THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Thursday, December 14, 2023
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 9:15 a.m. [ET] to conduct a study on emerging issues related to the committee’s mandate.
Senator Rosa Galvez (Chair) in the chair.
[English]
The Chair: My name is Rosa Galvez. I’m a senator from Quebec and the chair of this committee.
Today, we are conducting a meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. Before we begin, we will need to move forward with a motion. As you might remember, there was an agreement at the beginning of the parliamentary session that the position of chair will alternate every year between Senator Paul Massicotte and myself. Since this is the last meeting of the year, I would therefore like to advance the following motion: I move that the Honourable Senator Paul Massicotte chair the Standing Senate Committee on Energy, the Environment and Natural Resources as of January 1, 2024.
Would anybody like to second my motion?
An Hon. Senator: I do.
The Chair: Thank you. Do we need to vote? Is it agreed? Thank you so much.
Not to put pressure on Senator Massicotte, but the things that are outstanding are the report that you initiated — the study on oil and gas — and the extreme weather events planning. It is all there for you to continue, and hopefully in March, we will be visiting some of the areas in Canada affected by extreme weather events.
Senator Massicotte: I thought we would start with a trip to Dubai.
The Chair: No, no. You are not that lucky. It’s fun to be in Dubai, but 13 hours’ jet lag is horrible.
I would like to begin with a reminder: Before asking and answering questions, I would like to ask members and witnesses in the room to please refrain from leaning in too close to the microphone or remove your earpiece when doing so. Recently, there have been some accidents — not in this committee — so it is important that we avoid any sound feedback that could negatively impact the committee and staff in the room.
I will now ask my fellow committee members to introduce themselves.
[Translation]
Senator Miville-Dechêne: Julie Miville-Dechêne, Quebec.
[English]
Senator Sorensen: Karen Sorensen, Alberta.
Senator McCallum: Mary Jane McCallum, Manitoba.
Senator Anderson: Margaret Dawn Anderson, Northwest Territories.
[Translation]
Senator Massicotte: Paul Massicotte, Quebec.
[English]
Senator Wells: David Wells, Newfoundland and Labrador.
Senator Arnot: David Arnot, Saskatchewan.
The Chair: Thank you.
I wish to welcome all of you and the viewers across the country who are watching our proceedings.
Today, the committee has invited the Commissioner of the Environment and Sustainable Development to appear as part of its study on emerging issues related to the committee mandate. This panel welcomes, from the Office of the Auditor General of Canada: Jerry V. DeMarco, Commissioner of the Environment and Sustainable Development; Susan Gomez, Principal; James McKenzie, Principal; and David Normand, Principal.
[Translation]
Welcome and thank you for accepting our invitation. You’ll have 10 minutes for your opening remarks. Mr. DeMarco, you have the floor.
Jerry V. DeMarco, Commissioner of the Environment and Sustainable Development, Office of the Auditor General of Canada: Thank you, Madam Chair.
[English]
We are happy to appear before your committee to discuss five reports, which were tabled in Parliament on November 7.
I would like to acknowledge that this hearing is taking place on the traditional, unceded territory of the Algonquin Anishinaabe people.
[Translation]
Three of our five reports are about reductions in greenhouse gas emissions that are urgently needed to address the global climate crisis. Emissions in Canada are higher today than when this country and the world first committed to fighting climate change, more than 30 years ago.
[English]
Targets and plans have come and gone, and Canada has yet to deliver on any. Meanwhile, the need to reverse the trend on Canada’s greenhouse gas emissions has only grown more pressing. This is not my first time sounding the alarm, and I will continue to do so until Canada turns the tide.
Our first audit focuses on the 2030 Emissions Reduction Plan developed by Environment and Climate Change Canada under the new Canadian Net-Zero Emissions Accountability Act. While we were not required to begin reporting on the implementation of this plan until the end of 2024, given the urgent need for Canada to up its game in the fight against climate change, we decided to move more quickly. We found that the plan was insufficient to meet Canada’s target to reduce emissions by 40% to 45% below the 2005 level by 2030.
[Translation]
In its most recent projections, Environment and Climate Change Canada disclosed that the measures detailed in the plan would reduce emissions by only 34% below the 2005 level. Measures needed to meet the 2030 target were delayed by departments, or were not prioritized. We found a lack of reliability and transparency in economic and emission modelling, leading the government to make overly optimistic assumptions about emission reductions.
I was also concerned to find that responsibility for reducing emissions was fragmented among multiple federal entities not directly accountable to the Minister of Environment and Climate Change. This means that the minister has no authority to commit other entities to meet the target.
[English]
On the positive side, measures in the plan, such as carbon pricing and regulations, have the potential for deep emission reductions if they are stringent enough and applied widely. The federal government can still reduce emissions and meet its 2030 target with drive, focus and leadership. Implementing our recommendations would be a step in the right direction.
Let’s turn now to our report on departmental progress in implementing sustainable development strategies. We assessed the progress made by National Defence, Parks Canada, Fisheries and Oceans Canada and the Canadian Border Services Agency in meeting the target of converting 80% of the federal fleet to zero-emission vehicles by 2030. Together, these four organizations are responsible for most of the vehicles owned by the federal government.
We found that the percentage of zero-emission vehicles across all four organizations was low, ranging between 1% and 3% in 2022.
[Translation]
At this pace, only 13% of federal vehicles will be zero-emission by 2030, a far cry from the 80% target. None of the organizations had a strategic approach for how they planned to meet the target.
With a target date of 2030 and given that the government typically replaces its vehicles on a seven-year cycle, these organizations must act quickly to develop and implement realistic plans for acquiring zero-emission vehicles so that the government fleet can help reduce greenhouse gas emissions.
[English]
Also on the topic of zero-emission vehicles, our audit of the zero-emission vehicle infrastructure program found that Natural Resources Canada had contributed to expanding the charging infrastructure overall. The program is set to exceed its 2026 target of installing 33,500 charging ports. As of July 2023, 33,887 charging ports were either completed or under development. However, we also found that in funding charging stations, the department had not prioritized underserved areas including rural, remote and Indigenous communities and lower-income areas. The vast majority of the ports were located in Ontario, Quebec and British Columbia.
[Translation]
While the federal government is not solely responsible for funding charging stations for zero-emission vehicles, it can do more to help bridge the gaps in infrastructure that are unlikely to be addressed by the private sector. We found that Natural Resources Canada did not collect data to help it identify these gaps, nor did it set targets for underserved areas.
[English]
There remains a large gap between the current number of charging stations and the number needed by 2035. Natural Resources Canada needs to work with other levels of government and with the private sector to address gaps in charging infrastructure so Canadians feel confident making the switch to zero-emission vehicles.
[Translation]
Turning now to our audit of monitoring commercial marine fisheries catch, we found that Fisheries and Oceans Canada was unable to collect dependable and timely fish catch data. The department did not have a full picture of the health of Canada’s fish stocks.
We also noted that the department needed to improve its oversight of the information it receives from third parties. We found that many of the weaknesses we reported when we last audited this area seven years ago remain problematic. For example, the department created a Fishery Monitoring Policy in response to a recommendation in our 2016 report, but we found that it had not implemented this policy nor supported it with resources or an action plan.
[English]
Seven years ago, we also flagged that Fisheries and Oceans Canada’s information management systems needed to be modernized to support the collection of dependable and timely data. We found that progress in this area has been very slow. Fisheries and Oceans Canada has spent about $31 million to implement a system to provide ready access to data and integrate information across all of its regions. However, we found that the department’s rollout of this new system is incomplete and that a full launch has been delayed by 10 years.
Without dependable and timely data on fish being caught, Fisheries and Oceans Canada does not know whether commercial stocks are being overfished. The collapse of the Atlantic cod population in the 1990s, with its far-reaching economic and social impacts, has shown that it is far more expensive and difficult to recover depleted stocks than it is to keep them healthy in the first place.
[Translation]
We also released the annual report on environmental petitions. Petitions are a way for Canadians to raise their concerns relating to the environment and sustainable development and receive a response from responsible ministers.
In closing, I want to emphasize again that the window to avoid catastrophic climate change is closing fast. Intense forest fires, smoke-filled skies, heat waves, violent storms, and flooding are becoming more severe and frequent, and Canadians across the country are being impacted.
[English]
Canada is the only G7 country that has not achieved any emission reduction since 1990. Taking meaningful action to reduce emissions is the most impactful thing Canada can do to play its part in addressing the global climate emergency. Solutions exist, such as renewing the government’s fleet with zero-emission vehicles or implementing effective fiscal and regulatory measures to reduce greenhouse gas emissions. The problem is that available solutions are being implemented much too slowly. That needs to change — now.
Madam Chair, this concludes my opening statement. We’d be pleased to answer any questions the committee may have.
[Translation]
The Chair: Thank you very much, Mr. DeMarco.
We will now go to questions.
Senator Miville-Dechêne: Welcome to our committee, Mr. DeMarco.
In your presentation notes, you unequivocally state that Canada is the only G7 country that hasn’t managed to reduce emissions at all since 1990, which is deeply concerning for the future of our planet.
As you know, on December 7 the federal government presented its Regulatory Framework for an Oil and Gas Sector Greenhouse Gas Emissions Cap, where it announced that it would reduce its GHG emissions by 35% to 38% below 2019 levels by 2030 while also increasing oil production by 12%,
These are recent developments, but do you have any thoughts on them? Is this realistic? Does it give you hope?
Mr. DeMarco: As you have noticed, we need additional measures to reach our target. The measures in the 2030 Emissions Reduction Plan don’t add anything to the 40% to 45% target. So we need additional emissions capping measures.
Will that be enough? We haven’t done any detailed analysis, and it’s only one possibility. The regulations haven’t come into effect yet. It’s more of an idea than a concrete measure. If it was a concrete measure, we could analyze how much those measures had contributed to meeting the 40% to 45% targets. I’m happy that more measures are being taken, but at this point I still don’t know if the additional measures will be enough for us to reach our target.
Senator Miville-Dechêne: I have a second question, briefly. The framework states that these targets are achievable with the use of carbon capture. As commissioner, you’ve studied the efficacy or lack thereof of carbon capture technologies. Have you spoken to the fact that that’s the way to go if we want to reduce emissions without cutting oil production?
Mr. DeMarco: Carbon capture technologies are new and emerging. We’ve noted that people are too optimistic about carbon capture. It’s one of the examples in our report about modelling hypotheses: people may be too optimistic. That can have an effect on GHG emissions reductions, but it’s still to early in the technology’s development to know what impact it will have on emissions reductions.
[English]
Senator Miville-Dechêne: If I could be a bit more precise: Do you have any figures or percentages which show us how much capture can be done with the technology we have today?
Mr. DeMarco: With the technology that’s available today, it’s rather limited. I don’t have an exact number for you. We found that the number in the plan was overly optimistic. We didn’t attempt to replace it with our own number because there is too much uncertainty around it.
Our view is that, with emissions modelling generally and with respect to this plan, a conservative approach is needed. We can’t just hope that new technologies will fill gaps. We need to rely on existing technologies to fill the gaps and invest in new technologies that may make it easier to reach the target but not rely on technologies that are not advanced enough to assume that we’ll meet the target.
It’s a matter of having a realistic plan while still investing in the new technologies, but not just assuming that new technologies will do all the heavy lifting without knowing that.
[Translation]
The Chair: I’d like to welcome Senator Boisvenu to the meeting. Let’s continue with the questions.
[English]
Senator Arnot: Mr. DeMarco, congratulations on your reports and the good work that you do. You provide objective, independent assessment of these critical issues. You are indicating that you’ll continue to sing this song. Are you projecting to hold the government to account? Are you planning to do that for years or decades?
More specifically, you are saying success is directly related to drive, focus and leadership. I want you to comment on a couple of things. With respect to the clear implications of Canada’s performance since 1990 and 2005, do you think the government’s measures in the plan perhaps disproportionately burden some groups in order to meet the plan?
In Saskatchewan in particular, I want to point out that the SaskPower Corporation needs about four small modular reactors, and it will take about 8 to 10 years to get those online. They are about $5 billion a unit, so $20 billion for a population of 1.2 million people. I believe the federal government needs to step up and start to talk about how access to that kind of money is required.
In Saskatchewan, there is an infrastructure deficit. Currently, there are millions of kilometres of power lines over a vast, arable land territory. If we have more electric vehicles, or EVs, and electric grain drying, there is going to be a real contest on the electrical infrastructure. What needs to be done now to make those investments to meet these targets? Do you have any comment on that?
The last question, if you get a chance: Recently, we had a debate in the Senate on the Greenhouse Gas Pollution Pricing Act. I contended that the general public really doesn’t understand some of these issues very well. When you talk about drive, focus and leadership, what do you think the role and power of education is in educating the general public to the real crisis that we’re in? I’m not sure the general Canadian public understands that. Do you have any comment on that? I would be very interested to hear what you have to say, sir.
Mr. DeMarco: Okay, I’ll do my best to address most of those issues, Senator Arnot. To start with, will I still be singing this song? I will be in the sense that I plan, for the rest of my term, to continue to report on climate change progress or lack of progress. The new Canadian Net-Zero Emissions Accountability Act requires me to start that at the end of next year and every five years, but I have committed to starting a year early with this report and to do it annually until such time as Canada turns the tide.
While I’ll be singing the song, I do hope to change my tune, and I hope there is progress. I’m not saying we’re doomed to failure just because our past performance has been so shoddy. If we bend the curve down and reach these targets, then my reports will become more positive, but I will still be reporting on it. That’s the answer to your first question.
Going to the question of equity and disproportionate impacts, that was a theme in two of our reports, not for this tabling but for a previous tabling. So our Carbon Pricing—Environment and Climate Change Canada and Just Transition to a Low-Carbon Economy reports speak about disproportionate impacts with respect to carbon pricing on, for example, Indigenous communities or small businesses and the disproportionate burden as between individuals and industry, for example, with the various carve-outs for trade-exposed industries. And with Just Transition, the whole report was mainly focused on that in terms of the workforce and communities.
With this round of reports, we do speak to the issue in respect to infrastructure for zero-emission vehicles. In particular, rural, remote, Indigenous and lower-income communities are not seeing the same degree of attention, even per capita, that the areas that are already fairly well served are seeing. Issues of equity come up throughout our office’s reports, whether it’s from the Auditor General or from me as part of our office’s commitment to equity, diversity and inclusion, as well as the sustainable development goals, which also relate to those issues.
Investment in technology was one of the other issues. Canada definitely needs to make those investments, but as I mentioned with respect to the earlier question, we should not rely on just hopes that those will bridge the gap of 40% to 45% for the remaining missing elements of the plan. We have existing technologies in the areas of renewable energy, energy conservation and so on that can bridge the gap if the will is there, while also making those investments for technologies that will bear fruit further, probably beyond 2030. We need to work on both sides of the ledger.
Those are the three aspects that I remember. I’m not sure if there was a fourth one.
Senator Arnot: It’s the power of education and the lack of robust education plans or communication plans by federal and provincial governments to really ensure that there is a strong understanding of the crisis and the need to make a paradigm shift.
Mr. DeMarco: Thanks for the reminder. I knew I had opened this on this page for a certain reason.
Our 2021 Lessons Learned from Canada’s Record on Climate Change has eight lessons, all of which are relevant to some aspects of your question. But Lesson 5 is directly on point, and I would simply summarize Lesson 5 from our 2021 report by saying that increasing public awareness of the climate challenge is a key lever for progress.
The government can roll out as many measures as it would like, but if there isn’t a buy-in from Canadian society — because it is a whole-of-society problem and needs a whole-of-society solution — then those measures will not have lasting effect. There will be opposition and they will get repealed. It is critical to have the aspects of public education and awareness. We noted in our 2021 report that even though climate literacy has increased since the climate convention in 1992, in Canada, on a relative basis, we are still behind some of the other countries in terms of the population’s degree of awareness.
Senator Arnot: Thank you for that comprehensive answer. I appreciate that, and thank you for the good work you are doing. Please keep it up.
Senator Wells: Thank you, panel, for coming in and the good work you do. My question is about paragraph 22, which indicates that Canada is the only G7 country that has not achieved any emissions reduction since 1990. What’s the measure? And I want to talk a little bit more about the measure after I hear your answer. But is it per capita? Is it total emissions? What’s the measure?
Mr. DeMarco: The measure is illustrated in the following exhibit of our report, and it is the percentage change in total greenhouse gas emissions in each country. That’s the measure we use, although Canada is also a laggard in terms of per capita emissions. We don’t address that in this report, but we have done so in other reports. In this exhibit, the percentage change of total emissions from the baseline of 1990 is illustrated in blue. Canada is up since 1990; all the other G7 countries are down.
In dark grey, using the more recent baseline of 2005, all the G7 countries are down at least somewhat, but Canada is down the least. In either case, Canada is in last place, whether we look at it from 1990 or 2005, in terms of percentage change in greenhouse gas emissions.
Senator Wells: Percentage change — that was the answer I was looking for. What about in total emissions — not percentage change but total emissions? Where does Canada rank in the G7?
Mr. DeMarco: In the G7, I would have to get that for you. Total emissions generally over the last 10 to 20 years were in the 10th to 12th slot worldwide, which is somewhat surprising considering that our population usually ranks 35th to 40th, somewhere near Ukraine or Morocco. We do have a lot of emissions compared to our population size.
Senator Wells: It’s a different discussion, but I don’t put a lot of value in per capita, because when we look at China or India, which have massive populations and massive emissions, we compare poorly. That doesn’t make sense to me as a measure.
But, again, that is for another time.
Mr. DeMarco: It is clear that every country needs to do its part, and certain countries have a bigger impact than others based on their total emissions and population. Surprisingly, even though Canada ranks 37th or 38th in terms of population, our emissions are not insignificant; they are probably in the 10th to 12th range worldwide.
Senator Wells: That would still be 1.5% of global emissions.
Mr. DeMarco: Yes, the figure is usually cited as 1.5% or 1.6%.
Senator Wells: In your opening remarks, you talked about changing from a gasoline fleet to an electric fleet, what I would call “important things,” but maybe more symbolic things. How global is your view when you look at what Canada might be doing, or is doing, for example, when we look at the larger global emissions causes like, obviously, China, India and the U.S. as nations, but also volcanoes, wildfires, war and emissions from the airline industry, which have such a huge impact on global emissions? We are doing these small things that are important but maybe more important symbolically. What’s your view on that? In my view, we have to take a global view of this; we have to do our part, but we also have to look at what effect it is having globally.
Mr. DeMarco: Doing our part is essential. It’s a whole-of-society problem, but it’s also a whole-of-planet problem, given that there are about 200 countries and then subnational governments under that. Almost any jurisdiction can say, “If we do our part and the others don’t, then nothing significant will happen.” That’s the nature of the beast when you have a planet carved up into so many different countries and jurisdictions. Canada is not the biggest emitter, but it is not an insignificant emitter either, and it will require collective action and each country doing their part. If we don’t get a handle on the large emitters in terms of countries or large emission sources in terms of fossil fuels in particular, such as coal in other countries — this is not as big an issue in Canada as it used to be — then this will all be for naught. The idea of the Conference of the Parties that just concluded a couple of days ago at the United Nations is to try to bring everyone together to avoid a tragedy of the commons, because each individual state or sub-national government can view itself as insignificant and not the major part of the problem since, by definition, with such a large number of jurisdictions, no single country can solve it. That shouldn’t lead us to inaction; it should lead us to collective action.
The Chair: Since you are talking about it, can I ask you to explain what the indices are for how Canada performs based on current policies and the national determined contributions?
Mr. DeMarco: Under the Paris Agreement, which is the latest key climate change document at the international level, starting with Rio de Janeiro in 1992 and going through Kyoto, Copenhagen and so on, a different approach different from that of the other agreements was taken. It set a tangible target in terms of an actual global temperature limit: preferably 1.5, and, at most, 2 degrees Celsius. So, instead of just looking at emissions, they looked at the actual result, which was to limit global warming to, preferably, 1.5 degrees Celsius. We are at 1.1 or 1.2 degrees Celsius already, so we are already in danger. Each country under the Paris Agreement set for itself an emissions target. This is called the NDC, or nationally determined contribution. Canada set an initial one after Paris and ratcheted it up to 40% to 45% GHG reduction based on the 2005 baseline.
That’s what we’re measuring against. Our audit office looks at the commitment Canada has made in terms of its nationally determined contributions set out internationally and in domestic commitments, and how close we are to achieving that particular target of 40% to 45%.
That’s the current target. But as I mentioned, it is ratcheted up from the previous one. It is conceivable, given the global stock take that happened this week at the UN level, that Canada will be under pressure to increase its NDC, and that’s all the more reason for Canada to look for other measures to reduce its emissions, because 40% to 45% is the current target. It may move to something in the 50% to 60% range the next time there is an NDC created for Canada.
The Chair: Thank you.
[Translation]
Senator Massicotte: I have a comment followed by a question. Let’s look at this from the perspective of someone like me, a resident of Montreal. I have an electric car and I’d like to be able to recharge it when I’m in Ottawa. I’ve looked everywhere and I’ve only found four spots. There are several stations at the Westin’s shared garage with the shopping mall. We’re always left to hope there will be a free spot when we get there or that the car currently charging won’t be there for hours. I found another charging station in the neighbouring parking lot, but it was out of order. And then there’s one when you first get into town from Montreal.
I was surprised to learn that, here in the capital, there are only four places where visitors or people like me who come from out of town can charge their cars. There’s a clear lack of leadership and I find that incredible. I just wanted to say that.
Your study deals with all charging stations, including on government and commercial property. For tourists or people coming from out of town who need a parking spot with a charging station, I find that astonishing.
My colleagues and I were talking about carbon capture and storage technology, or CCS, and how far along it was. There are widely varying opinions on the subject. I’ve read up on it, and from what I’ve read, no one really knows if it’s going to work. There are a few cases where it worked, but not too efficiently, and there are some oil companies who say they will get there, that they know what they’re talking about and have a lot of expertise in the matter. A lot of people, including Bill Gates, support this opinion.
In your view, despite the complexity of the issue, what’s the solution? Is CCS the solution? It’s the only thing people talk about. It seems as though there are no other solutions. How far along are we with all this?
Mr. DeMarco: The technology certainly has potential. From an economic perspective, is it possible to establish a common technology everywhere? I don’t know. I’d like to tell you that the current plan for CCS technology is too optimistic and that the number should be x and not y, but I don’t know. As I’ve said, we need to invest and put the technology we have to work to meet our current challenges.
Similarly, we never know, when we invest in new technologies, whether that will be the solution. We need to pursue several avenues at once. It’s almost a philosophical issue. The optimists might say that, yes, CCS is the solution, but the pessimists will tell you that, on the contrary, there’s no technology and no economic analysis that shows that this technology will work. I don’t know whether CCS will be the solution. I know it’ll have an effect, but I don’t to what extent.
Senator Massicotte: Given the great risk inherent to various kinds of knowledge and technologies, in my experience, I think we need to partner with the private sector, because industry is much more knowledgeable than we are in terms of innovation and the ability to manage the situation.
Then, broadly speaking, we’ll have to find a way to tell industry — that is very knowledgeable and looking for, say, $15 billion to $18 billion — that it’s all well and good to spend other people’s money, but if they’re so convinced that it’ll work, then we will invest this much if they put up a large percentage of the money. I understand that there will be grants, but industry needs to be on board. If it doesn’t work, they will be the first ones to pull out. We’ll need to come to an agreement that benefits everyone, otherwise there won’t be any money.
Mr. DeMarco: As I said when I spoke to your committee about hydrogen a year or two back — and thank you for the excellent report, which I read — it’s not about choosing the winner before we even know if the technology will be reliable and if we will be able to implement it across the economy. We need to choose proven solutions that we already know will work while at the same time investing in new technologies.
That said, we can’t say that hydrogen, CCS or nuclear will be the solution; there are a multitude of solutions. It’s not about choosing just one and putting all of our investments into the chosen solution. We need to multiply our efforts and focus on proven technologies to meet our 2030 target. New technologies won’t be implemented in time to help us meet our 2030 target.
Senator Massicotte: Thank you.
[English]
Senator Sorensen: It’s too bad there isn’t one magic bullet. That would be very helpful.
The Government of Canada acknowledged its duty to consider the United Nations Declaration on the Rights of Indigenous Peoples in the development of the emissions reduction plans. You found in your report that Indigenous groups identified challenges with the engagement process; one comment was that the Assembly of First Nations noted there was insufficient time to provide meaningful comments and that the 2030 plan did not fully consider the standards of the declaration. A conversation that happens frequently in my committee work concerns what exactly “Indigenous consultation” means, because it is different in every scenario. My question to you is this: What steps would you recommend the government take to address that specific challenge?
Mr. DeMarco: In the spirit of reconciliation and the spirit of the sustainable development goals with respect to Indigenous communities, it is essential for Canada to uphold its duties in that regard — the duty to consult and its fiduciary duties to Indigenous peoples. What does that mean for every consultation? It’s a scale, depending on the degree of impact and whether there is a treaty present and so on. For something as important as this, because the climate crisis is one of the greatest challenges that humanity faces, and due to the fact that a number of Indigenous communities are in areas that will be disproportionately affected — for example, warming is happening at a higher rate in Northern Canada than it is in southern Canada and there is a higher percentage of Indigenous peoples the further you go north, as you are aware — it is all the more important to make meaningful consultation efforts and not rush through things in creating a plan or measure.
That seems to go against the urgency of climate change, so there are competing objectives. We need quick action, but we also need to do it properly. Is it impossible to do both at the same time? No, I don’t think so. If the will to do meaningful consultation is there, then a measure can be rolled out relatively quickly, but the urgency shouldn’t be used to bypass consultation or run roughshod over vulnerable populations and Indigenous communities.
Senator Sorensen: Thank you. Based on your report and comments, which are definitely not a “good news” story, you obviously understand the issues significantly. Again, this is a high-level question: Based on your experience, what are your recommendations to ensure some success in the next seven years? What should the government focus on? What are the first things we should be doing to try to have more positive results than what we’re seeing now?
Mr. DeMarco: That is an excellent question; it was one of the questions that I had when I started as commissioner in 2021, and it led to this Lessons Learned report. At a general level, I would answer it the same way this year as I would have in 2021: We need to do the eight things set out in this report. That’s at a high level and based on the subjects of leadership, collaboration, public awareness and so on.
We could look at it from another perspective, which is by sector, as well. We have a graph in our recent report about where the biggest impacts are in terms of emissions and where we need to concentrate. If I had to pick two, I would say oil and gas and transportation. If we could get a handle on reducing emissions in those two sectors, because just the two of them add up to 50% of all the emissions in Canada, then we would make significant headway.
In oil and gas in particular, the emissions have gone up so markedly since 1990 that they have drowned out the progress made in energy, heavy industry, waste and so on.
If we could bend the curve down with oil and gas and transportation, I would say those would be the two biggest sectorial priorities, along with all the intangible things in our Lessons Learned report, like leadership and so on.
Senator Anderson: Thank you to the panel.
Mr. DeMarco, you mentioned a realistic plan. In the Northwest Territories, we live climate change effects, from floods, to fires, to rising sea levels, to permafrost melt. We’re all too aware of the events that are happening because they are happening to us.
Some of the proposed greenhouse gas emission savings include unrealistic plans. As you know, in the North, we have dated infrastructure and a reliance on oil and gas. In the Northwest Territories, we have 21 fly-in communities; in Nunavut, all 25 are fly-in only. The types of vehicles that we require to accommodate our needs are trucks based on our roads, which are gravel roads, not paved, and are subject to weather and storms. There is a huge safety aspect with respect to the vehicles.
EVs are not realistic vehicles in the North. I would not drive an EV in the Northwest Territories, never mind that I don’t see chargers anywhere. For example, on the Inuvik-Tuktoyaktuk Highway, the concept of an EV is absolutely unrealistic. You have to consider the elements. You have storms. You have road closures. You have animals on the highway. EVs are just so far from our reality. It’s very concerning that EVs continue to be pushed without thought given to the realities that we face in the Northwest Territories and Nunavut.
I just want to mention heat pumps. The Northwest Territories has been studying heat pumps, and they have found that they are not efficient due to the cold. The cost of electricity in the Northwest Territories is four times higher than the rest of Canada. The N.W.T. is not able to accommodate a mass migration to heat pumps because of our electricity capacity. We don’t have the infrastructure for added capacity to accommodate heat pumps.
Also, we’re experiencing extreme weather events, so the delivery of our mandatory fuels that are needed for communities are not able to come up via the Mackenzie River. They have to be flown into our communities at an added cost, and with additional use of oil and gas, just to get the oil and gas they need to survive for the winter.
So my question to you is this: Given what I have stated, can you explain how the plans address the realities of the North and yet include Indigenous engagement and consultation, specifically with the three territories? Thank you.
Mr. DeMarco: Thank you for the question. This is a prime example of why a one-size-fits-all approach will not work in a country as diverse as Canada, both geographically and culturally.
I will use the example you started with, which was zero-emission vehicles. It is true for all the reasons that you have said, plus the fact that, for fly-in communities, the source of electricity is usually a generator. Plugging in a zero-emission vehicle in a community that is using a diesel generator to create the electricity just displaces the emissions; it does not reduce them. That’s why we mention in our report that, for Nunavut, as an example, there is no immediate rationale for switching to zero-emission vehicles, because you’ll simply displace the emissions from the tail pipe to the generator. You will still have all of the operational problems that you discussed already in terms of issues.
That’s why a tailored approach is needed with respect to transitioning vehicles, transitioning home heating, transitioning communities reliant on resource extraction — all of these things need to be addressed with federal leadership but implemented in a way that is tailored to the needs of communities. If you do not do so, with each issue, you’ll alienate different sets of communities that are being disproportionately impacted. Then you’ll have that critical mass of discontent regarding measures to fight climate change as a whole.
I agree completely that the meaningful consultation that I spoke about before with Senator Sorensen needs to happen so that we don’t have the imposition of one-size-fits-all approaches that might have no net effect on the environment, for example, with fly-in communities using generators, and could have a disproportionate impact upon those who are expected to change their behaviour to fit the one-size-fits-all approach.
These problems can all be addressed, but the solutions in Northern Canada are likely going to be much different than they will be in Vancouver, Montreal and Toronto, where it’s quite easy to switch to a zero-emission vehicle or heat pump, for example.
Senator McCallum: Thank you for the work that you do. It’s so critical, especially for First Nations and Inuit peoples.
I’m going to speak about First Nations in Manitoba who live in hydro-impacted communities. We don’t all start off from the same spot. First Nations are already living with inequity from the existing cumulative negative impacts that hydro brings in. Manitoba Hydro, as a corporate entity, has not included, in any meaningful way, the impacts of existing water flows into communities and destroying habitat and governance structures of the First Nations.
So when I look at all the variables that need to be considered in the rapid transition, there is the cost of the vehicles and charging stations. There is the geography, the power to support the grids and the mining of the batteries are unique to First Nations. There are more impacts on them than on those in the south. Then we look at the weight of the batteries, which are massive, which will create their own problems.
We’re looking to retrofit multi-unit buildings, single homes, parking facilities, boats and Ski-Doos, and transforming the power grid and grid integrity. That is happening over very different and difficult terrains during extreme weather conditions due to climate change.
The location of the dams, as I said, has been a problem. Now the hydro dams are telling us in three provinces that existing dams will not be able to power all that is coming up. They want more dams, which means more destruction. We also have aging dams.
When we look at all that is coming — I work with the First Nations in Manitoba. They have been trying to address this, and no one has been listening. They have been unable to make progress.
How will the history of the negative impacts be considered when we’re looking at doing even more damage because of this change that people are talking about?
Mr. DeMarco: Thank you for the question. It’s a good reminder that low- or zero-emission power sources do not equate to low or zero effect.
When I used to adjudicate disputes between communities and the government over new power generation facilities, it was something that came up: These facilities not only generate electricity, but they generate conflict and other problems. Even clean energies have their effects. Those effects might not be in the area of climate change, but they might be in terms of local livelihoods, flooding, habitat destruction and other things like that. All forms of energy production have some sort of an effect.
Partly because of the issues that you have just raised, and the issues that you and Senator Anderson have raised in the previous appearances that I’ve had at the committee in the last couple of years, we have undertaken two new audits for reporting in the coming year. We have an audit looking specifically at contaminated sites in the territories, which we hope to publish next year. Furthermore, we are beginning an audit on critical minerals and batteries to look at the fact that a solution to one problem can also have negative effects on other issues. We need to look at the whole picture as opposed to squeezing the balloon and apparently fixing one problem but creating another problem somewhere else. That’s the danger with critical minerals and batteries, namely that if we rush to do that, we may cause a different suite of problems while attempting to solve another in terms of emissions. It’s a complex equation.
I’m not intimately familiar with the specific projects by Manitoba Hydro that you are talking about. We wouldn’t be auditing a provincial Crown corporation like that at the federal level, but it is something that you could raise specifically with the Office of the Auditor General of Manitoba to see if there is anything that can be done there.
With respect to site-specific issues with a federal aspect to them, there is also the possibility of using the petitions process. I only talked about it briefly in my opening statement, but that is another tool that Canadians have in bringing issues of importance to ministers, if they are more site-specific issues that our office wouldn’t look at. We look at whole programs, and so on.
Getting back to your main point, any solution to the climate crisis can’t be something that just causes a different suite of problems with respect to biodiversity, communities and Indigenous livelihoods. We need to find win-win solutions, such as nature-based solutions and so on, that are given a lot of prominence now, as opposed to win-lose solutions that create a positive effect on a narrow ledger but do not create a net positive effect when you look at all of the ledgers together.
Senator McCallum: When we look at the lands I’m talking about, these are Indian lands for Indians. There is that special phrase, “for federal responsibility.” That’s what I’m talking about. People keep using the term “clean and green” with respect to hydro. It isn’t. It’s very frustrating. Why is that term used when it isn’t clean? Nor is it green — not for First Nations. Why is that term continuously used by government?
Mr. DeMarco: It’s a matter of degree, I guess. A run-of-a-river hydro facility can have relatively limited impacts compared to a large dam, for example. A dam may have more limited impacts than a coal-fired plant, although emissions from a coal-fired plant and the effects are completely different from those of a dam.
I don’t use that term myself, so I don’t necessarily need to defend it. If we look at it just from a climate point of view — which I think is a bad idea — then you can see how zero- or low-emission energy facilities can be considered green. However, if you look at it from a full-cost accounting point of view, you need to choose the locations for those facilities in a way that minimizes other types of effects on communities and biodiversity.
This all gets to the point which, unfortunately, doesn’t get as much attention in Canada as it used to during the energy crisis, namely, that we should also be looking at energy conservation and not just assuming that demand will stay stagnant and we just have to change the supply side of the ledger. We should also be doing whatever we can to increase energy efficiency so that we can reduce demand and not just redistribute the supply for a constant level of demand.
Energy conservation, in many instances, is economically viable and affordable and has fewer of the problems associated with simply creating more and more new, large-scale energy facilities.
[Translation]
Senator Boisvenu: Apologies once again for being late.
I entirely agree with my colleague Senator McCallum. People talk about hydroelectricity as a clean energy, but I think that’s just a myth. It was always compared to the most polluting energy sources, like coal. Hydroelectricity’s impact on the fauna and flora aren’t properly taken into consideration when developing this type of energy.
I’d like to return to another subject, that of COP28. There are two key takeaways from COP28, the first of which is the rehabilitation of nuclear energy. COP28 opened a door that had been shut by environmentalists years back. We aren’t talking about phasing out dirty fuel sources anymore; it’s about gradual reduction. That’s an important philosophical distinction.
I have two questions for you. First, in your opinion, is the rehabilitation of nuclear energy a positive step in reducing GHGs, among other things, given that 50% of GHG emissions come from the transportation industry?
Second, now it’s all about gradual reduction and not phasing out of, among other things, energy sources like natural gas. I’m thinking of the most polluting countries: South Africa, China and some European countries that have started burning coal again in their hydroelectric production due to the conflict in Ukraine. In light of that, shouldn’t Canada be promoting its natural gas? We have massive natural gas reserves, so when we talk about phasing out, wouldn’t that be a good way to replace coal, which is very dirty, with natural gas, which is less so? Those are my two questions.
Mr. DeMarco: Thank you for your questions. That’ll be up to the federal government, the provinces and other organizations like crown corporations in the energy sector to determine if nuclear energy will be a part of the transition from fossil fuels to other energy sources. I don’t know. I’m not aware of any study or audit result on the issue of including nuclear in the energy portfolio.
We released a report on management of radioactive waste last year, but it’s not up to me to say if energy, hydrogen or solar is the best solution. Those questions should be directed to the government.
Could you repeat your second question?
Senator Boisvenu: I was talking about the philosophical shift that occurred at COP28. They now talk about a gradual reduction in fossil fuels rather than a phasing out.
I was asking your opinion about the countries that started burning coal again. France has done so, as has South Africa, one of the most polluting countries due to the use of coal in its hydroelectric production. Shouldn’t Canada promote its natural gas as a substitute for coal, in order to speed up this gradual reduction, as is now the parlance at COP28?
Mr. DeMarco: Indeed, there’s a whole debate on transitional sources. In the long term — I like to look forward to 2030 and 2050 rather than just talk about tomorrow or next year — we need to limit putting carbon underground, underwater and in the atmosphere. That’s what the science tells us. If the carbon that’s currently stored underground keeps moving up into the atmosphere faster than we can store it, the planet’s temperature will rise. We can’t ignore that fact.
Senator Boisvenu: I understand that perfectly, Mr. DeMarco, but that wasn’t my question. At COP28, which brings together a number of world stakeholders, people weren’t talking about phasing out our use of resources, namely oil and gas. Now they’re talking about a gradual reduction.
The dirtiest energy source on the planet right now is coal. Compared to natural gas, coal pollutes 10 times more. Shouldn’t the countries that burn a lot of coal switch to natural gas as an energy source? Then we could effect a net reduction in GHG emissions planet-wide, and much more quickly, too.
I’m thinking in particular of China, which is responsible for 30% of the world’s emissions. It is a large producer and a large consumer of coal. Wouldn’t it be appropriate to quickly replace coal with natural gas, which, among other things, would effect a net reduction in GHG emissions? My question is very clear and very precise.
Mr. DeMarco: It’s true that many countries will need to turn to transitional energy sources. We can’t replace all of the coal in China, India and South Africa with renewable energy sources like hydroelectricity overnight. So we need transitional sources; they will have a role to play even though they’re still fuels and non-renewable. They will be part of the transition. This isn’t something that can change overnight.
Senator Boisvenu: Thank you very much.
[English]
The Chair: Everything we have talked about requires money and funding; we need to shift the money that is going to fossil fuels and bring it to all the issues that have been mentioned today.
You wrote an audit concerning the Office of the Superintendent of Financial Institutions, or OSFI, and you know that OSFI does not view its role as including the advancement of the government’s broader climate goals. So it’s not playing with the government, unlike other regulators that are actively moving in the direction that we want in this transition. Do you view OSFI’s mandate as currently incoherent with respect to government commitments on climate change? How does this impact OSFI’s role of looking at climate change in the banking, insurance and pension sectors?
Mr. DeMarco: Thank you for the question. I can’t emphasize enough the emerging importance of the links between climate and biodiversity and the finance sectors. It’s driven not only our audit on OSFI, as you mentioned, but also our audit on hydrogen, which is an environmental and economic issue at the same time.
I should call the committee’s attention to a report from Auditor General Hogan, which was released in November as well, and that was her audit of the Environmental and Social Review Directive of Export Development Canada, or EDC, another key player in the finance area.
In that audit, our office found that very few of the financing transactions by Export Development Canada went through its Environmental and Social Review Directive, and that it was continuing to finance high-emitting sources, although it was increasing its support for renewables. But it was also maintaining its support for non-renewable projects.
All of this comes to a head in the fact that we need to look at environmental, social and economic issues together. It’s not for me to interpret the existing mandate of OSFI. Their interpretation is that it is more limited than some of the examples in Europe that we set out in our OSFI report. That’s their interpretation of their mandate.
Now that they are subject to the Federal Sustainable Development Act, they can’t simply look at their own parent legislation for guidance. They need to look at their role under the Federal Sustainable Development Act, because they are part of the whole-of-government solution that piece of legislation is supposed to foster.
Can OSFI do more to green its approach toward finance? Definitely, yes, it can. We have made some recommendations in our report within the ambit of our mandate, but it’s also a question for Parliament and government as to whether it wishes to revisit the mandate of OSFI or EDC or other organizations that, up until now, have perhaps seen climate and biodiversity issues as peripheral to their mandate. That would be a question for Parliament and a question of perhaps statutory change in terms of forcing a wider view of the mandate for any of these institutions that are now supposed to participate in Canada’s whole-of-government approach to addressing sustainable development and the environment.
The Chair: I just came back from COP 28 in Dubai. What I am hearing is that the climate-related risk to these financial institutions is underestimated. That means, for example, extreme weather events and destruction. We have that every year in Canada, and now each one of those events costs in the billions. This risk is underestimated but materializing very quickly. Look at it economically.
How much danger are we in if we don’t take into consideration that the climate is changing very quickly and these extreme weather events leave the places where they occur more vulnerable?
Mr. DeMarco: Yes, you are speaking of one of the two sources of risk that we talk about in the OSFI report. There are physical risks to infrastructure, livelihoods and people’s lives from floods, heat domes, forest fires and all of the things that we have seen. There are also transition risks that are equally important, in terms of adapting to the new regulatory environment with carbon pricing and, eventually, carbon border adjustments — all these other things that will eventually come into play.
We have seen some progress with OSFI on our recommendations. They can look at material risks regardless of whether they are climate-related or not under their current mandate. We made recommendations for them to sort of up their game in terms of incorporating those risks with respect to the federally regulated institutions.
We have seen some progress since the report. That report was not in the batch that we issued in November, but from the previous batch of the reports. Whether that’s enough and whether they will interpret these mandates or seek a new mandate to even expand their ambit of concern regarding climate remains to be seen.
The physical risks and the transition risks are getting greater every year. We see that certain industries, like insurance, for example, are quite aware of that and incorporating it into their lines of business. Whether banks and pension funds and others are doing so to the same degree remains to be seen.
The Chair: Thank you. We have time for two second-round questions.
Senator Wells: I was going to ask about fisheries but I’m not going to do that now. I’m going to follow up on one of Senator Anderson’s questions and your comment that Canada is not a one-size-fits-all country because we’re large economically and culturally, with various resources, needs and vulnerabilities in different parts of the country.
You mentioned that oil and gas and transportation account for half of Canada’s emissions, and I imagine from that there would be recommendations on some sort of mitigation or remediation because of that high percentage. Do you separate, within the oil and gas industry, the effects that Alberta and Saskatchewan — the emissions from their production of oil, and separating it from the sands using heat — versus what’s off the coast of Newfoundland and their offshore operations, where there is no separation required? It comes up without the need for further processing and, therefore, far lower emissions. In fact, the only emissions from that would be flaring, which is a safety issue, not a pollution issue.
Mr. DeMarco: We don’t get into that degree of detail in our reports, but it is certainly an important issue for policy-makers to take into account, which is essentially the carbon intensity of extraction and, if needed, upgrading of what is being extracted. There are institutions. I believe it is Carnegie that set out the carbon footprint of various forms of energy extraction. I can recall — and maybe the analysts can assist the committee later — that the Athabasca crude, which is from oil sands, from one of the three major sources of the oil sands in Alberta, has a very high footprint because it requires so much natural gas to be used just to extract it, and then to upgrade it to something that can be transported through a pipeline or refined.
So, yes, there are degrees of footprints associated with different sources of oil, as in that example. However, in Canada, we only account for what we’re emitting within our boundaries. We’re focused a lot on the fact that, for example, the oil sands have a high carbon intensity in terms of extraction. We should also keep in mind, in the transition toward net zero globally, that this gets combusted somewhere else. We need to get a handle on the fact that that, even if we had old-style California gushers where it takes almost no energy to get the oil out of the ground, if we are still burning it and it goes into the atmosphere, it still has an effect on global temperature rise. That needs to be taken into account. We need to transition away from the burning of fossil fuels while at the same time transitioning from high-intensity sources to low-intensity sources during the transition time.
We need to look at the ultimate fate of what is being extracted. If it is burned or flared or vented into the atmosphere, then it has an effect on global temperature rise — even if there is not much of a footprint in the extraction process. There is definitely a relative difference, and I would recommend that you look at the graph of intensity of the various sources, from Athabasca crude to the others.
Senator Wells: I will, and I will chase down the Carnegie report. If I can’t find it, I might ask you to help me locate it.
When we assess Canada’s emissions, we don’t look at the downstream burning, do we? When we say that Canada has 1.5% of global emissions, we are talking about within Canada’s borders, not downstream.
Mr. DeMarco: Exactly. This is something we pointed out in our 2021 Lessons Learned report. In this sense, when you look at it from the total, Canada’s greenhouse gas emissions are much higher than those accounted for under the Paris Agreement, because the agreement considers only emissions released within national boundaries and not exports, which are attributed to the consumer countries. There is a reason for that: so that you don’t have double counting. However, it masks the fact that any fossil fuel extraction, even if it is fairly clean in terms of the extraction process and that footprint, still has an effect on climate change once it is exported and burned in a boiler or vehicle somewhere else.
[Translation]
Senator Miville-Dechêne: I will continue along the same line of questioning as Senator Wells. Is Canada the only country that measures its emissions within its own borders only and excluding footprint, or is that the international system under the Paris Agreement? By crunching the numbers again, is it possible that Canada’s system is different from the others? I’m trying to understand what you’re proposing.
Mr. DeMarco: Every country that ratified the Paris Agreement uses the same accounting system based on the location of the emissions, to avoid counting each emission twice if the energy is transported across borders.
The accounting system is one thing, but the decision to invest in the global challenge to transition toward other, renewable resources, that’s a choice. Even though Canada has an accounting system, it has a choice to invest in new energy sources, in pipelines or in new extraction projects. It has a choice.
We can assess the global impact of a project even though emissions accounting follows the model agreed upon under the Paris Agreement.
[English]
Senator Miville-Dechêne: You said you did not opine on the type of oil that should be privileged in terms of extraction in Canada, but if one is cleaner and in its process than the other and our goal is to get out as quickly as possible, why don’t you?
Mr. DeMarco: Those are choices for the government. From the perspective of attaining the target, which is what we’re looking at, if Canada privileges or prioritizes low-emission sources over high-emission sources, it increases its chances of reaching its goal.
Everyone knows that with oil sands, we’re using one source of fossil fuel, natural gas, to extract a more valuable fossil fuel, oil, and that both the extraction and the ultimate combustion have emissions, let alone the fugitive emissions associated with the natural gas as well. There is a double footprint from some sources, whereas for others, if you are just using natural gas directly, you don’t have that. That’s why there are, as I talked about before, degrees of carbon footprint associated with different sources.
Canada is in the situation it is in now because it put a lot of effort into not only fostering oil sands extraction but actually subsidizing it for quite a bit of time, and now it’s dealing with the harsh reality that Canada is a high emitter and the only G7 country with higher emissions now than in 1990. How the government chooses to the deal with that with respect to areas to further regulate and areas to subsidize, those are choices for the government. But the harsh reality is that we have put ourselves in a tough spot through such a reliance on high-emitting fossil fuels; it is hard to get out of that while also meeting our targets, which is why we have this problem in Canada.
The Chair: Thank you so much. I’m going to adjourn the meeting, but please don’t go away. The commissioner would like to invite all our members to remain for an informal 45-minute outreach session to discuss the work of his office and to get feedback from the members of the committee.
[Translation]
Thank you to the senators and our witness for their participation today. The meeting is adjourned.
(The committee adjourned.)