This House of Commons Environment and Sustainable Development committee meeting studied industrial carbon pricing. Witnesses were Caroline Brouillette, Executive Director of Climate Action Network Canada; Jim Keating, CEO of the Oil and Gas Corporation of Newfoundland and Labrador; Jennifer Winter, Professor at the University of Calgary; Adam Auer, President and CEO of the Cement Association of Canada; and Thomas Green, Senior Manager of Climate Solutions at the David Suzuki Foundation.
Caroline Brouillette argued that industrial carbon pricing does not increase household costs, citing negligible impacts on consumers and agriculture, and that oil and gas profits of $90 billion from the Iran war show the industry can afford compliance costs of about 50 cents per barrel in 2030. She recommended updating the system with a high, rising minimum price, a credible post-2030 trajectory, restoring a level playing field across provinces by enforcing the federal backstop, and eliminating loopholes like offsets.
Jim Keating stated that Canada is an outlier in applying carbon pricing to offshore oil and gas, as competitors like the U.S. and Guyana have no such price, and that zero exploration wells and bids in recent years show investment is deterred. He contrasted Norway, which offsets high carbon costs with a 78% marginal tax rate and refunds for exploration, and recommended Canada adopt a similar balanced system to attract investment, noting the emissions cap is more harmful than carbon pricing.
Jennifer Winter explained that Canada's output-based pricing systems incentivize emissions reductions while protecting competitiveness, with minimal economic effects, such as a 0.5% increase in food prices at $80 per tonne. She recommended harmonizing the 10 different provincial systems to reduce costs and improve productivity, as differential prices create internal trade barriers and raise the overall cost of meeting emissions targets.
Adam Auer stated that the cement industry supports well-designed industrial carbon pricing to drive investment in decarbonization, but the current fragmented system with five provincial regimes undermines investor confidence. He recommended completing a competitiveness review before changing benchmarks, and called for greater market integration and a harmonized national system to prevent carbon leakage, noting that British Columbia has already lost market share to imports.
Thomas Green argued that industrial carbon pricing is a key remaining climate policy tool, as the consumer carbon levy and oil and gas emissions cap have been lost, and that it supports competitiveness as global markets price carbon intensity. He recommended a strong, rising minimum price, a clear post-2030 trajectory, and a level playing field across jurisdictions, warning that the Alberta MOU and subsequent regulatory changes have weakened the system by flooding the market with credits.
The committee began with a procedural vote to grant access to meeting transcripts and blues to certain sectors, which was agreed to. The chair also announced a letter to the Parliamentary Budget Officer requesting an update to a 2023 report, and noted scheduling efforts for future meetings with the Major Projects Office and other witnesses.
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