THE STANDING SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
EVIDENCE
OTTAWA, Tuesday, November 28, 2017
The Standing Senate Committee on Agriculture and Forestry met this day at 5 p.m. to study the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors; and, in camera, for the consideration of a draft agenda (future business).
Senator Diane F. Griffin (Chair) in the chair.
[English]
The Chair: I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. I’m senator Diane Griffin from Prince Edward Island and I am chair of the committee. I would like to ask senators to introduce themselves, starting with the deputy chair.
[Translation]
Senator Maltais: Senator Ghislain Maltais from Quebec.
[English]
Senator Doyle: Norman Doyle, Newfoundland and Labrador.
[Translation]
Senator Pratte: Senator Pratte from Quebec.
Senator Dagenais: Senator Dagenais from Quebec.
[English]
The Chair: Today, the committee is continuing its study on the potential impacts of the effects of climate change on the agriculture, agri-food and forestry sectors.
Today we have a panel and for our witnesses we welcome, from the Association of Canadian Port Authorities, Wendy Zatylny, President; and Debbie Murray, Director, Policy and Regulatory Affairs.
Thank you for accepting our invitation to appear. I will now invite the witnesses to make their presentation, but I would also like to remind them their presentation should be roughly seven to 10 minutes in length and no more.
Following the presentation, we’ll have a question and answer period with the senators, with as many rounds of questioning as we need to get the job done. People can ask all their questions at once or spread them out. During that question and answer period, I’m going to ask senators to be succinct and to the point when asking their questions and I would ask the witnesses to do the same when answering so that we can get all the questions in.
On behalf of the committee, I would like to invite you to make your presentation.
Wendy Zatylny, President, Association of Canadian Port Authorities: Thank you, Madam Chair, and good afternoon, honourable senators. Madam Chair, I’m glad that you said 7 to 10 minutes because, as I was going through, we have so many examples of things that the ports are doing, I was starting to strike them off the list. Hopefully I can keep it under 10 minutes.
On behalf of Association of Canadian Port Authorities, I want to thank you for the opportunity to speak with you today regarding how Canada’s port authorities are addressing the notion of climate change.
To begin, I want to give you a quick reminder of who we are. We represent the 18 Canada port authorities that are located on both the Atlantic and Pacific coasts, as well as in the St. Lawrence River and in the Great Lakes. Together, our members move close to 300 million tonnes of cargo per year, both containerized bulk and breakbulk. In addition, we welcome over 1.3 million cruise passengers per year -- a number that is growing every year -- and we support nearly a quarter of a million jobs within the ports themselves, in the port hinterlands and along the supply chains. Those supply chains stretch far beyond the ports and port provinces into the Canadian heartland.
As ports, we are entities that are closely bound to the planet’s oceans, lakes and rivers and, as such, we are both captive to the effects of a more variable climate and we are also committed to doing our part to protect it. That’s what I would like to address in my remarks this afternoon.
From the perspective of Canada Port Authorities, the issue of climate change cuts three ways. The first is the need to be adaptable to potential changes and the volume and nature of the cargo that moves through the ports; second is the adaptation and mitigation initiatives that the ports are undertaking; and third are the efforts that our ports are making to minimize their impact on the environment.
In terms of the first point on the cargo we manage, Canada is in the enviable position, as you are aware, of having abundant natural resources and large expanses of arable land. As a result, we are global leaders in the production of forestry, agriculture and agri-food commodities and we are positioning ourselves to do even more. Recently, the government signalled its intent to grow Canada’s economy through trade, agri-food innovation and agriculture, and this strategy, of course, has direct implications for our ports as increasing crop yields will be exported to global markets through Canadian ports.
In 2016, 42 million tonnes of grain were exported through Canada’s major ports and we expect this to increase in the coming years. I would note that in addition to the 42 million tonnes of grain, which includes pulses and beans, we moved 11 million tonnes of fertilizer and 13 million tonnes of wood products. There is significant movement of cargo across all aspects of the agricultural and forestry sectors. As we are seeing these volumes increase, both through technological innovations within farming but also with longer growing seasons and as farmers are adapting, we are seeing volumes increase and we are trying to deal with the impacts on the supply chain.
At the same time, the port authorities are pivoting toward new opportunities and various markets. This was a record year for the production of pulses, grain and beans and all of the agricultural commodity handlers are adjusting to that. From our perspective, a great example is the Port of Hamilton, which is reorienting its focus from steel to agriculture. Its goal is to become the agricultural hub for the shipment of pulses and other agri-foods serving all the farmers in the southern Ontario region. Ports on the West Coast and in the Great Lakes, and specifically Thunder Bay in the Great Lakes, are dealing with near-record volumes as grain harvests increase and early predictions are saying we will have another bumper year for grain and grain exports.
What this means is that new investments in terminals, cargo-handling equipment and intermodal linkages are required to stay ahead of this and to meet this demand. An important element of helping us do so has been the government’s Trade and Transportation Corridors Initiative investment in gateways and ports, including the National Trade Corridors Fund.
Transport Canada and the federal government is currently reviewing the business cases that were submitted for phase 2 of the Trade Corridors Fund, and we note with some concern that the program was launched in September and it is already vastly over-subscribed. To date, the 170 applicants who were approved to move to the second phase of the competition are requesting a total of $9.9 billion in project funds for the short term, whereas the entire program has an available pool of only $2.1 billion over 11 years. We are not sure how this will play out, but it certainly points to a tremendous backlog of demand for infrastructure funding within the transportation trade corridor system, of which all the port authorities have submitted and are parts of.
To adequately support cargo handling capacity across the supply chain, we need to know what we’re going to be handling and how much at any given time. As you have undoubtedly heard from most of your other witnesses, climate change predictions are rife with uncertainty as to what the ultimate impacts are going to be. These depend on a wide range of variables. Recent weather patterns have begun to change more radically as well, making predictions more challenging.
From our perspective, in the face of such unpredictability, one thing is certain, and that’s the importance of data. With adequate data sharing and data transparency among the partners within the supply chain, we can at least start to predict in the short and medium term what the commodities will be, what the loads will be, and how we will manage them. To that end, ports are part of two important initiatives: the Commodity Supply Chain Table and the recently announced Transportation Data Initiative.
On the first, led by Transport Canada, the Commodity Supply Chain Table has been in existence for several years. It has developed into a mature multi-sector initiative where key stakeholders -- including government, rail, ports, trucking, agriculture, forestry and fertilizer sectors -- come together to jointly identify the issues and, more importantly, the solutions to bottlenecks in the transportation supply chain. Certainly, this month’s discussions were very much focused on what the grain harvest will look like, what the winter will look like, and how we will work together as partners to move that cargo out along the transportation chain.
Another key element at the recent table meeting earlier this month was Transport Canada’s proposed transportation data initiative. This initiative will see the development of a broad and deep public data platform of the country’s supply chain, which will be accessible to public users and policy-makers. Transparent and shared supply chain data will be essential in managing the system-wide impacts of climate change and its effects on crop production and forest canopy. Ports, as key hubs in the chain, are highly innovative users of data already. Data is very much the next frontier of port efficiency, and we will be using this new pack of data to improve resiliency, efficiency and commodity movement in the sector.
ACPA supports both the Commodity Supply Chain Table and the government’s effort to build and use transportation data to enhance utilization efficiency, capacity and resilience, and we certainly recommend that the committee explore both initiatives further.
Turning from exports, I want to focus on how ports are affected by climate change within themselves and the physical infrastructure.
As I said earlier, by virtue of who and what we are, we must adapt to extreme and unpredictable weather patterns, varying water levels -- including rising sea levels or rising and falling Great Lakes levels -- and variable ice cover.
On the physical infrastructure side, storm surges, high winds and generally unpredictable environmental conditions are having a significant impact on port infrastructure — it chews up port infrastructure — accelerating the need for capital investments and changes to the type of maintenance required. The ports are all exploring new technologies, materials and techniques to manage this, including improved weather forecasting, climate-resistant concrete mixes, or innovative pier design to resist storm surge overspill.
Canada’s port authorities currently have a $1.9 billion requirement to replace aging legacy infrastructure, and we also require funding to support resilient advanced infrastructure while handling this increased commodity throughput. Again, coming back to the notion of government support, that is an integral component of our being able to address these challenges.
On the cargo throughput side for ports, especially for freshwater ports along the St. Lawrence River and Great Lakes, managing the length of the shipping season is also key, and that is extremely variable, depending on the severity of the winter and the amount of ice cover. That includes ensuring an adequate complement of icebreakers in the seaway and the Great Lakes to keep the system as open, for as long as possible, during either end of the shipping season.
Turning to the third point, ports greenhouse gas reduction initiatives, all of our members are committed to minimizing the environmental impacts of shipping and port activity on the environment and on the surrounding communities. Many of our members are reducing carbon and greenhouse gas emissions through a wide range of voluntary initiatives, such as the use of electric cargo handling equipment and the provision of shore-power to cruise ships. In Vancouver, Prince Rupert, Montreal, Halifax and Quebec City, the implementation of shore-power allows cruise ships to plug in, which means they can shut off their engines and greatly reduce diesel emissions within the port.
Some ports have invested in converting rubber tire gantry cranes in container yards from diesel to electric to reduce emissions, while others invested in electrification of port vehicles and equipment. Ports are also looking at converting to LNG propulsion systems, implementing or installing LED lighting systems to reduce energy draws and, in a truly green move, the Port of Montreal last week announced they are planting 370 trees on port lands to enhance the port land canopy and carbon sequestration.
Many ports also provide financial incentives to green ships, such as Prince Rupert with its Green Wave program that provides financial incentives for ships that use cleaner fuel. There are many other such examples. We have a document here that is a compilation of all the environmental activities that the ports have undertaken and we’re happy to share that with the committee.
Ports also participate in Canada’s voluntary Green Marine program, which is a Canadian success story. Green Marine establishes high environmental standards, certifies members’ actions and disseminates leading environmental protection practices taken by all marine stakeholders, including ports, terminal operators and ship owners. All 18 CPAs are members of Green Marine, and they all work to achieve its highest levels of recognition as responsible environmental agents.
It should be remembered that as a transportation mode, marine shipping has the lowest greenhouse gas emissions per tonne kilometre of any of the other modes. For example, a modern, very large 18,000 TEU container vessel produces 3 grams of CO2 per tonne kilometre, in comparison to large trucks which produce 80 grams per tonne kilometre. Thus marine shipping offers a unique opportunity to reduce greenhouse gases while developing a more efficient national transportation system.
A great example of that is the St. Lawrence Seaway and Great Lakes system, which currently is significantly under utilized as a transportation corridor. It is running at about 50 to 60 per cent capacity right now. Considerable steps are being taken by governments at all levels, along with industry partners to increase traffic in this inland marine corridor. Certainly, we believe that increased seaway shipping would provide additional capacity to address the transportation demands from issues resulting from increased crop yields due to climate change, as well to the need to reduce greenhouse gas emissions overall.
Currently, there is an almost overwhelming array of federal transportation, trade and environmental policy development initiatives underway. What is important in all of these is ensuring a coordinated effort and that all are moving in the same direction among the many federal environmental strategies. Particularly what we see in some cases is that environment, trade and transport end up working at cross purposes to one another. As I said, we are strong believers--we very much support and act in this area--in the need to tread as lightly on the planet as possible, but we also have a mandate to move Canada’s cargo abroad and we need to ensure that both initiatives — both directions — are in alignment.
In summary, climate change is a very real consideration for our ports. We are affected by climate change-induced weather events and are developing adaptive infrastructure. We are doing everything we can to actively reduce our greenhouse gas footprints and, along with our partners, to introduce steps that enhance our efficiency, resiliency and sustainability. Initiatives such as data accessibility, transparency, funding for adaptive infrastructure and green projects and adequate support for needs such as ice-breaking capability will help us get there.
With that, Madam Chair, I will end my remarks and look forward to answering questions.
The Chair: Thank you. We have a speakers’ list, with Senator Doyle followed by Senator Dagenais, but we will go first to the deputy chair.
[Translation]
Senator Maltais: Thank you, Madam. You spoke of major short-term investments of $1.9 billion and of long-term $5.6 billion investments. Could you explain in what way these investments will be more environmentally sound than previous ones?
[English]
Ms. Zatylny: Thank you for the question. It is a question of proceeding along a continuum. As I said, the ports are already investing, looking ahead at their infrastructure needs. The ports are already designing new infrastructure that they’re investing in to be as adaptable and responsive to changing climate and cargo needs as possible.
The infrastructure funding that is being made available to us through the transportation corridor fund, for example, will help with that because it is aimed at identifying and eliminating bottlenecks within the supply chain: the greater the efficiencies, the less draw on infrastructure.
At the same time, the $1.9 billion that I referred to speaks specifically to a study that we had conducted with Transport Canada several years ago to identify what the overall port needs were. We identified the $5.9 billion, and that was for all federal infrastructure projects at the time. Of that, one third, the $1.9 billion, was simply to repair aging legacy infrastructure, things like the piers that survived the Halifax explosion, or wall facings, or current port road layouts that are not efficient that run traffic through a community whereby if we rerouted some of the roads we would be able to have a more efficient routing of vehicles into the ports. That aspect of fixing and updating old infrastructure to make it new again, improve it and make it more efficient would therefore lead to greener infrastructure overall.
[Translation]
Senator Maltais: If you replace one unloading crane today with another unloading crane, what will the difference be, environmentally speaking?
[English]
Ms. Zatylny: Some of the old cranes, the RTGs, the rubber tire gantries that I referred to, run on diesel, whereas the new ones are electric powered, so they reduce greenhouse gas emissions, particularly within the ports. That is one example.
Some of them are also moving toward more autonomous systems. With the crane and the dockside design, they have embedded sensors within the docks as they are being rebuilt so that the cranes operate more efficiently as they offload the ships.
The third element or the third aspect is simply larger cranes. The shipping industry is moving towards larger and larger ships, both as a measure of efficiency within marine transportation and as well as trying to reduce the overall emissions per container for cargo. Larger cranes are simply required to manage that.
[Translation]
Senator Maltais: Do you have greenhouse gas reduction objectives?
[English]
Ms. Zatylny: As a community of port authorities, no, we have not gotten to that point in the discussions. The individual port authorities have identified various targets of environmental goals and some of them include greenhouse gas emissions. However, I would refer you to the Green Marine program that does have specific standards within the program. One of the components is greenhouse gas reduction levels and the ports aim to move towards the various levels.
Senator Doyle: The investment in new technology, according to a lot of witnesses who come here, is key to the reduction of GHGs. To turn it around a little bit, because I know you mentioned that you are making investments in new technologies and what have you, but do you have any idea what percentage of the ships, the ocean-going traffic, is actually using technologies and equipment that don’t measure up in terms of their capacity to emit carbon and various other pollutants? It’s a difficult question, I know, but do you know what the current state of it is right now? Is there a big percentage of ocean-going traffic that doesn’t have the new technologies to curb the various pollutants you see on the go today?
Debbie Murray, Director, Policy and Regulatory Affairs, Association of Canadian Port Authorities: If I may, senator, we don’t have that number, but what I can say is collectively through the International Maritime Organization, which regulates the marine industry globally, there are targets that have been set and there are processes that have developed regulations, and in Canada there are requirements for emissions. There are requirements in terms of vessel construction. There are underway at the IMO in London processes to develop energy efficiency indexes. So collectively as an industry, there is quite a bit of effort. I could look into this for you further.
Senator Doyle: Do the port authorities have responsibility any longer monitoring ships that bilge their pumps at sea and cause water pollution and that kind of thing? Do you have any authority or responsibility in that regard, to chase these people down who clean out their bilge pumps at sea and cause environmental damage and that kind of thing?
Ms. Murray: We do not as ports. That would actually be Transport Canada. They actually have a fairly sophisticated aerial surveillance program that can track spills and identify vessels and then institute the appropriate processes.
Senator Doyle: So the port authority wouldn’t have any legal rights, say, to remove ocean-going traffic that blatantly violates the rules? Would you have any authority in that regard?
Ms. Zatylny: Well, they have the authority within their waters.
Senator Doyle: You have the authority?
Ms. Zatylny: The port authorities have the authority within their waters, but those are waters that are simply close to the port. They don’t extend out into, say, the 200-mile limit, for example. Even with that, we have the authority, but there are issues around being able to have the legislated authority to actually detain the vessels. They are two different things.
Senator Doyle: Thank you.
[Translation]
Senator Dagenais: I thank the witnesses for their presentations. My impression is that trucking is the preferred means of local transportation for our products, and this pollutes. I believe I understood that this is a matter of costs and efficiency. Regarding local transportation, can you be competitive with regard to costs, and to what extent could marine transportation play a role in combatting greenhouse gases?
[English]
Ms. Zatylny: I think the transportation system is just that, a system. It has its component parts, each of which plays a role. So what we actually have to talk about is achieving the most effective balance or combination of ship, road and rail, both in terms of commercial effectiveness for the shipper as well as costs overall and as well as environmental objectives.
Our belief is that there is room to alter the modal mix slightly to improve or increase the use of marine shipping within Canada, particularly within the Great Lakes and St. Lawrence Seaway system, such that there is more that is moved by ship. That would be a short-sea-shipping initiative. It has been challenging to get short sea shipping off the ground, so to speak, here in Canada, for a variety of reasons. The St. Lawrence Seaway and the Great Lakes are a binational system. There are different cabotage rules that have an impact. There are pilotage issues, pilotage costs.
To address those kinds of issues, which are currently being reviewed under the St. Lawrence Seaway review, I think would help address that question of appropriate modal mix. In that case, the system would sift itself into a more effective combination.
[Translation]
Senator Dagenais: To what extent does outdated equipment impact the choice of the means of transportation, due to costs? People choose trucking on the North American continent. Can you tell me if outdated equipment influences the means of transport, and if people prefer to use trucking?
[English]
Ms. Zatylny: If I could ask for precision, when you talk about out-of-date equipment, are you referring to ships?
[Translation]
Senator Dagenais: Senator Maltais referred to replacing cranes. In the Port of Montreal I noted a clear improvement with regard to the loading of ships. Is it the marine equipment that causes businesses to choose trucking, or would there be advantages to modernizing the equipment in ports?
[English]
Ms. Zatylny: Certainly the port authorities are working across the board to be able to be as innovative and to use the most modern technology possible, taking into account the cost.
The fact is that marine shipping is a highly competitive sector. Ships move. Shippers decide what routes they’ll follow based on a complex matrix of time and cost, essentially. They find the route that is the route of least resistance.
In Prince Rupert, for example, right on the West Coast, there is a lot of rail going down into the United States. In Prince Rupert, the containers come off the ships and are loaded directly onto rail cars. It takes them three days to get them straight into Chicago.
On the East Coast, Halifax has rail as well.
It is a combination of all aspects, but, as much as possible, the more efficient the technology — and that includes data management as well — the more we’ll be able to pull in cargo from other modes.
Senator Pratte: I would like you to elaborate more on the underutilization of the St. Lawrence-Great Lakes system. I wasn’t aware of that fact and I think it is very interesting.
To what extent is there really a potential there? As you mentioned, each mode has its role to play. If I understand you, you are saying that there is merchandise that could be transported by ships along that route that is presently going either by rail, I suppose, or by truck, which is probably not efficient and certainly more polluting. Is that the case?
Ms. Zatylny: Yes. Simply looking at what is already being moved into each of the ports versus what is being moved around by truck, particularly around Toronto and in that whole horseshoe area. With a lot of construction materials, for example, that are making it onto ships going into the ports of Oshawa, Toronto or Hamilton, for example, there is still unused capacity within those ports to be able to take on more.
What is holding them back is, again, the notion of not enough support for short-sea shipping initiatives, to begin with, which the ports are trying to stimulate. When you look at international shippers, there are the overall costs of utilizing the Seaway to begin with. Those refer to the pilotage fees. For example, to bring a ship from the Gulf of the St. Lawrence to Thunder Bay and back out again, the pilotage fees are upwards of $158,000 per ship. They represent the largest cost overall for transit of that ship.
Senator Pratte: So, for a relatively short distance, it is simply not worth the cost.
Ms. Zatylny: The cargo is primarily bulk cargo with thin profit margins, so any additional costs or increases like that wipe out the profit margins, yes.
Senator Pratte: I understand those things are currently being discussed; is that correct?
Ms. Zatylny: There is currently a review of the St. Lawrence Seaway being undertaken right now. It’s a multi-stakeholder review being led by Transport Canada. We will be advocating that those are some of the issues that be addressed.
Senator Tardif: Thank you for your presentation. You indicated in your presentation that your organization, the Association of Canadian Port Authorities, was reducing carbon through voluntary mechanisms. I was wondering how that was working out and whether you felt that more compulsory regulations may be needed in order to achieve your objectives.
Ms. Murray: I will answer that question. As far as the voluntary initiatives, all 18 of our Canada port authorities are participating in the Green Marine program that Wendy elaborated upon in her remarks. They are striving to achieve the highest performance in that program. It is important to note that this is a program that has expanded beyond Canada. It is a North American effort right now to, in a sense, voluntarily change behaviours at specific port authorities.
As far as commenting on specific regulations, the International Maritime Organization is the body that develops regulations for the marine industry. The Canadian government has a set of regulations that our port authorities adhere to and follow.
Senator Tardif: Have you set objectives for the reduction of greenhouse gas emissions within your group?
Ms. Murray: We have not set a target for the reduction of greenhouse gases within our group. As I mentioned, we do have voluntary initiatives within each of the port authorities that reduce their emissions. Many of our port authorities conduct their own audits and inventories of emissions on a yearly basis.
Senator Tardif: Would that information be available as to the amount of emissions that have been reduced as a result of the Green Marine program?
Ms. Murray: I believe it would be.
Senator Tardif: You would have that information?
Ms. Murray: Yes. I would be happy to share it with you.
Senator Tardif: Thank you. Please send it to our clerk.
Senator Eaton: Will the carbon tax imposed by some provinces have an effect on your competitiveness with foreign ships coming through? With CETA, there’s a certain amount of cabotage that will be allowed, I gather. Do you see that in any way affecting you?
Ms. Zatylny: For the moment, that is a difficult question to answer. We have not done the analysis on what the costs might be. We know — and the caution we have — is that shipping is a highly competitive sector and also highly price-elastic. It is highly sensitive to changes in pricing. A good example of that is that even when there were issues around the United States trying to impose an ad valorem tax on cargo entering the United States from Canada and Mexico, it looked to add a cost of about $100, on average, per container. That would have been enough to significantly affect traffic coming into Canadian ports.
With that in mind, I would probably say that, yes, our competitiveness would be impacted within the context of the matrix of other decisions that the shippers make around timeliness and efficiency as well.
The Chair: I have a couple of questions before we go to the second round, but first we have Senator Gagné to finish off the first round.
Senator Gagné: Do the port authorities partner with any of the colleges or universities on studies on climate change and how you can reduce greenhouse gas emissions?
Ms. Zatylny: We need a better tag team system.
Senator Gagné: You can both answer.
Ms. Zatylny: The port authorities have various partners, among them some of the universities. The best example we have is Clear Seas in Vancouver. I know UBC is involved in that, as is Simon Fraser. I cannot speak to any of the other port authorities, but certainly Saint John is doing something, as is Halifax. The short answer is, yes, we do.
Ms. Murray: I am sure I could conduct more research on that and be able to answer your question in more detail.
Senator Gagné: Are the port authorities funding research, or are the professors getting funds from the different research agencies? Do you know?
Ms. Zatylny: They are getting funds from the various research agencies. The one project I am thinking of is Port Partners and ACPA is a partner in that. We provided support for the project, but it was for a funding proposal through a third party.
Senator Gagné: Do you think enough research is being done?
Ms. Zatylny: There is always more research that can be done, given, at least from a port perspective, we deal with both coastal and freshwater ports. The needs differ so much between fresh and saltwater even in terms of how ships behave within those different kinds of waters. How do you deal with the different turbidity of the water with respect to ship engine efficiency, for example? I think a tremendous amount of research can be done in that area.
The Chair: To finish off the first round, I have a couple of questions.
You mentioned that it was a record year for the crop of pulses and beans and that it was a bumper year for export of those products as a result.
Where was the bumper crop? Was that in Ontario or elsewhere?
Ms. Zatylny: It is looking to be. The year is not over. That is what the predictions were during the discussions at the Commodity Supply Chain Table. I believe it was going to be out in the Prairies.
Ms. Murray: Primarily wheat, is what they were saying.
The Chair: I asked that question in a previous committee meeting today and I was told that it won’t be a record year, not like last year. It will be a good year, but not a record year, because of the unpredictable and problematic weather that occurred early in the season on the Prairies. I was wondering who had made up the difference, but maybe the Prairies did quite well.
My second question relates to what your needs are. For instance, the Government of Canada has a number of things at its disposal. It obviously has economic instruments. You cited that in terms of support for infrastructure. However, it also has regulatory instruments at its disposal.
Keeping those two in mind, what would your specific recommendations be for the top two things that the Government of Canada could do to help you reduce greenhouse gas emissions?
Ms. Zatylny: Being asked to give the top two is a bit like asking me to choose which are my favourite children, the top two children.
The Chair: If you have three or four, that is great too.
Ms. Zatylny: In terms of the top two instruments, I have to say the first is financial incentives. I know they are an economic instrument, but the port authorities are very adept at putting together a patchwork quilt of funding for all their various infrastructure projects. However, that relates to infrastructure. Sometimes within that, around special greenhouse gas reduction programs or energy-efficiency programs, those don’t fall within the realm of infrastructure funding. To have additional shared-cost funding support in that area would be extremely helpful.
About five years ago, there was a shore-power program that was run by Transport Canada. It was effective in kick-starting the implementation of shore- power initiatives in the various ports. Vancouver was the first, but it did spread to the other ports. Much work remains to be done. This was a shared-cost program, 50-50, but it was extremely effective.
Transport Canada phased it out several years ago, and we have long requested a restart of that program to provide support, but also to broaden it outside of the realm of simply shore-power to look at any kind of energy efficiency, greenhouse gas reduction, climate mitigation types of projects. That would be one aspect. Part of that, again, would be the broadest definition so the ports could come in with what is most effective for them.
The second element is less on the regulatory side environmentally but more in terms of the notion of what a port authority is. The nature of port authorities has been changing considerably over time. It used to be that a port was a place where a ship showed up, you took cargo off, sailors hung around, and that was it. That is still kind of what it is, but ports have evolved to become experts in logistics and efficiency that is expressed in ships, cargo, trucks and trains. They are, at their heart, data managers, knowledge economy participants, innovators and logistics experts. That gets expressed in innovation, both through some of the environmental initiatives they undertake and also their competitiveness and efficiency projects.
We have been advocating for changes to the Canada Marine Act and to our regulations, such as borrowing limits — for example, letters patent amendment processes — that allow the ports to fully come into their own in that area.
Given that kind of support, and given the strong recognition that the port authorities have of their stewardship of the environment in their communities, what will flow from that is an increased competitiveness and increased capability to implement more of these kinds of programs.
[Translation]
Senator Maltais: As you know, certain provinces like Quebec now have a carbon tax. How are the foreign shippers who unload merchandise in your province reacting? How do they view this?
[English]
Ms. Zatylny: I am sorry, senator, but I can’t comment on that. We have not had feedback from the ports in terms of how much of an impact it has had. I know the ports have certainly been stepping up.
[Translation]
Senator Maltais: What impact did the reduction of the navigation speed on the St. Lawrence have among your shipowners?
[English]
Ms. Murray: Are you speaking with regard to the speed reduction for the North Atlantic right whale?
The Chair: Yes.
[Translation]
Senator Maltais: No. On the St. Lawrence and in the Gulf, ships must reduce their navigation speed by 15 per cent to protect marine mammals.
[English]
Ms. Murray: Right. They are still in the process of collecting data. That speed-reduction zone has only been in place, I believe, since the beginning of August. For the Port of Gaspé, which is not one of our members, I understand that the crews’ itineraries have been cancelled. However, as far as the impacts of speed reduction, we are still collecting data on that. We so have some concerns, but we are collecting data as an industry.
[Translation]
Senator Maltais: I will give you the route. It starts in Newfoundland, in the Gulf of St. Lawrence, and in the channel that goes to Montreal, to the seaway. Quebec has issued some quite large fines to the shipowners that did not respect the required speed. How are the shipowners behaving?
Because you don’t sail into the Port of Amsterdam at 20 knots an hour, you have to reduce your speed a little before. The St. Lawrence Seaway is very important to the country, but everyone has to respect its standards, both going up it and coming down. It starts with the seaway on the way to Newfoundland, and from Newfoundland to the seaway. It is a new policy that applies to shipowners. Have you heard anything about their reaction to this situation?
[English]
Ms. Murray: The association is part of a working group with other industry associations, along with Transport Canada and DFO. We are working collectively to develop short-term and long-term mitigation policies or actions. That could be prior advance notice, such as an enhanced bridge watch for vessels. We are also looking at supporting DFO and Transport Canada long term in terms of their research efforts. We collectively recognize that this is a significant issue. I can’t speak on behalf of the ship operators; I can only speak on behalf of our associations. But we are working fairly closely to support anything that can enhance the population of North Atlantic right whales.
[Translation]
Senator Maltais: You have no specific targets to reduce greenhouse gases? And yet, this would be a good one, because if you reduce the speed of ships by 15 per cent, this will mean they will produce 15 per cent less greenhouse gases in the St. Lawrence. I think that the port authority of the St. Lawrence and the Great Lakes should work closely with the governments of Ontario and Quebec to see to it that the standards are respected. It would be one way for you to show that your association really is environmentally friendly.
[English]
Ms. Zatylny: I think you make a good point. That is why the Green Marine program is so effective, because it sets standards for environmental protection activities or actions within five separate categories, one of which is greenhouse gas reductions and particulate emissions.
The port authorities have limited capacity to impose that on shippers, so the port authorities do what they can within their realm of authority. They work with their attendants and terminal operators and try to implement measures that would encourage shippers to respect and respond to those. I mentioned that Prince Rupert does that with their Green Wave program and the Port of Vancouver does the same thing to financially incentivize ships that use cleaner fuels.
The notion of doing that through the other port authorities is already being looked at.
[Translation]
Senator Maltais: You could be the police forces of the St. Lawrence and the Great Lakes. You know that part of the tax the Ontario and Quebec governments are going to collect will go to marine research. You could benefit from this if you accept to police the St. Lawrence and Great Lakes.
[English]
Ms. Zatylny: Can we put pens down on that one?
The challenge that we have, then, is having the authority. Currently, we have responsibility without authority and that is a difficult issue to manage. Any kind of policing requires jurisdictional legislative authority to subpoena, to hold a vessel, to charge them and to go after them. That is a large set of issues that would have to be addressed.
Senator Woo: Ports have to continually reinvest in their infrastructure for competitiveness reasons but also, presumably, the reinvestment, if done correctly, can help improve environmental efficiencies and reduce pollution.
Can you talk a bit about the challenges that ports face in sourcing capital, including challenges related to investment from foreign or state-owned enterprises, the ability to raise capital from state-owned investors, and the ability to get financing from, say, the newly created Canadian Infrastructure Bank? What kind of challenges do ports face when it comes to raising capital for their expansion needs?
Ms. Zatylny: Thank you for the question. As I said earlier, port authorities have become adept over time, by necessity, at developing and managing a patchwork quilt of sources of financing.
As we known, marine infrastructure is extremely expensive — more so than many other types of infrastructure — and port authorities have to play in that space. Typically, port authority projects are funded through a combination of retained earnings — what the port itself can invest and what it can raise through the open markets, through financial bank loans — as well as what it can glean from private sector investors and the various levels of government. That is typically how it works. The issues that touch on that are many.
First, it relates to borrowing limits, which I mentioned earlier. When port authorities were created, they were given what we say are artificially low borrowing limits from the federal government, which are akin to the equivalent of the bank coming to you and saying, “Hey, guess what? Congratulations! You have been approved for a mortgage for $100,000.” And you say, “Great, I am trying to buy in Vancouver.”
The differential really is extreme. The port authorities are forced to go on a case-by-case, project-by-project basis to Transport Canada, the Department of Finance and Treasury Board to ask for a one-time increase in their borrowing limits which, of course, slows down or adds to the time it takes to get financing in place for a project.
The second issue relates to the Infrastructure Bank, which you mentioned, and we don’t know yet what that will be. There is not much definition around the Infrastructure Bank. Certainly, we are aware and supportive of and grateful for the changes that are being made to the Canada Marine Act that will enable port authorities to access funding under that. We look forward to that because it will be an essential component of that patchwork quilt of funding.
Beyond that, as I said, the federal, provincial and municipal funding is extremely important. That is where programs such as the NTCF, the National Trade Corridors Fund, become equally important. We have challenges there. One that we overcame was that the fund was designed to be open to the widest range of projects so that there was no floor or ceiling. However, at this point the fund is vastly over-subscribed.
There were 357 initial expressions of interest brought in and, of those, 177 were green-lighted to go to the business case stage. Those 177 are seeking $9.9 billion in short-term funding, whereas we know the program itself is $2.1 billion over 11 years.
Clearly, there is significant pent-up demand for infrastructure funding across all modes, but I know all of Canada’s 18 port authorities submitted. It will be a question as to how the rest of those projects that don’t get green-lighted get funded. Even though Transport Canada says it is merit-based — of course it is — no one will have gone through the business case development process without having a firm belief that theirs has merit.
The Chair: Thank you. I would like to take this opportunity to thank the witnesses. It was an interesting presentation and there were great questions. Thank you for being with us.
I will take a pause in the meeting right now and we will go in camera for a brief meeting.
(The committee continued in camera.)