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Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources

Issue 2 - Evidence

OTTAWA, Tuesday, November 18, 1997

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 9:05 a.m. to examine such issues as may arise from time to time relating to energy, the environment and natural resources generally in Canada (pre-Kyoto Forum).

Senator Ron Ghitter (Chairman) in the Chair.


The Chairman: Dr. Janzen, I welcome you on behalf of the committee. Please proceed with your presentation.

Dr. Henry Janzen, GHG/C Sequestration Researcher, Lethbridge Research Centre, Agriculture and Agri-Food Canada: Mr. Chairman, at the outset let me thank you for inviting us to appear before your committee to make this short presentation. With me this morning is Dr. Ray Desjardins, a greenhouse gas researcher with Agriculture and Agri-Food Canada here in Ottawa.

With your permission, I will take my place by the slide projector and make a short presentation from there.

I will briefly address three questions this morning. First, what is agriculture's contribution to the greenhouse gas emissions? Second, what options do we have to mitigate or reduce some of these emissions? Third, what are some of the uncertainties that await us as agriculture itself faces impending global changes?

By way of background, I will briefly review the greenhouse effect. We know that solar radiation strikes the earth's surface, thereby warming it. The earth, in turn, emits long-wave radiation back into the atmosphere, some of which is absorbed by various gases in the atmosphere, including methane, carbon dioxide and nitrous oxide. The absorption of this long-wave radiation essentially warms the atmosphere and the earth's climate. This is a favourable effect. Without this greenhouse effect, the global temperature would be, on average, 33 degrees lower than it is now.

The problem, of course, is that the concentration of these gases is increasing. Methane concentration is increasing at a rate of about 0.9 per cent per year; Nitrous oxide at a rate of about 0.25 per cent per year; and carbon dioxide concentration is increasing at a rate of about 0.5 per cent per year. In the last few decades we have seen carbon dioxide concentrations in the atmosphere increase from about 320 p.p.m. in 1960 to about 360 p.p.m. presently.

While there is still a great deal of uncertainty about the impact of these changes on eventual climate, we now know, with a great deal of confidence, that the atmospheric composition itself is changing. We are concerned about the eventual impacts of that.

What is agriculture's contribution? Agriculture plays a significant role in the emission of all three of these gases. It is, first of all, a source of nitrous oxide. Much of this nitrous oxide comes from agricultural soils, especially those which have been amended with various nitrogen materials; for example, nitrogen fertilizers, animal manures and various organic residues.

Agriculture is also a source of methane, primarily from animal agriculture, both from the animals themselves and from the wastes they generate. To some extent, there is a slow flux of methane from the atmosphere into the "agroecosystems." There is a slow rate of absorption of atmospheric methane by soils, so there is a slow downward flux into these agroecosystems, though the rate is very small relative to the rate of emission from the agricultural ecosystems.

Carbon dioxide is unique among these three gases in that there is a strong flux out of the agricultural ecosystems into the atmosphere. Agriculture also serves as a sink for CO2. In other words, there is a strong rate of CO2 absorption by agricultural systems. When we look at the impact of agriculture on the atmosphere, we must look at both directions of flux.

Shown on the slide are some current estimates of actual fluxes from agricultural ecosystems in Canada. The three gases are listed on the left. The next column under "Actual" represents the absolute rate of gas release, and that is shown in million tonnes per year. You see quite a range of rates.

We should emphasize that these gases are not equal in their global warming potential. Nitrous oxide is much more potent, roughly 300 times as potent as CO2, for example. In the last column, we show the CO2 equivalent in an attempt to account for the variable global warming potential of the three gases. You can see from that that nitrous oxide may be the most important of the three gases with respect to emissions from Canadian agriculture.

The Chairman: What is the third column?

Mr. Janzen: That is the CO2 equivalent. If we were to convert the impact of that N2O emission to CO2 units, that would be the equivalent.

In this slide,we are looking at emissions from agricultural ecosystems expressed as a percent of anthropogenic emissions in Canada. You can see that agricultural ecosystems are an important source of nitrous oxide and of methane, but a relatively minor source of CO2 when expressed in this way.

All told, when we account for the variable warming potential of the various gases, shown in the column on the far right, we estimate that agriculture accounts for roughly 11 per cent of the anthropogenic greenhouse gas emissions in Canada.

Canadian agricultural ecosystems are currently a source of all three of these gases. However, there is some uncertainty in these estimates, especially for nitrous oxide which is very difficult to measure and very sporadic in its emission patterns.

The next question is: What can we do to mitigate these emissions? What can we do to reduce the rate of emissions?

There are a number of proposed strategies with respect to nitrous oxide. Most focus on improving the efficiency of nitrogen use in agricultural ecosystems; for example, developing more efficient methods of fertilizer application and judicious animal manure application.

With respect to methane, much of the mitigation work is focusing on developing more efficient utilization of feed, for example, changing rations to some extent; the consideration of various feed additives; and improving manure management systems.

A great deal of the interest in mitigation has focused on CO2 because CO2 is both released by agriculture and absorbed by agriculture.

To explain that a little further, I have a simplified diagram of a carbon cycle in agricultural ecosystems. Essentially, CO2 is absorbed by crops and converted to various organic carbon forms. Some of that organic carbon is removed in the form of products. The remainder enters the soil and is stored there as soil organic matter and as soil humus. This organic matter gradually decomposes back to CO2, thereby completing the cycle.

Throughout the millennia of soil development, these soil carbon pools have built up to the extent that there is more carbon in the soil than in the atmosphere above it. If there is a change in the amount of soil carbon stored, that has implications for atmospheric CO2. If soil carbon is depleted and the concentration goes down, that means a net emission to the atmosphere. On the other hand, if there is a gain in soil carbon, that results in a net withdrawal of CO2 and storage in the soil. That process is referred to as "carbon sequestration."

A number of strategies have been proposed for changing that. In other words, the soil carbon pool is dependent on management. If we look at the historical effect of management on soil carbon, we see that before the inception of cultivation early in the century there was quite a sharp drop in the amount of carbon stored in the soil. Historically, agricultural soils have been a large source of CO2.

Senator Gigantès: Perhaps I do not have sufficient technical knowledge, but at this point I am not quite sure whether you are telling us it is good to have a lot of carbon in the soil or not.

Mr. Janzen: My apologies. It is a favourable process. As we increase soil carbon, we remove CO2 from the atmosphere. From the standpoint of atmospheric CO2 reserves, we would consider it a favourable process.

Presently, we are interested in reversing that historical trend. We would like to promote practices which result in the gain of carbon back into the soil carbon pool. A number of practices have been identified which, at least in some locations, can increase the amount of carbon stored in the soil. On this slide, we have shown a reduction in tillage intensity, less reliance on summer fallow, an increased use of various forage crops, and improved crop nutrition increase the amount of carbon. Summer fallow is still a widespread practice in the Prairies where the soil is left unplanted for a growing season. Forage crops are grasses and legumes. Improved crop nutrition is achieved through the application of fertilizers and various nutritive additives.

Senator Gigantès: That will increase carbon in the soil.

Mr. Janzen: Yes.

The Chairman: This would absorb the additional CO2 we are emitting into the atmosphere by various modes, particularly those related to oil and gas. This would absorb more CO2, which may be beneficial in the global warming issue.

Mr. Janzen: You are quite right.

The Chairman: Can you extend the reasoning that far?

Mr. Janzen: If the soil carbon pool increases by a tonne, all of that carbon will have come from the atmosphere. Any increase in the soil carbon pool results in withdrawal of CO2 from of the atmosphere.

Senator Spivak: These practices, apart from the fact that they are related to global warming, are also very good for sustainable agriculture. They are things we should be doing anyway.

Mr. Janzen: Precisely.

The Chairman: Is a "carbon sink" and "sequestration" basically the same thing?

Mr. Janzen: When I refer to soil as a carbon sink, I mean that the soil has a capacity to accept and absorb CO2. When I say that soil is a source, that means there is a net emission from the soil into the atmosphere.

Senator Taylor: With respect to soil absorption through photosynthesis and plant growth, is that not how the carbon gets into the soil? Sequestration takes place through photosynthesis.

Mr. Janzen: Yes.

Senator Taylor: A carbon dioxide particle does not fall on the ground and simply be absorbed by the soil. It has to be absorbed through photosynthesis.

Mr. Janzen: You are correct.

Senator Taylor: Therefore, the more growth on the soil, such as trees and summer fallow, the more photosynthesis we can expect.

I understand that the oceans also absorb a lot of CO2. Is that because of the algae in the water? The oceans absorb more CO2 than our land base, but I am not sure I understand the process.

Mr Janzen: The next question we pose is: What would happen if we were able to increase the use of these various practices on the agricultural landscape of Canada? You see here a diagram of the agricultural areas of Canada. If we were to make much more widespread use of these practices across the country, how much carbon could we pull out of the atmosphere and store in the soil? We do not yet have good estimates of that. The best I can do for you now is to provide a very hypothetical example to, if nothing else, give an order-of-magnitude estimate of the amount.

Take the hypothesis that soils gain carbon, in other words, draw CO2 out of the atmosphere, to an amount of three megagrams, which is three tonnes, per hectare over a period of 20 or 30 years. If that gain occurs on an area of about 35 million hectares, which is roughly the area of cultivated land on the prairies, that will give us an amount of carbon sequestration or CO2 withdrawal of slightly more than 100 million tonnes. To put that number in perspective, it is approaching the amount of carbon we release into the atmosphere annually from fossil fuel combustion. It is, in theory at least, not an insignificant amount.

There are a couple of factors we must take into consideration. Soils cannot gain carbons indefinitely. It is a short-term process. Eventually, the carbon gains stop as the soils reach a new equilibrium. This happens over a number of years. It is a relatively slow process.

The other important point is that most agricultural ecosystems rely on supplementary energy. Our ecosystems themselves use fossil fuel so, over the long term, the emissions of CO2 from this fossil fuel use may negate many of these gains in soil carbon. In fact, they may negate them entirely in the long term. Therefore, the net effect of carbon sequestration is a short-term benefit.

To review, there are a number of mitigation strategies for N2O, for methane and for CO2 and, in the short term at least, it may be possible to move that point for CO2 below the zero line. In other words, it may be possible for agroecosystems to effect a net withdrawal of CO2 from the atmosphere. We think, however, that that will be only for a relatively short period of time, perhaps a matter of some years, or one or several decades at the most, at which time they will revert to being net emitters of CO2 again.

Many of these practices, as has been previously pointed out, are very favourable practices to follow in any event. Agronomists will say that we should want to increase soil carbon regardless of any impact on the atmosphere. We promote many of those practices that we spoke of earlier for reasons of sustainability and productivity, quite apart from benefits to the atmosphere. Any improvement in the greenhouse gas situation is an additional benefit. The same can be said for the other mitigation practices for the other gases. Some of them at least lead to greater efficiency and better use of resources.

We have talked quite a bit about the impact of agroecosystems on the global environment, on potential global warming and so on, but there is also a feedback. If the global environment changes, that has obvious implications for agriculture itself.

I list here a few of the uncertainties that may arise from that, the first one being changes in production practices themselves. For example, increased demand for food production will put pressures on agricultural systems which may induce changes. Increasing livestock numbers can have implications on methane and nitrous oxide emissions. Another uncertainty relates to climate change. Increases in temperature and changes in precipitation patterns affect productivity of our systems.

The final uncertainty on the list is a change in CO2 concentration itself. We know that CO2 is a raw material of agricultural production. It is CO2 that crops use to generate organic material. Therefore, an increase in the concentration of atmospheric CO2 could have some benefits on yields, and some researchers say there may be some slight positive effect, although there is a still a great deal of uncertainty attached to that. These uncertainties await further research.

Senator Gigantès: What does all that is happening in Canada have to do with the rest of the world? Is the polluting that goes on in other parts of the world so extensive that what we might be doing here almost irrelevant? It is, after all, a global atmosphere.

Mr Janzen: My understanding is that Canada produces roughly 2 per cent of the world's greenhouse gas emissions. That is a relatively small proportion. On the other hand, speaking first about the agricultural community, we would like to at least keep our own house in order and ensure that we are not contributing to the problem. The greenhouse gas problem is unlikely to be solved by a single measure. There is no easy solution. Within the agricultural community, at least, we would like to say that we are at least not contributing excessively to the problem ourselves and taking whatever small steps we can to reduce the impact of the problem.

Senator Gigantès: That is morally very satisfying, but is what is happening in the rest of the world so horrendous right now that, even if we perform at our best level, it will not make any difference?

Mr Janzen: You are quite correct that the amount of change in greenhouse gas emissions that we can effect through changes in agricultural practices will have only a small impact on the global environment.

Senator St. Germain: My question relates to climatic change. Are your departments monitoring climatic change and the effect it will have on agriculture? We have recently seen ads by certain sectors or the industry stating that there is no global warming. Some even say there is global cooling. Does your department and your particular sector of the industry monitor any of this?

Dr. Raymond Desjardins, Research Scientist, Micro- meteorology, Agriculture and Agri-Food Canada: Agriculture Canada has research stations around the country . We have weather stations at these research stations which have collected weather data for quite a few years. That data is sent to Environment Canada and we examine it. There is much variability in this data, but there are trends in the last fifty years. On a monthly basis we sometimes see no trend but, if we look at an entire growing season or an entire year, we see an increase in temperature of about .9 degrees in the last 100 years in some places. In other places it is less. We have seen, for example, in the last 16 years, 10 of the warmest years on record on a global scale. Ontario and Quebec have been warmer in 8 of the last 10 years; but the prairies have been cooler than normal 6 of the last 10 years.

The picture is not completely clear, but there is no doubt that, on a long-term basis, the growing season or the number of growing days will increase. That is bound to happen. With the projected increase, if we accept the model, it is bound to be even more considerable.

Senator St. Germain: Your records are only 50 years old. I remember flying over southern Saskatchewan and thinking that, at one time, it must have been desert from Moose Jaw to Medicine Hat, Alberta. Is there anything definitive related to what man is doing, or is there a possibility that these changes are cyclical? If you look back a million years, or even a thousand years, could these changes in temperature be attributed to natural, cyclical changes as opposed to man's intrusion into the environment?

Mr. Desjardins: It could be attributed to cyclical changes, and it is difficult for us to prove the contrary. There is no doubt that we are closing some windows in the atmosphere. Emissions of some greenhouses gases is increasing. We know there were some places for the heat from the earth to escape, and, by increasing these gases, we know from physics that we are closing some windows. You are correct that the water records are fluctuating, and there could be an argument in favour of what you are saying. However, I do not think there is much doubt that there is a warming trend, and there is no doubt that the increased concentration of greenhouse gases has an effect on the global temperature.

Senator Spivak: The international panel on climate change, which has been in existence since around 1988, uses the services of 1,000 scientists and others who are particularly skilled in assessing climate changes, and they seem to suggest that there is increasing evidence of an anthropogenic impact on the climate. Is that not the most definitive statement that has been made recently?

Mr. Janzen: That is certainly my understanding as well.

Senator Spivak: You are looking at practices in agriculture which can produce not only beneficial results as far as climate change is concerned, but beneficial results for the agricultural industry in terms of soil loss and so forth. Why are you looking at the pattern? After all, because of government policies such as transportation subsidies being removed and so on, we have seen the beginning of a huge change in agriculture. For example, there has been an increased amount of hog production and a decrease in grain production.

What impact will that have, not only on climate change, but on agriculture generally and in the production of foods? What are your powers as a Department of Agriculture, given that the provinces control almost everything, to, in a macro-economic fashion, look at these changes and direct them? Why are you not suggesting that we produce bison instead of hogs for reasons such as nutrition, climate change, and sustainable agriculture? Are you letting hog production proceed unimpeded, with no direction from the federal government?

Mr. Janzen: I am not sure quite how to respond except to say that I am only familiar to some extent with what we are doing in the research branch of Agriculture and Agri-Food Canada. Many of us are looking at developing more sustainable systems. Much of the work prior to our work on greenhouse gas emissions was focused on sustainability. Initially, many of us worked on carbon cycling and nitrogen cycling, not from the standpoint of emissions to the atmosphere, but from the standpoint of conserving soils. We do have some expertise and some ongoing research into the impact of changing management and conversion to more livestock-based systems and on the broader sustainability of these systems, not just from the standpoint of greenhouse gases.

In partial answer to the question, increasing livestock numbers has, potentially, both positive and negative impacts on sustainability and the whole greenhouse question. Increasing amounts of livestock can lead to increases in emissions of methane and nitrous oxide. On the other hand, we also know that greater numbers of livestock may increase the area of soils related to forage crops, and forage crops can have favourable effects on soils and on the sustainability of the agricultural landscapes. The overall picture is quite a complex network.

Senator Spivak: Is some assessment being made of the various types of livestock, such as cattle, hogs, or bison, and which is more suitable, and which will have the greatest impact on greenhouse gases in the prairies? Huge changes are taking place. Is someone studying this?

Mr. Janzen: The issue of waste management, which is one of the primary questions, is receiving increasing attention among the various research centres in Western Canada, and I am sure in Eastern Canada as well.

The Chairman: Coming from Lethbridge, Dr. Janzen, you are undoubtedly familiar with the problems being experienced because of the high concentration of hog production. It is a major issue. There are immense hog lots and feed lots in that area.Has there been an impact on your area as a result of this high concentration of livestock?

Mr. Janzen: A flurry of research activity is being initiated right now. Some longer-term research has been conducted, but there is also a renewal of interest in areas such as water quality. For example, they are trying to determine the impact of increased manure application, of the leaching of nitrates into ground water, on the quality of well water and so on.

The issue of livestock numbers is, in simple terms, related to a potential excess of nutrients. The nutrients from livestock manures are beneficial. The problem arises when we concentrate them to a greater extent than the plants can pull them out of the soil. You then run into problems with these nutrients leaching into the ground water and being emitted into the atmosphere as greenhouse gases and various other pollutants.

Senator Hays: You conclude that there are benefits to be derived from changing farming practices, not only in terms of soil conservation and other reasons, but also for carbon sequestration reasons. There are some benefits to be gained from changing farming practices to follow the four suggested methodologies you have shown us on the screen by, basically, leaving more trash, more cellulose and more carbon materials in place. We know the value of roughage, forage, to ruminants as opposed to Senator Spivak's example of hogs which are dependent on grain.

At the other end of the scale, we know that, in agricultural policy, we are moving to a more market-driven or market-based decision-making paradigm. Would you care to comment on how you might bring these two ideas together? Do you let farmers do what they want to do and, if people want to eat more pork, encourage them to grow more pork? Alternatively, knowing that there would be a benefit to the world environment, do you encourage farmers to do something that is not market driven? Would we pay them to go out of hog production? Have you given any thought to that?

Mr. Janzen: There could be the development of farming practices that would make these measures economically desirable. For example, there has been quite a lot of research into the development of so-called "conservation tillage" or no tillage farming practices, which is a technique by which farmers can grow crops with minimum tillage. There was quite a research thrust into developing the equipment, the weed control methods, and the agronomic practices that would allow this procedure to work, to be economically viable and, perhaps, even profitable. As a result, this practice is now being widely accepted across much of Canada. We have seen quite a high rate of adoption, motivated to a large extent by economicfactors.

Senator Hays: Are you saying that only carrots and no sticks would be used to motivate farmers?

Mr. Janzen: In the case of conservation tillage, certainly, it has been a carrot. I am not familiar enough with how one might go about it.

Senator Hays: If there are only these kinds of incentives, do you think you could bring any predictability to this as a means of offsetting carbon emissions from the use of fossil few fuels? For instance, will we be able to say, in the year 2005, when Canada is comparing its carbon emissions to the year 2000, that we are much better off because there has been a contribution to carbon removal from agriculture, given that there is no way of mandating that?

Mr. Janzen: I am not sure how predictable it would be, no. It comes back to demonstrating some of the argonomic benefits.

I should make the point, too, that there is some value in interactive education among farmers, researchers and so on. Farmers have a strong sense of soil conservation. They recognize that it is important to ensure that the next generation has the resources to continue farming. That is an another motivating factor. It puts the onus on us to continue to work on education and the dissemination of information.

Senator Hays: You have already done a lot of that. Have you quantified its value? For instance, in areas subject to wind erosion, farming practices have changed. When flying from Calgary to Lethbridge you see less summer fallow. You see more farming techniques which will result in more crop residues being in place. Have we quantified that as a benefit already?

Mr. Janzen: Certainly, surveys have been done, and perhaps Mr. Desjardins can comment on those surveys.

Another technique now being used is remote sensing. Some of these changes can now be quantified by satellite imagery.

Mr. Desjardins: We have done what you have said, Senator Hays. We have looked at how much carbon we were losing in the 1990s. Based on the current trend of no-till practices and the increased use of fertilizers, we have noted that, by 1998-1999, we will be at a point of equilibrium and will not be losing carbon. Soils will start to sequester carbon until at least 2010. If agricultural production increases by between 10 per cent and 20 per cent up until 2010, then the reduction in carbon loss from soil will be equal to the increased emissions caused by methane gas being produced by cattle. Agriculture from 1990 to 2010 will be at a zero gain or loss. That is a short-term solution. In the future, agriculture will continue to be a source.

Senator St. Germain: Does this balance to which you refer apply only to the amount of CO2 which is emitted into the air as a result of agriculture, or is this the overall picture of emissions in the country?

Mr. Desjardins: It is just the on-farm agricultural emissions. It has nothing to do with the country as a whole because agriculture is a small player in the whole greenhouse gas issue. We account for about 11 per cent of the overall emissions.

Our calculations show that we can compensate for our increased emissions up to the year 2010, but only from the agricultural sector. That does not take into account transportation, the production of food or the manufacturing of fertilizer.

Senator Hays: Does that 11 per cent take into account all greenhouse gases, including methane?

Mr. Desjardins: Yes.

Senator Gigantès: Has there been any study done in which the gas emissions from the production of meat from various animals been compared? Per pound, are hogs worse polluters than bison, for example?

Mr. Janzen: From the standpoint of methane emission, ruminants have a higher emission of methane, ruminants being cattle and bison as opposed to hogs, for example.

Senator Gigantès: Is not more nitrous oxide produced by hogs?

Mr. Desjardins: Yes, from their manure. Cattle produce about 75 per cent of methane, while hogs produce about 25 per cent.

Senator Gigantès: Is that because there are fewer hogs than cattle, or is that per pound?

Mr. Desjardins: Per pound, cattle produce a lot more. Dairy cattle produce 500 litres per day, while non-dairy cattle, such as a steer, would produce 200 litres per day.

Senator Buchanan: I wish to ask a question about CO2. I come from a part of the country where we burn coal to generate 70 per cent of our electricity. We built five 150-megawatt plants from 1977 to 1990. This was a rather interesting period in the politics of Nova Scotia.

We were under attack during the late 1980s for building these plants because of SO2 levels. The premiers of the Atlantic provinces signed an agreement with the New England governors to maintain a certain level of SO2, which has been done.

The last plant built was the Point Aconi fluidized bed plant. The fluidized bed plant reduces SO2 by almost 90 per cent, that is, to negligible amounts. We then came under attack for CO2 emissions. David Suzuki came to Halifax and accused me of being a dinosaur for ever agreeing that these plants should be built. I suggested he go down to Cape Breton and make that statement.

At the time, many people, who I suspect knew what they were talking about, said that we should plant, literally, millions of trees, not just in Cape Breton, but throughout Nova Scotia. They even said that, if we funded the planting of trees as far away as South America, we would be aiding in the fight against CO2. Is that true?

Mr. Desjardins: New Zealand takes the same approach. It depends on what kind of land the trees are planted on. It is probably true if you plant trees on marginal land because, in the long term, they will sequester carbon. If you use good agricultural land, it is not true.

Senator Gigantès: Nobody would do that.

Mr. Desjardins: Some people might.

Senator Spivak: It is the other way around.

Mr. Desjardins: There is no doubt that forests are a very important sink for CO2. The question right now is whether or not our Canadian forests can account for all the carbon dioxide that we are generating in Canada. There is a missing carbon sink. Some people think it is in the ocean, and others think it is in the boreal forest.

Senator Buchanan: Before I leave that, I want to make this clear: Even though we burn coal and will continue to burn it, we produce less than 0.1 per cent of the carbon dioxide that is emitted into the air in Canada.

The Chairman: I am sure the witnesses understand that is not a question; it is a statement from the senator from the Maritimes.

Senator Gigantès: I did not quite understand the point about the Canadian forests.

Mr. Desjardins: Plants use carbon dioxide to grow. The carbon dioxide concentration is increasing by about 0.5 per cent per year. This increased carbon dioxide means that more is available for plants to grow, and some people think that forests could be growing faster and taking in more carbon in trees and in soil and that that would account for much of the carbon that is being generated by fossil fuel.

Looking at the equation, six gigatonnes of carbon dioxide is generated per year by burning fossil fuel. That is world wide. Analysts who review the numbers, say about two gigatonnes go in the ocean. There are some other sources. In the final analysis, it appears that two gigatonnes go into the atmosphere, two gigatonnes go into the oceans and we are still missing two gigatonnes which are being absorbed in the world. Otherwise, the concentration of CO2 would be rising faster than it is.

Scientists are looking at different places which could be absorbing that carbon dioxide. It is possible the boreal forest could be absorbing these amounts.

Senator Gigantès: Even though rain forests are being devastated?

Mr. Desjardins: It is suggested that a large amount of carbon is being released into the atmosphere by the destruction of the tropical forests.

Senator Taylor: I wish to ask a question relating to global warming.

Am I right that there is little or no carbon sequestration in the winter time, when the ground is covered with snow?

Is it not true that global warming would result in a shorter winter and a longer summer, more growing time? Have we not set out a self-controlling mechanism, that the longer the growing season, the more carbon is absorbed, therefore, if more carbon is absorbed, the less global warming, and the process continues? In other words, is it possible that perhaps nature has developed a self-governing system? Would you argue that that is possible?

Mr. Janzen: As Mr. Desjardins mentioned, increases in CO2 are not as high as one would calculate from the increases in emission. There is some absorption going into plant growth, the oceans and so on. There is some suppression. However, despite that, CO2 emissions are still increasing or have increased which would lead me to believe that, although there is some compensation or negative feedback happening, it is not enough to maintain concentrations at the pre-industrial level.

The Chairman: Did I understand you to say that, in the prairie provinces, some 100 million tonnes per year of CO2 are absorbed within the carbon sink?

Mr. Janzen: I meant to say that it is 100 million tonnes over the duration of the increase in soil carbon. That may take 20, 30 or 40 years. That is not an annual increment. That is an important point. It is a relatively slow accrual. It is not a huge number, considering the rate of emissions. It is a relatively small portion of the fossil fuel CO2 emissions.

The Chairman: Could those absorption figures be increased based on the matters you enumerated?

Mr. Janzen: Again, the curve that I showed was a theoretical projection of the amount removed, if we adopted these practices.

At the present time, we would guess that soils are almost neutral. They are not releasing CO2 or gaining CO2. At the present time, they are close to zero, and neither releasing nor absorbing.

If we adopt these practices -- and this is a rough guess -- we might gain an additional 100 million tonnes of carbon. But that is not an annual increment, that is cumulative, over a number of decades. When compared to the annual rate of emission of CO2, that is a very small fraction of the annual emission from fossil fuel.

The Chairman: On an annual basis, can you give us any indication as to what the agricultural community is doing with respect to absorption, or is that too difficult to assess?

Mr. Janzen: I think we have some projections based on model outputs.

Mr. Desjardins: In 1990, we were losing about 6 million tonnes of carbon dioxide per year, and we are still losing carbon dioxide. Since the beginning of cultivation, we have lost 1,600 million tonnes of carbon, 6000 million tonnes of CO2 from our agricultural soil. However, we project that, by the year 2005, we will begin to gain 1 million to 2 million tonnes of carbon dioxide per year in our soil.

Senator Gigantès: In what sense does the witness use the terms "losing" and "gaining" in this instance?

Mr. Desjardins: Before cultivation, there was a fair amount of carbon in the soil, and the carbon has decreased steadily to reach a point where it is at equilibrium. Given current management practices, carbon content in the soil has started to go up slightly. As the carbon content goes up, the soil is absorbing carbon dioxide from the air via the plants.

Senator St. Germain: There is a cost attached to these changes. The individuals involved in agriculture are price takers. They do not set prices. This has a huge impact.

The most vociferous polluters in our society are city and urban dwellers. There will be a cost to someone. If agriculture is seen to be a possible source of reducing greenhouse gases, do you see a change ahead that would create adjustments in regard to these imposed costs? People tend to gravitate to the most economical and the most productive change.

I went into the cattle business 12 years ago, and the price is still the same today, if not less. However, all the expenses have quadrupled, from tractors to taxation. Are any studies being done into how these price increases to farm producers will be dealt with?

Mr. Janzen: I am not aware of a lot of research in that area. I do know that there has been some discussion of giving farmers credit for carbon stored in soils. I am not sure about the source of funding for that credit. In any case, it is probably relatively small and perhaps not enough to entice farmers to adopt those practices from an economic standpoint alone.

Even if these measures are adopted on a widespread scale, agriculture will still be a source of greenhouse gases because of the methane and nitrous oxide emissions.

Senator Taylor: I have a question about carbon sequestration.

As you know, you can put ammonia gas in the soil. Is there such a thing as putting carbon under pressure into the oil. Would anything bond to it?

Mr. Janzen: There may be some possibility of that. The rate would probably be negligible.

There has been some research into carrying out that procedure in the oceans. The Japanese have looked into pumping CO2 into the oceans. There are some chemical mechanisms that could trap that CO2. However, as far as I know, the economics are not very favourable.

Senator Taylor: This might work in Nova Scotia. I am referring to taking the carbon dioxide from coal plants and piping it into greenhouses. Can you foresee a Nova Scotia radish that is grown in half the time using coal gases? Does carbon dioxide piped into greenhouses really make a difference?

Mr. Janzen: I believe that is routinely done in many greenhouses. They do enrich the atmosphere with CO2, and it does increase the rate of growth. The difficulty is that the amount of CO2 generated by fossil fuel combustion is so high that the benefit of that practice from the standpoint of atmospheric CO2 reduction is negligible.

The Chairman: Thank you, Dr. Janzen and Dr. Desjardins for sharing your thoughts with us.

Our next group of witnesses is from the Canadian Association of Petroleum Producers.

Please proceed.

Mr. David J. Manning, Q.C., President, Canadian Association of Petroleum Producers: Mr. Chairman, as you can appreciate, climate change is a very topical issue. For some reason, we seem to be pretty much in the thick of it.

We represent the upstream industry, that is, the industry which seeks out, drills for, and produces oil and natural gas, primarily, and liquids. As an organization, we represent about 95 per cent of Canada's production.

As of today, I can announce with great pride that six provinces are now oil and gas producers in Canada. Hibernia commenced production yesterday in Newfoundland. They have almost doubled their estimates of oil in place off Newfoundland in the Hibernia field alone. That single platform will produce 180 barrels per day next year, which is almost unheard of. That is very close to the production of the Syncrude plant from a single platform. We are very proud to represent the industry in the Maritimes as well as in Western Canada. We think that is key.

Senator Buchanan: You did not mention offshore Nova Scotia.

Mr. Manning: I was coming to that. The survey to which Mr. Peirce will allude in a moment, which we conducted as an industry, sought the opinions of Canadians about our industry, climate change and various other issues.

One of the key questions that an industry always asks is: How important do you think we are? I was very proud that 48 per cent of Maritimers think we are one of the most important industries in the Maritimes. Much of that is as a result of the tremendous interest in offshore Nova Scotia and the Sable field.

When I was based in New York for a number of years as a trade lawyer for Alberta, the talk was that Sable would be on stream in about 2020 to 2025. That was the official statement from the Consul General of the day. We have now moved that up to 1999. We are very optimistic that this project will proceed now that we are getting over a number of regulatory hurdles.

Climate change is an interesting issue for Nova Scotia. As you have probably heard, one of the only areas where acid rain is still a problem is in the Maritimes. Of course, over half of that SO2 is U.S. produced. The natural gas from Halifax, which will move in part to the U.S., will have the opportunity to fuel much more efficient plants and reduce CO2 emissions. It will also back out those smokers in the north-eastern United States and in the Maritimes which are contributing to the SO2 problem. Halifax has a very strategic role to play in the CO2 debate.

We have turned over to the committee a document we have just produced. You will find some key points in the small booklet which catches our theme, "Better Global Rules Solid Local Action." This is also the cornerstone of a public information campaign we have embarked upon across the country. We have copies of our advertisements in the package.

I want to commend the our governments on the Regina meeting. As a former deputy minister of energy with Alberta, I have attended probably half a dozen joint ministerial meetings over the years. I was waiting outside the room last Wednesday in Regina as the provincial representatives and representatives of the federal cabinet met to try to strike a consensus on this issue. I was struck by the ability to form consensus. As the Prime Minister of Canada made reference to an opportunity to improve upon the United States position, it is most important to note that he did improve on the U.S. position immeasurably on Wednesday in that we have a consensus in Canada.

The provinces have a suite of implementation options and, of course, the federal government has the responsibility for international agreements. The U.S. has been unable to bring those two elements together.

I met two weeks ago with the chief of staff from the department of energy in the U.S. who took the ads which CAPP has been sponsoring in national Canadian newspapers to the President so that he can see the level of cooperation between governments and industry in Canada.

As I understand it, the U.S. delegation to Kyoto may include up to 12 Republican senators and their staff. It will be a massive undertaking. I suggest that the opportunity for consensus in the U.S. will be quite strained.

The first challenge of this issue for us all relates to Canada's growth in population. Our population growth since 1990 has exceeded 10 per cent, which is three times that of the nearest country in the OECD.

The second challenge relates to economic growth. The charts in our material show that 1990 was a low point in the Canadian economy. We have had growth since that time, and that growth has driven more activity and more CO2 emissions.

The third challenge relates to the growth in exports; exports in natural gas and oil, obviously, from our industry, but also export in energy-laden goods. For example, we export far more cars than we import. A lot of energy goes into the manufacture of vehicles. There is a high energy component within agriculture. Every one of those numbers is up, which is one of the reasons the Canadian economy is strengthening. We are in fact an exporting country.

Those are the main factors with which we have to come to grips. We will do that by maintaining some solid local action, which we have always supported, in order to give us an opportunity to create an international platform for better global rules, because the real growth will take place in the developed world. That is not to say that we cannot take steps here at home, and not to say that we must be engaged at home to ensure that credibility, but Canada, with our experience in the land mines issue and our vast experience in terms of UN activity, has a real opportunity to assist.

As you know the APEC meeting will be held in Vancouver next week. The President of China will visit Calgary on his way to that meeting. I have just returned from Beijing myself. I am pleased that a small group will be having dinner with him. What a contrast from his trip to the United States where he was called upon to debate Tiananmen Square in the international press and where he encountered resistance at every step. Who better than Canada to work positively with China at the Kyoto Summit?

Mr. Chris Peirce, Vice-President, Canadian Association of Petroleum Producers: We would like to spend most of our time answering any questions you may have. We are willing to do that now, and in the days and weeks to come, once you have had a chance to review our material. You are only the second group to have received our materials. They have just come together over the last couple of weeks and we are pleased to be able to put them before you, Mr. Chairman.

CAPP became involved in the public debate around climate change because, frankly, we felt that the debate, as it was surfacing in the public in the run-up to Kyoto at the beginning of this year, seemed to be skewed by the extremes; the extremes representing both those who felt that action was called for that would, in our view, jeopardize the economic growth Canada has experienced over the past few years and not get us where it was purporting to get us in terms of progress on greenhouse gas emissions; and those who would say that it is not a problem, that nothing needs to be done.

We commissioned a public opinion survey at the beginning of this year which was completed in the spring of the year. The executive summary from that survey forms part of the materials before you today. Intuitively, we felt that did not sound like where Canadians would be on the issue of taking real and substantive action to reduce greenhouse gas emissions.

We felt that the results of our survey had some clear messages for our industry. We also felt that it had some clear messages for government. The message for our industry was that it did not behoove us to be engaging in any sort of debate over the science of climate change, that we were not a credible voice on that topic, regardless of what we may feel, and that that issue will be resolved by others in other locales, by others who are trusted to have information and expertise on point. However, there was an appetite for us to be talking about what we do. We are a technologically innovative and driven industry, one that we believe is one of the most environmentally efficient in the world, an industry that is perceived as having part of the answer to any global solution to the issue of greenhouse gas emissions.

The other point that we really felt underlay our public opinion research was that Canadians want both responsible environmental action and economic growth. They are not prepared to have solutions proposed to them which would jeopardize either one of those.

We felt that we had a balance to offer in the public debate that would both help the proper formation of public policy and provide our industry with the type of certainty that is required to facilitate the long-term capital investment that started in 1979 off the coast of Newfoundland which is finally yielding oil today. That type of investment does not happen overnight. We need stable rules to attract the type of investment that will lead to further development of the oil and gas sector in Canada.

Our pragmatic approach to the issue of climate change is intended to balance both economic growth and environmental sustainability. Our materials before you today indicate that we should be taking prudent steps which will lead us to better control of greenhouse gas emissions globally, and work to encourage and further spur economic growth in Canada.

We recognize as an industry that we must take proper action at home rather than no action. We must take steps to broaden and deepen the efforts of our industry.

In terms of government, the current global regime does not recognize certain Canadian perspectives, quite apart from the perspectives of any other nation. The first of those is the fact that we export over half of the natural gas and oil that we produce in this country. The notion that Canada is the leader in per capita consumption of energy is wrong, if one looks at what we do with the energy we produce. We do not consume over half of it here at home in Canada; we export it.

Senator Gigantès: Does that include oil?

Mr. Peirce: That includes oil, yes. Exporting, especially natural gas to the United States, is a positive environmental step, because when that natural gas arrives in the United States, it invariably displaces other more emissive or less efficient fuels. Canada now provides over 14 per cent of the U.S. domestic consumption of natural gas.

As many of you will be aware, with the realities of international trade, that is a huge market share for any Canadian product in the United States. There have been no trade disputes in that area. With Sable Island and other natural gas production, that is on the verge of further growth.

We need a global regime which gives us credit for the fact that we must emit greenhouse gases in order to produce that natural gas and export it. Right now, those are seen to be a debit on the Canadian ledger sheet. There is no recognition of the fact that this natural gas must be produced to be exported, and that it is not consumed in Canada.

We also need a global regime which recognizes actions taken to reduce greenhouse gas emissions, wherever those actions are taken. If Canada or Canadian firms are taking actions to reduce greenhouse gas emissions here, in China, or anywhere else, we need a global regime that recognizes that and gives us credit for it. That does not happen currently. When a CANDU reactor is being built in China or when a Canadian natural gas pipeline company is building a natural gas pipeline in South America, there is no credit given to Canada for the greenhouse gas emissions those actions will reduce or eliminate.

As well, we believe that the developing world must be involved in any global approach to greenhouse gas emissions, not that we need to seek from them the same type of commitments for greenhouse gas reductions that we are seeking here in the developed world. That is not what we are saying. The developing world needs to be engaged, which will promote the kind of transfer of technology that we have here in Canada and in the developed world and help assist economic development in the developing world, while promoting actions which reduce greenhouse gas emissions.

We underlay all three of those points with the notion, that we understand we must do more. We must do all that we can in Canada, and therefore, with respect to the voluntary challenge and registry we, as an association, have now increased participation in our industry to over 96 per cent of domestic production of oil and gas. We know that we have to walk the walk and show that we can translate that participation into further real reductions in CO2 emissions. Right now, we have reported reductions in CO2 emissions at 8 million tonnes between 1992 and 1996. We know we must do more and do better. We also know that all sectors of the Canadian economy have to do more. We are responsible for only about 12 per cent of CO2 emissions in Canada.

Those are the fundamental points of our position on climate change. We would be pleased to answer your questions.

Senator Gigantès: You mentioned the developing world and China. If I am not misinformed -- which I often am -- China has enormous reserves of dirty coal. It is difficult to see how they can avoid using it, considering the size of their population and their need to grow industrially.

Is your industry doing research on scrubbers to clean the emissions from coal plants and reduce those emissions, as Nova Scotia has done, to export and implant in places like China? Can China afford it?

Mr. Manning: The efforts of the Canadian oil and gas industry will be to provide natural gas infrastructure. China also has substantial reserves of natural gas. China is quite preoccupied with water quality. Nationally, their main goal at the moment is to improve the quality of their water. They are also aware that 40 per cent of their rail system is taken up by coal and that it is a very inefficient system.

Because of the inefficiencies in their system, our industry is not engaged in assisting their coal industry. You should appreciate that we do not speak for coal concerns here in Canada either. However, we have been organizing and contributing financially to their oil and gas upstream sector and importing our technology, as well as our environmental technology, for the development of natural gas particularly, and investing and developing pipelines to bring natural gas in China to the cities. It is quite a mountainous region, and the costs of transportation are very high.

In terms of clean coal technology, there are programs, primarily based in the United States, which include the coal firing of natural gas and coal, but they are not yet in commercial use. Scrubber technology is being continued by the coal industry, and primarily by the electrical power producers. Sixty per cent of the United States electrical power still comes from coal, so that is, primarily, an investment of the Department of Energy, the electricity producers, and the Edison Electric Institute. Those are the sources of development on clean coal technology to date. Our industry is not engaged in that, but we do think there is a future for coal firing where coal is burned and natural gas is burned above it. Natural gas burning above a bed of coal has the ability to take out many of the impurities which are emitted. That is not yet in commercial use.

Senator Buchanan: You mentioned that in Nova Scotia, in the 1980s, we started with what is called a fluidized bed technique. We built the largest fluidized bed generating plant in the world. I am not sure anyone has overtaken us as yet. It is operated in a fluidized bed, and an absorbent like gypsum or dolomite is introduced which absorbs the SO2 before it has a chance to escape into the atmosphere. It has worked extremely well, and it has reduced SO2 by as much as 90 per cent in that plant. There are similar plants in the U.S. We visited some of them in the 1980s.

In Nova Scotia now, with Sable Island coming onstream, we are looking at the technique of using natural gas and coal in the generating plants, because the burning of natural gas will absorb many of the gases that would otherwise be emitted.

Senator Gigantès: I know this is not in your field, but what I am about to mention may affect you in the future. Mercedes Benz has already produced an engine, which it will be putting in motor cars, which uses hydrogen as a fuel, and the only emission will be H2O. The hydroelectrical potential of Labrador comes to mind. Your industry could be furnishing the power that would help to produce that, or you could be involved in it in some way. Have there been developments in producing commercially exportable hydrogen as fuel?

Mr. Manning: Interestingly enough, the only commercial use of hydrogen in North America today is in our industry, in particular from petrochemicals, oil and gas, and oilsands. We have commercial pipelines for hydrogen. As you know, much of the challenge with hydrogen concerns its storage and transportation. Hydrogen can be produced from natural gas, which is presently how it is produced for our industry. We have related industries to oil and gas which are producing, using and shipping hydrogen. That is the contribution of the oil and gas sector. The Alberta Department of Energy has funded a hydrogen research program for a number of years. That is our contribution to future hydrogen power opportunities.

Senator Gigantès: You said that it goes through pipelines, did you not?

Mr. Manning: Yes. We have commercial pipelines in Texas and Alberta which presently ship hydrogen.

Senator Gigantès: Would you be involved if hydroelectric power were used in Labrador to produce hydrogen? Would you have the technology to move it from there to export markets or to other parts of Canada?

Mr. Manning: Yes.

Mr. Peirce: Directionally, that is one of the key routes that we think the federal government should be following in promoting the right kind of innovation to help reduce greenhouse gas emissions. Because there are nascent technologies and alternative energy sources out there, it is possible to balance different sources of energy. Our industry, which is the oil and natural gas industry, can be a big player in helping to develop those technologies. The government can help that process along by creating the right kinds of incentives toward technologies that help reduce greenhouse gas emissions.

Senator Spivak: I would like to congratulate you in general on your no losses/no regrets policy. I do not know the details, so I would make that a qualified congratulation. It certainly seems to be in the right direction.

Have you been influenced by the statement signed by 2,800 economists, including eight Nobel Prize winners, which is quoted by the Royal Society and which says that not only can these measures not result in costs but, through increased productivity, they will probably produce great benefit? That is what this very distinguished group has said.

Mr. Manning: With respect, that statement is very generally worded, senator. There are some very critical qualifiers in terms of timing and capital stock turnover. Some of the misinterpretation from that type of statement will lead one to think that there can be tremendous transitions in how Canadians are employed in a short span of time. Our view certainly picks up on that. However, it is a more constructive approach. Exporting the technology that we have available today and improving upon it at home will get us there. That is the kind of economic growth in the near term that we can see.

Others have quoted that same study more expansively. For example, Greenpeace would be of the view that the carbon industry can be replaced immediately by alternative fuels. I think we must be cautious.

Senator Spivak: I agree with you that caution is necessary. One area they emphasized in their report was productivity and reduction of inputs, something which has been demonstrated in the oilsands.

Senator Gigantès: Could you explain that, senator?

Senator Spivak: The cost per barrel of Syncrude and Suncor has gone down immensely through efficiencies and input reduction measures.

Mr. Manning: That is true.

Senator Spivak: We were told by the Sierra Club that one way to reduce emissions would be to replace coal with gas for the generation of hydroelectricity. I am not saying that would happen tomorrow. Could you comment on that statement?

My second question has to do with the transportation sector. There can be great reductions of gas emissions in the transportation sector, a major problem, if the technology of the car engine were changed. There was a great kerfuffle in this committee about MMT and there will be further discussions surrounding changes in technology. Can you comment as well on what has been termed "eco-efficiencies"?

Mr. Manning: I would make three points. First, with respect to oilsands eco-efficiencies, I shall give you two examples related to that. Sand is taken from the earth and put into huge drums. Heat and chemicals are applied and oil and sand are separated. The sand is returned to the hole and the oil is consumed. The temperature used in the process has been reduced through improvements in technology.

Senator Gigantès: Reduced from what?

Mr. Manning: It has been reduced from 80 degrees Celsius to 35 degrees Celsius. That is not yet in place, although the design work to implement it has been completed. Its installation will take place over the next two to three years.

Another area of improvement involves truck and shovel technology. Mining trucks now have a 240-tonne capacity and will soon be able to accommodate 370 tonnes. The massive equipment which is more expensive to maintain and less efficient is being replaced.

Another area of improvement involves hydro transport. Instead of conveyors carrying the material, the material will be moved in closed pipelines where the separation starts to occur within the transportation cycle. It will be mingled and heat will be applied throughout. Once again, less energy will be used.

The next issue I wish to deal with is coal in Alberta.

Senator Spivak: Do you mean for the generation of electrical power?

Mr. Manning: Yes, for electrical power generating. Part of the difficulty is that coal-generated power in Alberta is highly efficient. You have a hard, clean coal in western Canada as opposed to the Virginia coal which Ontario Hydro uses. It contains less than .05 per cent sulphur. The power plants are sitting on top of coal seams. There are no transportation costs. We have to be careful when we talk about replacing that kind of efficient production.

In terms of CO2 emissions, Weyburn is a good example. There, we are using CO2 thrown off by a power plant in North Dakota. It is the world's largest injection program. CO2 is being injected into the ground for enhanced oil recovery. There may be other opportunities for sequestration. Certainly, the CO2 emissions could be reduced, but it would be done at an unnecessary cost. We are not representing coal.

Over the next 20 years, China will be building some 110 coal plants, each one with a 75 year to a 110 year life. One could argue where to best spend the money.

Transportation is a much larger issue. Our industry has gone to high efficiency motors. In that way, we have been able to reduce our consumption of energy.

Mr. Peirce: You raise one other important point, senator, when you used the word "efficiency." We think it is important that the global regime, whatever it is, recognizes efficiency. When Mr. Manning refers to the great gain being made in Syncrude, especially with the tarsands, I would point out that that is still a newly developing industry. There is great possibility for huge gains in efficiency, that is, emissions per unit of production.

One of the problems we see with the 1990 base year is that Canada, when you compare it with East Germany, West Germany and Britain, was far less efficient in 1990 than was the Canadian economy. In 1990, we were the second least reliant on fossil fuels of those already in the OECD, second only to France in terms of our lack of reliance on fossil fuels. Therefore, the marginal cost for us to become more efficient is consequently higher than for many other nations.

Senator Spivak: Are you wedded to the voluntary system or do you not think that regulation will be necessary, particularly for transportation?

Mr. Manning: The flexibility of the voluntarily system is beneficial, but it must be substantially broadened and deepened.

Our industry does not fear the concept of regulation, but there are certainly great gains still to be made within the flexible system of voluntary measures.

Senator St. Germain: The Canadian Coal Association has made the statement that there is no global warning. What is the position of your association in regard to that particular question?

The question of accounting is a major concern. Is there no other accounting method that would give us the credit we deserve when we do export natural gas? It seems unfair that, if a system is upgraded in the U.S. by virtue of the utilization of our natural gas, we do not receive a credit for that.In fact, we are actually debited. Has there been any movement or have any steps been initiated to try to change this accounting method, or is it possible to change this accounting method?

Mr. Manning: First, with respect to the science, our position has always been that the science is unclear. We know that the IPCC has indicated that they have found a link between man-made activity and global warning. They have not been able to quantify that. The next report of the IPCC is due in the year 2000. CAPP's position throughout is that there has not a fruitful debate and that the science will be resolved elsewhere. That is not our area of expertise. It is our view that there are steps we can take in the way of efficiency and whatnot, regardless of the outcome.

Turning to your second question about international accounting, in 1988 when I first went to the U.S. to represent Alberta, Canada had 4 per cent of the market share and the American domestic industry was fighting vigorously to keep Canadian exports out. We now have 14 per cent.

I am constantly asked by representatives of the U.S. domestic oil and gas industry how reliable our supplies are, and how much we can expand. They have had a significant downturn in the Gulf Coast. They are most anxious that Canadian supplies be maintained.

We are in a different position now, as a necessary part of the U.S. energy mix and as the "friendly" part of their oil imports. The vast majority of our oil exports go to the U.S., primarily to the midwest, the Chicago area. These are not even considered to be imports, psychologically, by the U.S.

We are now in a better position than ever before to start the discussion which must take place at the level of government as to how credits should be given for the upstream production which is consumed in the U.S. That discussion has not commenced. We do not have a platform. The U.S. has only become engaged in this issue, fully, in the last three or four months.

Senator Hays: I would like to join with others in congratulating CAPP on your engagement in this issue. I think it augurs well for a good solution for the portion of the industry that you represent, and I know how difficult that must be, given the different views that would be expressed within your organization.

I have two questions. I assume you have been consulted by the government in its process of preparing for negotiation. Could you tell us, within a range, what you see as a success for Canada as an outcome of the Kyoto Conference?

Mr. Manning: Canada has positioned itself to play a constructive role in the developing world. We are reluctant to engage in a numbers game. We are reluctant to see the federal government proceed beyond the mandate it was given by the provinces, because that was an important success. The Prime Minister has an opportunity to deliver where the U.S. cannot, in terms of that consensus.

If Kyoto were an endpoint, I think it would be less than successful for all parties. We must develop a system, an understanding and a process where we can work this through, be it like a GATT arrangement or a Uruguay Round arrangement. We need longer term solutions.

Mr. Peirce: We understand that there is a political reality in that the world has been setting targets, and that, perhaps, there will be a need to set another target.

Far more important in terms of a global strategy to reduce emissions, are issues like recognizing contributions to reduce emissions, wherever they take place, and recognizing real contributions to emissions difficulties, to which Senator St. Germain referred.

Canada, like most other developed nations, did not reach the target set in Rio in 1992, so I think it is foolish to set further harsher targets before we reach the 1992 goals.

We were heartened by the Prime Minister's indication a couple of weeks ago, here at the dinner in Ottawa, that Canada was going to take forward to the international table these issues that we think are so important, like credit for actions taken in the developing world or here, and credit for exports of natural gas from Canada. Those issues have not been discussed before at the international table. It will take great resolve to carry those issues through Kyoto. It is crucial to the attainment of any target to give proper credit to Canadians who were trying to do the right thing.

Senator Taylor: Am I correct in my understanding that carbon emissions from a vehicle using natural gas would be about 25 per cent of what it would be if gasoline were being used?

Mr. Manning: I cannot confirm that number. Our association has not been directly engaged in the natural gas vehicle issue, but there is an advantage.

Senator Taylor: If we are trying to back out coal, why are we not trying to back out foreign crude into Montreal and Toronto, which now supplies all our gasoline, when we have all this natural gas from the Maritimes? Why not use the Maritimes natural gas in Montreal and Toronto rather than Algerian crude?

Mr. Manning: Certainly, the natural gas vehicle effort has been more or less the purview of the downstream gas industry. Again, I cannot speak knowledgeably in terms of their issues or efforts.

There is no question that natural gas is a proven and established transportation fuel. However, you will appreciate that the gains that have been made as a transportation fuel have involved government incentive, particularly in fleet usage.

In cities like New York, for instance, Brooklyn Union Gas has three natural gas vehicle buses. The taxi fleet in New York, which is probably one of the least maintained in the country, could easily be running on this. There are only half a dozen petroleum stations in New York City.

You will not hear our association engaging in a public debate between the two fuels. However there is no doubt that there are real opportunities for natural gas as a transportation fuel.

The Chairman: Thank you very much for your presentation today.

The committee continued in camera.