Mr. Roger Samson (Executive Director, Resource Efficient Agricultural Production (REAP) Canada):
Thank you very much, and good morning, everyone.
If you want to get out our brief, it's in the briefs that have been circulated to you. Actually, we have revised this and added some references, so a new brief will be coming to you.
Basically, REAP Canada is a research and educational organization that's been working since 1986 on sustainable agriculture and, more specifically, on biofuel development in Canada since 1991. We released the most recent report on greenhouse gas mitigation from biofuels in Canada last month, and that brief is called “Analyzing Ontario Biofuel Options: Greenhouse Gas Mitigation Efficiency and Costs”. There were seven authors on that report, and we would like the committee to review it in detail to better understand the biofuel issues.
There are two things that make a good biofuel: that it's very efficient at displacing greenhouse gases, and that's it's cost-effective for the Canadian taxpayer.
If you look at figure 1 in my brief, you'll see the life-cycle greenhouse gas emissions for production of bioenergy fuel technology by energy-use sector. We compared three sectors: the transport sector, the green power sector, and the green heat sector. You'll see that in terms of greenhouse gas emissions, the heating sector and the green power sector are more efficient at reducing greenhouse gases. They have lower emissions.
If you go to figure 2, you'll see that on a percentage basis. You'll see that corn ethanol, according to our report, is 21% efficiency in terms of a greenhouse gas offset and biodiesel is about 50% to 58%.
In Europe, they've created a biofuels standard where the EU must show that they generate at least 35% less greenhouse gas than gasoline and cannot come from land with a recognized high biodiversity value. So corn ethanol would not be eligible in the European Community, whereas if you look at green power and green heat, you have offsets of 80% to 90%.
So what makes a good biofuel? A very good offset makes a good biofuel, and the second criterion is its cost.
If you look at figure 3, you will see we've done the pricing. We examined the federal and provincial subsidies available in the province of Ontario, and we looked at the offset efficiency of those fuels. What we saw was that biodiesel is about $100 a tonne in terms of mitigation costs and corn ethanol in the province of Ontario, with current incentives, is $375 a tonne.
If you look on the right side of that chart, you'll see there are options available for about $50 a tonne in quite a number of technologies, including one we've worked on, which is growing grass, pelletizing it, and using it as a thermal fuel offset.
If we scan through to page 9 of the brief, in table 1 we see our fuel analysis in terms of net greenhouse gas offset of renewable fuel. How can we use an acre or a hectare of farmland to offset greenhouse gases efficiently? We've shown the offsets here: about 900 kilograms from soybean biodiesel per hectare; corn ethanol, 1,500 kilos; cellulosic ethanol, 4,700 kilos; and switchgrass pellets, 13.5 tonnes per hectare, eight to ten times more efficient than corn ethanol as a strategy.
We're inviting anyone in the Canadian scientific community to challenge these numbers. We're very confident in these numbers, and we don't understand why the Canadian government isn't embracing more efficient offset technologies.
In our recommendations for the committee, we have three major concerns about this legislation. The first is that it won't appreciably reduce greenhouse gas emissions. We've been told that 4 million tonnes of offsets could be expected. If you run the numbers from our recent report, we find the numbers only come up to 2.1 million tonnes—almost half of what the government is saying to Canadians.
Secondly, we think a serious land conversion problem is going to occur, because Canada doesn't have the land base to grow that fuel. We're going to have to either import it or turn our grasslands into arable croplands, and that's going to release large quantities of greenhouse gases. Several scientific reports came out last month, and they talked about 50- to 130-year paybacks for that land. So this is not going to reduce greenhouse gas levels at the levels that are proposed. We do not believe that's going to happen.
Thirdly, it's not a made-in-Canada solution, because Canada largely will import the corn to make this ethanol. And in terms of biodiesel, it's just too expensive. Canola biodiesel today is $1,000 a tonne, and it's $1,300 a tonne for soybean oil. These do not make economical biofuels. The incentives that are available today for the federal government are not going to make it in terms of the 2% blend.
The legislation does not demonstrate fiscal responsibility. Carbon dioxide offsets, as you saw from the charts on corn ethanol, are in the order of six to ten times more expensive than other options.
We recommend three things that the government should do. The government should implement results-based management strategies throughout its research and incentive programs to ensure that the desired outcomes of greenhouse gas mitigation and rural development are achieved. We think the environment can be a winner, farmers can be a winner, and taxpayers can be a winner if we develop effective policy, but we don't have an effective policy framework today to address the carbon dioxide problem.
The second point is the government needs to embrace perennial energy crops and abandon the use of annual crops as biofuels. It should be recognized that there's a limited surplus arable land base in Canada, and the main opportunity for biofuels is from our perennial landscapes. Use our farmland that's marginal and grow biofuels like switchgrass for pellets.
The third point is that the government needs to embrace parity in terms of the way it's applying incentives to the biofuel sector. The Canadian government should not pick winners. There's a joke that governments pick winners but losers pick governments. Really, what we need to do is embrace carbon dioxide pricing as a means to create an effective strategy to reduce carbon dioxide. We would like to see Agriculture Canada expand its research in the use of whole-plant lignocellulosic perennial crops. Currently there's a deficiency in research funds in this area, and we would really like to see that strengthened.
Thanks very much.
Mr. B. Todd Moser (Vice-President, Alternative Fuels, Rothsay):
Mr. Chairman, members of the committee, thank you for giving me the opportunity to appear before you this morning to share my insights on Bill C-33, an act to amend the Canadian Environmental Protection Act, 1999.
I come to you today as someone with over twenty years' experience in the refining, supply, distribution, and marketing of conventional petroleum products in Canada and as vice-president of Rothsay, a proud member of Maple Leaf Foods and a pioneer in Canada's biodiesel industry. I trust that my practical and commercial experience in both conventional and alternative fuels will be beneficial in today's proceedings.
I would like to impress upon the committee two messages today: first, that alternative fuels like biodiesel hold many benefits for Canada and Canadians; second, and more importantly, that quick passage of Bill C-33 is critical if we are to realize any of these benefits.
Renewable fuels like biodiesel can benefit Canada and Canadians in three ways. First, renewable fuels can address the growing challenge of climate change. Climate change is real, and the environmental consequences of being addicted to carbon-based fuels are a key source of the problem. Renewable fuels like biodiesel can help address these issues by offering substantial environmental benefits over conventional carbon-based fuels. In the case of biodiesel, the environmental benefits are many.
According to Natural Resources Canada, biodiesel greenhouse gas emissions reductions are 70% to 95%, depending on the feedstock. Even a blend of 20% biodiesel with conventional diesel can reduce carbon emissions, on a life-cycle basis, by over 15%. Our Sainte Catharine's plant alone helps eliminate approximately 122,000 metric tonnes of greenhouse gases annually, which is equivalent to taking 16,000 light trucks or 22,000 cars off the road.
Biodiesel is as biodegradable as sugar, and is ten times less toxic than table salt. Biodiesel also has a very positive energy balance. In fact, a new analysis conducted at the University of Idaho in cooperation with the U.S. Department of Agriculture shows that the energy balance of biodiesel is a positive 3.5 to 1, which is to say that for every unit of fossil energy needed to produce the fuel over its life cycle, the return is 3.5 units of energy. This compares very favourably relative to conventional petroleum diesel, which yields less than one.
Second, renewable fuels like biodiesel help address the issue of energy diversity. The $100 per barrel for crude oil is more than enough reason to look at renewable alternatives as a means to diversify our reliance on carbon-based fuels. Not only have crude oil prices climbed but product prices are also at record levels. Over $3 a gallon in the U.S. and $1 per litre in Canada is now commonplace thanks to an aging refining network, minimal spare capacity, and ever-increasing product specifications.
In their most current medium-term oil market report issued in July of 2007, the International Energy Agency, a well-respected source of energy information worldwide, forecasted increasing market tightness beyond 2010 due to OPEC's spare capacity declining to minimal levels by 2012.
In the same report, they indicate that energy demand is not receding any time soon. Expanding economies, particularly those in non-OECD countries--for example, in Asia and the Middle East--are forecast to grow their oil demand by 3.6% per year over the next five years. This is clearly a recipe for continued upward price pressure on both crude oil and petroleum products in the foreseeable future.
Renewable fuels like biodiesel can help diversify our energy supply by adding additional supplies and production capacity for clean, renewable alternatives that are fully compatible with today's engines, can meet the highest product standards, and can be easily integrated into our distribution infrastructure. What's more, these fuels are available now.
The third major benefit of renewable fuels is their positive impact on the Canadian economy. Our Sainte Catharine's facility in Quebec is proof positive of what even a modest investment can mean to local communities.
In terms of employment, we are proud to offer employment opportunities for professionals, skilled and semi-skilled individuals. We have over 25 people directly involved in our biodiesel business. We also spend over $800,000 per year on local services to support our operation and over $15 million will be spent acquiring domestically produced feedstocks.
Our plant contributes to the local tax base supporting municipal, provincial, and federal taxes. In 2007 we also completed a major capital upgrade of the facility and utilized local trades and services during the fabrication, construction, and commissioning phases of this project.
A strong domestic biodiesel industry establishes new markets and price stability for oilseed crops and animal by-products, while diversifying and strengthening rural economies. Clearly these three benefits--the impact on our environment, energy diversity, and the economy--are positive for Canada and Canadians. However, these will not be realized without quick passage of Bill C-33.
Bill C-33 is imperative if Canada is to foster a strong domestic renewable fuels industry and market. Make no mistake, Bill C-33 and a renewable fuel standard will not see appreciable demands in Canada for renewable fuels, which in turn will not contribute to the relatively small investment needed to our supply infrastructure to accommodate these cleaner renewable fuels.
We already see this now, with almost all of our 35 million litres of production from our Sainte Catharine's facility going directly to foreign jurisdictions that have much more developed renewable fuel programs. Today in Canada we have but two commercial-scale biodiesel facilities, while our neighbours in the U.S. have over 130, with another 37 under construction. What's worse is the significant gap that exists for consumers who want to use biodiesel. I'm aware of only two product terminals in Canada that can effectively blend biodiesel, and fewer than a handful of fueling facilities that actually offer biodiesel to consumers.
Quick passage of Bill C-33 will change this by creating the catalyst needed to secure investment in biodiesel plants and the necessary infrastructure to get this clean renewable fuel to consumers. Should Bill C-33 fail to pass, I'm certain that future investment in biofuels will be seriously impaired, if not outright abandoned. This is certainly the case for my organization, which would like to expand our biofuels business but is reluctant to do so, not knowing if a market will even exist in Canada.
In summary, I believe renewable fuels hold great promise and benefits for Canada and Canadians. They address climate change, improve energy diversity, and have an opportunity to add to rural development and Canada's economic growth. Quick passage of Bill C-33 will provide the catalyst needed to spur investment and to help Canada realize the many benefits renewable fuels have to offer.
Thank you for your time and attention.
Mr. Mark Nantais (President, Canadian Vehicle Manufacturers' Association):
Thanks very much, Mr. Chairman.
Good morning to all the members of the committee. I want to thank all of you for this opportunity to address you today as it relates to Bill C-33.
The Canadian Vehicle Manufacturers' Association is the lead national association that represents Canada's light- and heavy-duty vehicle manufacturers, including Chrysler, Ford, General Motors, and International Truck and Engine Corporation. Together, these companies account for over 70% of all domestic vehicle production, 55% of all vehicle sales, and our member companies support 150,000 Canadian workers and retirees throughout their entire business operations.
Very quickly, I can say that I'm here to lend our unconditional support for Bill C-33 and call for its passage as quickly as possible. You may be surprised, but I think there are many organizations that feel the same way about the quick passage of this bill, and I'll tell you why. The CVMA strongly supports a comprehensive renewable fuel strategy that is backed by appropriate regulation. Efforts to expand the availability and use of quality blended renewable fuels in Canada provide an opportunity to significantly reduce greenhouse gas emissions from the vehicle fleet.
The government has rightly and justifiably acknowledged the advantages of renewable fuels from a life-cycle greenhouse gas perspective in its Canada Gazette notice on renewable fuels, in 2007. This is the first time that the government, under the Canadian Environmental Protection Act, is requiring that a component be added to Canadian fuels.
We believe that the real opportunity exists to ensure success in the marketplace by addressing both the fuel quality and consumer acceptance of these green fuels. Ensuring a seamless and successful deployment of renewable fuels in the Canadian marketplace is critical for the long-term confidence in and acceptance of these fuels by Canadians.
Furthermore, due to the innovative nature of the industry across North America and the Government of Canada's stated commitment to common North American vehicle emission regulations, it is important that the Canadian and U.S. approaches on renewable fuels be consistent, at least to the extent possible.
Since the 1980s, all gasoline-fuelled vehicles produced by CVMA member companies are capable of running on fuels containing up to 10% ethanol. Our members are also industry leaders in providing E85 flexible fuel vehicles. These are vehicles that can run on 100% gasoline, all the way up to 85% ethanol, which is totally transparent to the driver. In addition, our diesel-fuelled vehicles may also operate on biodiesel blends, per manufacturers' recommendations.
It is essential that renewable fuels, both the bio-renewable component and the conventional fuel component, meet appropriate fuel quality standards. Failure to assure fuel quality can result in potential negative effects relative to criteria emissions, suitability for use in extreme cold or hot weather, adversely affect the operation of the vehicle, or could affect the vehicle fuel and emission systems themselves. Accordingly, the bill needs to expressly stipulate the fuel quality requirements to ensure that appropriate and consistent biofuels are available across Canada where they may be offered.
It is also important to acknowledge and recognize the nature of vehicles and fuels as a fully integrated system. That's certainly a concept or a principle that is already acknowledged and accepted in CEPA itself, and now in Bill C-33.
The following issues need, in our view, to be addressed to ensure a successful implementation of renewable fuel regulation whereby it meets the government's stated renewable fuels objectives and environmental improvements. The first issue is fuel quality requirements as expressed in the context of a national fuel quality regulation; second, controls and management of implementation and transition issues related to ethanol storage, compatibility, tank cleanliness, and water management; and third, expansion of the availability of high-level ethanol and gasoline blends, up to 85% ethanol.
I would also like to offer a few comments on the rationale for a federal fuel regulation. A national fuel quality regulation for conventional and renewable fuels would address the developing patchwork of provincial actions to date. We encourage the federal government to work closely with the provinces during the drafting of the legislation and the regulation to ensure consistency and one national approach for Canada covering both renewable fuels and the overall fuel quality, recognizing certain regional and seasonal factors.
It is our understanding that under section 140 of CEPA, the minister has the authority to make regulations that specify fuel quality parameters. CEPA 1999 indicates that regulations that are enacted related to fuels need to show that they do not adversely affect the environment, human life or health, or the operation, performance, or introduction of combustion and other engine technology or emission control equipment.
Therefore, in our view, a practical approach for renewable fuels would be to reference the fuel quality specifications contained in the applicable Canadian General Standards Board or American Society for Testing and Materials standards in a manner similar to that approach taken by the Province of Ontario in its regulation 535, which is their ethanol regulation. This will ensure consistency of fuel quality across the country and demonstrate the government's commitment to ensuring that renewable fuels are implemented in a manner that improves the environment but also avoids any adverse effects or impacts on Canadian vehicle operation, not to mention showing federal leadership in this area.
Although the Canadian General Standards Board, CGSB, is recognized as a credible standard-setting body, their fuel standards have not been consistently adopted or implemented as provincial regulatory requirements across Canada. Currently gasoline quality parameters developed by the CGSB are regulated by three provinces, I believe, quasi-regulated by another, and are partially cited by reference in another, so there is no provincial legislation requiring that all on-road fuels meet current applicable CGSB standards.
A further example of CGSB not being adopted and implemented across Canada is the gasoline detergent specifications. Environment Canada data on deposit control additives indicates that approximately 20% of Canadian gasoline does not contain any deposit control additives that are necessary to minimize fuel system deposits that can lead to increased emissions and affect vehicle performance. I might add that the auto industry and the oil industy are working together on this issue and making improvements in this area to ensure that there is total satisfaction for our mutual customers.
Given this, we believe that a national fuel quality standard as part of the renewable fuels regulation is necessary to address such shortcomings now and in the future.
I'd also like to comment on controls and management of the implementation and transition issues with ethanol storage, compatibility, tank cleanliness, and water management. The use of ethanol in gasoline is permissible at concentrations up to 10%. Due to the nature of ethanol and gasoline blending, the motor vehicle industry suggests that efforts need to be undertaken to minimize co-mingling effects with gasoline that could lead to increased fuel system vapour pressure, increased VOC emissions, and possible vehicle driveability issues.
Significant environmental benefits from high-level ethanol blends--that is, up to 85% ethanol, 15% gasoline--can be realized by taking full advantage of the E85 flexible fuel technology that my vehicle manufacturers have made available in Canada for nearly a decade. The NRCan GHG Genius model shows that E85 fuels, on a life-cycle carbon dioxide emissions basis, can be reduced by 47% to 55% compared to conventional gasoline. One way to minimize issues related to infrastructure, distribution, and management of ethanol blends is to mandate or incentivize a portion of the 5% ethanol objective to be supplied as E85 fuel.
In addition, if Canada is to aspire to increased levels of ethanol use in Canada, as have leading jurisdictions such as Sweden, the U.S., and Brazil, then this will require the use of E85 flexible fuel technology as well as the associated infrastructure that goes with it. Supportive government policy must be given serious consideration in this area. By expanding the availability and use of clean and renewable fuels, government can not only assist consumers but actually accelerate greenhouse gas reductions in Canada.
I'd like to offer a couple of more comments.
In 2007 the CVMA member companies announced and launched a realistic, integrated approach to accelerate greenhouse gas reductions in Canada. Our plan focuses on accelerating the introduction of green technology, expanding cleaner renewable fuels, removing older polluting vehicles from Canada's roads, greening environmental fleets, and changing driver behaviour.
While we are already making progress in some of these areas within the industry's control, we require the support of the federal government and provincial governments to achieve even greater success. For instance, we would suggest that we create a Canadian tax credit incentive similar to the United States alternate fuel infrastructure pump conversion initiative. The United States has a tax credit support model, which provides up to $30,000 per retail pump conversion to E85. Second would be to reinstate the excise fuel tax exemption for E85 fuel. Third would be to continue to support the purchase and use of flex fuel vehicles by governments and private fleets. And the fourth is to continue the existing supporting mechanisms for conventional ethanol and provide additional focus on cellulosic ethanol production in Canada.
Mr. Chairman, I just want to summarize by saying that Bill C-33 is a critically important component to a broader integrated approach to reducing greenhouse gas emissions and achieving our environmental goals, and we hope it will be passed as quickly as possible.
Mr. Gilles Morel (Director, Eastern Canada Division and National Office, Canadian Petroleum Products Institute):
Mr. Chair, Members of Parliament, and to Canadians who have access to this hearing, on behalf of the members of the CPPI, thank you for inviting us to offer our perspective on Bill C-33, the statutory framework that will permit the enabling of a national renewable fuel regulatory framework in Canada.
Right away, like the three speakers before me, I wish to express our association's support for Bill C-33. As you know, the CPPI is the national association of major Canadian companies involved in the refining, distribution and marketing of petroleum products for transportation, home energy and industrial uses. There are three key points that we wish to highlight with you as you consider Bill C-33.
Firstly, CPPI believes that the only sensible approach to renewable fuel mandates is one that is national in scope. Secondly, CPPI has worked hard with the Canadian Renewable Fuels Association to develop a national approach. Thirdly, CPPI is dedicated to leading-edge research on fuel quality specific to the realities unique to Canada, such as weather and geography.
Canada is a country with immense geography, a relatively small population and an economy fundamentally linked to, and in our case, competitive with the United States.
Movement of product free of economic barriers has been the cornerstone of Canada's success, and as all levels of government focus on how to remove internal trade barriers it is regretful that policies in provincial jurisdictions regarding renewable fuels have had the effect of creating new economic barriers across Canada.
As can be seen on the chart presented in the document, a patchwork of regulation is emerging across Canada. The second chart shows where the main refining centres are located. What is not shown here is that as we speak, there are recent proposals from Ontario and British Columbia to follow in the footsteps of California and introduce further another layer of complexity called the low-carbon fuel standard. The goals are unclear.
One of the benefits of Bill C-33 is that a national framework will emerge, and we congratulate the Parliament of Canada on recognizing the importance of showing federal leadership.
Secondly, regarding the essential feature of a national policy on renewable fuel, CPPI understands the many motivations that underlie public policy attention to renewable fuels. More important, let's remind ourselves that this framework cannot achieve this on its own. While countries like the United States pursue renewable fuel policy based on energy independence and security, this is not the case in Canada, nor is it likely to be the case in the near term. Canada has an abundance of natural resources that with some stewardship and innovation will provide both energy security and value-added jobs and economic growth for the benefit of all regions of Canada.
A national renewable fuel strategy is also not a panacea for the challenge posed by climate change. It may be one day, but for the moment I think we can agree that scientists, engineers, health practitioners, and modelling experts are still working on the real solution to climate change, and we are ready partners in that research.
So why have a renewable fuel mandate? At the very least, it is instructive that the House of Commons has referred this very important piece of legislation to the Standing Committee on Agriculture and Agrifood. As stated in our jointly agreed policy framework with the Canadian Renewable Fuels Association, we have repeatedly taken the position that it is up to government to make the political decision to develop a renewable fuels policy that is in the best interests of Canadians.
Mr. Chairman, Bill C-33is but one building block that will bring a sound renewable fuels framework to fruition. The agenda ahead, if we are truly to succeed, is laid out in our CPPI-CRFA framework, which is attached for your information.
Basically, the framework calls for five things: federal leadership; a competitive environment; technology advancement; policies that induce the ability of renewable fuels to drive down GHG emissions; and open borders.
I wish to inform parliamentarians that the federal government, in the budget, sent some very confusing messages about renewable fuels.
On the one hand, very generous programs will be in place as of April 2008 to provide production subsidies. One of the federal government's announcements concerned the ecoENERGY for Biofuels Initiative, which will invest up to $1.5 billion over nine years to boost Canada's production of biofuels.
Unfortunately, in the 2007 budget, the Excise Tax Act was amended to repeal the tax exemptions for renewable fuels.
In fact, the government brought in a higher tax rate for biofuels. Over the same period of time as the ecoEnergy program, the government has cut $1.5 billion that would otherwise have been used to keep the cost of bioblended fuels in line with regular gasoline and diesel fuel.
From where we stand, this translates into no net new investment in biofuel production.
As has been demonstrated in the U.S., a federal blenders' credit is the preferred method of supporting ethanol production. The equivalent of Canada's federal blenders' credit terminates on April 1 of this year, but in the absence of a comparable arrangement with our largest trading partner, we will fall short of expectations that renewable fuel in Canada will easily compete with the same product south of the border.
Mr. Chair, Mr. Gene Carrignan, chair of the national association, will now conclude our presentation.
Mr. Gene Carrignan (Chair, National Fuels Committee, Canadian Petroleum Products Institute):
Mr. Chair, the last component of our presentation deals with real-time work on biofuels.
In meeting the needs of this policy, we are conducting leading-edge research. On January 22, 2008, Canada's largest cold-weather on-road demonstration of renewable diesel was officially launched in partnership with CPPI, the federal and Alberta governments, and a diverse multi-stakeholder group including Climate Change Central, the Canola Council of Canada, and the Canadian Renewable Fuels Association.
Over 60 trucks of various sizes have hit the roads throughout Alberta, because its climate poses some of the most extreme challenges to renewable diesel use. The demonstration will provide hands-on cold-weather experience for fuel blenders, distributors, long-haul trucking fleets, and drivers. We are proud to be part of this group of stakeholders, working to broaden the understanding of how best to maximize the benefits of renewable diesel in Canada.
In addition, we are working with Natural Resources Canada and Environment Canada on a second proposed biofuel research program. It is designed to understand and address issues with biofuel mixtures under specific Canadian climate conditions. Its design will include low-temperature operability of heavy-duty engines, fuel storage for multiple applications, and thermal and oxidative stability of heating fuel oil under seasonal variations.
The picture in our handout shows a unique cold-weather chamber in Sarnia that will be used in this work. In fact, from this meeting we'll be going directly to another to continue the design of that program.
In summary, Mr. Chair, we at CPPI have some bottom lines that are not negotiable. First of all, we are the face of energy providers at the consumer level. We've heard from producers; we are the ones who actually get the customer complaints if something malfunctions.
We make the necessary investments to meet the public policy objectives on a grand scale. At our core, our collective mission is to ensure that we provide to Canadians the fuels that perform as expected in a safe and reliable manner and that we cooperate actively with government and society to pursue science-based solutions to health and environmental priorities. Our track record in this regard is quantifiable.
Moreover, CPPI seeks to ensure that our collective workforce will convey respect to, and strive to earn the confidence of, the many constituencies members serve, and that Canadians will continue to enjoy the widest variety of fuel choices in a rigorous, competitive market.
As stated earlier, CPPI supports Bill C-33 and encourages its adoption by Parliament. In fact, we want the necessary renewable fuels regulations to be in place as soon as possible, so that we, as the companies that must comply with this policy, have sufficient time to implement the necessary changes to our operations.
We're happy to take your questions.
Mr. Mark Nantais:
I have spent some time with the Saskatchewan government. They are very supportive of an appropriate ethanol program.
We have to be very careful in what we say about the feedstocks for grain ethanol as they relate to food prices and things such as that. There are just as many studies showing that it's not the case that it's been responsible for the increase in shortages of food. In some cases.... There's the infamous taco story from Mexico. My understanding is that it is more trade- and tariff-related than anything else.
We're suggesting that when you have an opportunity to reduce greenhouse gas emissions by half relative to gasoline and you have more than 100,000 of our vehicles out there now that can run on it, if we don't take advantage of it, this is a real missed opportunity. We've been talking with the provinces in the prairies about an ethanol highway across Canada, where it makes sense to do so. It's the same with biodiesel. I'm driving a clean diesel vehicle now that can run on biodiesel, and it's great.
So I think there are real opportunities here. But we have to be very careful, because a lot of these feedstocks are feedstocks for livestock. You can create the ethanol from them and can still use the mash, if you will, for food for the livestock. But you can use the waste from it, through a cellulosic process, to create ethanol as well. This is where we have to go eventually: to all the opportunities that are showing themselves now—they're evolving—that relate to cellulosic ethanol.
Again, we have a real opportunity here. When you look at the global demand for vehicles and the energy that will be required to power those vehicles, we have to look to diversifying the fuel mix as well as we can.
Globally speaking, demand right now is 71 million vehicles. It's going up to probably 91 million vehicles in ten years. We have to find some way to power those vehicles in a clean and environmentally responsible way.
Mr. Alex Atamanenko (British Columbia Southern Interior, NDP):
Thank you very much for sharing your expertise, gentlemen.
I think one thing we have to understand is that from the point of view of agriculture, anything that helps farmers is a good thing, and there are aspects of this bill that will make life easier for farmers. However, this is not an agricultural bill; it's an environmental bill.
I just want, first of all, your comments, Mr. Samson, and hopefully we can get some reaction here. You mentioned that according to the research you've done, it won't appreciably reduce greenhouse gas emissions, and that it is evident that there is no solid scientific support that the four million tonnes of carbon dioxide anticipated by this legislation will be achieved.
We've seen recently--I believe this month or last month--that the U.K. has put a moratorium on biofuels. There are a dozen or so U.S. scientists questioning the direction in which the United States is going with its corn-based ethanol program.
I'd like some comment on that. We're saying that biofuels are environmentally friendly and that they reduce greenhouse gases. Yet your research and other research is saying that maybe when you take everything into consideration, this is not quite the case.
I'm going to make one more point, and then I'll open it up for some comments.
Your second point is that it's not a made-in-Canada solution, and that it will primarily support markets for U.S. corn growers, and also that we'll open up more LNG for intense corn ethanol processing.
Yesterday we talked about the idea that this bill could be an insurance for our farmers, that in times of trouble, at least there would be somewhere to go. I think Manitoba is setting aside 10% of their arable land for biofuels production from low-quality wheat, hoping to get farmers involved in this, especially when times are rough.
With the high prices for wheat and canola, it's possible that now farmers may not want to take advantage of the biofuel industry. So the question is, where do we get the feedstock? I'm wondering whether you foresee that we will in fact become importers of cheap feedstock, not only from the U.S. but from the southern hemisphere, where we've seen this to be devastating to forests and to farmers forced off their land.
The question is, can we keep the biofuel industry as a made-in-Canada solution? One of my amendments to this bill is that we keep it made in Canada. Any feedstock for the biofuel industry in Canada has to be Canadian.
I'll stop there and ask for your comments, and others can perhaps comment on what I've said.
Mr. John Moffet:
Thanks, Mr. Chair.
I would make two comments with respect to this proposed amendment.
First of all, indeed, some of the authority that would be added here we believe would already be covered in subparagraph 140(1)(g)(iii), which would authorize the Governor in Council to issue regulations that would require proponents of fuel to submit information about the adverse health or environmental effects. And those adverse health or environmental effects could indeed relate to any point in the life cycle of the fuel. So that would cover proposed subparagraph (iii.2) and part of proposed subparagraph (iii.3), which refer to environmental impact. So I would respectfully suggest that part of the amendment is superfluous, to use your words.
I guess there are two other concerns. One is that some of the terms used here are somewhat vague, and I appreciate that they're intentionally broad. For example, the term “environmental balance sheet” is not a term of ours that officials in the Department of Environment would be used to, nor is it sufficiently precise that a potential regulatee would know that they might be subject to this provision, which is sort of a fundamental principle of drafting.
A third concern has to do with the final amendment here, which would give the Minister of the Environment and the Minister of Health the authority under CEPA, which is an environmental protection statute, to recommend regulations regarding social impact. Again, I would echo the comments made by Mr. St. Amand. While this is undoubtedly well intentioned and is potentially well within the purview of this committee, I would request that the committee keep in mind, when dealing with all these provisions, that we are dealing with amendments to CEPA, not to an agricultural statute and not to a trade statute. These are amendments to an environmental and health protection statute. So the scope of that statute is very clearly constrained to protecting the environment and health and not to addressing social objectives or economic objectives. Certainly we have no history of using CEPA to collect social information or economic information, and one might argue that this amendment would go well beyond the scope of the statute the bill is amending.
Mr. Alex Atamanenko:
Now, can I talk a little bit about why I want to do this?
I feel we have to exercise a precautionary principle. I think the compromise we can arrive at is that by adopting this bill, if we build in some checks.... What we're saying here is that the Governor in Council may make regulations in respect of biofuel production in Canada, and in particular shall within six months after this subsection comes into force make regulations. Then you'll see that the last amendment, the second one I have, is to have a review of this.
It's important.... We've discussed and we've heard from witnesses with regard to genetically modified grains. What I'm proposing is that we prohibit the use of genetically modified grains, oilseeds, or trees for biofuel production, except for those that are already in existence.
This is not just something on which we have received information from organizations that have been studying the aspect of health; this can be costly to farmers. It can be costly because of contamination. Farm Update, a document that was prepared in regard to genetically modified crops in Ontario, says that:
|Contamination events can cost farmers and industry billions. For example: In 2006 and 2007, two unapproved GM rice varieties were found in 25 countries including Canada. The rice contaminated foundational seed in the U.S. and resulted in bans and restrictions on imports of U.S. produced rice. The rice was grown in U.S. field trials in 2001 but the U.S. government has not tracked the exact source of contamination. The Canadian Government now only approves a GM crop for growing if it is also approved for human consumption. This measure was taken after Starling corn, approved in the U.S. for animal feed but not for human safety, widely contaminated the world's food supply resulting in product recalls in an estimated $1 billion cost to the food industry.
That's just an example I use to show that by exercising precaution, we can move ahead in the industry, but let's not use the industry as a means of introducing more GM technology. Specifically I'd like to look at wheat. As you know, whether or not we agree on the marketing, we know we have a very good quality of wheat and durum that is renowned in the world. If we were to allow, for example, for the sake of expediency the introduction of a brand of wheat that is genetically modified for biodiesel, for ethanol, then the strong possibility exists, if we look at what has happened with rice in the United States, that the wheat we grow now for food consumption and production could be contaminated.
Then we can see the costs and we can see ourselves trying to catch up. That's the main reason for including proposed paragraph 140(2.1)(a). As for prohibiting the use of lands protected by federal legislation and other sensitive biodiverse lands and protecting biodiversity, we have to ensure...
| Biodiversity...refers to the variability among living organisms. It includes diversity within species...and ecosystems.... Biodiversity is important for its intrinsic value, but also for the priceless ecosystem services that it provides, such as clean water, clean air, maintenance of critical nutrient cycles, flood control, pest control, pollination of crops, compounds for new medicines, and seeds for new crops.
This is taken from a document from Environment Canada; it's not some organization away out there trying to talk about this. It may look as if it doesn't say much, but it says that we do preserve our biodiversity in Canada as we advance in this industry, once again applying that precautionary principle.
Paragraph (d) is self-explanatory. I do not feel and my party does not feel we should be importing feedstock for the biofuel industry in Canada. We heard from witnesses--and the gentleman who talked about canola today felt we can sustain ourselves--that we can provide that feedstock for the biofuel industry in Canada.
If we don't have a clause that prohibits this, then we open up our industry to cheap fuel feedstock coming in, not only from the United States but from all other parts of the world. The southern hemisphere, where we have seen this, has contributed to devastating the agriculture industry and small farmers. This is vitally important. If we have a biofuel industry, let's get it off the ground correctly. Let's ensure our farmers benefit, because if we allow importation, that allows prices to go down because of competition with, for example, subsidized corn from the United States.
I think this is a very practical measure, and it's an integral part of my amendments.
I apologize for taking time. I want to make the point clear. I'm trying to be as concise as possible.
The whole idea of criteria for environmental sustainability of biofuel production in compliance with internationally recognized best practices is important as we embark upon this. I've just been reading a document from the OECD that we conform to international standards. We cannot be seen as a country going in our own direction, maybe following the lead of what's happening south of us and not respecting international standards.
There are concerns. They're saying it is more likely that land use constraints will limit the amount of new land that can be brought into production, leading to a food versus fuel debate. That's the other point we have to address as we look at the whole idea of conforming to international standards. We have to look at what they're saying at the OECD, for example. They're saying other conventional biofuel technologies typically delivered greenhouse gas reductions of less than 40% compared with our fossil fuel alternatives. When such impacts as soil acidification, fertilizer use, biodiversity, and loss of toxicity of agricultural pesticides are taken into account, the overall environmental impacts of ethanol and biodiesel can very easily exceed those of petrol and mineral diesel.
We've heard from Mr. Samson today on the reasons he wants us to be very cautious and wants this bill not to go forward. From the point of view of the environment, what we're proposing is not efficient. In the study he has done, the thick one that I read, the most efficient use for the environment are pellets for energy sources, for example.
We're going to do this, but as we do this, we have to try to meet and conform to international standards. That's why, by having this clause in the bill, we can do that.
Paragraph (f), the last point, is on establishing restrictions on the use of arable land in Canada for biofuel production. I think we could quite comfortably follow the Manitoba model where they've set aside, according to the natural resources minister I talked to, 10% of arable land for biofuels. In other words, farmers can benefit from that by growing crops that are not used for food production.
In conclusion, I will try to generate support, and I am sure everybody will unanimously vote for my amendment, just as there was a full house last night in the House when I was speaking.
Those are the concerns I have. They should be noted. We can do a good bill and introduce those amendments.
Mr. Larry Miller (Bruce—Grey—Owen Sound, CPC):
Thanks, Mr. Chairman.
I just want to respond briefly to Mr. Easter's comments about the corn company. Of course nobody's more opposed to the dumping of corn in here, if that was the case, than I am.
I think a point that needs to be given—and I think Mr. Steckle will agree with me and back this up—is that Ontario is a net exporter of corn, and whether that corn comes into an ethanol plant or it comes in and goes directly to our feedlots.... If the corn is coming in from the U.S., if it is going to the ethanol plants, basically what that means, in simple terms, is that more of the corn that's being bought out of local elevators is going into feedlots and other uses--starch mills, that kind of thing. I just thought that needed to be brought up.
On the bill itself, I respect Mr. Atamanenko's philosophical view and his party's on this, to a degree, but the bottom line is that where this amendment is going is not appropriate in this bill. It may be a debate on another day, on another issue, but I think it's irrelevant here. If you want to go on and then carry it, without genetically modified, which seems to be the term they want to use, today we'd have 60-, 70-bushels-an-acre corn, but frankly, we wouldn't even take the time to turn the cattle in Ontario any more. Those are the advancements that have come.
We want our farmers to compete around the world, and no one's ever become sick on something that's been modified that I'm aware of—and I think Mr. Steckle pointed that out yesterday. So I think we need to save that debate, Mr. Chairman, for another day. It's just not appropriate here. It's a well-written amendment, but not what we need to see in this bill.
Mr. Alex Atamanenko:
I'll give you a couple of examples. Before I start, I'd like to say that I look upon this as a form of insurance. Once again, I think we can never be too cautious. It doesn't hurt to have some insurance to ensure that there is review.
I would look at it from the environmental point of view. I think we have to reassess or look at the whole idea of greenhouse gas emissions, because we are moving in that direction as a country. We should be looking at the impact on land and land use. Has it proven to be an economic stimulator in our rural communities, or has a large company taken over, which provided a few jobs but, as Dr. Klein pointed out in his caution, have other jobs been lost in the agriculture sector, for example?
I don't know. I think by having this, we can look at, specifically for me, the economic benefit to rural Canada. If the economic benefit isn't there, then we may have to do some modifications. Ideally, and we're all hoping, it will be.
This is just insurance to do studies of that nature. As time goes on, as we have the feelers out in our communities, there may be something, Brian, in Alberta for example, that's triggering a specific point that the people you talk to might want to have reviewed. I, or others, might hear something.
I don't think it impedes the bill coming into effect. All it does is say let's look at it under these two aspects and see what the evaluation is at a specific point in time.
Mr. André Bellavance:
You may see some similarities here with the amendment to clause 2 that I moved earlier. However, I think it relates more to clause 5. I am confident that committee members will appreciate the relevance of this amendment.
As it now stands, the bill allows for fuels and biofuels to be treated differently, based on different criteria, such as emission levels, the amount of raw materials used or the chemical composition of these fuels.
In our view, the proposed amendment to clause 5—again, it is a case of giving some power to the government, which should please you—calls for different handling of biofuels, according to much broader environmental criteria.
WIth respect to my amendment which calls for an environmental and energy balance sheet, a life-cycle analysis and consideration of the social and environmental impact, earlier a number of arguments were voiced. I have no problem with people arguing their case, but I would like to reiterate my position. As far as I'm concerned, it is important for the government to ensure that biofuel production is a safe process and that means allowing it access to more in-depth analysis of the potential impact of biofuel production.
Mr. John Moffet:
Thank you, Mr. Chair.
I would make the same comments that we made with respect to the previous Bloc motion, BQ-2. I'll just repeat them, if I may have your indulgence.
Amendment BQ-2 is about reporting. These provisions would be added to the various considerations that the government could take into account when developing regulations. So they are not mandatory by any means. Nothing in section 330(3) would be mandatory, but they would be factors the government could take into account. So the Bloc amendment would add three additional considerations, and I'll just speak to each of them.
The first one is proposed paragraph 330(3.2)(j), the environmental and energy balance sheet. The concern that we have as officials has to do with the vagueness of the terminology used here. There's no principled opposition, but I'm frankly not sure what this would add to the legislation, given that environmental balance sheet is not a term of art. As for energy balance sheet, we're not sure what the precise considerations would be that this would enable the government to account for.
If the objective is to allow the government to account for the full range, for the full spectrum of possible environmental implications, then we already have that authority in CEPA. Indeed, the essence of CEPA is to provide the government will a full range of authority to address environmental and health impacts of products, including fuels.
I would make the same comment with respect to proposed paragraph 330(3.2)(k), with a similar comment, although life-cycle analysis is becoming a clearly understood environmental term of art. Again, I would emphasize that CEPA already provides clear authority to regulate throughout the life cycle of a product.
I would make the same point with respect to proposed paragraph 330(3.2)(l) when it refers to environmental impact. That's exactly what CEPA is focused on. So it's not clear to me that this provision would add anything to the act. Indeed, by adding these provisions here you might raise an issue of statutory interpretations, in the sense that if it's necessary to add this clarity here, perhaps in some way this implies that this authority does not exist already in CEPA elsewhere. It would be our position, and it has been since CEPA was first drafted in 1988, that this full life-cycle approach is implicit in the act.
The final point I would make is with respect to the word “social”. Again, CEPA as an environmental protection statute does not currently, nor is it intended to, enable the government to establish different regulations based solely on social considerations. Indeed, one might argue that at least some parts of CEPA--for example section 93, in part V, the toxics provisions of CEPA, which this provision would affect--are premised on the criminal law head of power. I think it is fairly clear that one wouldn't be able to establish a criminal law based on a regulation that differentiates among regulatees strictly on the basis of social considerations.
So just to reiterate, I think there's a potential redundancy with respect to most of the proposed amendments here, some vagueness, some possible confusion that they would create with respect to the authorities that are already implicit in the act, and certainly with respect to the world “social”. I think the amendments would take us well outside the existing scope of the statute.