THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
OTTAWA, Wednesday, May 29, 2019
The Standing Senate Committee on National Finance met this day at 1:30 p.m. to study the subject matter of all of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019, and other measures (Payments — Climate Action Support — Part 4, Division 4).
Senator Percy Mockler (Chair) in the chair.
The Chair: My name is Percy Mockler, senator from New Brunswick, Chair of the Standing Senate Committee on National Finance.
I’d like to welcome all those who are here today, as well as viewers across the country watching us on television or online.
As a reminder to those watching, the committee hearings are open to the public and available online at sencanada.ca.
At this time I would like to ask senators to introduce themselves, starting on my left.
Senator Klyne: Martin Klyne, Saskatchewan.
Senator Forest: Good afternoon. I am Éric Forest from the Gulf region in Quebec.
Senator Duncan: Pat Duncan, Yukon.
Senator M. Deacon: Marty Deacon, Ontario.
Senator Boehm: Peter M. Boehm, Ontario.
Senator Forest-Niesing: Good afternoon and welcome. I am Josée Forest-Niesing from Northern Ontario.
Senator Pratte: I am André Pratte from Quebec.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
The Chair: Thank you, senators.
Honourable senators and members of the viewing public, today we continue our consideration of the subject matter of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019, and other measures.
This afternoon we will examine the payment provision appearing under “Climate Action Support” in Part 4, Division 4, as listed in the summary of the bill.
To discuss the matter we welcome Richard Eberhardt, Director of Communications and Development, Green Economy Canada.
Lastly, from Low Carbon Cities Canada, we have Mary Pickering, Vice-President, Programs and Partnerships, The Atmospheric Fund.
I have been made aware by our clerk that Mr. Eberhardt will make a presentation to be followed by Ms. Pickering and then questions from the senators.
Richard Eberhardt, Director of Communications and Development, Green Economy Canada: Honourable members of the committee, good afternoon. My name is Richard Eberhardt, I am proud to be here representing Green Economy Canada.
In my remarks I will provide some context for what we describe as the low-carbon transition under way in the Canadian economy. I will describe Green Economy Canada’s unique role in helping to drive that transition and explain how rebates of greenhouse gas pollution fees as defined in Bill C-97 could benefit the small- and medium-sized organizations who are the focus of our work.
Green Economy Canada believes that our nation’s future economic growth is tied directly to a low-carbon transition. Through innovation, investment and a shift in business as usual, we can continue to produce and grow while limiting our climate impact and avoiding serious risks to the economy, including those identified in the Bank of Canada’s annual financial system review.
With an extensive national conservation focused on our largest sources of greenhouse gas emissions, the role and impact of this low-carbon transition on small business can sometimes be overlooked.
Green Economy Canada has direct experience supporting small- and medium-sized organizations in their efforts to reduce their carbon footprint.
Our organization launches and grows community-based Green Economy Hubs. Currently operating in seven Ontario cities, with the nationwide expansion under way starting in New Brunswick, Hubs are working with over 250 participating organizations to help them lead the transition in their communities.
Focusing our efforts on municipalities and First Nations, hospitals and schools and small independent businesses of all types, Hubs drive the transition to the low-carbon economy by helping these organizations understand their environmental profile, supporting their action planning and working with them to set and achieve reduction targets.
By convening these businesses into a network, they have the opportunity to learn from their peers and are publicly recognized for the progress they make toward their goals.
I am happy to share with you two brief case studies of what the transition to a low-carbon economy looks like for these organizations.
Morin Industrial Coatings is a small business which specializes in finishing heavy mining equipment in Sudbury, Ontario. Through a modest one-time investment in energy efficiency upgrades, they were able to cut their natural gas consumption by almost half. This project follows efforts to virtually eliminate their output of spent sandblasting media, a solid hazardous waste generated by the tonne in most similar operations resulting in major savings.
Your Credit Union is a financial services co-op with branches here in Ottawa and in Cornwall, Ontario. It has been steadily entrenching sustainability into every aspect of its operations. Over the last three years, Your Credit Union has implemented video conferencing to replace business travel, reduced office supplies by almost 50 per cent and installed building automation systems which have shaved off a third of their annual electricity bill. Staff have become engaged and are challenging Your Credit Union to do more.
These are just two of dozens of case studies we have seen within our network, demonstrating how businesses are becoming more economically competitive while reducing their emissions. These actions are made more effective when engaged by programs like Green Economy Hubs and are supported through incentives at the government level.
Small- and medium-sized organizations are becoming aware of their imperative, financial and otherwise, to take action on climate change. More of these organizations are profiling their carbon emissions, thereby evaluating their real exposure to carbon pricing and internalizing their need to respond.
The rebates addressed in the budget are key to ensuring a response which builds the low-carbon economy.
Greenhouse gas pollution fees will raise costs to small- and medium-sized organizations directly proportionate to their carbon intensity. The market provides them a choice: They can raise the price to the end user, offset the cost by cutting expenses or make smart investments as businesses throughout the Green Economy Network have, to reduce their carbon emissions and thereby lower or eliminate their exposure to the fee.
The rebates described in the budget provide an excellent opportunity to move small- and medium-sized organizations toward these investments. Incentivizing a range of energy-efficiency improvements which are meaningful in the small business context will enable more significant actions, more significant greenhouse gas reductions and, ultimately, a stronger economy.
These rebates can also enable continued investment in programs which engage small- and medium-sized organizations. Through education and support, more of these businesses will choose to make smart investments which improve not only their bottom line and, in turn, the economy as a whole but will also help Canada meet its national greenhouse gas reduction targets.
Thank you. I look forward to your questions.
The Chair: Thank you, sir.
Mary Pickering, Vice President, Programs and Partnerships, The Atmospheric Fund, Low Carbon Cities Canada: Good afternoon. I am here as a representative of a new Canadian initiative called Low Carbon Cities Canada, or LC3 for short. LC3 has received a $183 million allocation in the federal government’s budget 2019 as part of a $350 million investment in the Federation of Canadian Municipalities Green Municipal Fund.
LC3 is a self-sustaining initiative that will support community action to accelerate urban carbon-reduction solutions. Based on a proven Canadian model, the project is designed to support the Pan-Canadian Framework on Clean Growth and Climate Change to help Canada meet 2030 and 2050 climate targets.
Climate impacts are being felt most acutely in cities around the world, including in Canada. Cities are where half of our national carbon emissions originate from sources such as buildings, transportation, industry and waste. This is why cities are an important place to focus our attention in our efforts to meet our climate targets.
Local host organizations have already been mobilizing for over two years to prepare to quickly deploy new resources to accelerate climate action in seven of Canada’s largest urban areas: Vancouver and the Lower Mainland, Edmonton, Calgary, the Greater Toronto and Hamilton Area, here in Ottawa, Montreal metropolitan community and the Halifax region.
The Federation of Canadian Municipalities is our national partner in this work and it’s perfectly situated to leverage their deep existing relationships with Canadian cities to support LC3 and connect the program with cities all across the country.
LC3 centres will position local climate actions for broad-scale adoption. They will provide grants, financing and programmatic supports to help advance actions like energy retrofits and net-zero construction of new buildings; distributed renewable power systems; shared mobility and electrification of transportation; and a zero-waste economy.
Work will be done in full collaboration with local municipalities but will be specifically designed to engage many different community sectors, prioritizing low-carbon opportunities that maximize co-benefits such as improved public health, increased access to mobility and local job creation.
The LC3 program was advanced after a cross-country consultation concluded there is a need for more assistance to speed up climate action in cities in light of the pressing need to advance Canada’s greenhouse gas emissions reductions.
LC3 is modelled after the work of The Atmospheric Fund. Since 1991, this unique agency has contributed to significant local air pollution and emission reduction outcomes in Toronto while revolving its original $23 million asset to put more than $60 million into community actions and profitable local climate investments.
People in Canadian cities are increasingly concerned about climate change and seeking local solutions. LC3 will tap into diverse community resources, insights and investment and invite broad engagement. It will provide complementary supports in collaboration with municipalities, and it will design climate actions that address not only climate change but also core community issues like public health, local economic development and social equity.
For example, more efficient transportation options will reduce the productivity losses associated with traffic congestion and keep city air cleaner. Scaling up building retrofits will provide local jobs and can create new opportunities for those experiencing barriers to employment.
Improving the energy efficiency of Canada’s homes and buildings will make them more affordable by lowering energy bills and improving the condition of building stock in social housing will create better living conditions for some of our most vulnerable local residents.
LC3 will safeguard and leverage the federal investment over time. Federal funding of this program will be matched through local donations and investments.
LC3 centres are housed within experienced local host organizations that are ready to put funding to work quickly at the local level. Rather than spending down the capital, LC3 centres will invest it on a revolving basis, maximizing opportunities to invest specifically in climate change and clean growth ventures. This will provide ongoing revenue to support the activities of these centres in perpetuity.
Thanks so much for the opportunity to talk to you about this today. I look forward to your questions.
The Chair: Thank you.
Senator Marshall: My first question is for Mr. Eberhardt. Could you tell us about your organization? Do you receive funding from the federal government? Do you, like Low Carbon Cities Canada, receive a certain amount of money that you distribute out? I looked at your website and I know you have these projects under way, or they may be completed, but do you have funding to distribute to them? Could you tell us a bit about your operations and where the money is coming from and going to?
Mr. Eberhardt: Green Economy Canada right now acts as an umbrella for Green Economy Hubs. Green Economy Hubs are all housed in independent organizations within their own communities that are experienced working in those communities.
For ourselves, most of our resources have been moved from the public sphere in the change in government in Ontario. So no, there is not a general funding stream coming from the federal government to support the work that Green Economy Canada is doing or the Green Economy Hubs, though we’ve had some excellent support from the government and encouragement. The exception is that we have some resources that have been gathered through a federal project of Natural Resources Canada that is supporting the ongoing expansion of our hubs into new communities.
Senator Marshall: Do you foresee being eligible for any funding that is showing up now in budget 2019, or is it these individual projects that you’re overseeing, or do they access the funding?
Mr. Eberhardt: We, of course, advocated for the government to seriously consider the engagement particularly of small- and medium-sized enterprises as an important investment in the transition to the low-carbon economy. We are hoping and we are suggesting that it would be favourable for the government, in its programs that are coming out of the rebates identified in the budget, to make available, particularly for the community-based programs, access to engagement-level funding. It would be distinct from incentivizing a specific greenhouse gas reduction project and, rather, incentivizing or funding the engagement of businesses to take action.
Senator Marshall: So what will be your involvement, then, if they’re funding these organizations or projects outside of your organization? What will your role be?
Mr. Eberhardt: Our role will continue to be a centralized engagement point for the hubs so that we can continue to communicate about the role that small businesses and Green Economy Hubs are playing in the transition to the low-carbon economy and finding ways to continue to fund that work on the ground.
Senator Marshall: Do you not receive any federal funding or will you not receive any federal funding? Ms. Pickering was talking about the $183 million, and I feel now you’re missing out. Do you expect to receive any?
Mr. Eberhardt: I wouldn’t discourage you. No, but we are extremely hopeful that the rebates identified in the budget, when they become programs operated by Environment and Climate Change Canada, will help to fund operations on the ground. We will continue to look for opportunities to make sure that Green Economy Canada, as an umbrella organization supporting this work on a national level, will also have the resources it needs. We continue to look for opportunities at the federal government level, as well as with the various provinces, to make that happen.
Senator Marshall: Thank you very much.
Senator Pratte: My first question would also be for Mr. Eberhardt. You mentioned the rebates identified in the budget. Can you specify which program you’re talking about exactly?
Mr. Eberhardt: Yes. Under Part 4, Division 4, “Climate Action Support,” the rebates as defined in the budget by my “not legislative” understanding are that the money that is collected in the carbon greenhouse gas pollution pricing act will be rebated primarily to consumers and then what is set aside, or left over, will go to programs rebating small- and medium-sized enterprises in the provinces that money was generated from.
Senator Pratte: That’s what you were talking about.
Do you have any indication from the government as to how this will work exactly? That is, what small businesses will benefit from these rebates and how will the rebates be distributed to small businesses?
Mr. Eberhardt: We do not have any inside knowledge, but we do have a point of view. That point of view is that those rebates are best delivered by incentivizing action at the small business level so that they can take on projects that will reduce their carbon output, increase their energy efficiency and thereby build the low-carbon economy at the same time as increase their competitiveness.
Senator Pratte: Thank you.
Ms. Pickering, I’m sorry but it’s the first time I am hearing about LC3. I have a couple of questions. I’m trying to understand how this works exactly. You have received $183 million that, I gather, will be distributed to the local centres who will manage that money.
Ms. Pickering: That’s correct.
Senator Pratte: First of all, do you have any idea who will receive what? Has this been decided?
Can you give us an example of how this money will be leveraged? If I understood correctly, you want to keep the capital for the long term. How will you leverage this money? Give us an example of a local centre and something that they could subsidize or invest in.
Ms. Pickering: Sure. The funding for Low Carbon Cities Canada goes to the Federation of Canadian Municipalities first, and they are a national partner. They will work with us to provide those working capital assets, first, to the seven local centres that I mentioned. They will each receive between $10 million and $40 million in working capital assets, plus some additional funding for the new centres to cover the costs in the first three years.
The way that they will leverage these assets is that, first of all, they will be required to match the working capital asset that they receive with local donations to their main fund and through co-investment in local projects.
An example of this might be, in my organization, The Atmospheric Fund. We’ve been doing this work since 1991 so we’re like the model, and we have leveraged $160 million in co-investments in things that we invest in through our working capital in the greater Toronto and Hamilton area. Mostly we’ve been investing in high-impact building retrofits, for example.
Senator Pratte: You are mentioning that each local centre will receive between $10 million and $40 million. Is this enough to make a difference?
Ms. Pickering: I can tell you that The Atmospheric Fund received its initial investment of $23 million in 1991, and we have made some significant contributions to emission reduction in the city of Toronto, which now has a 33 per cent lower greenhouse gas emissions profile than it did in 1990.
So I believe it does make a big difference. I believe that we’re going to need every resource we have at hand. I think it’s a great start to begin to leverage new resources at the local level.
Senator Pratte: Final point. So they’re looking for matching contributions from local partners. Is it difficult to find that money?
Ms. Pickering: Maybe check back with me-in-in a couple of years. We have 10 years to do it.
Senator Forest: Ms. Pickering, cities are indeed important players when it comes to reducing greenhouse gas emissions, especially in terms of land use, active mobility, public transit, and the collection and management of residual waste.
You selected eight cities or urban areas. You work in partnership with FCM, whose Big City Mayors’ Caucus brings together the mayors of 22 cities. How did you pick the eight urban areas? Why them and not Rimouski? I don’t understand why Rimouski isn’t on the list, but that’s my next question.
Ms. Pickering: The reason that we have just seven cities to start is that it is just a beginning, and these were cities that express some interest in co-developing this project with us over the last two years. However, we’re very pleased that the full envelope of funding that FCM received for this work will allow us to extend the program to other cities as we go. So the seven are just a beginning, and the FCM will be creating a new program to extend this opportunity to other cities to follow on.
Senator Forest: When you say seven cities, aren’t you including the Halifax region? I count eight.
Ms. Pickering: Seven?
Senator Forest: Vancouver, Edmonton, Calgary, Toronto, Hamilton, Ottawa…
Ms. Pickering: Toronto and Hamilton is considered one city region, so we’re just counting one for that.
Senator Forest: What kinds of projects are you going to focus on? Further to my fellow senator’s question, I’d like to know whether the community has to match every dollar invested? Do funding participation requirements apply to these projects?
Ms. Pickering: Depending on the circumstances, we do try to leverage as much as possible the local investments in projects, which are often related to building investments but also to other types of new ventures that reduce emissions. For example, energy from biological waste facilities and so forth. Often we are looking for at least a one-to-one match with co-investment. In some cases, we take the full investment upfront in a smaller project to prove the case because part of our role is to help to establish business cases for new ventures in order to attract follow-on investors afterwards, and we document the business case in those situations.
Senator Forest: Thank you. As far as the $183 million goes, does the full amount go to projects, or is part of the money used to cover your organization’s administrative costs?
Ms. Pickering: The funds will actually be invested and then the returns on those funds will cover all administrative costs for the organizations out of their earnings.
Senator Forest: Your administrative budget is in addition to that funding, then.
Ms. Pickering: No, I would say that once these organizations are established, like my organization, we have a working capital asset, we invest it and we only spend what we earn to cover our administrative costs, granting costs and other programmatic costs.
Senator Forest: What you spend on administration as a share of earnings isn’t clear.
Ms. Pickering: For our organization, which is the only example I can draw from right now, we would never spend more than 20 per cent of our annual budget on administration.
Senator Forest: I have one last question for Mr. Eberhardt. It’s more of a technical or concept-based question. Have you looked into the circular economy approach in relation to new practices based on zero waste?
Mr. Eberhardt: It’s an excellent question. Waste avoidance and the circular economy are a core part of making the transition to a greener economy or a low-carbon economy. The focus of work that’s happening within green economy hubs is primarily on direct greenhouse gas emissions through projects but also includes other aspects of sustainability, including waste reduction and waste avoidance, and the concepts behind the circular economy consuming less is the best choice versus consuming better. That is absolutely one of the aspects of our program.
Senator Forest: What you do, then, is build expertise, know-how, to help small and medium-sized businesses in Canada make the transition to the circular economy. Is that right?
Mr. Eberhardt: We would describe it as capacity building with the participants so that they understand their environmental profile, including their waste profile. The example that I provided in my comments, Morin Industrial Coatings, a sandblasting firm, instead of shipping out tonnes of sand, they are moving to a metal shot that is recycled. That is a circular economy in action.
Senator Eaton: My questions are much more straightforward.
So you don’t give money to larger concerns; in other words, if I’m a manufacturer and I have a big carbon footprint there’s nothing in it? I would pay you a carbon tax, or I’d pay the government a carbon tax, but there would be nothing that would come back to me to incentivize me to make changes to the way I manufacture my good; is that right?
Mr. Eberhardt: Green Economy Canada and the Green Economy Hubs are focused on community-based organizations. It doesn’t mean we overlook or ignore larger emitters in our programs. But I think your question, senator, is really focused on the makeup of the Greenhouse Gas Pollution Pricing Act and the way it responds to putting a carbon fee on larger emitters versus smaller emitters. I’m not an expert in the second stream, which is focused on the large emitters and the way that those fees are calculated for them, but there is a distinct difference between those two streams.
Senator Eaton: So you’re not focused on emitters so much. When you say there are schools, hospitals and non-profits, the money you give to them is for retrofitting and improving their carbon footprint?
Mr. Eberhardt: Just for clarification, we are advocating for the rebates that are identified in the budget to go to programs that are going to best help those organizations.
Senator Eaton: You pick them out?
Mr. Eberhardt: We do not select. We support. The organizations themselves have the responsibility to respond, or not, to carbon pricing, and our organization solely exists to support them in selecting the best possible response.
Senator Eaton: I’m sorry; you’re supporting whom? The government in its choices or the person asking for a carbon rebate?
Mr. Eberhardt: We act on the ground with small- and medium-sized organizations that are looking for the best solution possible to both climate change mitigation and carbon policy.
Senator Eaton: And then they go ahead with your support and make the request of the government?
Mr. Eberhardt: That’s correct. Our advocacy is focused on the makeup, should this aspect of the budget move forward, what is the makeup, the best program that can be delivered to support those types of organizations in making the best possible choice.
Senator Eaton: Thank you.
Senator Forest-Niesing: My question is for Mr. Eberhardt. Since putting a price on pollution will likely mean extra costs for small and medium-sized businesses, do you think the measures we’ve talked about today strike the right balance between addressing climate change and ensuring small and medium-sized businesses remain competitive and profitable?
Mr. Eberhardt: It very much depends upon the nature of the programs that come out of these rebates. The school of thought that rebates alone can deliver the reductions that are going to offset the costs is — the math may not add up. The extra part is providing that business case for a more significant and broader acceptance of investment as a solution or an offset to carbon pricing, versus other market choices that a business might make, which may have adverse effects to the economy.
Senator Forest-Niesing: If I understand correctly, you play a crucial role in helping small and medium-sized businesses make the right choices.
Mr. Eberhardt: Yes. We’ve found that particularly in a small and medium-sized organization sector, engagement is key to move them down a path where they’re choosing investments over other types of responses to carbon policy.
Senator Duncan: This is not really a question; it’s a comment directed to Ms. Pickering.
I appreciate the link with the Federation of Canadian Municipalities, FCM, and the focus of your organization is with municipalities and on the more populous areas of Canada. I would like to draw your attention to Yukon, where I’m from, which is the most affected part of Canada by climate change. Our municipalities have made significant efforts.
My comment is to draw your attention to the efforts of the Vuntut Gwitchin First Nation in Old Crow. This is a self-governing First Nation, so there isn’t a municipality in that area, there isn’t any other local government. It is the First Nation government. Their First Nation government has declared a state of climate change emergency in their community.
They wouldn’t be eligible for your funding because they’re not a municipality. Government, then, points to Indigenous Services and they’re a self-governing First Nation, so where do they fit in all of this? I don’t think they fit under your program. I just wanted to draw your attention to their efforts.
Ms. Pickering: Thank you for that comment. If I may, our funding is not for municipalities; it is for all community organizations that want to advance climate action at the local level. That’s what makes this program unique and apart from other types of activities that are currently happening. This is local funding, not municipal-focused funding.
Senator Duncan: I apologize. Thank you for that clarification. In other words, this First Nation government could apply to your organization?
Ms. Pickering: Yes.
Senator Duncan: Thank you very much for that.
Senator Klyne: This is for Mr. Eberhardt. I wanted to ask you to share some stories of success. You’ve launched a number of local hubs, and you’ve been supporting some local hubs. This is, I take it, around sustainable economic growth, which is economic development, which is protecting the natural resources and the environment for generations to come.
Tell us about one of the success stories you have had through you leveraging the services into these organizations and supporting them.
Mr. Eberhardt: Certainly. Thank you very much for the question. I’m always happy to talk about the successes.
Our program was started as a single community entity in the Waterloo region and one of the oldest, the most long-standing members or participants in the program is a small metal manufacturer named VeriForm. VeriForm started out with a staff of 20 or 30 people and began to make changes within their own operations. A metal manufacturer reducing their greenhouse gas emissions, their direct, on-the-ground greenhouse gas emissions by 77 per cent, offsetting the rest. They’re essentially a carbon-neutral steel manufacturer. At the same time, they were adding staff and expanding their shop floor. As far as examples within the Green Economy Canada’s network has been, and we’ve worked with many organizations and we have about 250 active right now, the VeriForm example shines brightly as a way of approaching the green economy transition.
Senator Klyne: They set goals and you celebrate the achievement of those. Do they set any social impact or sustainability goals? Are those primary drivers?
Mr. Eberhardt: There are many programs internationally which encourage broader corporate social responsibility. The Waterloo Regional Sustainability Initiative in Waterloo has adopted the Benefit Corporation’s B Lab assessment as a tool they can set a target on. Participants in that hub are able to set targets against broader corporate social governance and sustainability goals, as well as water, waste avoidance and reduction, and greenhouse gas emission reduction.
Senator Boehm: Thank you for being with us today. I appreciated the shout-out to Kitchener-Waterloo where I’m from originally.
I’m following on something that Senator Forest raised earlier, and that is smaller municipalities and how they can be engaged. It’s great that the Federation of Canadian Municipalities representing everyone is so engaged.
My question is for you, Ms. Pickering, in the sense that even smaller municipalities across the country are establishing smart city offices, or smart city management systems, whereby they are looking at the overall picture. How to integrate AI, how to reduce carbon, how to reduce carbon by reducing the reliance on electricity and the like, changing hours, working different ways in municipal facilities, et cetera.
So I’m wondering, as you roll out your program — and hopefully it will go to some of these smaller communities where there is a lot of enthusiasm — are you working with the smart cities managers and others who are charged with those responsibilities?
Ms. Pickering: Yes. I will say that the further rollout of this program has to be designed. As yet there are no parameters, but the money has been set aside for it. I don’t work for FCM, but my understanding is that different-sized cities have different types of needs, and resources and situations, so things are best custom designed for different types of needs that way.
Certainly with a program like this, a first place to begin is with the people who are already engaged and there’s already a significant amount of traction, especially within the city government itself. We’re also interested in reaching out to champions outside of the municipal sphere, as I was explaining earlier, because we’d like to bridge into the community more broadly and help to support champions inside and outside the municipal infrastructure.
Senator Boehm: So you’re interacting directly with the people working in the municipal bureaucracies?
Ms. Pickering: Through FCM. That is their clientele. Definitely they will be the people who will be consulted and who would be advising, I would think, on the design of this program, based on their needs.
Mr. Eberhardt: If I can just pick up on your question, senator. I note you’re from Waterloo region. The region of Waterloo has eight municipalities participating in their local hub. In the Sudbury context, in northern Ontario, where there are many, many very small communities within 200 kilometres of the core of Sudbury. The larger municipalities in those contexts, of course, have very many supports. The small ones have extremely limited capacity from a staff standpoint. For that reason, the Green Economy Hubs in those zones are working closely with a city clerk who may also have several other responsibilities or an economic development officer who may also have other responsibilities beyond the economic role that they play to move them down this path to deliver on the FCM’s goals they’re participating in.
You’re right. There’s a particular challenge there in those smaller municipalities because they’re looked at, to lead their communities down a path of GHG reductions, as well as their own corporate GHG reductions, without having very much or any on-board capacity to do that work.
Senator Boehm: So you would be looking, then, at also providing some capacity building or training for the municipal workforce of the future?
Mr. Eberhardt: Absolutely. For the workforce of today and the future. Absolutely.
Senator Boehm: Thank you.
The Chair: Senators, we will move on to a second round.
Senator Marshall: My questions are for Ms. Pickering. It’s on the $183 million. That’s part of — that’s $183 million of a $350 million investment in the Federation of Canadian Municipalities’ Green Municipal Fund, right? You haven’t received that money yet, have you?
Ms. Pickering: No.
Senator Marshall: So who decides how it will be allocated?
Ms. Pickering: The allocations were in an original proposal. So we are confirming that now in consultation with the Federation of Canadian Municipalities. We’re in discussions to oversee the transfer.
Senator Marshall: So the $183 million have been fully allocated out?
Ms. Pickering: The plan for it has been fully detailed, yes.
Senator Marshall: Do you report back to the federation? Because there’s $183 million, so you’re going into this with some objectives in mind. Are there certain objectives you’re hoping to meet and that you report back to the federation?
Ms. Pickering: Yes. There will be. There will be a set of key performance indicators that will be shared among all the centres that are being created now, and it will form part of the contract of individual centres with FCM, along with a reporting schedule, which I would assume would include audited financial statements and reports against key performance indicators on an annual basis.
Senator Marshall: Could you give us an example of some of the key performance indicators so we can get an idea of what it would be?
Ms. Pickering: I can give you an example of the key performance indicators used at my agency, if you like. We talk about the potential emission reductions associated with the investments and grants that we make, and we tally those on an ongoing basis. We look at financial capital mobilized by our investments as well. So those are two key indicators. We also do some associated indicators that have to do with local job creation and economic development.
Senator Marshall: So there is something on job creation also.
Ms. Pickering: Yes.
Senator Marshall: Thank you very much.
Senator Forest: Something concerns me about this. It’s a good initiative, but only seven cities were selected. FCM’s Big City Mayor’s Caucus brings together the mayors of 22 cities. Canada has more than 4,000 municipalities and over 5,600 census subdivisions, if I include Indian reserves and unorganized territories. The initiative targets seven cities and has a funding envelope of $183 million. My municipal background may be the reason why I’m so bothered by this. The green fund has been around for over 12 years, and we know it doesn’t get fully depleted because it’s not accessible to small communities since they lack the necessary resources. Unlike the global challenge affecting the entire planet, the strategy to invest $183 million in seven municipalities or urban areas is something I can’t quite wrap my head around. I can’t see the logic in picking seven urban areas out of more than 4,000 municipalities.
Some small municipalities are doing big things in terms of initiatives to reduce greenhouse gas emissions. In the Eastern Townships, for example, a group of communities in a regional county municipality made the decision to ban plastic bags and to process biodegradable material. Rimouski has been doing that for 10 years or so. I can’t understand why these seven cities were chosen out of all the municipalities given the challenge the green fund poses.
Ms. Pickering: We hope that we can engage all the cities in Canada in this work. I think it’s critical that we do so to reach the kind of targets we have on the national level.
The seven organizations that we are looking at, to begin, represent multiple cities. These cities have the majority of the urban population, and the emissions are associated with people in cities doing things. Those are where the big emissions are coming from on the overarching basis.
So it’s a place to start. It should not be the end. It should be somewhere that we can begin and generate. There are hosts in those cities now that are ready to start, but there’s no way that we want to end there. We do want to design this program to support all the different types of needs and cities across the country to do this type of emission work, not only in their local municipalities but with their community partners as well.
I think that will be a critical component of this work. That’s why the other half of this allocation is set aside to stimulate and generate support for other cities beyond these seven that represent the majority of the urban population.
Senator Forest: Will your organization be reporting on the outcomes associated with its investments? Will it be reporting solely to FCM or to FCM as well as the supplier of funds, in other words, the government? How will the reporting work?
Ms. Pickering: Are you asking how we measure the impacts?
Senator Forest: I’m asking about the impact and cost benefit, meaning, the return on the investment. I’m interested in your organization’s accountability for these major investments, outcome-wise.
Ms. Pickering: The development of co-benefit metrics is very important. It’s something we’ve been working on at my agency. I can’t say that we have fully developed metrics yet. However, we work with the City of Toronto, and we’re working on that as well. For example, we know that there are Canada-wide studies that show the number of jobs that can be created with each dollar invested in energy efficiency, which is a very large component of much of this work. We’ll be examining and deepening our understanding of that.
My agency, for example, just did work with the University of Toronto to measure the pre- and post-levels of air quality in social housing buildings before and after retrofits. It was the first scientific study on this topic to show us what happens inside those buildings to measure the air quality and indoor comfort which is a critical component of indoor health for the vulnerable populations in those buildings. We’ll continue to develop and refine those, and report them, and we’ll be asking all centres to report against the same set of metrics, which we’ll co-develop with FCM over the next six to eight months.
Senator Forest: Within a year, after FCM holds its conference, it will be possible to check. Will you be reporting to FCM and the authorities generating the funds and giving you the funding to do what you’re doing?
Ms. Pickering: That’s right. We will have to report against those key performance indicators on an annual basis to FCM, and they will review that performance annually as well.
Senator Pratte: Mr. Eberhardt, in an op-ed in the Hamilton Spectator earlier this month, your executive director, Ms. Lloyd, insisted on the role of businesses like you just did. She said:
Businesses have a crucial role to play in driving our transition to a more resilient low-carbon future.
I noticed in the examples you gave of small businesses that participated in some of those programs or initiatives, there’s obviously an environmental impact, but for many of these businesses it’s also a financial impact. They usually save money if they use less energy, and so on.
If there weren’t rebates to compensate for the cost of the new carbon fee, would businesses still, simply for business reasons, continue to and even increasingly put forward programs to reduce their carbon footprint? I’m wondering whether the rebates will really make a difference.
Mr. Eberhardt: I think the answer to both questions is, yes. Businesses will take action in a non-incentivized environment. More businesses will take more action faster in an incentivized environment. Our goal as an organization — and I believe our national prerogative — is to accelerate that action and, in so doing, indemnify the economy from risks while exposing the economy to opportunities. Businesses will take action in an incentivized environment faster than in a non-incentivized environment.
Senator Pratte: But the carbon tax is supposed to be the incentive, right? That is, the larger your footprint, the more you pay. We’ve had this discussion before, but if you compensate for the carbon tax, then the incentive is less, isn’t it?
Mr. Eberhardt: If you’re compensating for the full and total cost of the carbon fee, at every level, there is no purpose to collect it except to help people understand the impact of their profile. Businesses have to work to find out that profile. They have to assess it. They might need some help like organizations like are Green Economy Hubs. It’s not readily apparent from just looking at a hydro, or a gas bill, or your diesel surcharge, that you’re using a certain amount of carbon. You have to find that out for yourself. Both the rebates, as far as encouraging a certain type of response and the existence of the fee, work together to accelerate action.
Senator Pratte: Thank you. Ms. Pickering, your organization works with business. Do you have a view on the impact of rebates, and how necessary they are to incentivize those companies to act?
Ms. Pickering: I agree that there is a base of businesses that will undertake energy efficiency directly, but it is not enough to reach the targets; and that we do need further supports for this work and to make sure there’s a strong business case to go forward with this work. Sometimes the paybacks are a bit longer than businesses want to accept. This helps to bring the business case into a more acceptable form for most businesses.
Senator Pratte: Thank you.
Senator Neufeld: Thank you. This question is for Mr. Eberhardt. You answered a question to Senator Klyne in regard to a company that reduced itself to a zero emitter and it was a steelmaker unless I misunderstood you. That’s great. I’m not disputing that. Could you tell me a little bit about how they did that? I want to drill down a bit. How did they accomplish that? If they accomplished it, why can’t others accomplish it?
Mr. Eberhardt: I would be happy to provide the clerk with more details to back up that case and explain exactly what actions were taken at Veriform to deliver that. The carbon emissions profile at any steel manufacturer would be the cost of any process, or the amount of energy going into any process. That is, reducing their process emissions, reducing their facility-level emissions from space heating, primarily, and reducing, as much as possible, other transportation-related costs.
Speaking very generally, a company like Veriform, that, while growing, reduced their GHG output from the baseline by 77 per cent, did all those things and deeply in order to accomplish that, all while increasing competitiveness. I would be happy to provide the clerk with a detailed brief about the changes that were made at Veriform. They’re very proud of them had and they like to share them.
Senator Neufeld: Yes, and they should be. I think it’s very interesting, but I’ll first read what was done to reduce those emissions. Thank you for saying you will provide it to the clerk so all of us get it.
Mr. Eberhardt: If I can add, the second part of your question was: Can other businesses do this? Can other businesses make the same changes? The answer to that question is absolutely. They can make the same or similar changes within their own operations to accomplish the same goal.
Senator Neufeld: Thank you.
Senator Klyne: I’m not trying to make a leap here, but is any of this done under the umbrella or in connection with the 2030 agenda for sustainable development?
Ms. Pickering: Sustainable Development Goals are very aligned with the kind of work we’re doing in Low Carbon Cities Canada for sure, including the approaches we are taking that focus on leveraging partnerships with the community to maximize impacts and engage our citizenry with this work. We can’t do this work alone with our cities or otherwise, but there is quite a strong alignment.
Senator Klyne: Was that a requisite to receiving any funds that it aligned with the 2030 Sustainable Development Goals?
Ms. Pickering: We haven’t received any funds yet, so, as yet we haven’t heard that’s going to be a requirement. But I think if it were, it would be handled pretty easily.
Mr. Eberhardt: The Sustainable Development Goals are developed to look across the entirety of the international situation right now. The Canadian context for sustainable development goals, particularly the work we’re working on sustainable cities and climate action, are key aspects of those very broad Sustainable Development Goals that are forming the basis of our work.
Senator Klyne: I believe that all the ministries in our federal government need to align themselves in some way to that 2030 agenda so you might do well to pitch that in your delivery.
The Chair: With the indulgence of the senators, I have three little questions. Stakeholders at round tables I did across in Atlantic Canada, more specifically in New Brunswick, are telling me that in Canada with respect to energy and global warming — and I’ll make a statement and then I’ll ask three little questions. The need to reduce greenhouse gas emissions in order to avoid catastrophic global warming was recognized and accepted in Canada more than three decades ago.
That comes from scientists. They also say in order to meet its commitments, the Government of Canada, as they are looking at it in the prism of today, needs to transform the structure of the entire economic system. That’s the statement they provided. They also said that carbon tax will not be the single most important vehicle or instrument to make those changes that we should be endeavouring toward.
My question to you, and if you could be a bit more explicit and with better clarity: What kinds of technological innovations would be supported by climate action support payments? Can you give us specific examples?
Mr. Eberhardt: I can give you examples of what should be incentivized. The government will develop its programs following the budget, but the best examples are really focused on increasing the efficiency of heating systems, both for building efficiency and for processes within industrial and manufacturing contexts. Those are high intensity emissions. Also vehicles, so transportation and reducing the amount of greenhouse gas emissions to move goods around the province.
Ms. Pickering: When you’re talking about this statement from your constituents about the needs for transformative change, focusing on technological solutions only is just a very partial type of solution. For example, we need to get 80 per cent emission reductions from the buildings in all of our cities, and we have the technology we need to do that already and have for decades. It hasn’t happened, but why? For other reasons. Because we don’t have the right types of regulatory regimes or financial structures or because we haven’t engaged people who live in those buildings with the best techniques. I would just say that we have to look at this problem in a very broad manner if we’re going to get the deep results that we’re looking for.
The Chair: This prompts my second question. What return on investment, for example, reduction of greenhouse gas emissions, could be expected from the investment in Low Carbon Cities Canada’s initiatives? Can you give some clarity on that, please?
Ms. Pickering: We estimate that achieving the Energy East objectives outlined in the Pan-Canadian Framework would result in 118,000 jobs and a boost in our GDP by 1 per cent by 2030. I can also tell you that, from a financial perspective, that the investments that my organization makes with its collaborators in our local investments are creating a highly profitable rate of return in our portfolio, higher than the benchmark.
The Chair: How will it be measured?
Ms. Pickering: How is that particular — that’s measured through financial return on investment in our portfolio.
The Chair: Thank you. My last question, and I don’t want to name the senator that talks about Fred and Martha — I say Canadians at large, from coast to coast to coast — will churches and community halls qualify for community initiatives?
Ms. Pickering: Yes, they will.
The Chair: Thank you.
(The committee adjourned.)