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AGFO
THE STANDING SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
OTTAWA, Thursday, October 26, 2017
The Standing Senate Committee on Agriculture and Forestry met this day at 8:00 a.m., to continue its study on the potential impacts of the effects of climate change on the agriculture, agri-food and forestry sectors.
Senator Ghislain Maltais (Chair) in the chair.
[Translation]
The Chair: Today, the Standing Senate Committee on Agriculture and Forestry is continuing its study on the potential impacts of the effects of climate change on the agriculture, agri-food and forestry sectors. This morning we welcome Mr. Dale Beugin, Executive Director, Canada's Ecofiscal Commission. Thank you for accepting our invitation to appear. My name is Ghislain Maltais, senator from Quebec, and chair of this committee. Before I give the witnesses the floor, I invite the members of the committee to introduce themselves, starting on my right.
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
Senator Dagenais: Jean-Guy Dagenais from Quebec.
Senator Doyle: Norman Doyle, Newfoundland and Labrador.
Senator Pratte: André Pratte from Quebec.
Senator Petitclerc: Chantal Petitclerc from Quebec.
Senator Gagné: Raymonde Gagné from Manitoba.
Senator Mercer: Terry Mercer, Nova Scotia.
The Chair: I would also like to introduce Senator Oh, from Toronto.
Mr. Beugin, you have the floor. I would remind you that the shorter your presentation, the more time the senators will have to ask questions. Please go ahead, we are listening.
Dale Beugin, Executive Director, Canada's Ecofiscal Commission: Very good. Thank you very much. It's my pleasure to be here.
My presentation today is on the implications of climate change policy on the economy as a whole, in particular, and with a few specific cases of sector data. Mostly I'm going to stay at a higher level; I'll talk about broader impacts and broader principles. There are some sector-level stories that are important that I don't have detailed research for but that I think are still informative for you.
A little bit of background: Canada's Ecofiscal Commission is a group of 12 economists from across Canada, all high profile, all experienced in policy, mostly non-environmental economists. Nevertheless they are brought together by their belief that policy can work for both the environment and the economy. We've been around about three or four years now and have done extensive research and extensive work on carbon pricing in particular. That's mostly what I'll talk to you about today.
On my second slide, what is carbon pricing, I suspect you are aware, but coverage is less at this stage. Carbon pricing essentially puts a price on emissions of greenhouse gases, requiring emitters of those gases to pay a price. It creates an incentive to change behaviour and therefore to reduce their emissions. The means of that price could be a carbon tax or it could be a cap-and-trade system or it could be some combination of those two things. We see examples of all those policy instruments across Canadian provinces currently, with more to come under the forthcoming Pan-Canadian Framework on Clean Growth and Climate Change.
To slide 3, why carbon pricing and not regulations? By regulations I mean command and control regulations that require specific levels of performance or specific technologies. In essence, this slide is really why Ecofiscal Commission exists. We make these points again and again on different policy issues in different contexts. It comes down to four reasons why carbon pricing costs less to achieve the same outcomes that regulations would do.
Number one is flexibility. It relies on markets to set a price and letting emitters respond to that price by whatever means they see fit or have available to reduce emissions at the lowest cost to themselves. Those firms or households can respond to the price in ways that makes sense for them rather than having to meet specific standards or specific requirements that might be set by regulations. The result is lower costs.
Our first report from about three years ago did some modelling analysis. We compared achieving Canada's 2020 target under a regulatory approach versus a carbon-pricing approach, and we found significant economic benefits of relying on carbon pricing rather than regulations, worth around 3.7 per cent of GDP relative to the other scenario in 2020. That's a large permanent benefit.
The second key benefit is revenue generation. Carbon pricing can generate revenue that creates options for governments to cut other taxes to invest in clean technology or infrastructure or to provide transitional support to households or to businesses, and we'll come back to that point later.
Information is critical as well. It's actually very difficult for governments to regulate because they don't have great information as to the specific technologies or the specific costs of those technologies in specific sectors that are available to reduce greenhouse gas emissions.
Carbon pricing doesn't require them to have that information. It allows them to set the price and relies on the knowledge of firms and industries to identify their low-cost opportunities to reduce greenhouse gas emissions.
The final piece is innovation. Carbon pricing sets this expectation not only for a price on carbon now but a price on carbon in the future. That means that practices and technologies that are new and innovative that can reduce greenhouse gas emissions at lower cost are always valuable and always will be valuable, therefore creating more incentives for developing those innovative new technologies and practices.
To slide 4, which is not numbered, apparently, this is the bottom line in terms of economic impacts, again, from a modelling study using some economic modelling. There are two points I want to make here. One is that the impacts of a substantial carbon price gradually increasing to 2030 are actually very small in terms of the economy as a whole. You see growth rates here under various scenarios with and without carbon pricing. Carbon pricing, no matter how it is applied, does not substantially affect that growth rate. In the worst-case scenario we're seeing a decline from around 2 per cent of growth in the model to 1.9 per cent of growth. Again, even the margins of error within this modelling analysis are probably larger than some of the differences between these scenarios. They're meant to illustrate trade-offs.
The other point I'll make is how governments use revenue to recycle the revenue that they generate from the carbon price back to the economy; they have different choices in how they might do that. They could send cheques to households; they could provide support to industry, in particular subsidies to output; they could cut income taxes, whether personal or corporate; or they could invest in clean technology. Those are just five of the many options available for revenue recycling.
However, they do have trade-offs. They have different trade-offs in terms of economic impacts, political implications and distribution implications. They also have implications for competitiveness and leakage.
I will turn to slide 5, and this is where I'll spend more time.
Perhaps the biggest opposition we hear to carbon pricing again and again is this concern that pricing carbon in Canadian jurisdictions but not in other jurisdictions will put our industry at a competitive disadvantage. It will create a non-level playing field and as a result cause production, investment and emissions associated with that production and investment simply to migrate to jurisdictions with weaker policy.
We think of this as competitiveness on the economic side or leakage on the environmental side. When this is happening, you're dampening the effectiveness of your climate policy. You're not reducing global emissions; they're simply relocating to other jurisdictions, but also imposing costs on the economy. It's a thing you want to avoid, and it's a significant concern for some specific sectors, as we'll see in a second. However, it's also addressable with policy. Good policy can solve this problem; well-designed policy can solve this problem.
Slide 5 shows scenarios with and without the U.S. acting in policy — the U.S. being our biggest trading partner. By the size of that green bar at the top, you see there's a competitiveness and leakage implication from Canada moving ahead of the U.S. The bigger the carbon price the more that issue matters. But matters for whom and to what extent? The next slide, competitiveness pressures by province, shows essentially a sum-up of the subsequent slides of the extent to which the Canadian economy is vulnerable to these competitiveness pressures.
As you can see, most of the Canadian economy is actually not affected by these competitiveness pressures. It's around 5 per cent of the economy nationally, more like 28 per cent in Alberta and Saskatchewan, and it all comes down to which sectors are vulnerable to these pressures. That's what the subsequent two slides for Alberta and Ontario show.
Vulnerability to competitiveness pressures comes down to two factors. Number one is emissions intensity. That's the extent to which you are producing more emissions as a firm per unit of output. That basically increases your carbon cost per unit of profit. Higher numbers mean a greater burden to your sector.
On the other hand, number two mentions trade exposure. This is the extent to which the sector trades in international markets and as a result can't pass on its costs and its carbon costs to those buying its goods and consuming its goods.
It's really only the sectors that are in the upper right-hand quadrant of these bubble charts for Alberta and Saskatchewan. I have other provinces in my reports. I've shown two here to illustrate. These are the so-called emissions-intensive and trade-exposed sectors, EITE, and they are sectors like cement production, oil and gas, chemical manufacturing, and mining sectors to some extent. These are the sectors that are most important in terms of vulnerability to competitiveness. I will highlight other resources at the sector bubble that is most relevant for you. That includes agriculture and forestry. It would be nice to have greater resolution and greater breakdown of sub-sectors within these bubbles. Data is a challenge.
I won't go into the details of either the Alberta or the Ontario figures. We can probe that in questions if need be. But I will note that they are quite different. In Alberta you see that cluster of emissions-intensive trade-exposed sector up in the top right-hand corner. In Ontario, many fewer sectors. Much more of the economy rests in the lower left-hand column in these service, government, transportation and non-emissions-intensive domestic sectors.
To slide 9. As I noted, this is a problem that's significant and important for these specific sectors. It's also a problem with a policy solution. We think of the policy solution as having two components, and the slide is titled "Two Problems, Two Tools." The first problem is reducing greenhouse gas emissions at lower cost. Carbon pricing, as I've discussed, is the best solution to that problem. It's the lowest-cost way to reduce greenhouse gas emissions. You can combine that instrument with a second, an output-based subsidy that essentially provides support to these specific sectors, giving them incentive to reduce emissions, given the carbon price, but not to reduce emissions by reducing their output and shifting their production to other jurisdictions. Those two things combined lead to the incentive to improve their performance in terms of emissions intensity but not to migrate to other jurisdictions. The sum of those two elements is equivalent to output-based carbon pricing that is very much the design of the federal backstop under the Pan-Canadian Framework on Clean Growth and Climate Change, but also the Alberta policy on carbon pricing.
To slide 10, I'm going to return to those different revenue-recycling choices. This is, again, from some modelling analysis. The point I want to make here is that transitional support to industry, the fourth bar, which is actually another way of describing these output-based allocations or output-based carbon pricing, significantly reduces the extent to which emissions reductions are lost to leakage and the extent to which competitiveness impacts matter for the economy as a whole.
Two last points, moving away from carbon pricing, on slides 11 and 12. We want to acknowledge — we've done extensive work on this at the commission — that carbon pricing is the lowest-cost approach and best approach to reducing greenhouse gas emissions. It's kind of a key piece to a policy package, but it is not the only piece to a cost-effective policy package. Other instruments can make sense in very specific circumstances. Those three circumstances are defined on page 11. Other non-carbon-pricing policies can reduce emissions that are not affected by the carbon price, not covered by the carbon price. We'll come back to that in a minute. They can make the carbon price work better by addressing other market problems and other barriers to responding to that price in the economy, or they can drive other benefits. A great example here is air pollution. If you are reducing greenhouse gas emissions through reducing coal-fired electricity generation, for example, you're also reducing local air pollutants, with significant health benefits. That may be a more expensive way to reduce greenhouse gas emissions but may, nevertheless, be justified, given those other benefits.
The bottom line here is that if non-pricing policies don't fill one of these needs and they are not, in addition, well designed, you're probably better off using carbon pricing. You can reduce your emissions at lower cost using carbon pricing rather than relying on subsidies or regulations. A quick example: We have done extensive work on renewable fuel mandates, ethanol mandates, and found those non-pricing policies to be very expensive ways to reduce greenhouse gas emissions, around $185 per tonne of greenhouse gas emissions reduced for ethanol mandates, maybe even as high as $300, depending on your assumptions about the life cycle around different biofuels. That's one example of relying on very specific tech instruments that require specific technologies rather than being technology agnostic, increasing costs.
Slide 12 is my last point here. I wanted to home in on gap fillers a little bit because it matters in particular for your sectors, for agriculture and forestry. Carbon pricing is difficult to apply to your sectors because many of those emissions are difficult to measure and, therefore, to price. Most combustion emissions are very easy to price, fossil fuel combustion, because it's all about chemistry, the extent to which you're burning fuels and, therefore, reducing greenhouse gas emissions. It's harder to quantify emissions in a baseline from soil or from forests or from enteric fermentation from manure and cows, from different agriculture practices. While it's difficult to measure the levels of those emissions, it's possible to measure emissions reductions from specific actions. Therefore, that can make sense for offset programs to complement carbon pricing, maybe other regulations, maybe incentives aimed at those other sources of greenhouse gas emissions and other opportunities to reduce those greenhouse gas emissions. Principle 101 of greenhouse gas policy is that broader policy is better. You want to cover all sources of emissions with your policy package so that you're not leaving any potential low-cost emissions reductions on the table, so to speak. Complementary policies are one way to do that when carbon pricing doesn't apply to all of those emissions. With that, I will leave it.
Senator Mercer: Thank you for being here this morning. It was an interesting presentation. I want to take you to your slides on Alberta and Saskatchewan and Ontario. Some slides are not numbered. I guess it would be slide 6. You show the competitiveness pressures by province. The exposure of Alberta and Saskatchewan is evident there. In simple terms, can you explain why that is? Is it just the oil and gas sector that gives that exposure?
Mr. Beugin: To a large extent, it is. The oil and gas sectors in Alberta and Saskatchewan are the biggest factors. The sizes of those bubbles are essentially the size of the sector relative to the total economy of the province. You can see that oil sands and natural gas and bitumen upgrading are significant pieces of those economies and are all in that upper quadrant. They are all both emissions expensive and trade exposed. It's not at all surprising. Those are sectors that are fairly emissions intensive. We know that they are significant sources of greenhouse gas emissions, but we also know they're highly traded. Those are global commodities, not domestic commodities. Alberta policy can't affect the price of oil in Alberta because the price of oil is set globally. As a result, there's no way that Alberta oil and gas producers can pass on those higher costs to their consumers. As a result, they have to essentially eat those costs. They must absorb their costs into the bottom line, and that gives them an incentive to reduce production.
Senator Mercer: If your main customer was paying world prices instead of West Texas crude prices, would that come closer to solving the problem?
Mr. Beugin: No. It makes it even worse.
I think that Alberta has long known that it is different than other provinces in that bar graph on the previous slide, competitiveness pressures by province. I know that the climate leadership team in Alberta found this analysis incredibly useful in proposing a carbon-pricing policy for Alberta, designed for Alberta, because it gave them clear reason and evidence to move to this output-based carbon pricing system to ensure that they weren't simply driving production out of the province.
Senator Mercer: Carbon pricing should be geared to each region or each province as opposed to having a national policy that goes coast to coast?
Mr. Beugin: Yes. I think there are reasons to customize carbon pricing province by province. I think that revenue recycling is at the top of that list of reasons. There are different priorities for different provinces; therefore, it will make sense for them to use revenue in different ways. The extent to which different provinces are more or less vulnerable to these competitiveness pressures, I think that's another reason. That doesn't mean there's not a need to coordinate those provincial carbon-pricing policies. In terms of minimizing costs overall, that is achieved with the same carbon price, the same incentive to reduce that last tonne of greenhouse gas emissions across all provinces.
Senator Mercer: At this table, over the years, we've always talked about agriculture and forestry not being the main problem but part of the solution. How do we reduce the effect on the bottom line for a farmer or forestry operation and still do what we should be doing with greenhouse gases?
Mr. Beugin: It's a good question. Our research doesn't provide a definitive answer on this question, but I'm going to extend it a little anyway. Principle number one is that you want to include incentives for all sectors to reduce greenhouse gas emissions. You don't want to exempt any sector because it's possible that that sector will be able to provide low-cost emissions reductions. If so, you want those emissions reductions to be contributing towards our overall target and overall objectives. Otherwise, you're raising costs. Those sectors, agriculture and forestry, do have a role to play. As I noted, they're hard to include under the carbon-pricing system in many cases. I think that does imply that offset regimes or other regulations can make a lot of sense.
Offsets may even be a new cash stream for some of those sectors. They are essentially driving additional emissions reductions, getting a credit for those emissions reductions and selling it to other emitters who have more direct compliance obligations under carbon-pricing policies.
Senator Doyle: My question probably has been answered. From the notes I have here, are you saying that it would be a whole lot better to have a pan-Canadian or pan-North American approach to carbon pricing, that that might be the best approach? Would it follow from that that you would need a bigger carbon marketplace to maximize results? And has there been sufficient educational work done on that for the public consumption?
Mr. Beugin: Good questions. Let me put it this way. The first best would be a uniform, consistent carbon price across North America but also across the world. If every emitter faced the same carbon price, these leakage and competitiveness concerns would not exist whatsoever in any way.
That being said, Canada can't control the carbon price on non-Canadian GHG emissions. In the absence of everyone else moving ahead with carbon pricing, it can still make sense for Canada to price carbon if it provides this additional support, if it couples its carbon price with support for its emissions-intensive trade-exposed sectors to avoid leakage. It is a second-best approach, given the realities of this slow transition globally towards better policy to reduce GHG emissions.
To your second point, this conversation is one that Ecofiscal has more than any other conversation. The pervasive attitude maybe still remains that the U.S. is a stumbling block and that the Trump administration, with no apparent intent to price carbon or reduce GHG emissions, is a significant barrier to moving forward with their own policy. Our findings are that that's not true — that we can move forward even in the face of U.S. inaction if we design and tweak our policy design appropriately.
Senator Doyle: Why are we having such a problem trying to measure agricultural carbon emissions? It's probably self-evident, but you talked about government regulation probably being the better approach. What would government regulations involve in that regard?
Mr. Beugin: Let me make it more concrete. The potential emissions reduction we would want to be part of the story here is emissions from enteric fermentation, from livestock, not to put too fine a point on it, probably from soil practices. There are opportunities for emissions reductions from differing agriculture practices to increase sequestration of greenhouse gas emissions in soil. There are opportunities for sequestration in forests from changing forestry practices and afforestation and reforestation practices in a way that reduces emissions through other means.
In all those cases, it's hard to measure a starting point. In the cases of burning natural gas or gasoline, it's very clear how to charge for emissions that are being produced. If you're burning gasoline, if you're burning coal, if you're burning natural gas, you're producing the greenhouse gas emissions associated with that fuel.
It's trickier. When there isn't that same baseline, you're measuring emissions reductions from changing your practices in forestry, or you have a very large number of cows with very different sources of greenhouse gas emissions. It's hard to benchmark them.
That being said, if you have opportunities to change the way you farm through different tilling practices, or change the way you manage your manure or livestock by feeding them seaweed to reduce their emissions, those are opportunities that may be important and may be low cost.
Senator Doyle: Of course, if you had regulations, you would need a very wide participation by the agricultural community in that regard.
Mr. Beugin: That's right. That's maybe why an offset regime could be an option in lieu of regulations in which they can respond to market incentives in the same way even though they aren't directly out of the system.
Senator Oh: Between 2008 and 2013, fuel use in B.C. dropped 16 per cent while it increased by 3 per cent in the rest of Canada. We know that British Columbia adopted a carbon tax that applied to major fossil fuels in 2008. Do you think there's a direct correlation between the carbon tax and fuel use?
Mr. Beugin: I do. I think there is extensive scholarly academic statistical work that tries to isolate the impacts, and the best available work says that the B.C. carbon tax has reduced B.C.'s greenhouse gas emissions by 5 to 15 per cent relative to what they would have been in the absence of that carbon tax.
Senator Oh: Why do Americans shy away from all these environmental issues? Is there a cost factor? Have their scientists found different things happening?
Mr. Beugin: I'm loath to speculate on politics, let alone American politics. I don't think I know the answer. I think it's become a partisan issue and isn't about evidence anymore.
Senator Dagenais: Thank you, Mr. Beugin. My first question pertains to our country's size and geography. That certainly has an impact on carbon pricing, and the economic effects probably differ from Halifax to Calgary, for instance, as you pointed out. Can you give us an overview of the regional issues you have noted, and the places where the effects on the industry will be the greatest?
Mr. Beugin: There are many regional differences that matter, so it's hard to boil it down to any one. But let me take a slightly different tack in answering your question. It's illustrative to consider how different provinces already have chosen different carbon-pricing systems, whether prior to the pan-Canadian framework or afterwards.
You see provinces with generally rising emissions trends, emissions due to increase over time, preferring instruments that give them certainty with respect to the price of carbon rather than to the quantity of emissions reduced. In other words, you see B.C. and Alberta choosing carbon tax-like instruments, and Ontario and Quebec choosing cap-and-trade type instruments.
The difference between emissions trends is relevant there. The difference between structures of the economy, in terms of the sectors that provide emissions, absolutely matter. It will be interesting to see Manitoba move forward with its carbon-pricing policy in the next few days, with an economy that is very much driven by agriculture. A very large share of emissions in Manitoba are from agriculture and are therefore hard to include under conventional carbon-pricing systems, and they have to rely more on other approaches to get at those emissions reductions.
In terms of impacts, it does depend on the details. It depends on how revenue is being used. It depends on whether international perma trade is part of the story or not. Ontario and Quebec have trade with California. Alberta and B.C. do not. That again affects the overall impacts.
The bottom line is that for none of these provinces and under none of the policies designed so far should we expect extreme economic impacts, even as our own modelling shows that when prices rise to $100 per tonne, the economic impacts overall seem relatively moderate, especially when policy is designed well.
Senator Dagenais: The redistribution of carbon tax revenues raises many concerns. Why has the government not created an assistance program to allay fears and make sure that everyone works together instead of hesitating to support the new system?
Mr. Beugin: I'm not sure I understand the question. Let me clarify. Are you referring to the federal government and federal revenue recycling?
Senator Dagenais: Exactly. The federal government has not clearly explained the redistribution of carbon tax revenues. Moreover, this is not the only area where there is a lack of clarity. As a result, people have fears and are hesitant to comply with the system. When something is presented, people are hesitant if they do not know where it is going.
Mr. Beugin: That is a great question. I think Canada has a history with previous carbon-pricing proposals, whether proposed politically or through the government, and significant concerns have been raised around redistribution of provincial revenue. Substantial concerns have been raised, particularly in the West, of revenue being generated in more emissions-intensive provinces like Alberta, Saskatchewan and even B.C. and then being recycled in other provinces like Ontario and Quebec. I think those concerns around inter-regional transfers have stoked other kinds of anxiety and concern.
One of the big advantages of the pan-Canadian framework is that it doesn't include any redistribution of revenue. Revenue that is generated in a given province will be spent in that same province. That being said, I think your concerns are still important and valid, and I think they can be addressed at the provincial level as well.
Alberta, for example, has made it clear that some portion of the revenue generated by the Alberta carbon-pricing policy will be returned to households in the form of quarterly cheques. That kind of approach can ensure that the policy is not regressive and not unfair to low-income households and provides some kind of assurance that overall costs will not be overwhelming, especially for low-income households. Those same choices can be made at a provincial level rather than a federal level.
Senator Woo: Thank you for your presentation. What is your view on the calculation of GHG reductions due to substitution effects globally? I'm referring, of course, to LNG and their notion that producing LNG in Canada and exporting it to China will displace coal-fired power plants and therefore reduce GHG on a global scale.
Mr. Beugin: That's a great question and a question to which I do not have a great answer. I haven't done the work on it. I think it depends on what is being displaced and what fuel use is being displaced.
Senator Woo: Coal.
Mr. Beugin: It also depends to the extent to which you can draw a clear connection between additional LNG production in Canada and reduced use of coal in other jurisdictions. That is a tricky connection to make in some cases, but not impossible, so I'm reluctant to weigh in without having done the analysis myself.
Senator Woo: If one could make the connection, would LNG displacing coal lead to a net reduction in GHG emissions?
Mr. Beugin: It will also depend on the life cycle emissions from that natural gas production and the LNG manufacturing process. Again, that is a tricky question. You have upstream fugitive emissions from natural gas production and extraction; you have very different approaches to how you manufacture LNG, depending on the fuels used there. The question is too complex for a safe, simple answer, I'm afraid.
Senator Woo: Thank you.
Senator Gagné: The commission has stated that governments should revisit policies now that the federal government has decided to set a federal carbon tax. You have also published reports not necessarily criticizing but stating that biofuel subsidies and renewable fuel standards that were introduced about 10 years ago should be revisited because of the costs of those subsidies.
Could you comment on the different policies that the governments should revisit?
Mr. Beugin: I think all policies should be revisited over time. That is good practice for policy-making in general to do what economists call ex post analysis -- that is, looking backwards at what has actually happened and trying to assess the extent to which it has achieved its outcomes and the cost at which it has done so.
The report you are referring to on biofuel policies, on both the production subsidies and on the fuel mandates that require certain shares of ethanol and biofuels to be mixed in with fossil fuels, that was Ecofiscal's attempt to do that kind of ex post analysis. In that analysis we found the costs of driving those emissions reductions had been very high, at $185 for the ethanol mandates and renewable fuel subsidies. When you compare that to the emissions reductions you're getting under carbon-pricing policies, essentially the $30 carbon price drives emissions reductions — all of them that cost less than $30 — you can see the scale of those emissions reductions and the cost of those emissions reductions being quite different.
What may have made sense 10 years ago, when carbon pricing was impossible for whatever reason and governments were forced to rely on other mechanisms, may not make sense anymore and it may make sense to revisit those policies.
I think this is particularly true for greenhouse gas policies, regulations and subsidies that were meant to substitute, so to speak, for carbon pricing. They were meant to do what carbon pricing might do, but carbon pricing was impossible. Now that carbon pricing is a reality and is increasing in stringency over time, I think there is all the more incentive to look back at what policies might overlap with that policy, and might overlap in ways that add costs unnecessarily and duplicate efforts unnecessarily, and perhaps even interact with that carbon-pricing policy in negative ways.
Senator Gagné: Would the Canadian government have a role in investing in breakthrough technologies to reduce greenhouse gas emissions?
Mr. Beugin: I haven't done work on this, either. In theory at least there is an economic case for doing so that could qualify as what we call the signal-boosting policy because there is something else going on in the market. There are insufficient incentives for firms to do that breakthrough innovation themselves because they can't capture all the returns themselves. If they innovate something new, brilliant, groundbreaking and low cost, their competitors will also benefit from that innovation. That problem in the market undermines incentives for innovation.
There is a case for additional policies for research and for innovation policies aimed broadly rather than specifically to complement carbon pricing. That would meet the criteria for a signal-boosting complementary policy.
Senator Kelvin Kenneth Ogilvie (Acting Chair) in the chair.
The Acting Chair: The last point you made is quite interesting. In an innovation economy, those who come out with the innovation initially have a competitive advantage at least for some period of time. Through that, reinvestment in research should keep them, if they have that culture within the firm, at the head of their industry. I see it slightly differently in terms of its being a positive development as opposed to a neutral or even negative concern in competitiveness.
Mr. Beugin: I totally agree with you and you are quite right. The only question is whether additional policies are required to create that incentive in the first place to take those chances and risks.
To be honest, there is extensive debate both in policy circles and in the economics literature as to the extent to which those additional policies are justified. That is a live and relevant issue.
Senator Pratte: I want to drill down a bit more on the mandates issue. We had the ethanol industry people earlier this week.Of course, they are promoting the renewal of mandates, and they want an increased percentage of ethanol in fuel, up to 10 per cent. I think 10 per cent is their lower figure; they would want 15 per cent and even more. The oil and gas industry is fighting that.
Instinctively, it looks like a simple solution. From 5 per cent, you go up to 10 per cent, and, automatically, you get a reduction of GHG emissions.
In provinces where they have a carbon tax or cap and trade, you might have seen a reduction of GHG emission from transportation, but, for instance, in Quebec, where you do have cap and trade, GHG emissions from transportation are still a huge problem. They have actually gone up. In a case like my home province, if you did increase the percentage of ethanol, you would have an automatic reduction of GHG emissions from transportation, which you do not have with the cap and trade, the price being what it is today.
Why is the mandate so expensive, and why do you believe that, eventually, the cap-and-trade system will produce more GHG emissions reductions?
Mr. Beugin: I think the most important point here is on flexibility. The fuel mandate essentially requires a specific mode of emissions reductions. It essentially defines an outcome rather than a market condition. A carbon price is the opposite. It doesn't require a specific outcome at all. If ethanol is a low-cost way to reduce emissions and comply with the cap or respond to the carbon tax, so be it. That is part of the response — it could be part of the response — to a carbon-pricing system.
The only reason it wouldn't be is if those emissions reductions are more expensive than other possible emissions reductions and if the economy, as a whole, would rather meet that cap with other ways of reducing emissions than with increased biofuel or ethanol.
The renewable fuel industry didn't like our report on biofuels, but Ecofiscal does not object to the idea of biofuels at all. We are technology agnostic. If they are a low-cost way of reducing emissions, fantastic. Let that be one more tool in industry's tool kit for responding to those prices and reducing emissions at lower cost.
A second point for Quebec specifically — and this is a somewhat tricky, technical point but important — is the idea of interactions between cap-and-trade systems and other policies that apply to the same emissions. If you combine a cap-and-trade system, as Quebec has, with additional policies that apply to the same emissions covered under the cap — and fuels are covered under the cap — then forcing those additional emissions reductions in transportation may not reduce emissions any more overall. The cap defines the allowable emissions in the economy overall. By forcing those specific emissions reductions in one sector, you are essentially allowing other emissions reductions to bubble up somewhere else. I think of it as a balloon. The balloon defines the total allowable number of emissions, a.k.a. the cap. If you squeeze one end of the balloon, it might squish that part of the balloon on your end, but it bubbles out somewhere else. The total volume remains unchanged. So those interaction effects are really important. In that case, you may be increasing costs, forcing more expensive emissions reductions, without even the benefits of additional emissions reductions.
Senator Pratte: Does the fact that people are willing to pay quite a high price for transportation fuel — because they are, apparently — have a role to play in this?
Mr. Beugin: This is a really interesting question about what we do about transportation.
Senator Pratte: It is elasticity.
Mr. Beugin: Yes, exactly. It is important to differentiate short-run versus long-run elasticities. I will use the jargon since you invoked it first. The carbon prices, especially lower prices, may not have huge impacts in terms of changes in driver behaviour, but they may have very significant changes in the choices of vehicles and the preferences of vehicles. Those changes don't happen quickly. They happen only over time, as drivers end up choosing to buy their new car eventually. They don't do it immediately in response to the carbon price. They do it when their old car is ready to be put to rest or traded in. That means it takes time.
There is good evidence from B.C., again, good economic, ex post analysis from the University of British Columbia, that shows that the B.C. carbon tax has started to have impacts on vehicle choices, on the kinds of new vehicles that British Columbians are choosing. There is a response to that price. It just may take time, and it may be that the price needs to go higher over time, as I think we all believe it does, to achieve the emissions reductions that we have set out for ourselves to achieve.
Senator Petitclerc: I want to hear you a little more on data because, to me, it feels like the basis for any good decision is data. You need good data to make good decisions and good policies. You did mention how difficult it is when it comes to agriculture and forestry. You mentioned also, a bit earlier, that you had some data gaps in some of the graphics.
Is it that this data is never going to happen; it is impossible to find? Or is it that we don't invest enough resources or that we are not organized enough to collect that data? How important is it if we want to be fair when it comes to policy?
Mr. Beugin: Great questions. Let me tackle your two specific ones separately, the bubble charts and then the agriculture and forestry pieces.
The bubbles essentially require sector-level and subsector-level data on emissions, output, exports, imports and production. Lots of little individual data points are required. In many cases, the Statistics Canada data is simply confidential. That is the barrier there. It is the most important barrier there because some of those subsectors are individual firms, only one firm in given provinces. It is hard for StatsCan to publish that data without violating confidentiality issues. The data is there, to some extent; it is just challenging to get it publicly.
It has been interesting to see provinces wrestle with that data problem as they design their carbon-pricing policies. Again, I will use Alberta as an example. Alberta is designing this kind of hybrid system, with carbon price and these output-based allocations to solve the competitiveness problem. Defining the scope of those output-based allocations, which sectors get them, how many they get, is a very data-intensive process and has been a challenge, I think, to implement in practice. It means there is a little bit of art, as well as science, in that policy design, but that might be the nature of the beast, to some extent.
The agriculture and forestry piece is a bit different, to some extent. We have relatively good data — not bad data, at least — from an economy-wide perspective. We have our national inventory reports that we submit to the UNFCCC that show our overall emissions, and they include things like non-combustion emissions and those sources in sinks that are tricky to quantify. They are estimates. They are not measurements per se, and that is true of the other emissions in the economy, too. It is simply that the estimates in those cases are better. They are very good estimates because we know with precision the amount of carbon embedded in a litre of gasoline or in a cubic metre of natural gas. It is easier to estimate in those cases.
In designing policy, there is only so much you can do in terms of quantifying the methane emissions proved by a given rancher from his herd of cows. That is a challenging thing to measure, kind of inevitably.
Another example is upstream oil and gas, where there are fugitive emissions from methane leaks, from equipment and from pipes. Again, that is not combustion. It is not burning the fuel; it is just leaking methane. So it is hard to measure for the same reasons. We are starting to see improvements with new technologies, like infrared technology, that can view those emissions and start to quantify those emissions through new technologies. There are possibilities; they are just kind of emerging at this point.
The Chair: Thank you. Before we move on to Senator Mercer, I have a question about something in your presentation that intrigued me and relates to Senator Dagenais's question. It pertains to the redistribution of carbon tax revenues. What will be done with those revenues? In general, we always understood that carbon tax revenues would be distributed and directed primarily to research in the fields of shipping, transportation, the automotive industry, agriculture and forestry. You said that money could be given to families, or to just about everyone. What you are saying is exactly the same mistake that was made in Europe. You know that the carbon tax in Europe was collected by Europeans and redistributed to 27 countries. No one can account for the money or say how it was used. Are they building roads and schools, providing medical care or constructing buildings? No one can say. In Canada, if we are to achieve the Paris Agreement objectives someday, we will have to change expectations or change methods. It is very important to clearly indicate — and you are in the best position to do so — where the carbon tax revenues need to be reinvested.
Mr. Beugin: That is a great question. We wrote an entire report on exactly this question, exploring the revenue-recycling question and laying out the options. My commissioners, for once, did not land on a single consensus recommendation. They didn't emerge on the single best way to recycle revenue from a carbon price. There isn't one answer. There are multiple answers. There are complex trade-offs associated with those choices.
If you use revenue to send cheques to households and families, you will perform very well in terms of fairness. You will make sure that low-income households are not disproportionately affected by the carbon price.
The Chair: I will stop you for a moment. Let me give you a very specific example. When you go to the grocery store, any one, you bring your own bags because they no longer have plastic and paper bags. Have you seen how long the receipt is that they give you? It takes two spruce trees to make the paper for the receipt! It should not be that way. I think this is a very poor use of our natural resources; it is a waste. I have not seen anyone, in Quebec or elsewhere in Canada, complain that store receipts are too long. There are hardly any printed newspapers anymore; they eat up the forest. They are responsible and they should be taxed. Everything is electronic now, the amount due appears on a screen. Then it says "paid". Hello and goodbye! We do not need to cut down a spruce to walk out with a parcel under our arm.
Senator Mercer: I remind colleagues that we sometimes discount around this table the effects of agriculture on greenhouse gases, in particular cattle and other livestock. I remind people of the situation in New Zealand, where the number one contributor to greenhouse gases in New Zealand is cattle. That is their single-biggest problem because of the way their industry is structured.
You said something in your presentation that I have to go back to as an Atlantic Canadian who lives by the ocean. You said we could help reduce greenhouse gases from livestock if we feed them seaweed. We have lots of seaweed. That seaweed, I assume, would need some processing before it was fed to cattle and would also help solve the problem of having a salt lick available for them because there is a fair amount of salt in seaweed.
Mr. Beugin: I will confess ignorance as to the details. I have definitely read in literature and articles that there is potential to significantly reduce the methane emissions from livestock by introducing seaweed into their feedstock. But I do not know the details, and I cannot confirm with 100 per cent credibility that it is an effective tool.
I will confess that I don't have the details on this one, although it does seem interesting.
Senator Mercer: There is at least one company in Nova Scotia that is harvesting seaweed and processing it for fertilizer. It is doing very well.
Mr. Beugin: Very interesting.
Senator Mercer: I would like to ask the analysts to have a look at the seaweed question and see if we can find a witness that would be able to give us more detail.
The Chair: Thank you very much, Mr. Beugin.
You have seen how interested senators are in this. This is very important to us, and your testimony definitely makes an important contribution to our work. We thank you for that. I invite you to check out what I said and go to the corner store to buy a quart of milk. The receipt will be longer than the milk bottle, and it will cost less than $3. Thank you very much.
For our second round of questions, we welcome witnesses by videoconference: from the Université de Bruxelles, in Belgium, Emile Frison, and from London, Bernard Soubry, doctoral candidate in geography and the environment, from the University of Oxford's Environmental Change Institute.
We will start with Mr. Frison. I would remind you that the shorter your introduction, the more time there will be for senators to ask questions. Welcome to you both. Mr. Frison, you may begin.
Emile Frison, Member, (Former Director General of Biodiversity International), International Panel of Experts on Sustainable Food Systems, as an individual: Thank you very much for this opportunity. The first thing I want to say is the impact that climate change will have on agriculture and food production is going to be significant — that is well established — but it is also going to be somewhat unpredictable. It varies a lot depending on the location and the particular environment. It will have an impact on productivity. In most cases, it will have a negative impact on productivity if temperatures increase.
There will also be changes in nutritional content. It is established now that with higher carbon dioxide in the air, the photosynthesis will increase, producing more sugars but fewer nutrients. That will have an impact on the nutritional balance.
What I would like to draw attention to is that beyond the increase in temperature, what is already happening today and what will increase in the future is the greater frequency and intensity of extreme weather events. We have witnessed it already this year in many locations.
This requires us to rethink our approach to agriculture and resilience of our agriculture. The question of resilience has not been a central question in agriculture in the past, but with this increased frequency and intensity of extreme weather events, we will see a greater impact on agriculture.
I'm the lead author of the International Panel of Experts on Sustainable Food Systems. In the report we produced called From Uniformity to Diversity: A paradigm shift from industrial agriculture to diversified agroecological systems, we not only analyzed the impact of climate change but also looked at how our food system, and particularly our food production system, will have to change in order to address the resilience to climate change on one side, and also to provide for quality nutrition. This has led us to rethink a new paradigm, an evolution that will be needed towards a new paradigm that will address not only the economic outcome of agriculture, which is, of course, essential, but also the impact on the environment, the resilience towards climate change, the quality of the nutrition, and also the social equity impact on farmers.
As you probably know, in virtually every country of the world, the farmers, especially small family farmers, are among the poorer side of society. We must really think about an evolution of our farming system and food system that also provides greater equity.
This can be achieved by bringing in two elements. One is a diversification of our production system. Having large areas of monoculture makes it very prone to accidents. If you have a hot spell or a flood or a dry spell at the wrong time of the season, it can have devastating effects — you virtually lose everything — while diversification will minimize that risk.
In addition we are seeing a lot of limitations with the current model that relies entirely on synthetic fertilizers and pesticides, which has an impact on the health and fertility of the soil, and therefore calling on agroecological practices that understand how nature is functioning and how we can have the soil microbes perform their role to provide nutrients to the plants.
By having a new way of thinking about agriculture that, on the one hand, diversifies and, on the other hand, applies the laws of nature, if I can put it that way, we can achieve not only an economically productive agriculture but one that will sequestrate carbon in the soil. It has been demonstrated that diversified agriculture based on agroecology will put carbon in the soil, and that has a tremendous potential in mitigation, at the same time as being a tool to adapt to climate change because it brings in the resilience that comes along with diversity.
By taking this different approach, we can really address both mitigation and adaptation for the same price, if you want. In addition to that, it can provide quality nutrition.
We know that in Canada, like in many other countries, there is an increasing interest of the consumers in the quality of the food that they are eating. For example, the market for organic food is increasing quite rapidly. There's a potential, by diversifying, to produce a greater proportion of what is needed in Canada itself. I think that taking this approach will achieve multiple objectives at the same time.
Mr. Chair, I will leave it at that for my introduction.
I will be very pleased to answer your questions, either in English or in French.
The Chair: Thank you so much, Mr. Frison.
Moving on now from Brussels to London, you have the floor, Mr. Soubry.
Bernard Soubry, doctoral candidate in geography and environment, Environmental Change Institute, University of Oxford, as an individual: Thank you, honourable senators, for inviting me and allowing me to give my presentation by videoconference. Thank you, Mr. Frison, for stealing all my ideas. I will try to offer something original.
My name is Bernard Soubry and I am a doctoral candidate in geography and environment at the Environmental Change Institute at the University of Oxford, where my work focuses on climate change and the food system in Eastern Canada.
Before coming to Oxford, I worked with Dr. Ian Mauro of the University of Winnipeg on the multidisciplinary project, Climate Change in Atlantic Canada, and for a number of years I was an apprentice vegetable grower and farm manager on small-scale farms in Hants County, Nova Scotia.
Within the Environmental Change Institute, my research is part of the food cluster, and I'm particularly focused on mapping the impacts of climate change on food production across the Maritime region and developing resilience and adaptive capacity within the food system.
My master's research, which is now my doctoral research, focused on the impacts of climate change on small-scale mixed-vegetable farmers across Nova Scotia, New Brunswick and Prince Edward Island and on the adaptation strategies that are being developed, both on-farm and by other governance institutions, including the provincial and federal governments. As far as I know, it's the only study of its kind that has been performed in the Maritimes.
My research shows that the food system in the Maritime region of Canada is deeply vulnerable to climate change and that, though there have been many efforts to build resilience and to adapt to changes across the agricultural and agri-food sectors, these are being restricted by a lack of understanding and communication between farmers and governance institutions.
To begin, in my initial research, I did not find any provincial documents analyzing the risks of the impacts of climate change on agriculture and the food system in the Maritime region. All the publicly available provincial documentation that I saw on climate change and agriculture recommends a strategy for reducing greenhouse gas emissions in farming, but is silent about the impact on production.
As far as I know, there is no federal documentation discussing the impact of climate change on the food sector. Unless I am mistaken, the national food policy, which falls under the Department of Agriculture's mandate, does not consider the impacts of climate change.
I provided working papers to the clerk. I'm not sure if you got them, but they discuss all of this in greater detail. I'll focus on the major insights that came out of my research, which was based on seven months of interviews with small-scale farmers from across the Maritimes, as far north as Bathurst and as far south as the South Shore of Nova Scotia. I'll talk about the climate impacts first, before moving on to adaptation.
First, farmers that I talked to reported that temperature changes are negatively impacting crops in the region. Changes in temperatures are shifting the production season for vegetables towards wetter springs and later autumns, which has the potential to shorten the season overall. Farmers reported later and later killing frosts in the fall, as well as wetter springs, which has a tendency to slowly shift production towards autumn. Farmers are especially concerned about this because vegetable crops rely equally on temperatures and on light levels to time growth. If temperatures rise and the production season shifts towards the fall but the light stays the same, then any benefit that we get from increased temperatures would be negated.
Second, farmers noted an increase in the erratic and extreme weather, which can damage infrastructure on farms, as well as lead to crop losses. There are more frequent, sustained winds across the region, which stresses crops and dries them out and has the potential to damage greenhouse and hoop-house infrastructure. Farmers are also reporting precipitation shifting towards long cycles of drought, followed by large dumps of rain, which is a huge stress on production, unless irrigation systems are installed on farms to mitigate that.
Finally, farmers are increasingly concerned with potential impacts to transportation infrastructure. The models that we have project that sea levels around the region will likely rise by 0.4 metres in the next 20 to 30 years. This is a significant concern to producers and distributors who, for example, need to go through the Chignecto Isthmus, which is the major transportation corridor between New Brunswick and Nova Scotia. There's a 34-kilometre span of dikes that many of you will know, which, the modelling says, can easily be overtopped by a storm surge. If you've ever stood on those dikes at a full moon, you'll know what I mean. This means, if the storm surge does overtop the dikes, that the highway floods, and that means that food, among other goods, can't get through until the flooding abates.
Having told you this, I should point out that farmers observed these impacts entirely independently of the forecasting and the modelled projections that are already in the literature. One of the key insights from the research is that local knowledge corroborates many of the projections that we have. So listening to local knowledge in the future is going to be an essential part of figuring out how to respond to the impacts of climate change on food systems in the Maritimes.
The other part of the research I wanted to communicate was adaptation strategies. I found that, across small-scale farmers in New Brunswick, Nova Scotia and Prince Edward Island, farmers are already developing adaptation strategies to the impacts that they are perceiving.
For farmers in the Maritimes, overall, climate resilience is driven by financial resilience. So adapting to climate change means being solvent enough or being able to access funds to build, say, a greenhouse that will allow for season extension or the necessary irrigation systems to avoid damage from rainfall.
The government programs that are being offered by the provinces, however, are currently reaching almost exclusively large-scale producers. Small farmers reported that adequate information is not being provided to guide them through the application process and that the opportunity cost of taking time off to apply versus simply working means that they rarely apply for programs. They also mentioned poor timing for many of the programs and the frustration of reimbursement-based programs for farmers who have a low cash flow to begin with. Many of the farmers I interviewed reported having detailed, farm-specific plans for adaptation, but they didn't have a trusting enough relationship with governing institutions that might help to make those plans a reality. My analysis in the working papers suggests that if we're to move forward with adaptation planning for the food system in Eastern Canada, or in Canada as a whole, there needs to be more clear and open communication between agricultural producers and their supporting institutions.
From the literature and planning that I've read, there seems to be a prevailing standard in Canadian climate change adaptation towards adapting via risk management, figuring out what the potential impacts might be and then dealing with those directly to mitigate the impacts. But this approach will only protect us from the devils that we know, and climate change is going to bring, as Mr. Frison said, quite a few devils that we don't. An alternative approach, which is being championed by researchers and adaptation specialists, is instead to focus on building adaptive capacity, in other words, to figure out those factors or drivers in a system like the Maritime food system that allow actors to react quickly and creatively and to bolster and support those existing parts of the system. Building adaptive capacity for a more sustainable and resilient food system requires discussions at every level, and it will have to start with people on the ground.
In conclusion, climate change projected by scientific models is already being felt by farmers and is already negatively affecting the food system in the Maritimes. Despite the adaptation efforts of individual farms, my research shows that the disconnect between farmers and government bodies is preventing a truly effective adaptation strategy from being introduced. In sum, I believe that an adaptation strategy for the food system in the Maritimes will really only work if it is developed together with those farmers who will be affected.
The impacts of climate change in the food system are only beginning. It's my expert opinion that, especially if significant national and global efforts to mitigate emissions are following current trends, if no comprehensive adaptation policy is developed, the food system in Eastern Canada will be extremely vulnerable in the coming decades, which may undermine food security. Building a truly resilient and adaptive food system will require collaboration from all parties from farms to federal government.
I look forward to discussing this with you. There's a lot more to talk about. I appreciate your time this morning. I'm happy to assist you in any way I can.
The Chair: Thank you very much for your presentation, Mr. Soubry. I would just like to say something: Canada is a very large country. Quebec was the first to take part in the carbon exchange with the state of California, in the United States. Ontario followed suit. The central provinces are developing a system. British Columbia has already come on board. For the Maritimes, it is coming.
Obviously, a country that is the size of Europe cannot do everything in one day. That is why our study focuses on the impact of carbon on agriculture. That is our mandate. What Mr. Frison said is exactly what we are in the process of doing. So we need your expertise, your experience and your conclusions.
Senator Doyle: Thank you for your submissions. I notice in your submission that you point out that there is no federal documentation discussing the impact of climate change on the food sector.
Mr. Soubry: None that I was able to find.
Senator Doyle: The national food policies don't even look at that. Obviously, that's a very important part of the whole picture.
Why do you suppose that in such a very important sector the federal government would not have any documentation discussing the impact of climate change? If you haven't looked at it, it's a very important area for you to pursue. Maybe you could pursue that with the federal government because I'm really taken aback by that, that they wouldn't have any documentation compiled so far.
We've been talking about this for a long time, and it's very valuable to us that you've pointed it out. Maybe you could also point it out to the federal government in the future to make sure that it's looked at adequately. Any comments?
Mr. Soubry: I assure you I've been trying, senator. What I did say is publicly available documents, and so I don't want to necessarily be criticizing the government where it need not be criticized because there may be things that haven't been looked at.
One of the things I found, looking at the literature, is that there's a difference between looking at impacts on agriculture and looking at impacts on the food system. The food system takes into account agricultural production, but also other types of production and distribution and processing and infrastructure and consumption and waste. It's a huge, complex thing to look at, but, as you were pointing out, it's a very necessary lens to be taking. There's a lot of inertia where people are inclined to look at impacts on agriculture but not look more broadly at impacts on the food system. Both are equally important.
Senator Doyle: Maybe you can talk about the adaptation strategies that farmers are using in the Maritimes. Let me point out what I consider to be an omission as well. Farming is becoming increasingly important in Newfoundland and Labrador. It would be beneficial for our province to be involved in your research as well because you point out that it's climate change in Atlantic Canada. I get sensitive over the fact that we seem to be left out of these studies. Maybe it's because we're 90 miles removed from Nova Scotia. But why do research in New Brunswick if it can be done in Nova Scotia? Or why do it in P.E.I. if it can be done in New Brunswick? Why not do it in Newfoundland as well?
We happen to be a province in this country. I had a little argument last week about this as well. It's becoming increasingly important to me that our province be included in whatever research is going on because we do not have a large farming sector, but farming, as I said, is becoming increasingly important to us.
Mr. Soubry: I appreciate the critique, senator. I'll clarify, first off, that when I spoke about climate change in Atlantic Canada, I was referring to a multimedia project that ran out of Mount Allison University in 2012 and 2013, which isn't the basis of my research. It was a separate climate study. That did go to Newfoundland and Labrador. I had several interviews over there.
I agree with you that it's very important. In terms of the research I'm presenting, I was limited by my fieldwork capacity within my master's degree, and my borrowed pickup truck was not able to go over water. I also had only so much gas money. That's why it hasn't been added on.
Senator Doyle: Maybe this is where the federal government could help you out a bit.
Mr. Soubry: Investment in hydroplaning is definitely where I'm going, senator. Yes, I think that it is extremely important. It is something to be looked at, and I'm in contact with a lot of organizations in New Brunswick and Nova Scotia and Prince Edward Island, food security organizations that are connected with networks in Newfoundland and Labrador.
If you're ever interested in following up on that, I would be very happy to connect you, because there is a very strong Atlantic network, even though my research has been, thus far, in the Maritimes.
Senator Gagné: Welcome. We really appreciate your joining us remotely and thank you for your excellent presentations.
My question is for Mr. Frison. Your presentation was very critical of industrial food systems, which give rise to a number of vicious circles, whose structure is harmful to the quality of nutrition and produces significant greenhouse gases and so forth.
You also said we need to shift towards diversified agroecological systems. In your presentation, you also referred to measures that could help us transition to those systems. I would like you to elaborate on that. What measures could help us adopt those diversified agroecological systems?
Mr. Frison: Thank you for your question. First of all, I have to say that there is no miracle solution that works everywhere. The same thing applies to agroecology: you have to understand and work with local conditions. What is universal, however, is a shared approach, whether in regions with small family farms, or in regions such as the Prairies, where farming is on a much larger scale and focuses on a few species. It is possible to apply the principles of agroecology, but the methodologies and strategies will vary from region to region. There are nonetheless certain common aspects, specifically diversification. What concrete measures could be taken to identify the most promising strategies, based on a study of local conditions? Federally-funded research is essential to make the shift to those agroecological systems of study, which is not happening right now.
One of the major limiting factors that I noted during my visits to Canada in June and September is that most federal government funding for agriculture research is provided through public-private partnerships, wherein the private sector has to provide 30 per cent of the funding, as I recall. This requirement limits the type of research that is undertaken from the outset. The private sector is primarily interested in two or three main crops and works with the technologies offered by the private sector. That greatly limits the possible areas of research, including agroecology. In 2015 in Canada, $649 million were invested in agriculture research. Just $1.7 million of that $649 million, or less than 0.25 per cent, went to agroecological systems or organic farming. That is something that needs to be corrected if we want to shift to agriculture that is better adapted and more resilient to climate change.
Mechanisms are also needed to encourage young farmers to practise sustainable farming. If farming practices are changed, for instance, from the industrial type with a high level of synthetic inputs, to agroecological farming, yields will drop for a few years until soil fertility is restored. So measures have to be implemented to support farmers in the transition.
I was delighted to learn, when I visited Quebec in September, that the province has implemented support for organic farming, which I think is closer to the diversified agroecological system that our report recommends. Extending such measures to other provinces and perhaps federally would speed up the transition.
The IPES-Food report that I mentioned clearly showed that there is enough data available from different parts of the world to prove that this approach is not only economically competitive, but that it also produces results in terms of the environment, nutrition, society and health. We need to implement not only the measures that I just mentioned, but also other measures in cooperation with the stakeholders involved, as Mr. Soubry said. It is important for farmers and producers to be included in discussions so we can address their needs, and not only offer technological solutions that may or may not meet those needs.
Senator Oh: Thank you, witnesses. I have two questions for you. First, according to some researchers, climate change is a natural thing, but human-induced climate change has been observed for some time now. As in the past many years, we have major droughts in India, China, Africa. What do you think about this statement?
Mr. Frison: I think it has been well established now that the human-induced climate change has seen an acceleration of the increases in carbon dioxide in the atmosphere, leading to an acceleration of the climate change process. If you put that on a graphic, you see a steady increase over a long period, and then, all of a sudden, you see a very rapid increase, which coincides with the increase of the industrialization and the rapid increase in human population on this planet. I think that is a well-established fact.
I know that there are still — although very few — a few people that do not recognize that, but I think this is very solid science now.
Mr. Soubry: I would like to echo everything that Mr. Frison said. The climate science is undeniable at this point, and a lot of the extreme weather events that we have seen over the past few years have been attributed to or made more likely by human-induced climate change. Anything else is not accurate with respect to the data or the statistics.
Senator Oh: My second question is about crop diversity. What do you think about the new crop diversity that could help in the future with resilience in the face of climate change?
Mr. Soubry: Can you define what you mean by crop diversity, senator?
Senator Oh: New species.
Mr. Frison: The new growth.
Senator Oh: Yes, new kinds of crops that are specially developed to withstand climate change.
Mr. Frison: I will have the first go at that. There is, first of all, a need to really diversify the number of species that are being grown to provide for the resilience that our production systems will need. I know that some people are advocating drought-resistant varieties, but that is just marginally decreasing the risk of losses. You will never able to maintain a single-crop approach. Even if you increase the drought resistance, for example, you will never be able to eliminate the risk. So the strategy has to be a strategy of diversification. That can be achieved in all types of agriculture. Of course, the particular ways in which that can be done are very different if you have a small horticultural setting where you can grow 25, 30 different types of vegetables than if you have an area of large cereal production. But even in that, the reintroduction of agri-forestry, for example, that is perfectly compatible with large-scale mechanization, has demonstrated, for example, in the South of France, that a lot can be achieved in making the system not only more resilient but also more productive from an economic point of view.
Mr. Soubry: I would add that there is a lot to be said for crops that are being bred out of specific microclimates. One of big the problems we have in Eastern Canada with modelling climate change is that the topography is so different that it is quite difficult to set up a variety.
I am not sure how familiar you are with seed breeding and the ways you can do it. But in most cases, if you have a hybrid seed being bred for a specific purpose, it is being bred in a specific location. Location will help with a certain vivaciousness within the seed but will not be able to respond to the specific microclimates.
In Eastern Canada, within the diversification, people are selecting seed in vegetable crops for what is working for their region. As climate trends are shifting, we are seeing, for example, in tomatoes, there has been an onset of blight since the 1980s or 1990s or so, and now we are seeing regionally produced tomato seed that is blight-resistant that can be used within small-scale farms and that is cost-effective.
Within engineered seed, I would briefly caution, from the point of view of studying international environmental law, that a lot of the problems that come from it are not necessarily yield; they are intellectual property-based. That is the minefield that you wade into.
Senator Dagenais: I have two questions for Mr. Frison. First of all, you talked about equity, which is hard to achieve for farmers since they are subject to demands from government GHG reduction programs, among other things. Can you give us some examples of measures that were taken in Europe to help farmers and compensate them when they invest in fighting climate change?
Mr. Frison: Do you mean examples of policies implemented in Europe?
Senator Dagenais: To compensate farmers for the investments they have to make in fighting climate change. Are there programs in Europe to help farmers?
Mr. Frison: There are some measures that are compatible and that are part of the common agriculture policy, but they are left to each county's discretion. I think about 30 per cent of all investments in common agriculture policy can be directed to climate change adaptation measures, for instance, and in particular to approaches relating to diversification, reduction, pesticide use, support for organic farming and so forth. But this varies considerably from country to country and we know that, for the whole of Europe, there is still too little funding directed to these approaches. So that is one of the actions regarding which the group to which I belong is planning meetings and developing arguments to support a European food policy that not only better reflects production needs and agriculture competitiveness from an economic viewpoint, but also considers aspects relating to greenhouse gas emissions and nutrition quality. It is in an evolution that, unfortunately, is still moving too slowly. In the reflections of the various countries that we have seen in the last two years and especially in the past year, I hope they will start to realize that urgent action is needed in this regard.
Senator Dagenais: Now, turning to the economic impact on consumers, I'd like to know how food labelling can contribute to conscious consumerism. Do you have examples of any such measures adopted in Europe? Do you think consumers would be willing to pay more if they were aware of the measures taken by various European countries?
Mr. Frison: I think the steady and rapid rise in organic farming's share of the market is a testament to the fact that consumers are more conscious. There is still a long ways to go, however, in terms of better controlling the overall impact of the type of agricultural system used by providing legible information on the end product. The two labels that most commonly appear on products are the organic and fair trade labels, which are more representative of social fairness factors. From that standpoint, then, we still have some work to do.
All the responsibility should not be borne by consumers. Although consumers certainly play an important role, some of the environmental and health effects associated with the current agricultural production system can be prevented using a more sustainable system. The recommended approach is a diversified agroecological system, which would reduce negative effects on the environment and health, for instance, with respect to water purification. On the one hand, it's important to have an agriculture and food policy that supports more sustainable farming systems with a focus on the environment and human health. On the other hand, consumer awareness is needed so that they pay attention to the benefits and disadvantages of their food system.
Senator Dagenais: Thank you very much.
The Chair: Now, from Quebec, we have Senator Petitclerc.
Senator Petitclerc: Thanks to both of you for your passion-filled presentations. Mr. Frison, the model you advocate requires fundamental changes and an approach that calls into question our entire relationship with farming, the food chain and, of course, the environment. Your presentation actually reminded me of a book I read a very long time ago by Frances Moore Lappé, entitled Diet for A Small Planet. It came out in 1971, so this idea existed back then but has still not been put into practice. I am curious as to how you respond to people who say that, although your model is very nice and all and may work on a small scale, it isn't necessarily realistic on a large scale. Actually, I would like to know two things: first, what you say to that, and second, whether any experts, who, using models and projections, have been able to confirm that, yes, it is realistic. Has a scientific case been made, as opposed to one based solely on personal convictions?
Mr. Frison: Thank you for your question. I am very glad you asked, because that is, indeed, a claim that is still all too often trotted out to justify keeping the current agricultural production system in place. In our report, we provide fairly clear documentation in response to the argument that this so-called alternative production system, in other words, a diversified agroecological system, cannot serve to feed the planet. I think we have enough data to show not only that the system can produce enough food, but also that it is already being used in numerous small regions. Its use is not limited to small-scale farming, although that is certainly the level where it started and where most of the research and experience comes from. The system has nevertheless been put in place by larger-scale farmers who converted their operations.
Unfortunately, the resources available for research are still very limited. Again, I would refer you to the figures for 2015, when less than 0.25 per cent of Canada's agricultural research funding went towards alternative or ecological agriculture. A larger investment in that regard would allow for much better and more relevant research on conversion options. It is no secret that many groups have a vested interest in keeping the current system in place. Those who sell the inputs necessary for industrial agriculture have every reason to continue perpetuating their message. I can tell you, from personal experience, that they are very actively pushing the idea that, by 2050, we'll have 9 billion or 10 billion mouths to feed, implying that we won't be able to produce enough food unless we increase our use of fertilizers, pesticides and so forth. However, it has clearly been shown that that claim is not true and that other solutions exist.
Senator Petitclerc: Thank you.
The Chair: Mr. Frison, I have a question. How is it that a small country like Belgium has not yet fully converted to organic production? I am also including in that Luxembourg and France — even England — which are not big countries but have yet to fully convert. It should be easy, however. We aren't talking about vast areas of agricultural land. When you talk about expanses of farming land in France, I can't help but smile; we don't have the same perception of dimension here, in Canada. How come you have not yet converted to a fully organic production system?
Mr. Frison: To begin with, I said that the percentages were going up rapidly, in other words, between 6 per cent and 10 per cent annually. Belgium is a small country. I don't live there; I live in Italy. I'm in Brussels on a trip. I am from Belgium originally, but I moved away long ago. The pressure on farmers is tremendous, and lobby groups are using just as much pressure to keep the industrial system in place. That pressure may be even stronger in Belgium than elsewhere, because it is the headquarters of the European Commission and thus the base for numerous lobby groups. It is important to point out that many farmers feel like prisoners of their production system. The companies selling the seeds, fertilizers and pesticides are often the very same ones buying the grain or end product, and sometimes extend credit to farmers. The majority of farmers are in significant debt. They operate in a system that has a stranglehold on them.
Without an active and robust policy for change, the conversion is extremely difficult. Unfortunately, the politicians, be they Belgian or not, have not yet realized how urgently the system needs to change. France's previous government had a policy that strongly supported agroecology. The former agriculture minister, Mr. Le Foll, championed the issue while in office. It was clear, though, that the lobby groups in favour of the current system made his job as minister very difficult. I think it's obvious that, if we don't change, we are headed for disaster. It's important not to discount the influence of institutions and companies with an interest in keeping the current system in place.
The Chair: In England — we can draw the parallel with Canada's misty isles — when the fog lifts, what does the agricultural landscape look like?
Mr. Soubry: Do you mean as far as ecological agriculture in England is concerned, Mr. Chair?
The Chair: Yes.
Mr. Soubry: I can't comment on that. I studied in England, but I did not study England itself. I study Canada's maritime regions.
The Chair: Very well.
Mr. Frison: Mr. Chair, if I may, I'd like to make another quick comment. What we are finding in Europe and Canada is that the young people going into farming generally favour a sustainable approach to agriculture through agroecology. In traditional, conventional or industrial farming, many young people are not interested in taking over the family farm because they are aware of the health problems, the lack of economic viability and the considerable debt burden that go along with that type of farming. The next generation of farmers is flocking mainly to agroecological farming systems because they require significant innovation, knowledge and expertise. That means not simply adopting a system where the merchant dictates which seeds, fertilizers or pesticides you have to use and when. Under that model, farmers become farmhands, without the ability to take any initiative. Conversely, agroecology requires a lot of skill, which makes it much more appealing to young people.
The Chair: Mr. Soubry and Mr. Frison, thank you for being with us today. Your comments were very enlightening. As you saw, you certainly had the senators' interest. We wish you great success in your endeavours. We are going to continue our work on reducing greenhouse gases in the agriculture sector. I am hopeful that the committee will be able to make recommendations that are useful, even in Europe.
Our sincere thanks.
(The committee adjourned.)