Proceedings of the Standing Senate Committee on
Energy, the
Environment and Natural Resources
Issue 11 - Evidence, February 19, (12:25 PM)
OTTAWA, Wednesday, February 19, 1997
The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill C-29, to regulate interprovincial trade in and the importation for commercial purposes of certain manganese-based substances, met this day at 12:25 p.m. to give consideration to the bill.
Senator Ron Ghitter (Chairman) in the Chair.
[English]
The Chairman: I should like to call the meeting to order and welcome representatives from the City of Montreal. Thank you very much for being here today. After your submission, my colleagues and I will want to have a discussion with you. Please proceed.
[Translation]
Ms Johanne Lorrain, Municipal Councillor, Member of the Executive Committee, City of Montreal: Mr. Chairman, thank you for agreeing to hear the views of the City of Montreal concerning Bill C-29, the purpose of which is to ban the interprovincial transport and, by extension, the use of MMTs in Canada. Since the Senate is the best place for Canada's various regions to express themselves, I am delighted to have this opportunity to make you aware of the concerns of the City of Montreal.
Essentially, our municipal government is worried about the effects that Bill C-29, if passed by the Senate, will have on the petrochemical industry in Montreal East.
Firstly, I will provide you with an outline of Montreal's petrochemical industry, noting the difficult period we experienced in the early 1980s.
Secondly, I will explain to you why we fear that banning substances containing MMT will have a destructuring effect on Montreal's refining industry.
Thirdly and lastly, I would like to add my voice to that of other witnesses who have asked you not to pass Bill C-29 before new scientific studies have determined whether substances containing MMT damage vehicle pollution control devices.
Let us start by looking at Montreal's petrochemical industry. Approximately 27,000 persons work in the province's petrochemical and plastic industry; a substantial portion of these jobs are located in the greater Montreal area.
As you may know, Montreal's petrochemical industry experienced considerable difficulties in the early 1980s. At that time, our city saw four of its refineries close, one after another: Texaco in 1982, Esso Imperial and BP in 1983 and Gulf in 1985. These closures meant the elimination of 2,000 direct jobs and over 14,000 indirect jobs. However, thanks to the perseverance of all parties concerned in both the public and private sectors, part of Montreal's petrochemical industry has survived.
Currently, Montreal has two refineries: Petro Canada, located in Pointe-aux-Trembles; and Shell Canada, located on the outskirts of Montreal East. These two refineries have a combined capacity of 220,000 barrels per day; their replacement value is $3 billion. They employ 1,000 persons directly and, according to Statistics Canada, create 7,200 indirect jobs.
In light of my remarks on the crisis in the 1980s, you will understand that we place the highest value on the presence of the companies that have survived that turbulent period, and that we are sensitive to measures that may jeopardize their profitability.
Let us now turn our attention to the risk that the proposed legislation presents for the refineries in Montreal East. According to estimates by the Canadian Petroleum Products Institute, banning substances containing MMT would mean initial capital expenditures of $115 million and annual expenditures of not less than $65 million for Canada's petroleum industry. Recurring annual costs to Montreal's two refineries would be $12 million.
Some people may argue that, in comparison with the sales figures of Canada's petroleum industry, these costs are negligible and that, in any case, environmental protection does not carry a price tag.
I want to respond to each of these two arguments.
In an industry in which Canada faces strong international competition, no costs are negligible, and there is a very fine line between a profitable refinery and one operating at a deficit. It is also important to take into account Montreal's particularly difficult economic situation at present. The most recent Statistics Canada report indicates that the unemployment rate on the Island of Montreal is 15.1 per cent, an increase of 2.5 per cent over last year. This unemployment rate is unacceptable and every job counts.
Where environmental protection is concerned, the City of Montreal agrees that it is priceless. Our city is recognized for its efforts to protect the environment. In Montreal's 51 districts, we have created environmental neighbourhoods in support of environmentally friendly initiatives by community groups. Our city's name is associated with the Montreal protocol for the protection of the ozone layer. From 1990 to 1996, as a municipal government, we successfully reduced by over 60 per cent the carbon dioxide emissions for which we were directly responsible.
You will understand that, strengthened by this record, we would be the first to call for a ban on substances containing MMT if it were shown that MMT harmed the environment. However, this is not the case. Claims that MMT would damage the control system of vehicle pollution control devices have never been proven. The United States Environmental Protection Agency has even acknowledged that MMT does not cause failure of these systems. Furthermore, it must be recognized that MMT has made a significant contribution to reducing urban smog in Canada.
We therefore consider perfectly reasonable the repeated suggestion by the Canadian Petroleum Products Institute that an independent study of this matter be carried out under the aegis of the Canadian Council of Ministers of the Environment. The opposite course -- jeopardizing hundreds of jobs in Montreal with no convincing scientific evidence justifying the passage of such legislation -- would be unreasonable.
The Senate has an important role to play in ensuring that there is national harmony in Canada and mediation among various industries. The automobile industry has not been able to support its claims against MMT. Canada's petroleum industry warns us that Bill C-29 will harm it considerably. Eight Canadian provinces and both territories are opposed to Bill C-29. Quebec's National Assembly has twice unanimously asked the federal government to defer passage of this legislation.
As a municipal government representing over one million Montrealers, the City of Montreal is asking you today to delay the passage of this bill until scientific studies have been carried out in order to clarify the situation.
This is the only approach that genuinely respects the necessary balances within the Canadian federation.
[English]
The Chairman: Are you suggesting that there is the possibility of the refineries in Montreal being closed down if this legislation is passed? Do you have information to support such a position?
[Translation]
Ms Lorrain: I can only say that during the 1980s, in a bid to streamline operations, the large oil companies shut down a number of refineries in Montreal. Montreal's refinery stock suffered. I have not heard specifically that these two refineries might be closed. However, I am more or less convinced that additional investments would be needed to bring this stock up to speed. These refineries are rather outdated and this could cause some problems in Montreal.
Senator Robichaud: I have a question for you. You would like us to delay the passage of Bill C-29 until new discoveries have been made. However, when is this going to happen? When are you going to give the government permission to go ahead and adopt Bill C-29?
Ms Lorrain: We want to see convincing evidence that MMT is harmful to the environment and this has not been proven to date. That is what is causing the problems. I know that studies are underway. It has yet to be proven that MMT is harmful to the environment. We are asking you to wait until the studies have been completed. You must proceed with caution because jobs are at stake in Montreal East.
Between 1981 and 1991, Montreal East lost nearly 16,000 jobs, essentially as the result of the closure of a number of refineries. Employment is important to our community. We are asking you not to take any more chances and not to risk jobs when a study may show in a year's time that MMT poses not threat to the environment or to people's health.
Once studies prove this conclusively, the City of Montreal will be the first in line to support a ban on substances containing MMT. I could submit documents which show that the City of Montreal is concerned about the environment. We have taken all kinds of steps to ensure that the environment is a concern not only for administrations but for Montrealers as well in an effort to get them involved in environmental conservation in this large city. This is an on-going concern of our municipal government. I can submit documents to you. If these studies prove that MMT is indeed harmful, we will be the first to support his bill which would ban the substance once and for all. For now, this bill could put many jobs in jeopardy.
Senator Robichaud: You mentioned a study.
Ms Lorrain: I am not an expert on the subject, but I do know that studies are under way.
Mr. Letendre: We know that studies are under way in the United States. We also know that the Canadian Petroleum Products Institute had suggested that studies be carried out and that they be financed jointly with the automobile industry. Thousands of jobs are on the line in Montreal. Why not wait until there is conclusive scientific evidence before taking action that will cost us dearly?
If unemployment on the Island of Montreal is running at 15.1 per cent, this means that it is closer to 20 per cent in east-end Montreal. Close to 16 per cent of residents are income security recipients. The unemployment rate is unbelievable. Legislation like this could deal a very harsh blow to Montreal and we are asking you to take this fact into account.
Senator Spivak: Is it true that the Montreal refineries already produce petroleum without MMT?
Ms Lorrain: No, MMT is an additive.
Senator Spivak: We were told that they produce this petroleum for the U.S. market.
Ms Lorrain: MMT is an additive. You have to understand that I am not an expert on this subject. I did not come here to discuss the product as such. The petroleum industry is of vital importance to the Montreal East community which has weathered some hard times.
Senator Spivak: I understand, but we were told that every automobile rolling out of the plant must run on MMT-free gasoline. Therefore, the refineries produce MMT-free gasoline for the U.S. market.
Ms Lorrain: I do not have an answer for you.
[English]
Senator Taylor: Are the witnesses aware that the representatives of Petro-Canada and Shell told this committee there would be no closing of any refineries in Canada? That, of course, refers to Nova Scotia.
Are you aware that there is MMT-free gasoline produced all the way from Come By Chance to Montreal and exported to the U.S.? It is not in major quantities, but there is some.
Are the witnesses familiar with the fact that the pipeline for raw crude which went from Toronto to Montreal has now been reversed so Montreal-refined products can invade central Canada? Consequently, if central Canada is to buy those products, and MMT is free, you would actually have an expanded market. You would be able to market into Ontario through the reversal of the pipeline, whereas before you could not. You could not come across the Ottawa Valley.
[Translation]
Mr. André Murphy, Director, Economic Development, Montreal East, City of Montreal: We are greatly concerned by the fact that the refineries in Montreal are not the most modern of their kind in Canada. Added costs could sway the balance between the different refineries. A substantial number of jobs are located in this part of the city. Generations of the same family have worked in the petroleum industry and if overnight, we had to contend with recurring annual costs of $12 million, which means that significant investments would have to be made, companies will always look at where it would be best for them to invest. Will they invest in an outdated refinery or in a new one? That is what worries us.
As for the evidence, we have some problem with that. We have not yet met anyone able to tell us whether this poses a danger to job creation or maintenance. Sustaining current employment levels is a key priority for all levels of government.
[English]
Senator Cochrane: How many jobs would be at stake in the Montreal area if this bill were passed?
Mr. Robert Letendre, Governmental Affairs, City of Montreal: We think that at least one refinery will close as a result of the passage of this legislation. We think that one of the refineries is at risk.
Senator Cochrane: How many people are employed at this refinery?
Mr. Letendre: They provide 500 direct jobs and 3,000 indirect jobs, so somewhere around 4,000 jobs.
The Chairman: Can you give us more details as to the refinery you think is closing? Do you have more information, or is the information confidential?
Mr. Letendre: We considered it as confidential. We did not want to create a panic. I am glad to hear that the president of that company testified to the opposite, but that is certainly not the message we were receiving in Montreal.
The Chairman: In fairness, they said that at this point in time they have no plans of doing that. I am not sure what that means about tomorrow.
Mr. Letendre: While travelling to Ottawa with Ms Lorrain, she was telling me a story having to do with an Esso Imperial Refinery which would never close. Perhaps she would like to tell you this story.
[Translation]
Ms Lorrain: Perhaps I can tell you what happened during the 1980s. I am the municipal councillor for my district where I have resided for the past 15 years. I was living there when the refineries shut down in 1980. This industry employed 17,000 people at the time and these jobs were handed down from father to son. When the refineries closed down, many members of my family lost their jobs. They never thought that this would happen to them and I can tell you that even six months before the closures, no one would ever have imagined that these refineries would shut down one after the other. This was a dramatic, frightening turn of events in this industry and it took its toll on the workers and their families. When we hear the claim that the refineries will not close, I can tell you that we heard the same tune in 1980 and that six months later, three refineries were shut down with dramatic consequences.
It is hard for me to believe or accept any guarantee that refineries will not be closed. Considering how much room to manoeuvre these companies have and how important competition is to them, there is no question that as soon as they have any additional costs to bear, they will start talking about streamlining their operations. That is what happened in 1980 after the price of crude oil dropped. They were forced to streamline their operations and the refineries in Montreal East were targeted. This was an extremely difficult time for the residents of the region which is only now slowly recovering. Another blow would have a devastating effect.
[English]
Senator Kenny: With all due respect, how do you explain the logic of the situation? When the refineries and the managers of the refineries appeared here, they could have easily blamed the closing of refineries in Montreal on this bill. It would have been the easiest thing in the world for them to say, "If you pass this bill, we will put these people out of work." It would have scared all of us here. Everyone in the room would have been nervous. They did not do it, but they could have.
Nothing in the world is forever; nothing in the world is certain. I accept that. We all know that the price of oil goes up and down. Refineries open and close. However, representatives of Imperial Oil, Shell, Petro-Canada and other refineries not represented in Montreal appeared before us. They told us that they did not see their refineries closing as a result of this piece of legislation. They could have, but they did not. If you have information that they did not have or if you know things about their refineries that they do not know, we would be pleased to hear about it.
[Translation]
Mr. Letendre: We cannot interpret or understand this strategy. If the government is absolutely convinced that there is no risk for the refineries, it could very well make a solemn commitment that in the event of job losses, it is prepared to compensate the regions with special funds. The Minister of the Environment could pledge to create a $200 million fund to compensate people for possible job losses. I could turn the question around and say: if the government is so confident that this will not lead to job losses, it could make a commitment to bringing in compensatory measures.
Therefore, we could also assume that the government believes that there will be job losses; the same logic applies.
[English]
Senator Kenny: With respect, you are playing political games with the committee and it is not acceptable. The officials involved in running the companies say no jobs will be lost. There is no requirement for a government guarantee. If the officials were saying that jobs were to be lost, you might have a case to come before us. You have no case at all.
Mr. Letendre: How do you interpret, sir, that eight --
Senator Kenny: I do not interpret it at all. I have not finished my question.
With respect, Mr. Chairman, I am entitled to finish my question.
The Chairman: Go ahead.
Senator Kenny: To suggest that the government needs to come forward with a guarantee in perpetuity that a refinery will never close is nonsense.
We asked the very same question. We have the same concern about the workers in Montreal as you do. We do not want to see them laid off in Dartmouth or anywhere else. We were all worried about the possibility of layoffs as a result of MTT.
We had them sitting right in the seats where you are sitting. committee member after committee member asked the same question: Will this bill cause layoffs? The witnesses all answered "no".
There is no need for any fund that you are suggesting. Any fund that you are suggesting, I submit, is for the political game you have in Montreal. It is not because the refineries will close. They say they will not close because of this bill.
Mr. Letendre: That is your opinion, ssenator.
[Translation]
Senator Nolin: I was not here when you made your presentation, but I read through your submission quickly. Are you familiar with the Canadian Council of Ministers of the Environment?
Mr. Letendre: Yes.
Senator Nolin: I am asking you this, because I will be taking it for granted that you are familiar with all of the measures adopted by this council of federal and provincial environment ministers.
In 1994, the CCME set up the Cleaner Vehicles and Fuels Task Group. As you explained quite clearly to us earlier and in your notes, Montreal is one community in Canada where refining is a very important industrial component. We need only recall the impact that the closures had 10 or 15 years ago.
Were you consulted, either by the Quebec Environment Minister or by federal or provincial environment officials? Were you involved in the activities of the Cleaner Vehicles and Fuels Task Group?
Mr. Letendre: I do not know if this answers your question or not. We are involved in a volunteer program of the Quebec Environment Department to reduce gasoline emissions. We have cooperated extensively with the Quebec Environment Department in the development of these instruments. As Ms Lorrain mentioned, Montreal has achieved dramatic results in terms of reducing carbon dioxide emissions. We have reduced our own emission levels by 60 per cent in six years, particularly by shutting down incinerators. Reducing emission levels is a concern of ours.
However, getting back to the question of the Environment Ministers, I believe they asked the Government of Canada to carry out additional studies on MMT.
Senator Nolin: You are getting ahead of me. We will proceed step by step. A group was set up to examine cleaner fuels. This was a priority identified by different ministers. Last week, a witness from Alberta explained to us how this process worked. I understand that the City of Montreal is working on a voluntary basis with officials from the Quebec Environment Department to formulate these strategies. Therefore, within the context of this group, you have had a hand in formulating the Quebec government's position. Is that correct?
Mr. Letendre: Eventually, we did.
Senator Nolin: You anticipated my question somewhat. Did your group raise the issue of substances containing MMT with the Quebec government?
Mr. Letendre: In recent weeks, we have communicated with the office of the Quebec Energy Minister. I can tell you that we have been in contact with him.
Senator Nolin: As part of the work of this voluntary group?
Mr. Letendre: No.
Senator Nolin: This issue was not raised then? Is this not a priority consideration?
Mr. Letendre: I cannot answer that question conclusively. I know that we have people on these committees working with the Quebec government at finding more ecological and environmentally friendly solutions. I do not know if the question of substances containing MMT was specifically raised in this committee. I do know that the City of Montreal and the Quebec government have been engaged in a political dialogue as far as this matter is concerned.
Senator Nolin: Is the City of Montreal not engaged in a similar dialogue with the federal government?
Mr. Letendre: That is to say that --
Senator Nolin: Have letters been exchanged or --
Mr. Letendre: I have to say that the City of Montreal was counting on the Senate's opposition to this bill. No letters have been exchanged with the government. However, there has been some communication with the leader of the Opposition in the Senate, Senator Lynch-Staunton.
To our minds, the debate on MMT is not a real environmental debate, but rather a debate between two industries: the automobile industry and the petroleum industry. If we look at where the parties stand on this issue, we note that Ontario's elected representatives and senators back this legislation because the industry is based in their province. The other provinces which do not have an automobile industry are worried about the jobs in the petroleum industry. The Senate is precisely the place where disputes are arbitrated, the forum which keeps the Canadian federation together. It must not play the government's game, which will pit one province against eight others and two territories. It comes down to a question of national unity. Is a job in Montreal as important as a job in Ontario? I am convinced that you believe it is equally important and that you will block this legislation.
[English]
The Chairman: Thank you very much for being here today and sharing with us your views.
The committee adjourned.