10 February 2009
Honourable senators, I rise with great pleasure to present my bill, Bill S-213
I want to explain what this bill is designed to accomplish and then deal with some of the arguments I can anticipate that some of you might be inclined to make.
This bill will provide a tax credit to individual Canadians who invest in green projects to reduce carbon emissions, in addition to what might otherwise have been done, had this initiative not been taken: therefore, they will be required to provide something additional. There are significant mechanisms by which third parties can verify real reductions.
The ultimate design of this bill and of this credit is to give individual Canadians the inspiration, and the way, to invest, specifically, in environmental improvement in the reduction in the carbon footprint. The purpose is ultimately to confront climate change in a constructive way and to give Canadians the mechanism to do that.
I would limit the tax credit to the first tax rate of 15 per cent. If someone invests $1,000, they would receive a tax reduction of about $150.
There is precedent for this reduction in the government's own tax policy. For example, if I were to invest in hockey skates and pads for one of our sons, I would be entitled to a 15-per-cent reduction on a $500 tax credit. That would give me back about $77.
With this program, consider that Canadians might be inspired to invest as much as $1 billion. At the 15-per-cent tax rate, the actual cost to the treasury would be $150 million. That money is a small part of the $64 billion deficit the government has brought in largely to create stimulus.
Each and every dollar of the $1 billion levered by the 15 per cent needed to implement this change would go directly into investments, farms and Canadian business. That money could be used to invest in and to create jobs and profits essential to stimulating the economy at a time when we are facing one of the worst economic crisis, as so many people have said, since the 1930s.
This kind of directed investment — directed by what is a relatively minimal tax credit at the margin in the bigger picture — would have huge leverage. Certain initiatives taken in the government's current budget have been proven in the U.S. experience to leverage about 10 cents on every dollar.
In this case, people will need to find investments; they must spend this money to receive the tax credit, ergo, the impact will be about one for one. It is not unlike the idea that we should receive a tax credit for building a deck in our backyard because that money goes directly into the economy and creates jobs right now. This tax credit would allow me to invest in a green project that is perfectly certified and I would receive the 15 per cent reduction.
There are those people who will argue against this initiative, probably, on a few fronts. First, there are those people who deny climate change. They deny that carbon emissions are a problem. However, there are far fewer of those people now because the evidence is so compelling it would be hard to stand up and say there is no climate change.
The second form of denial is that the climate change is not created by human activity. However, there is such profound consensus among scientists on this issue that there can be almost no doubt that human activity contributes to climate change. As I was thinking about the power of this science and the overwhelming consensus, I considered the observation that there were, and probably still are, leaders in South Africa who still believe that HIV does not lead to AIDS, in spite of all science to the contrary. The inclination to deny that climate change results from human activity is tantamount to that denial as well.
The third way they will argue against this initiative is to say that carbon credits are, among other things, Russian hot air and we will not invest in those things; that they are not made in Canada and we will not address anything that is not made in Canada — we will not invest in credits elsewhere. The last way is to say that this approach is only a way to let the rich off the hook by buying their way out of reducing their pollution. Of course, we ask the rich to buy all kinds of things for society. I would deem it consistent to ask them to buy these credits because it would be so profoundly important for both the environment and investments in our economy, thereby creating jobs and stimulus.
For those who believe that credits do not work, there is huge evidence of the credibility of carbon credits. There is a $92 billion market in carbon credits in Europe. Alberta is the first jurisdiction in North America to impose a cap system. Bless Premier Stelmach's heart because it is at least a start. That cap is based on intensity targets and is not fully adequate, but it does create a cap. Companies that cannot get down to that cap level of emissions because they have not had the time or the technology or the inclination can buy credits from someone who has reduced their carbon footprint in an additional way, third-party verified. That becomes an investment in the party from whom they buy the credit.
Do honourable senators know what Alberta has done? Farmers are creating those credits and selling them at $6 per tonne. I do not know how many people are aware of this, but the money from the sale of those carbon credits goes directly into the farmers' pockets.
In Europe, one tonne of carbon offset costs about $15. To put this into perspective, let us consider Kyoto. If we did absolutely nothing to reduce our carbon footprint in Canada, instead of buying a hybrid car, sealing our windows or walking instead of driving, we would have to buy carbon credits in the amount of 250 million tonnes to meet our Kyoto obligations. If we went to the market in Europe to buy those carbon credits, where we would pay $15 per tonne, it would cost us $3.8 billion each year to meet our Kyoto obligations. At $6 per tonne here in Canada, we could pump money into every farm across this country that could want to and would want to create real credits, and it would cost $1.5 billion per year for the five years. What did we reduce in GST? I use the term "we" lightly. I should have said "your government." It would be $13 billion a year. So $1.5 billion or, at maximum, $3.8 billion. We could solve the Kyoto problem and set the stage for leadership in the world, establish this policy in the culture and the context of Canadians' minds and begin to solve a problem that is every bit solvable if we would simply get started. We need leadership.
In some sense of not doing credits, which we certainly have seen with this government, is a moot point because President Obama will bring in a cap-and-trade system. Let it be known to those on this side who want a made-in-Canada policy, it will not be made in Canada; it will be made in the U.S. and it is likely that we will be dragged along, instead of getting ahead of it, which raises serious implications for Canada. In the term "cap and trade," the word "trade" means carbon credits, and it means carbon markets like the one in Europe and the one in Alberta. How does it work? Companies will be given a cap to reduce their emissions from one point to a better point. If they cannot get to that point, then they can buy the required amount from someone who is able to get below that point. We will find that companies will take that money and invest it in an individual business or farm to meet their obligations. Credits cannot go on forever and they will not, but they will provide a way to deal with the low-hanging carbon emission "fruit," as it were. This will establish a huge opportunity in the future green economy. The next Industrial Revolution will be stimulated by this kind of activity in the United States. As I said earlier, it is a breath of fresh air to have such indications from President Obama.
However, Canada will miss that economic opportunity if the government continues its current direction such that we are not prepared to take advantage of that market. If we have not worked with our industry and our farms to develop the structures for carbon credits and reducing our emissions, we will not be able to compete with U.S. firms who have done so. If we do not have a market in Canada for carbon credits, when we are forced by the U.S. regime to lower our carbon emissions, our companies will have to buy them from the U.S. markets. Where will that money go? It will be invested in American firms that had the foresight, supported by government, to reduce carbon. It will go to their technologies, which they will sell around the world, and will create jobs that we could have had but de facto will lose. All we need is some leadership.
No matter the record or the rhetoric of this government, I am profoundly concerned that there simply is not the intensity and the commitment to make this work. We heard almost three years ago that the government would have a cap-and-trade system. We saw the government that got into power cancel all of the climate change plans of the previous Liberal government. When I asked the Minister of the Environment to give me the studies in defence of their action, I was told that a study had not been done. I can show honourable senators the quote. It is not that the government has a commitment but rather that the government has an ideological aversion to investing in or intervening in the economy, even though it is required to do so in this sense. To say that those who want to deal with climate change can go ahead and do so is akin to saying that those who want to win a world war can go off and do so. No, there has to be specific leadership at the government level to work with the various sectors in our society and our economy to make this happen.
This program need not be particularly expensive. It would take a small portion of the amount that will be invested in the stimulus package of the current budget. It would have tremendous leverage in creating stimulus because most of it would go into investment and creating jobs and profits that are the basis of our capitalist system. At a personal level, it would draw the attention of Canadians to the possibility that climate change could be dealt with. It would give Canadians at least one specific mechanism with which they could do so. It is not only an actual tool to meet specific objectives but also an educational tool.
I feel a tremendous sense of urgency, and I implore honourable senators to feel this same urgency. Climate change has not been addressed by this government. In fact, this government has run away from it. This could be a simple, straightforward and effective solution to not only deal with that issue but also to begin to change the culture of Canadians so that they can see the possibilities and become leaders in their own right. Canadians have been waiting too long for government to provide leadership.