get to about a 27 per cent reduction by 2030. That's assuming, again, that the manufacturers meet the standards on the passenger side and that there's continuous improvement on the heavy truck side, which, given the recent history on that side of the sector, is quite ambitious.
All that is to say the shorter-term target that the Liberal government confirmed last week is achievable for the road transportation side, almost, at 27 per cent; 30 per cent is the target. So overall, that's doable. There's a series of conditions that need to be met to make that happen.
The challenge is really beyond that. Paris focused on 2050. We all heard of the overall international target of limiting the concentration of CO2 emissions to 450 parts per million for the planet. The Paris agreement aims at an 80 per cent reduction by 2050, and that's 80 per cent of the 1990 level. The Paris agreement is extraordinarily ambitious.
In the scenario in the report you'll see that we push some of the assumptions based on technology, and, of course, electric vehicles become much more important for passenger cars as you move forward, but still you have some mileage, so to speak, to cover to get to the 80 by 50 for passenger vehicles and for trucks. We've made a number of scenarios, and in fact you have to push some of those assumptions really far to get to the max we get given the technology available today. With some of the financial investment returns that would be required to adopt these technologies for the players in sectors, whether it's you and I as passengers or commercial vehicle or truck operators, you get to about 70 per cent. That stretch is really when you get in the long run. This opens the door to what we can do about that, which is really about changing some of the fundamental behaviour dimensions of highway transportation services in Canada.
I'd like to compare that to when the smoking rate was around 50 per cent in the 1950s. Now we're done to about 15 or 18 per cent. To do that, you had regulation, taxation, publicity; you had the fiscal measures that were in place, the scientific community, so all the stakeholders involved in making that policy agenda move forward, connected.
I would argue that for the challenge ahead, for the transportation sector to meet its 80-by-50 targets, that's similar to the environment we're in. It's really a paradigm shift compared to how we see transportation services overall. How do we decide to move? Whether it's goods or individuals, we'll have to change fundamentally. Technology today doesn't allow us to get there. We'll have to have a paradigm shift.
I'd like to offer some promising innovation with automated vehicles, for example. Ride sharing is another one that we've all heard about. There is a promising path to change the way we see our relationship to cars and how we move. We're not there yet, but the path is open.
The ultimate point is that a more ambitious agenda needs much more than what technology can offer today. If you tie it back to a growth agenda for the economy, how we transition to that low-carbon economy will require some of those paradigm shifts.
The Chair: Thank you. Very interesting.
Senator Massicotte: I thank all three of you for being here and making a presentation. It's very relevant and useful.
Mr. Thériault, I want to summarize what you said. The percentage of participation in electric is not very high, 3 to 5 per cent, but because of the regulatory limitations of engines, there is a high probability we will be close to achieving 30 per cent below 2005 within 15 years.
That's very good news because I never thought we would be close to that. Your concern is post-2030. Like you said, a lot of things can change, especially behavioural. We are talking a lot about the driverless cars. We had a witness two or three months ago on that same issue who was pretty convincing. If you look at what the automakers are doing, trying to line up with the Ubers and so on, I think you'll see significant change.
I had lunch with the president of Toyota in the last two weeks, and Toyota is huge. It's as large as the next four companies put together. Who knows what the future will be, but his bet is you'll see hydrogen cells used for medium to large vehicles, and electric will only be used for small vehicles.
The only challenge left is not technology; it's infrastructure. In Tokyo and other countries, they have these gas stations which used to take a lot of time, but now it's three minutes to fill up, like normal gas. Is that significant? Has that been counted on? Is that in your numbers?
Mr. Thériault: To a certain extent it is, yes. For the scenarios building increased penetration rate of electric vehicles, we had to make some assumptions.
The resistance we've seen to date is around the factors you point out. Some of the recharging stations, the time it takes to recharge, there's some range anxiety that exists, given the technology today. Again, that changes quickly. Two weeks ago one of the car manufacturers came out with a doubling, almost, of the range the battery offers.
Innovation on this side is central. When we start making up scenarios like this, the problem is we can't pretend what that innovation will be. We can push the envelope based on the technology that exists today.
For the shorter term for this kind of agenda — 2030 could be considered short term — we've done that, and I think the physical limits around infrastructure requirements, because of the lag, in other words, we're not there yet, we're starting to plan it, we've all heard of the City of Montreal and Mayor Coderre's effort to add plug-in stations, for example. Those will take time.
What we're seeing for that new technology is the same thing we see for many industries, in fact; the adoption rate earlier on is usually quite slow, and it starts picking up steam. Eventually it gets to a critical mass where it starts making a difference.
The scenario illustrates that we're not quite there yet; the momentum is behind. You see the potential with electric vehicles, after 2030 in this scenario we have shown, but the shorter-term agenda will not be driven by that. As you pointed out, the internal combustion engines and the tailpipe emission standards around that will still dominate. That's the bottom line.
It's always a question that comes, and the same question applies to the rest of the Canadian economy. The innovation agenda on how we deliver services for transportation or how we supply energy is really the lynchpin to make it happen.
Senator Massicotte: Ms. Zatylny, you enumerated a lot of things your ports are doing to reduce CO2 and increase the efficiency of energy.
You referred to the Green Marine initiative; you also have the Shore Power Tech. Give me a sense of what that means. You've done all of that, reduced CO2, but what percentage? And what is your goal?
Ms. Zatylny: There is no numerical quantity associated with the goal. The ports have been involved in this for a long time, predominantly as an inherent good and benefit, both in terms of cost savings, efficiencies within the port sector, as well as the benefit to their communities. In a port located within an inner city, the reality is that if you have ships coming in, or cruise ships, there are impacts on the surrounding communities. The ports have worked very hard to minimize those impacts; hence programs like Shore Power to reduce the emissions from the cruise ships. The ports are looking at it from the perspective of an inherent good and a cost-saving measure.
As I said, we have started with our environment committee to catalogue all these efforts. We don't have the total number yet, but I can give you a sense of what the individual ports have done. The Port of Montreal, for example, has replaced their locomotives with new-generation, multi-propulsion or multi-use engine locomotives that have reduced their greenhouse gas emissions by 90 per cent and reduced their fuel consumption by 54 per cent.
Senator Massicotte: If you look at the Port of Montreal as a major port in Canada, if they were at 105 years ago, what are they at today, relative to CO2?
Ms. Zatylny: That's exactly what we're in the process of trying to capture now. I could probably answer that question two months from now, but not right now.
Senator Massicotte: I think we share your opinion that it's all feel-good measures unless you measure it. If it's really important it should be measured, and that's when you really focus the mind on getting real results. Otherwise, it's like a PR exercise, and I'm sure the objective is beyond that. I highly encourage you to measure, which I think you're on the way to doing.
Ms. Zatylny: Yes.
Senator Seidman: I'd like to continue with Ms. Zatylny, because I was going to mention the Port of Montreal and the fact that last year they got funding to install these plug-ins. I wondered what the impact is. You're saying you can't tell us yet. Perhaps I can ask you specific questions about it. When the ships aren't plugged into the electric grid, what power sources do they use? Is it their engines?
Ms. Zatylny: Yes.
Senator Seidman: How much time might they spend plugged into the grid in port?
Ms. Zatylny: My understanding is that they are plugged in probably about 90 or 95 per cent of the time. They arrive, plug in and shut down.
Senator Seidman: That is substantial?
Ms. Zatylny: It is significant, yes.
Senator Seidman: Do you know if alternative fuels or electric or any other kind of automated vehicles are being used in ports?
Ms. Zatylny: Yes. Pretty well all of the major ports have moved to some combination of hybrid vehicles for all their port maintenance, drayage facilities, anything like that. As I said, a significant portion, all but probably the very smallest of the ports, have already done that. In addition, they are looking at working with their terminal operators as well in replacing a lot of fleet vehicles.
Senator Seidman: In your presentation you said that marine shipping offers the unique opportunity to achieve significant environmental benefits. You talked about Canada's abundant waterways, and you said that you now consider the environment an important piece of what you do in the ports.
If I think about my home province of Quebec, the St. Lawrence River supplies drinking water for almost 40 per cent of the Quebec population, and it appears to me that water management should become part of any future environmental strategy. So what initiatives has your organization taken to include water management in your environmental strategy?
Ms. Zatylny: From our point of view, the two concepts in fact go very much hand in hand. It's not an either-or; it's a both-and for ports in the entire marine sector.
Each of the port authorities is very cognizant and takes very close care and is very aware of the impact of their port operations on their surrounding environment, whether it is land-based or whether it's water.
What's interesting about the province of Quebec is that their maritime strategy is extremely well-balanced because it recognizes that duality and recognizes that you can advance on both fronts. Certainly, we'd like to see that kind of initiative exported to the other provinces, particularly Ontario, that share the Great Lakes St. Lawrence Seaway system.
There is, as I said, a significant catalogue of what the ports have done individually. I don't want to take up the committee's time here, and we'd be happy to send that forward. But I certainly can assure you that in each case the waste water treatment, port operations, spill response are all taken into account in port operations and the impact they have on drinking water and water for recreational use as well.
Senator Seidman: That's helpful. I appreciate that.
Mr. Thériault, you presented us with very interesting information and some charts on the impact of alternate fuels and a different approach to transportation. You mentioned Montreal and the electrification program, which is quite a significant commitment. Indeed, it's small cars. So city transport used by the City of Montreal is sort of the first line of attack.
If I could look at Quebec specifically, in 2012, the largest percentage of GHG emissions in Quebec, 44.7 per cent, was produced by the transportation sector, and GHG emissions in this sector grew, from 1990 to 2012, by almost 26 per cent.
So now there is this big push on to look at alternatives to public transport and driving choices and freight transportation, and Quebec is making available various incentives to shift away from diesel and adopt alternatives, such as natural gas and electricity.
Could you give us some idea if there is a perspective as to whether there's an appetite to use natural gas for long haul transport elsewhere in the rest of Canada?
Mr. Thériault: For the rest of Canada, I couldn't say specifically. I think your point around the nuances around what it means by province is really relevant. For Quebec, on the production side of energy, because hydro is the cleanest source possible with respect to greenhouse gas emissions, that's not the issue. When you look at what the activity needs to focus on, it's definitely the transportation sector.
In terms of relative challenge, it's quite different if you look at Alberta versus Quebec; the relative importance of the various sectors would vary quite dramatically.
Then you have the industrial fabric of Quebec versus B.C., Alberta, Ontario, et cetera. So there are a lot of nuances that need to be brought in in terms of what the provincial plan is to meet the targets.
On your specific answer on natural gas and trucks and freight, we look at what exists today, and the fuel switching that exists, even if it's for Quebec or other provinces, I would argue, doesn't make much of a difference.
As to the technology, when it exists, what we found — and it's quite systemic for the freight side of road transportation — is resistance to the adoption of new technologies. Even if they make financial sense, they're not the preferred choice of the industry. It's not the preferred choice of the industry even if the payback is relatively quick.
Apparently, there is all kinds of — sometimes quite trivial, to be honest — resistance to adoption; it just doesn't feel reliable. If it exists, it makes sense on paper, but the industry, for whatever reason, feels, or the players in the industry feel, that it's not reliable.
Whether it's natural gas or whether there are a lot of advances in braking systems, for example, as well, in terms of material for weight, it's really hard to have mass adoption of those alternative technologies, even if they exist. We found that the resistance is particularly high on the freight side, even more so than on the passenger side. We all know and all relate to that for passengers, but for freight it's even more.
Senator Seidman: Some would say it's sort of an obvious one to look at replacing diesel fuel with natural gas in the large truck sector, but you're saying that it's a question of reliability. I'm trying to understand.
Mr. Thériault: Not for natural gas in particular but for the various technologies that we've analyzed that make sense economically, financially today, whether it's natural gas or others. I couldn't list you the ones we've specifically analyzed. But we looked at what the alternatives are, and in general that's the overarching point. Even if it makes financial sense, from a relatively fast-payback kind of financial analysis framework, it's still not adopted.
So there are other things in the financial considerations that drive behaviour in terms of adoption of technologies and the freight side of road transportation. That's my point.
Senator Seidman: That's interesting. In your study, did you come up with possible incentives or things that might encourage adoption of alternate fuels?
Mr. Thériault: Whether it's freight or passenger — and I guess it's back to the last slide I presented — I think incentives have played a huge role in the adoption of hybrid cars, for example, for the cost of conversion of diesel trucks, when it's possible, to natural gas, if that's even technically feasible — I'm not even sure — or just replacing the engine, with everything else that is required to make it work. So incentives in the transportation sector have been central to the progress we've seen over the last many years. If you look at the cars of the 1970s and the trucks of the 1970s and now, there's been a lot of progress on an energy-efficiency basis. The problem is that people use the energy- efficiency gains, and because the price of fuel is relatively low, then they just buy bigger vehicles. Or they rely on a more traditional internal combustion engine technology, gasoline or diesel in trucks.
The preferred technology remains, by default, what you know, I guess, and as to the gains we've made, particularly for passenger, we've shifted from smaller cars to bigger cars, more powerful cars. Many things other than the pure transportation-service element come into play when you make a decision to buy one car or one vehicle versus another. There are nuances around that, depending on whether it's freight or passenger, but I think the notion still applies in terms of preferences that are hard to change.
The government toolkit includes incentives, standards and regulation. Frankly, the auto sector, largely the fun and truck sector, is probably the most regulated industry overall of all sectors, and that has paid off in terms of gains over time, but the gains have been offset to a large extent by other factors, as I just described, when the gasoline or diesel is so cheap it's really hard to fight the economics and the natural preferences of people making decisions about whether they should go with the new technology or just keep the old one. On the truck side, we found that it's relatively conservative in terms of moving to that next best environmental technology. There may be good reasons for it too, in terms of the reliability factor, but I couldn't really judge that.
Senator MacDonald: Thank you both for your presentations.
I have questions for both of you, but I'll just put something on the table here for both of you to consider. I've been on the Energy Committee for six years and have heard and learned a lot of things. We seem to be operating on two assumptions. One is that there's direct correlation between the increase in carbon and the perceived changes in climate. I've been in Ottawa for seven years, Nova Scotia for 61 years, and I haven't seen a lot of change in the climate here or in Nova Scotia, I must admit. Maybe it's going on around the world, and it appears to be. Many learned people believe that the increase in carbon is actually pulled by the increase in climate change and doesn't drive the increase in climate change, so I guess we'll have a few more years and see what comes out of that assessment.
Two, there's another big assumption that we're going to be pretty well committed to a non-carbon economy in 20 or 30 years. I'm a bit of a doubter on that. If you look at the last 20 years and the evolution of this debate, we're still pretty well plugged into a carbon economy, and I think it may be there for a long period of time. I'll get to my two questions.
Ms. Zatylny, I'll go to you first. You mentioned that ports have been affected by climate change induced by carbon emissions — there's that assumption again — and ports must adapt to the impact of carbon-induced climate change, such as extreme and unpredictable weather patterns and varying water levels and ice cover.
I've spent all my life around port towns; I grew up in one and still live in one. Could you add some substance to that? You said it's been affected by the climate changes. Can you point to where in Canada ports have been specifically affected by climate change?
Ms. Zatylny: There are two areas or probably two big envelopes in which to respond. The first is particularly in Central Canada and the Great Lakes St. Lawrence Seaway, where there has been significant variability both in water levels, lake levels and levels within the St. Lawrence Seaway, as well as the variability of the climate. There is more extreme weather, again particularly the impact of El Niño, La Niña effects, which have a spillover effect into the kind of winters that we have. I referred earlier to the winter that we had two years ago that saw significant ice cover of the Great Lakes. That ended up shortening the shipping season by six weeks overall, with three weeks on either end of it. That resulted in significant losses in being able to move cargo for the port authorities who were shipping out through the St. Lawrence Seaway.
Similarly, the water levels have a significant impact. Essentially, a loss of three inches in water depth translates into about a thousand tonnes lost in the ability of a laker to carry tonnage, so that results in significant losses of revenues.
Senator MacDonald: Of course water levels are going up on the Atlantic Ocean.
Ms. Zatylny: They're going up and down in the Great Lakes.
Senator MacDonald: They're going down and they're going up.
Just as anecdotal evidence, you mention that incident. Where I grew up around Louisbourg Harbour, it was very cold in the winter. I'd say that once every 10 or 12 years you could walk across the harbour because it was frozen, and it still freezes every 10 years or so.
I'm putting it out there because when I think about climate change, it's a really long graph and it goes over decades, centuries, millenniums, really. But I'll get back to specifics.
There is interest in Shore Power. You mentioned Vancouver, Prince Rupert, Halifax and Quebec City, and then you added Montreal, but it seemed to me when you mentioned Montreal it was about on-land shuttling; is that correct?
Ms. Zatylny: That's in addition to. Shore Power is a specific program to allow ships to plug into onshore electric power so that they can shut down their engines.
Senator MacDonald: I understand that. I think it's a great idea. I'm just curious why it's restricted only to these four ports. Do these four ports get their shore power through some sort of program with the federal government?
Ms. Zatylny: Yes. There are two main factors for why it was restricted. One is simply cost. It is expensive to implement that kind of technology, and you have to have the provincial or the local power supplier willing to provide preferential rates as well. So you've got to have them at the table to be willing to play.
The other part is the kind of ships that arrive. Up until now the preference was towards cruise ships because there was standardization in the electrical grid within the ships so that you could have a standard plug-in onshore and all the cruise ships could plug into that.
There is tremendous variability in freight, particularly in bulk, so there's no capability right now, no standardization within the industry that would enable a port to choose a particular plug-in configuration that the greatest number of cargo ships could plug into.
Therefore, Vancouver, Montreal and Quebec City implemented Shore Power for their cruise ships. Prince Rupert has long-term agreements with several container lines that have given them standardization in the container ship that arrives, so they were able to experiment there as well.
Senator MacDonald: I'm curious about the capacity. How many ships would they accommodate at one time to make it cost-efficient?
Ms. Zatylny: That would be a question for the individual port authority. I do know that in Vancouver they will take in three to four ships at a time, and they are able to accommodate.
Senator MacDonald: Mr. Thériault, you were talking about converting heavy trucks and the challenges for electrical compared to natural gas.
I'm assuming most of the diesel used in this country is for heating in the North, let's say, for power, and for running large vehicles like heavy trucks or locomotives. Have we done any analysis on whether they would be best converted to natural gas or to LNG and which one would be the best way to go?
Mr. Thériault: There's some overlap with your question. As part of the report we've looked at the various technologies. On natural gas versus diesel, that conversion, what we found, again, is that even if it makes financial sense it's not something that's adopted as an alternative easily and for all kinds of other reasons that are not financial necessarily. I guess the context now where diesel is so cheap doesn't encourage that. If you want to move that agenda forward, you really have to hit on other types of policies rather than just the purely immediate financial scenarios. Frankly, that makes sense in a context where prices are a little higher. When we did this study, the prices were a little higher than they are today.
Senator MacDonald: What about the use of LNG as opposed to natural gas?
Mr. Thériault: It's the same argument. On the freight side, if you really want to make a dent, you have to shift to something much more fundamental. It would help, but the tailpipe emission standards are quite severe the way they are. The incremental gain to get to 80 by 50, if you take that long-term agenda or even just the 2030, as I pointed out, we're not there with these technologies. It helps incrementally.
What I cover with road transportation is 80 per cent of the whole, but ports, rail and air make up the other 20 per cent. If we're to meet any significant reduction targets, we'll have to look at all the sectors. In freight there's tension right now; it's hard.
Senator MacDonald: We're not there yet then?
Mr. Thériault: No.
Senator Ringuette: I'll focus on one issue that you both had in your presentations, and that is transportation planning.
[Translation]
Mr. Thériault, when you conducted your study, did you compare truck, train and boat transportation emissions per metric tonne and for a given distance? Did you make the comparison for greenhouse gas emissions?
Mr. Thériault: That's a very good question. The work I'm presenting today concerns only the road transportation sector. No detailed analyses were conducted of potential options that would likely be more efficient in terms of reducing greenhouse gases.
The fact remains that truck transportation is a very economically viable choice right now. If rail transportation is used instead of truck or air transportation, the reason is that the industry is evolving within a very limited financial framework. When the industry decides to transport goods by truck, it uses economic and financial logic. We could do the exercise. For example, the pipeline is still the most efficient way to transport oil, but rail transportation is used much more often because there aren't enough pipelines.
The comparison is possible, but my point is that the barriers aren't only financial. The same argument is made for the pipeline, namely, the capacity constraints.
Senator Ringuette: Ms. Zatylny, would you like to comment on this first question?
Ms. Zatylny: Yes. What struck me in the answer to your question is the relative efficiency between the different modes of transportation. We're working with data on ships that transport cargo on the Saint Lawrence River and the Great Lakes, and the amount of cargo that can be transported.
[English]
I'll do this in English. One Canadian laker will typically carry 30,000 tonnes of cargo. That is the equivalent of just under 1,000 trucks or just over 300 railcars. That being said, in addition to that, the typical laker is about 700 per cent more fuel-efficient per cargo tonne than a truck and about 74 per cent more efficient per cargo tonne than rail.
Now, when I was talking about how we look at it, earlier in my presentation, it's important to look at the appropriate modal mix in transportation. A port does not exist without road and rail. Otherwise it's just a place where stuff accumulates. But within that, if you're looking at overall national greenhouse gas reduction targets and how to offset the competitive challenges within particular sectors, we look at it from a broader view. If you manage to address some of the barriers, particularly in Central Canada, around moving increased numbers of tonnes of cargo on the Great Lakes St. Lawrence system, you can actually realize some of these gains through that kind of shifting of the modal mix of cargo.
Senator Ringuette: Yes, exactly. That's what I was getting at.
Mr. Thériault, according to your report, in terms of road transportation and moving people by car, eventually we'll get there. It's not the biggest problem. The biggest problem is the transportation of goods across the country. You've identified the government's tool kit.
I guess my sense is that in order to achieve the goal, the government will have to intervene with regard to the financial cost and the carbon cost in addressing multi-mode or efficient modes of transporting these goods across the country.
Is it possible for both your organizations to work on the transportation of goods with regard to the cost, the emissions and the national need to have an efficient transport plan, considering both these very important parts of the future of our national economy?
[Translation]
Mr. Thériault: You're absolutely right. I would say there is a way to optimize all the existing modes of transportation. Can gains be made? Likely.
You mentioned that boat transportation is by far the most efficient in terms of greenhouse gas emissions. It's not technically possible to make theoretical gains. The physical limits of the logistics chain must be reviewed, but gains can likely be made. Rail transportation is also a very viable alternative in terms of greenhouse gas intensity.
The Conference Board is currently implementing an initiative based on a low-carbon economy. The work will be published in the coming months. The initiative's main goal is to establish a facts base to help create policies to enable a smooth transition. An assessment is being conducted of the implications of achieving the collective goal set in Paris to reduce emissions by 80 per cent by 2050. Each sector is being reviewed, and it has been noted that the optimization of the transportation sector plays a key role.
Senator Ringuette: Yes, because there is a range of transportation logistics systems. These logistics systems could easily include optimal modes in terms of finances and greenhouse gas reduction.
Since there is also the matter of the potential of a centre for trading, buying and selling, it could be very good for you, for the government and for users.
In a logistics system, suppose that a user can choose between solutions A, B and C. Solution A results in lower costs, solution B results in lower carbon costs, and solution C is a combination of the first two solutions. If there is an incentive for the user to choose transportation logistics C, I think it wouldn't be complicated.
Even though it's not complicated in my head, it may be more complicated than that. We're looking at long-term initiatives, and I think it would certainly be very good for the range of greenhouse gas emitters.
Mr. Thériault: Our horizon scanning and forecasting exercise is particularly useful for answering this type of question. What is the optimization potential for the entire transportation sector in our collective goal to reduce greenhouse gases? Is the potential large, average or small? Have we already tried optimization? The exercise is important to answer the question and provide insight into the actual potential of this avenue, which is a very valid issue. What percentage of the objective would we achieve through optimization? Also, when should we start to encourage, using incentives, changes to the business as usual scenario?
Senator Ringuette: You confirmed that the Conference Board is currently studying these factors.
Mr. Thériault: Yes, for all the sectors.
Senator Ringuette: When your report's published, can you send a copy to our committee?
Mr. Thériault: Absolutely. Right now I can't commit to a specific deadline because the work has just started. However, by early or mid-January, we'll have a fairly solid draft. The information will be communicated to the media and to groups such as yours. We'll be pleased to present the results to you. The study will cover more than the road transportation sector. The study is somewhat similar to this exercise, but it also addresses the opportunities related to the achievement of the collective goal and the sectors that need help to make their transition smoother.
[English]
Senator MacDonald, you raised the point about having an economy that's carbon-intensive, and you're quite right. In fact, energy is part of Canada's fundamental endowment. You can debate climate change and the science behind it, but we accept that the IPCC, the Intergovernmental Panel on Climate Change, stated that it is. We need to limit 450 per million. Let's just go with that. Assuming that, what do you do about it? There's a fiduciary aspect. If I'm a shareholder in any company, I want to consider that as a risk to the company I'm on the board of.
I'd like to shift the conversation from the fuel to the carbon and the fuel. Carbon sequestration is a good example. Could we make energy production carbon-neutral? If we take a long-term horizon on that, the competitive advantage that energy offers Canada, I would like to think that will remain 2050 and beyond. Will it be in the current shape and form? Probably not.
We've innovated a lot in the industry in producing energy in Canada over the years. I'd like to think if we refocus not on fuel but on the carbon and the fuel as being the challenge, then we can start making a case where a lot of players can win. Because it's an innovation agenda, and you're not pointing at the fuel as being the problem in this case. You point at the right thing, which is what the collective goal is, to reduce carbon. So let's focus on carbon.
Scrubbers and coal, they haven't been financially viable. SAGD, steam-assisted gravity drainage — I'm going beyond the mandate here — but technologies for oil sands production, same thing. They weren't financially viable. They became financially viable.
If you keep pushing on that agenda on the supply side and reducing the carbon footprint on the production side, and the same thing for transportation, the ride sharing and the automated vehicles offer innovative options going forward that will still maintain our competitive position in the marketplace and still respect the fact that we're well- endowed in energy and will still be producing some 100 years from now.
Senator Patterson: Mr. Thériault, this is an important and timely study that you've done on the transportation sector. Looking at the 2030 goals, 30 per cent below 2005 levels, does your study suggest this target can be achieved?
Mr. Thériault: It suggests that, as I pointed out, if the tailpipe emission standards for passenger cars and light vehicle trucks are respected by the manufacturers, we would be at 40 per cent reduction relative to 2005 by 2030.
It's all driven from not the alternative technologies, whether natural gas or ethanol or electric vehicles. In fact, in the most aggressive scenario that I just pointed out, where 5 per cent of new cars every year will be electric vehicles, only one megatonne will be achieved by 2030. It all comes from the standards on tailpipe emissions that have been declared by the U.S. EPA and largely adopted by Canada.
This is not without some assumptions because, again, we'll have to see if it's technically feasible to meet these standards. But if we keep going on that track and it's technically feasible, yes, we could meet on the passenger front. Not the freight. That's a different story.
Senator Patterson: Where does carbon pricing factor in? Does your study conclude that carbon pricing is also a means to reduce emissions?
Mr. Thériault: Carbon pricing is part of the solution for sure. It's a surprise to me, because I started with a preconceived notion that carbon pricing would have to kick in to make it financially viable for some of the technologies to be adopted, but what we found is that there's resistance outside the financial context. Carbon pricing is part of the solution, but for some of the resistance for adoption, it's not where the action takes place. Take freight. In the report we really go to a rundown of the various technologies available that are not adopted that would be more efficient from a greenhouse gas emission standpoint, and we look at the financial ROI of adopting them. Even if they meet the financial ROI standards that you would typically see in a given industry, they're not adopted. So there are other factors that make people resist their purchase.
Electric cars are at a 1 per cent penetration rate. Every year slightly fewer than 1 per cent of all cars sold are electric. Norway and California are at 3 per cent. Those are the most advanced. There's still a lot of resistance. Electric cars have been on the market for a while, but the adoption rate is slow. Range anxiety has been pointed out as a problem, and so have infrastructure and the availability of plug-ins. The cost of that technology for the passenger side has been a barrier.
Senator Patterson: Carbon pricing pushes people to alternative modes of transportation. Is that the theory?
Mr. Thériault: And they change behaviour. If you take transportation service as something that needs to be met, there are many ways to meet it. Ultimately, you can decide to walk; so that's pushing it to the extreme. In the report we talk about public transit. Buses are not used enough right now, so on a per-passenger basis, taking the bus is more carbon-intensive than taking a car because there are not enough people in those buses. Carbon pricing starts to incent people to take alternative modes of transportation. It's not just in terms of purchase of technology for your own needs, but it's about using what's available now differently.
Ride sharing. We talked about Uber as one example of how that can work, but that's another aspect. Carbon pricing starts to incent people to adopt different ways of getting around.
Senator Patterson: I don't know if you've thought about it, and maybe this a very minor piece of the puzzle, but how would choosing other modes of transportation work in remote communities where there's no public transit, where you can't ride a bicycle because of climate, where you often can't walk because of climate? Have you considered that situation?
The three Northern territories have said they're not sure that carbon pricing would work in a place that already has a very high cost of living, where there aren't these alternatives, for better or worse. Any comments?
Mr. Thériault: That's a good point. Today, case in point, we have an initiative called the Centre for the North. My group today released a report about diesel and the cost of electricity in the North.
You're right. The alternatives need to exist for carbon pricing to make any sense. If there's no alternative, then in the short run, even if you assume that eventually it will get there, you still have a problem and you have to factor in the transition. For the remote communities in the North, and remote communities in general, it's definitely a challenge. There are promising avenues when you start talking about automated vehicles, for example, that are electric, get around and get plugged in automatically, come on demand and go back to their plug-in station.
For long distances — and that's the problem we see in freight in particular — it's not as advanced right now. You could argue that it's not the same thing, but in terms of long distances or long haul, if you take a remote community, it's a long haul to get from A to B given that you live in a rural community, and some of the same logic applies. It's more difficult.
When carbon pricing gets to the services, transportation needs for remote communities need to be looked at with some offset measures, for sure.
Senator Patterson: Thank you. We look forward to reading your report on the diesel issue.
Thank you both for your presentations. This question is for the port authority.
You talked about how you're monitoring efforts by the International Maritime Organization to develop carbon reduction instruments for the marine mode. You mentioned collecting data on vessel emissions and a carbon price on fuel. Could you tell us a bit more about that? I'm interested in this: Has the industry, then, agreed that there should be a carbon price on fuel? Also, is there an initiative to move to low-sulphur fuel in the industry, or a higher-quality fuel that will produce fewer carbon emissions than the current fuel that's used in Canadian waters?
Debbie Murray, Director, Policy and Regulatory Affairs, Association of Canadian Port Authorities: Thank you for the questions. I think I heard three with regard to the IMO. I think you had expressed interest in hearing about that, carbon price, and a move to a low-sulphur fuel.
What I could do is tell you a bit about the IMO, which is the primary regulator for the marine industry globally. The Government of Canada adopts or incorporates into the domestic regulatory framework the regulations that are developed there and participates in the regulatory development that occurs there.
At the IMO, there is a central committee called the Marine Environment Protection Committee, or MEPC. Right now they are in the process of developing, under significant pressure globally, a mechanism to reduce carbon in the marine mode. There is agreement now to develop an MRV, a monitoring, reporting and verification system. The first phase of that is a data collection system which has been developed. So the monitoring part of it has been established, with the thinking that as the data are collected around carbon emissions on an ongoing basis, we can get into setting targets and then verifying the modification around carbon reduction.
We are monitoring that now. There is a meeting coming up the week of October 24 in London at the IMO where they will be looking at discussing further the establishment of, perhaps, a market-based measure and setting a target. But as you can probably understand, at some of these international fora these discussions take time. They're also under significant pressure at the IMO from the COP process to develop a marine carbon price, or some sort of decarbonization mechanism. So whatever happens at the IMO next month will be pivotal in terms of pushing back on the COP process. I'm trying to simplify something, but we're quite engaged in that, and I've been quite engaged in that process as part of the Canadian delegation.
With regard to sulphur, there has been a target through MARPOL Annex VI, which is another marine convention mechanism through the IMO, and Canada collectively has set a target to reduce sulphur by 2020. So we'll see 0.5 per cent sulphur.
Senator Patterson: Will that impact the carbon as well?
Ms. Murray: You have certain technical and operating efficiency mechanisms that occur. So as there's a drive to increase efficiency, you can have engines that are more efficient, so they will emit less carbon, and they can emit less nitrous oxide and sulphur, and that is happening right now.
One point I wanted to make is that there's such a focus on carbon price, but there's a whole range of mechanisms that can be used to reduce carbon — not necessarily carbon price, but there are regulatory mechanisms. In the marine mode there's been tremendous success, actually, with a lot of the regulatory and policy developments in terms of energy efficiency, design indexes, vessel re-engineering and fuel mixes. It's becoming a very energy-efficient mode because of the regulatory mechanisms. I have to be careful not to make a policy statement here because we're still in the process, but I will say there's a broad range of mechanisms that can be used at the marine mode through regulatory changes, energy efficiency, the vessels that are being purchased, hull design and hull coatings. There are many ways to seek efficiencies, like fuel mixes using different types of fuel like LNG, methanol and low-sulphur fuel.
I think I've addressed low sulphur and the IMO.
As far as carbon price goes, I do know that the International Chamber of Shipping put forward a potential carbon price, but I think they backed off on that, and next month at the IMO there will be some discussion around what is a fair share. There's some discussion globally about setting an NDC for the industry, actually.
Senator Patterson: NDC?
Ms. Murray: We talk about NDCs, nationally determined contributions, for countries, but maybe there could be an NDC that industry puts forward. That's been one discussion, about their fair share, although I do know that the Canadian government just released the position that they're not in favour of a fair share and they'd rather just set a target.
All of that is to say that our industry, in Canada, emits 5.5 megatonnes of carbon, which is a small, small portion of overall carbon emissions. So it's a good reason for considering the modal mix that we have been talking about.
Senator Fraser: Chair, I would like to apologize to you and to the witnesses for coming in so late. I was trapped in another meeting and couldn't get out. I don't make a habit of barging in late, but because I was late I'm not going to ask any questions because I don't want to be repetitive.
The Chair: I just thought I'd give you the opportunity, Senator Fraser.
Senator Fraser is a new member of our committee. This is actually her first meeting, so we welcome her input. It will be great. I look forward to it.
I have just a few questions at the end, and then we'll be done.
Ms. Zatylny, you mentioned that fuel availability is somehow an impediment. Can you expand on fuel availability when it comes to greenhouse gas emissions?
Ms. Zatylny: Absolutely. That was specifically referring to the eco-requirements under the emissions control area that I mentioned, to move towards the low-sulphur fuel. There's a difference in the availability of the fuel between the two coasts. On the West Coast it is easier and therefore more economical to obtain the lower-sulphur fuel. On the East Coast a similar capacity is not present, so it presents a bit more of a challenge and increases the cost.
The Chair: All right. Similar to Senator Massicotte, on measurement, I had that as a question. And it will be interesting. We want to keep in touch with you about measurement and where you've been and where you're at and the cost incurred to get from point A to point B to make those changes. I hope that's part of it because part of what we're trying to decide or find out is, at the end of the day, what the cost is going to be to the average person in Canada to meet 30 per cent by 2030 and 80 per cent by 2050, especially when the IEA says, "We're going to consume, as a world, an awful lot more fossil fuel between now and then,'' and how we're going to mitigate the carbon emissions.
So that will be very interesting. You also talked about some programs that were discontinued that need to be continued. Can you maybe expand on that just briefly for me, please?
Ms. Zatylny: Thank you.
It was actually the Shore Power program, under Transport Canada. It was a shared-cost, 50-50 funding program that had been put together. When it was initially launched, it was believed that shore power would be the only mechanism that the federal government wanted to support — hence the name of the program. What they found when they went to implementation was that they came up against some of the challenges that I was describing earlier in terms of consistency of the technology, and so there was limited uptake, which was, therefore, why only the larger ports with the cruise ships were able to take it up.
We started to examine other mechanism or other technologies, and certainly when I asked my members, there came forth a raft of interest in other opportunities, whether it's the AIS technologies, the move to LED lighting, the hybrid vehicles, all that sort of thing, but the program was stopped about two years ago.
The challenge that we're facing here is that although the larger ports have more retained earnings and so can fund some of these more experimental technologies, the smaller ports have challenges doing that. Restarting a program that would help with the greening would certainly help to cascade some of this out to the smaller ports.
There was a second program still related to marine; it was the Marine Transportation Security Clearance Program. It was designed to fund the enhanced security requirements that were imposed after 9/11. At the time, a lot of ports used that in their security technology to go to much more low-energy LED lighting, low-energy cameras, that sort of thing. So that was also a second program that was useful that was also eliminated within the past three years. The two of them worked very well together as shared-cost programs.
The Chair: Is there a possibility that the ports, the larger ones, can actually foot the bills themselves to do LED lighting and that kind of thing? Is that not possible?
Ms. Zatylny: They've all been doing that.
The Chair: Just so you know, I was with the Government of British Columbia as Minister of Energy, and we would put in shore power to the cruise ships. So I'm aware of that program.
The need to actually switch the trucks that move the containers from being older, inefficient vehicles to newer, probably natural gas vehicles is not new. That's been done in the ports of, I think, Los Angeles and San Francisco, and it has helped a tremendous amount. Westport Fuel Systems, a Vancouver company that actually developed those kinds of things, sells that technology all over the world, but we seem to have trouble having it catch on with the ports.
Can you help me a little bit with that? I think that might take just a simple regulation from the port authority to say, "You know what? If you're going to move containers from this port, you're going to come in with a newer model vehicle, and you're going to have it powered by natural gas, just like they did in Los Angeles and San Francisco and other ports around the world.'' Help me with that a little bit.
Ms. Zatylny: Happy to. The Port of Vancouver has the experience of doing that. They implemented requirements with their truckers that the fleets would have to move to newer fleets, specifically post-2006. It was a bit of a carrot and stick combination, so there were financial incentives. As well, the port invested in technology to help speed the truck turnaround time so that they could improve the revenues, the profitability, for each of the truckers.
It certainly has been moving towards success, but it's a process, because the reality is that while the port itself can implement financial incentives, they don't have the kind of hard regulatory power that has them impose a hard obligation. They operate in a competitive environment, both in terms of the shipping and the cargo that they attract, as well as the service operators, whether it's road or rail that services them, and so everything that the port does has to be done in a manner that is more collaborative, much more carrot than stick.
The other ports are certainly watching what Port Metro Vancouver has done, and over time they have started to implement it themselves in various ways that are appropriate to the relationships they have. Prince Rupert is a good example. They've not had to impose those kinds of age restrictions. What they're doing is looking at a new road project that will cut the transit length by about half. So they're trying to adjust that problem that way because they don't have an old-truck problem.
Each port is trying to adjust that issue in a manner that is most effective and subject to their individual and local requirements.
The Chair: I appreciate it's a little difficult. I've been on this for a long time. It's a little difficult, and it costs a bit more money. But other ports have done it. You do have the regulatory authority to actually travel on port land; you need to have this kind of equipment. That is a regulatory tool that could be used on any port in Canada, I would argue. Anyhow, I'm not going to argue it long with you, but that's my opinion and the opinion of quite a few people.
The other thing about ports is that you said that the shipping industry is only responsible for 5.5 megatonnes. That's just import, right? That's just in the waters around the port? Once you get out in the open sea, there's no measurement for that. It just goes into the atmosphere. You go into Bunker C, and those types of fuels just emit to the atmosphere.
Is there a movement amongst the shipping industry to do much the same as the airline industry is doing, to start thinking about how you can collectively, so that everybody competes in the same bubble, reduce GHGs when you're out of port, when you're traversing the ocean?
Ms. Murray: With regard to the 5.5 megatonnes, that's a Government of Canada statistic, so that is emissions domestically. Globally, the data collection process, which I mentioned with regard to Senator Patterson's question, taking place at the IMO will be the central mechanism for collecting and recording carbon emissions by industry. I will note that right now the EU does have such a framework in place, and they are actually just beginning to collect data from vessels that transit EU waters. So that is in place, and it's putting pressure on the IMO to actually develop a mechanism to measure carbon. So that's this MRV, this monitoring part, that will be finalized next month.
The Chair: We'll probably ask for both of you to come back later with some of the studies that you have both talked about.
Just a few questions to you, Mr. Thériault: You looked at electric cars. Where I come from in northern British Columbia, electric cars don't fit, to be perfectly honest. They might from a few miles out of town into town, but not for most of the light-duty work that's done because most of that is done on a huge-mileage basis, where electric won't do the trick.
But did you figure in the cost of more production of electricity? Was that part of the cost of what you anticipated it would take to make electric cars? In Quebec, Manitoba or British Columbia, it's clean energy, relatively cheap, but in places where you have to go to more coal or generation of electricity by natural gas, it's not so cheap. Was that part of the mix?
Mr. Thériault: Well, for the carbon footprint net, yes. We looked at the source of electricity, if it's coming from fossil fuel, and the carbon footprint from producing the electricity was part of what we've looked at. It was the cost of electricity in the various jurisdictions, when it came to looking at the financial payback. We looked at the specific market reality.
The point you're making around the technical feasibility of the scenarios, and what I presented here on the slide where I showed different penetration rates of electric vehicles, that was just for illustration purposes to show that you would need a lot for a long time to have electric vehicles make a major dent in your greenhouse gas emissions.
That was really the point. Often we hear that electric vehicles are the solution to the challenge. The point was to say in the long run it starts making a dent, and the next 15 years, not so much, even if you're really aggressive with your penetration rate scenarios. Then you get into barriers that are beyond the financial barriers, which are, as you described, the limits of the technology today in terms of range, infrastructure and availability for plug-ins.
But to answer your question, yes, the net greenhouse gas emissions coming from the various sources were considered as part of this scenario and the various costs of electricity.
The Chair: It would be interesting to have that information, if you could provide that to our clerk so that we can actually dig a little deeper into what those costs and reductions were.
I haven't checked out whether this is true or not, but I heard that one country decided to go big in electric cars — I won't mention the country — but pushed it really hard with subsidies, and you can't drive anything but electric cars in the major cities, and then they had to build coal plants to generate the electricity to run the electric cars.
I don't know whether that's true or not, but it's interesting, and it could easily be something that took place.
Senator Massicotte: I want to make sure that you answered the question, as I understand it. Not only did you consider what the source of electricity is when you have to charge your battery, you also considered the sourcing of the construction of the car. Am I correct in saying that? In other words, if you produce the car, in some provinces where it's actually coal, did you consider that footprint from constructing the car?
Mr. Thériault: Building the car, no. The usage of the car.
Senator Massicotte: You assume there's no footprint relative to the construction of the vehicle?
Mr. Thériault: It's not part of road transportation. The focus of this study was road transportation, the usage of vehicles to move around. What you're referring to is the manufacturing of the car industry. The study was mentioning all the sectors and sources. Then you get into other environmental questions that are beyond greenhouse gas emissions, like the fuel cells and the batteries themselves and what goes into them. That's a valid question, but it wasn't part of this.
Senator Massicotte: It's a big number.
The Chair: You talked about technology and the tailpipe emission standards that are in place. You said whether manufacturers meet those tailpipe emission standards. Is Canada meeting those tailpipe standards today?
Mr. Thériault: Up until now, Canada usually is just an adopter of the EPA standards, and we do that, yes. So the challenge I referred to is more for the light vehicles, like the trucks, the SUVs, and there's a technical feasibility question mark. It's one thing to have a standard, and the standard now goes to 2026. That's 12 years from now. Given the progress so far, the question remains whether it is feasible from an engineering standpoint. That's the question.
The Chair: What you're saying is that we're meeting the standards set out today, but whether we can in the future meet the more restrictive standards that will come remains to be seen. Thank you.
If you look at Canada's charts, we need to reduce greenhouse gas emissions by 291 million tonnes. That is a lot. When you look at where it comes from, even if you took the oil and gas industry totally out and left it all in the ground, you still don't meet that standard. We should not fool ourselves. This is going to be a difficult, if not impossible, target to meet.
Thank you for your presentations. They were good. We'll look forward to some of the other information. We'll probably have another meeting with you again in the future.
Thank you.
(The committee adjourned.)