Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 9 - Evidence, May 15, 2001
OTTAWA, Tuesday May 15, 2001 The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill C-4, to establish a foundation to fund sustainable development technology, met this day at 4:32 p. m. to give consideration to the bill. Senator Nicholas W. Taylor (Chairman) in the Chair. [English] The Chairman: Honourable members, we have before us an old friend, Minister Ralph Goodale, to give a presentation on Bill C-4, to establish a foundation to fund sustainable development technology. As you know, this committee is not only involved with energy. Environment is also within our mandate. We will be interested in seeing how this will improve our environment. Hon. Ralph E. Goodale, Minister responsible for the Canadian Wheat Board and Minister of Natural Resources: Honourable senators, it is a pleasure to be here to talk about Bill C-4. I do appreciate the attention that the Senate is giving to what I consider to be an important topic and an important piece of proposed legislation. It is a bill to establish a foundation to fund sustainable development technology. Bill C-4 would authourize the establishment of the Canada Foundation for Sustainable Development. The foundation would administer the Sustainable Development Technology Fund, which was established, as you know, in budget 2000 at $100 million. The foundation will be at arm's-length from the government in order to provide a new vehicle for engaging Canadians and fostering the necessary long-term collaboration to tackle the enormous challenge of sustainable development. The foundation will be accountable to Parliament through its annual report, which will include an evaluation of the results achieved from the funded projects. The focus of the foundation will be on two topics, that is, climate change and clean air. These are two of the major environmental challenges that we currently face. It is possible, of course, for the fund to grow in future years with additional budgetary allocation, should the Minister of Finance so decide. It is also possible that the mandate of the foundation could be broadened at a future date to include sustainable development topics beyond climate change and clean air. However, we are starting with $100 million and those two issues as a focus. Under climate change, the foundation will concentrate on development of new technologies to slow down, arrest and eventually roll back the threats of so-called "global warming." The foundation will concentrate on technologies to reduce greenhouse gas emissions, to make carbon energy systems less carbon intensive, to increase energy efficiency and to capture, use and store carbon dioxide. Bill C-4 builds on what was Bill C-46 in the last Parliament. That bill was tabled in the 36th Parliament in response to the specific commitment made by the Minister of Finance in his budget in February 2000. That commitment was to establish a foundation to stimulate the development and demonstration of new environmental technologies, and in particular, climate change and clean air technologies. In developing this bill, the government has done extensive consultation over the last two years. The provinces, the municipalities, the private sector and academic and non-governmental organizations have been thoroughly involved. We have also discussed Bill C-4 in detail with directors who serve on various private sector foundations. The government decided that a new fund and a new foundation to administer it are needed, given the importance of climate change and air quality issues to Canadians. There are other existing mechanisms, such as the Federal Business Development Bank, the program for energy research and development, the networks of centres of excellence and the Canada Foundation for Innovation. All of these programs and agencies are making important contributions in their respective niche areas. However, none of them orient their funding to private-sector-centred partnerships to tackle problems and issues of concern to a particular sector. There is a real need to engage the private sector in working harder on climate change and air quality. An arm's-length organization is a good way to make that happen. Bill C-4 ensures that the foundation will apply the principles of good governance. The foundation will operate with a 15-person board of directors, and another 15 people will form the members of the foundation. The members will represent all the various stakeholders. They will be analogous to the shareholders of a corporation, and as such, they will scrutinize the activities of the foundation. The board of directors, and the members of the foundation, will be drawn from all regions of Canada to ensure a fair and proper balance. A minority number of each body will be appointed by the Governor-in-Council. The individuals will have experience in developing and demonstrating sustainable development technologies. They will represent the business, academic and not-for-profit communities. They will all be from outside government. I would like to provide you with some brief details on how Bill C-4 ensures the foundation's accountability. Directors will operate the foundation in an open, transparent manner as per the provisions of the bill. Public information will be available through the annual report that will be tabled in Parliament by the Minister of Natural Resources. The foundation will be subject to audits conducted by an independent, professional, private sector auditor and will operate in accordance with generally accepted accounting principles, all of which will be made available in the public domain. The annual public meeting of the foundation will provide a venue for the evaluation of the results achieved and the disclosure of information on specific funded proposals. Taken together, these various requirements will ensure prudent operation of the foundation. The foundation will give funding support for the development and demonstration of new and promising sustainable development technologies. It will also support measures to get these new tools into use quickly and as widely as possible. A brilliant new innovation is only a matter of academic interest as long as it remains on the laboratory shelf. It is important to get those technologies deployed effectively across the economy. As I mentioned earlier, the foundation will focus in particular on the funding of new and emerging climate change and clean air technology, including some in which Canada has established an early international lead, and in which further investment is likely to produce new breakthroughs and new benefits. Some committee members may be familiar with projects of this kind in their own respective regions and the environmental and economic benefits that they have brought Canadians. For example, this foundation could support technologies that reduce greenhouse gas emissions at source. I think of innovations like fuel cells or new clean coal systems. The foundation could support technology such as carbon sequestration, which allows us to capture and imprison carbon dioxide and other greenhouse gases underground. I think of work that is underway with respect to the storage of carbon dioxide in deep coal seams in Alberta. That activity was undertaken by the Alberta Research Council with financial support from the Government of Canada. I think also of the potential to develop carbon dioxide collection systems from high-emitting sources, where the CO2 would be gathered as soon as it is emitted, captured and stored in a safe and benign way. One can speculate about the impact that might have on the oil sands in Northern Alberta. The oil sands are a tremendously valuable resource. There is more oil there than in all of Saudi Arabia, but it does release greenhouse gases when it is developed. Can technology give us the answer on how to capture that CO2 at source, store it and take it out of the atmosphere? The foundation could support the development of new and alternative fuels, including ethanol, solar energy and wind power. As part of our climate change action plan for the next four to five years, it is our objective to triple ethanol production in this country. With respect to solar energy, we will have an interesting announcement to make next week about advancing that technology. There will be an important announcement on wind power in Atlantic Canada the week after next. The foundation could support energy efficiency technologies. Here again, I think of some precise examples - new-generation vehicles that will utilize new, lightweight metals and alloys that would allow them to operate in a much more energy-efficient fashion. I think of a range of new innovations with respect to energy efficiency in appliances, and new building systems for both residences and commercial buildings. The foundation could also support technologies in the field of enhanced oil recovery that reinforce our energy independence by squeezing new oil from old wells. I would refer to a project that is underway in south-eastern Saskatchewan called the Weyburn Enhanced Oil Recovery Project, undertaken by PanCanadian Petroleum. You will know that the Weyburn oil patch is a very old field. It is probably, in conventional terms, within the last year or two of its productive existence. PanCanadian is using new technology in that oil patch to enhance recovery by injecting a new recovery agent underground that drives more oil to the surface. They expect to extend the life of that oil patch by 20 to 25 years. Obviously, in terms of jobs and economic activity in Weyburn, that is very good news. The recovery agent is carbon dioxide. They will be sequestering underground, through this new technology, the equivalent of the emissions from 100,000 automobiles per year. The foundation could also support a variety of other technologies that reduce particulate matter in the air and improve air quality. Within all these areas, the foundation will concentrate support, mobilizing collaboration by partners in industry, government, the universities and not-for-profit organizations. Let me dwell on that point for a moment. When we analyze strategies for spurring new technology innovation throughout the world, we find that a common element of those strategies that work is support for a collaborative effort. The sum of these combined efforts is more than any one component part. Synergy works. In effect, Bill C-4 is about supporting synergy. It is about putting money into the pooling of skills and expertise. It will help to finance projects that bring together Canadian experts from industry, universities, various associations and other not-for-profit institutions. It will pull together team members from the whole spectrum of technology innovation, each bringing a specific competence to the table. In doing those things, the foundation will fulfil another vital need. It will use the leverage of the foundation's funds to bring new money, private sector money, into the development and demonstration of this technology. None of these objectives, Mr. Chairman, are unique, and nor are the strategies for achieving them. They are similar to those of other federal programs that occupy a specific niche in support of technology development. This foundation will complement and reinforce these efforts through its emphasis on collaboration in climate exchange and clean air technologies. It will also complement and reinforce them by bringing new money into the system and putting it to work. Innovation is paying off for Canada, but we must meet the challenges of climate change and clean air. We must maintain our momentum. We must continue to move forward in knowledge and technology. We must develop a new mix of energy forms. We must transform every part of the energy chain, from production to end-use. This bill, Mr. Chairman, will help us to reach those goals in, what I believe, is a very constructive way. Thank you. The Chairman: Mr. Minister, as you know, we love to ask questions. Are you prepared to answer them? Mr. Goodale: Yes, I am. I could remain until about 5: 30 p. m. Senator Spivak: Mr. Minister, research and development money is wonderful, and $100 million is not to be sneezed at. I know that the federal government has advanced much money for things like fuel cells. However, I am wondering why you have chosen this initiative rather than some wonderful things that have been asked of you. The Clean Air Coalition, which is made up of oil companies and environmentalists, has requested tax credit initiatives. Also, the council of ministers has received numerous proposals on energy efficiency and so forth. The Institute for Appropriate Development has a whole range of things it would like done. We must do research and I have no quarrel with the money. However, there is some urgency. Under the voluntary program, Canada is falling further and further behind in emissions control. The latest international panel is suggesting that temperatures may rise by about 10 degrees. They have revised their estimate. Our friends in the north, certainly the senators from the north, are becoming anxious. Why is the government not acting in the face of this urgency? While the foundation proposal is wonderful, why is there not more action, because every year we fall further behind in the battle against climate change? Mr. Goodale: Senator Spivak, I would make two general observations in response to your point. The first one is an offer. I would be more than happy, when an appropriate time can be arranged, to make a presentation before this committee on the government's entire plan with respect to climate change. The Sustainable Development Technology Fund is one small component of that plan, but it is a multifaceted plan, developed in consultation with over 450 Canadian experts who participated in 16 issue tables over a period of two years, to develop for federal, provincial and territorial ministers a menu of options that we might choose from in order the meet our climate change objectives. That effort is the most open, transparent, collaborative effort that any country has undertaken with respect to climate change. Many people, in both the private and public sectors at all levels, contributed a tremendous amount of intellectual capital to this exercise. We do have a wealth of options from which to choose. We were moving on a variety of initiatives even before receiving these options, and I will not go into all of that past history. However, once we received the options from the consultative process, from the issue tables process, we took two steps last year to put those into action. One was the collection of measures that were included in budget 2000. The Sustainable Development Technology Fund was one, but there were seven or eight others that totalled an investment by the Government of Canada of $625 million. The next phase of our package came last fall when, in concert with provincial counterparts, we announced the National Implementation Strategy on Climate Change and our first business plan. The Government of Canada's contribution to that business plan was a further $500 million that would allow us to move forward with another range of progressive measures. You are right to say that technology is critical. You are right to say that this bill will make a useful contribution to sustainable development technology. You are right to say that it is a modest beginning. However, there is much more to the package, specifically from budget 2000 and from the climate change action plan announced in the fall of 2000. If the honourable senators would be interested in a full, comprehensive presentation, I would be more than happy, perhaps in cooperation with my colleague, David Anderson, - because we jointly manage this set of issues - to give you the full story. The Chairman: Thank you very much. We will certainly take advantage of that. Trying to bring the three packages together will be the biggest problem. Senator Spivak: In other words, Mr. Minister, if I read you correctly, in spite of the continental energy policy, and in spite of Canada's negotiations on the Kyoto issue - which have not been the most encouraging - you are suggesting that Canada will meet its objective, and is beginning to meet its objective, despite figures to the contrary. If we wait, it will be 25 per cent, 26 per cent, or 70 per cent. Mr. Goodale: First, I appreciate your sense of urgency. Second, yes, Canada has made progress during the 1990s. I can go into the details when we have that broader presentation, but let me give you a rule-of-thumb example. Our economy grew by 30 per cent during the 1990s. Emissions grew by only 13 per cent. That is still too much, but we have begun to break the lockstep relationship between economic growth on the one hand and emissions growth on the other. The rate of growth in emissions is substantially slower now than the overall rate of growth in the economy. We believe that the measures we have put on the table will get us one-third of the way toward the achievement of our Kyoto objectives. Obviously there is more to do yet. We remain committed to those Kyoto targets, and we believe that what we have started with here, and what we will build upon in subsequent budgets and subsequent action plans, will in fact permit Canada to meet the goal that we established in Kyoto in 1997. Senator Banks: Minister, thank you for being here and for being so generous with your time. Does the government believe that there are circumstances - I presume it does - whereby certain things can best be achieved through the establishment of an arm's-length foundation? Mr. Goodale: Yes. There is no single innovation vehicle that will address all issues and all problems. We need a range of tools and vehicles. Some of them will be entirely in-house, within the government. Some of them will be entirely external, outside the government. Some will be hybrids of the two. However, I think it is important for us to have a range of tools to try to stimulate the type of action that is necessary. Senator Banks: I have a great deal of time for independent and arm's-length foundations. I am largely in favour of them, as I am with the thrust of this bill, minister. I do not think you will find anyone here quarrelling with it. I have a procedural question. Do I understand correctly that this foundation in effect already exists? Mr. Goodale: No, Senator Banks, but we have taken one interim step. Let me explain. I mentioned that the predecessor bill in the old Parliament was Bill C-46. It was introduced after the budget of February 2000. At that time, one could expect that a bill introduced reasonably early in the year would find its way through the parliamentary process and into law before the end of the next fiscal year, which would be April, 2001. The process was unfolding in that direction until we were interrupted last fall by an electoral event. You will notice that this successor bill bears a very low number, C-4. It was introduced on the very first day that Parliament was back in action after the election. However, we had effectively lost four or five months of time. The money that was set aside in budget 2000 needed to be put to work before the end of the fiscal year. Otherwise, it would lapse and then we would have to start again. In order to safeguard against that possibility, we introduced the bill as rapidly as we could to give it an early start in the new Parliament, and we wrote in transitional arrangements that would allow for the creation, if you will - I am using a term here that I do not mean as a legal term - of an interim holding company that could get into action before the end of the fiscal year, under certain limits. It could not, for example, actually adjudicate on projects, but it could get up and running. According to our legal advisers, it is possible, under the Canada Corporations Act, Part II, to actually function in that manner for the long term, and even to establish a not-for-profit corporation and go for it. We would prefer to have legislation that is specific to this purpose, rather than simply operating by budgetary pronouncements and shifting money to a not-for-profit corporation under the CCA. In our view, it would be better to have a specific foundation created by a specific piece of legislation in which you can write in all the subtleties that pertain to sustainable development. This holding company, as I will call it for want of a better expression, is up and running and holding a space. When parliamentary approval is forthcoming in the normal course, that holding company will be rolled into the creature created by Parliament. Senator Banks: I am worried about the order of that. It seems an affront - if that is not too strong a word - to Parliament that this has been done and money has been moved before parliamentary approval has been given. I am wondering if the order is appropriate. For example, who are the principals of that foundation? Are they employees of the federal government? If not, who are they? Do you think that the moving of $100 million, though it might be legal, is appropriate before Parliament has approved the bill under which the foundation will operate? Mr. Goodale: That certainly was not my preferred ordering of events. As I said, we were interrupted last year in what would have been the normal flow of events. It was important, from the point of view of the fiscal framework, to deal with this $100 million before the fiscal year ended. Otherwise, the money would no longer be available for this purpose. In order to keep the money for sustainable development purposes, we had to act during the course of the last fiscal year. We were faced with a conundrum. We followed a technique that is completely consistent with the legal principles of both the government and the Canada Corporations Act, Part II. There are precedents for other foundations being handled in this way during their early start-up phase, so we did not break new ground. We also placed certain restrictions on this "holding company." For example, it is restricted in reviewing and actually funding proposals until certain periods of time, and so forth. We wanted to ensure that it did not go too far in its holding company capacity. We contracted people with considerable private sector expertise. I am very happy to tell you who they are. They are Mr. Jim Stanford, a former chief executive officer of Petro-Canada, who has a very strong reputation in respect of environmental matters; Mr. Ken Ogilvie, who is with Pollution Probe in Toronto; Dr. David Johnston, the President of the University of Waterloo; and Dr. Alain Caillé, the Vice-Rector responsible for research at the University of Montreal. Those are the individuals who have established this holding company, if I can call it that. I think that from the personal credibility of those individuals, you could agree that we are proceeding in a prudent manner. The Chairman: I had a little trouble following your logic. You set up the holding company and then the election interfered. Mr. Goodale: It was after the election, Mr. Chairman. It was set up on March 8, 2001, by the four individuals. The Chairman: Does that not make Senator Banks' question even more relevant? What was the hurry in getting people in place if it was after the election? Mr. Goodale: If we did not have a recipient in place to receive the $100 million before the end of the fiscal year, the money would lapse. We needed a vehicle to hold the space for sustainable development. The Chairman: That is not a procedure you recommend for all ministers, is it? Mr. Goodale: I would only use it in extraordinary circumstances. We had a timing problem. Frankly, I wanted to ensure that this money was retained for the purpose for which it was first intended, which is sustainable development technology. [Translation] Senator Hervieux-Payette: Mr. Minister, this foundation was established in a rather pragmatic way. The number of foundations established by the government worries me. The Canada Foundation for Innovation could have done this work. Why put in place a whole management team to redo what the Foundation has already done, that is hire specialists and build offices? Why put in place the infrastructure of a foundation when another organization could have done it? Are there legal rules preventing the Foundation from doing some financing in the area of sustainable development? Why are we not associated with this Foundation? Can we not give it the $100 million? [English] Mr. Goodale: Hypothetically, Senator Hervieux-Payette, that would have been possible, except the mandate of the Canada Foundation for Innovation is for research infrastructure; in other words, largely bricks and mortar - building facilities in which R&D activity is undertaken. It has a broad mandate that is not specifically focused on sustainable development. It is every form of technology, and its objective is to encourage construction of physical facilities at universities or research institutions. The Sustainable Development Technology Fund is, first, focused on sustainable development. Its focus is much more precise than that of the CFI. Also, the sustainable development technology foundation will not be building laboratories and research facilities. It will be actually funding research work. The CFI has a different subject matter to deal with and a different mandate. The Sustainable Development Technology Fund is precisely focused on sustainable development, and the funding is for the research work itself, not the building in which the work gets done. [Translation] Senator Hervieux-Payette: Will the strategic plan to reach the Act's objectives be submitted to you so that there is some balance between the different forms of energy? I am thinking of research made by the Ballard group. A certain form of clean energy exists, for example the electrical car in opposition to other sources derived from oil, gas or coal. How will you make sure, given that the energy situation varies from one region to another, that this Foundation will give priority to the type of research it wishes to make and that it will remain neutral on the technological level? I say neutral in the sense that it will be able to make decisions based on Canada's best interests on the environmental level, not only in relation to the distribution of research budgets. [English] Mr. Goodale: Senator, the details of the government's expectations would be laid out in a funding agreement between the government and the foundation. Issues like balance among various subject areas, balance from a regional point of view, balance in terms of efficacy of the type of research being undertaken are addressed in the funding agreement. It is important that that kind of balance be achieved. We think the combination of the instructions that are given to the foundation through the funding agreement, together with the eminent qualifications of the people involved, will ensure that we get excellent results. Senator Hervieux-Payette: I have a question on the financing side. Have you set up guidelines on the administration costs versus the research expenditures? Mr. Goodale: Yes, our expectation is that the administration costs will be 10 per cent or less. Senator Adams: Mr. Minister, you mentioned that the foundation will have a board of directors. I live in an isolated area where there is a very difficult situation at the moment. If you set up your foundation with a board of directors, you are talking about 15 people, maybe more. Some of them are going to be on the payroll, maybe some of them not. You mentioned the four people at the top. You are talking about power generation and other similar things. In the Arctic the cost of living is high. Will that board work out of Ottawa? Mr. Goodale: The board, of course, can meet from time to time anywhere in the country. Its base of operations would be in Ottawa. I would certainly expect that as the full board of directors and the full membership of the foundation is fleshed out, a very strong effort will be made to be as inclusive as possible. You represent a region of this country that is particularly sensitive to the issue of climate change. When you see permafrost that appears to be melting, when you see glaciers apparently thinning, when you can no longer build winter roads because the ice will not sustain them, when you see Pacific marine species turning up in the Mackenzie Delta, that is all an accumulation of evidence that something is going on here that we should all be concerned about and to which we must pay attention. Given the particular impacts of climate change on Northern Canada, I would certainly hope and expect that northerners would be represented in the ranks of the foundation. I think that is a very important dimension which must not be overlooked. Senator Adams: You mentioned the news release of February 2, and you mentioned the other two ministers, David Anderson and Brian Tobin. Is that part of the same $100 million, or do you have another budget? Is it under the same system? Mr. Goodale: The three of us are involved in putting this initiative together. For my part, as Minister of Natural Resources and the chairman of the economic committee of the cabinet, since 1997, I have had the responsibility for leading the government's effort in domestic implementation of our climate change commitments. Mr. Anderson has responsibility for the establishment of overall environmental policy, which certainly includes climate change, and in particular, the international dimensions. Mr. Anderson represents Canada in all of those global negotiations. Mr. Tobin, as Minister of Industry, carries the lead responsibility for innovation in the broad sense on behalf of the Government of Canada. All three of us are collaborating here to put this together. All of our departments and officials are actively engaged. Senator Adams: Thank you. The Chairman: $100 million is a fair amount of money. You already have some directors - and the number may increase - from the private sector and from NGOs. Will they be subject to the same limits or curtailments as a cabinet minister, in the way of blind trusts and conflict-of-interest regulations? Mr. Goodale: Senator Taylor, I would not, quite frankly, anticipate exactly the same regime as would apply to a cabinet minister, but there will certainly be conflict-of-interest guidelines, and the directors would establish them in the bylaws of the foundation. The Chairman: They have not been yet, but they will be? Mr. Goodale: I am not aware if they have been established yet. I am sure they are working on them. It is probably premature at this stage, but at some point, Senator Taylor, after they have had a chance to get up and running and get a little experience under their belts, you might want to invite representatives of the foundation to come and visit with your committee. The Chairman: I am sure we will. Senator Wilson: I am interested to see that you are recommending an arm's-length approach from the government, with which I thoroughly agree. I have two questions related to that. When I read in the bill that the Governor in Council will appoint the chairman and six members, who then apparently appoint the other members, I am wondering how arm's-length it will be. My other concern is under clause 14, which talks about members being appointed to hold office during good behaviour - whatever that is - for five years. What is more troubling is that a member is eligible to be re-appointed for one or more terms. How do you get rid of someone? Most organizations have a process built in to bring in new blood on occasion, if not every five years, every ten years. How do you get rid of people who prove not to work out? Mr. Goodale: Senator, it is arm's-length. Other foundations have used this technique whereby the government names a minority number of directors and then they choose the others to constitute the majority. That experience has been very positive in terms of, first of all, the talent and the expertise that they attract and their effective functioning at arm's-length. Anybody who has encountered the Canada Foundation for Innovation will tell you that they are fiercely independent, and that really flows from the calibre of the individuals, people of impeccable credentials who can be counted upon to exercise sound but independent judgment. They are not likely to be influenced by the governmental process. In regard to getting new blood into this group, we wanted flexibility here. If there are able directors or members serving well, we did not want to artificially cut them off with a mandatory exit scenario. At the same time, there is a need, from time to time, for new blood, fresh ideas, different perspectives and so forth. I believe the way that those clauses are worded provides for the continuity, but also for change, if necessary. It is a delicate balance to get both. I recognize that no legal wording precisely captures that sentiment, but the provision does allow us to have continuity where desirable, and permit change where desirable. Members "may" be appointed; it does not say they must be. Senator Wilson: I appreciate the need for continuity. Could you point me to the clause that allows for flexibility? Subclause 14(4) clearly says: A member is eligible to be reappointed for one or more terms not exceeding five years each. Mr. Goodale: They are eligible. It does not mean that they will be. Senator Wilson: Who decides that? Mr. Goodale: In the case of those selected by the government, the Governor in Council would make that decision. In the case of those nominated by the board of directors or the members, they would make that decision. This is a permissive clause that makes reappointments possible but not mandatory. Senator Kenny: On behalf of the committee, I wish to say that we are proud of you. We hope you keep up the good work. There are ethanol plants popping up all over Ontario? Mr. Goodale: Part of our action plan is to triple the production of ethanol in Canada over the next five years. If we were to do that, we would have enough production to have 10 per cent ethanol in 25 per cent of our fuel supply. That would be a big improvement over where it is today. It makes the point that tripling only takes us to just 10 per cent ethanol in 25 per cent of fuel supply. We have a long way to go. Senator Kenny: How long will it take to get to E-85, which is where we would like to be? Mr. Goodale: I am not sure I can envisage the date today. I hope that within the mandate of this government, we can become more precise about that. One of the impediments is refuelling infrastructure and the availability of the vehicles from the manufacturing plants. Senator Kenny: My understanding is that it is just a chip, not reconfiguration. Mr. Goodale: It is a relatively simple procedure and it has improved over the last number of years. Virtually any automobile on the road today can handle E-10 or E-15. Any higher than that will require conversion. The auto manufacturers have demonstrated that they know the technology. It is doable. I am encouraging them to get a broader variety of vehicles on the road. Chrysler has a minivan in that category now. Ford has the Taurus. There are a number of others. In order to get maximum consumer penetration, there must be a broad range of selection. While we are tripling the production of ethanol, we will certainly be pushing on that other front, too. Senator Kenny: You discussed "good behaviour" with Senator Wilson. I assume you chose "good behaviour" to make them more fireproof than they would be if they were serving "at pleasure." That is a yes or no question. Mr. Goodale: That is correct. Senator Kenny: I follow your reasoning about not wanting things to lapse. You are part of a government that is committed to sustainable development. You and your colleagues are keen on the issue. What would have happened if it had lapsed? Would you have had a problem going back to cabinet and saying, "Look, this fell of the table in the last fiscal year; it is still in the Consolidated Revenue Fund, it did not evaporate, we still have the dough. Pop it back on, fellows, and let's get going?" Mr. Goodale: I do not doubt the government's resolve on sustainable development. I will undoubtedly be returning to cabinet with requests for future investments. Senator Kenny: Would you not have lost six months if you had had to do it that way? Mr. Goodale: It could have been more than that. Our great problem, senator, is that we would have lost the $100 million. That would have been calculated in the year-end surplus and would have gone against the debt under the Financial Administration Act. Senator Kenny: I follow that. Mr. Goodale: Then we would have had to get it out of another fiscal year. It was a bird in the hand. Senator Kenny: If I could draw your attention to paragraph 19(2)(c). You referred to evaluation, but with all respect, this is really wishy-washy. Why did you not set aside a certain amount for evaluation? Why do you not require that everything be evaluated and that the funding for it be substantial? Mr. Goodale: Paragraph 19(2)(c) refers to the agreement that the foundation will enter into with the grantee. We are requiring an evaluation there. There is also an evaluation requirement in the funding agreement, which is an obligation the foundation would place upon a grantee. At another level, the government places an obligation on the foundation, and a portion of the 10 per cent funding for administration would be used to conduct those evaluations. Senator Kenny: I wonder if you would be receptive to an amendment that would toughen up the evaluation process, so that we had clear funds set aside for that? We need to be certain that we would not be reinventing the wheel. I am also concerned about the lack of transparency. One of the beauties of a foundation is that it can be more transparent than a government department. Where is the transparency here? Where is the assurance that all of us will be able to observe the operation on a day-to-day basis? We need two things as citizens: a regular evaluation of a complete nature, and transparency that guarantees us access in understanding the decisions that this group is making. If we do not understand the decisions, if we cannot see the evaluations, and if we are not sure that they are even taking place, then we do not know whether this is working well or not. I submit that you could find situations where errors are repeated year after year. Mr. Goodale: I certainly do not want the repetition of errors, Senator Kenny, but rather I want the repetition of success stories. I understand your point. Regarding information to the public, the foundation will be required to produce an annual report. That report will be tabled in Parliament. The report will, of course, include the independent audit, which will be conducted by a private sector accounting firm in accordance with generally accepted accounting principles. The foundation will be required to hold an annual meeting, where results can be evaluated and there can be disclosure of specific projects that they have undertaken. It seems to me that the transparency exists and the accountability is there. Also, it would be possible, from time to time, for this committee, or another appropriate vehicle of the Senate, to call the foundation to appear before it. Senator Kenny: I have seen some progressive legislation recently that required the disclosure and the evaluation of each grant. If each grant is disclosed to the public, so that everyone knows about it, and if each grant is evaluated, then you do get a good picture, rather than waiting until year-end. How would you feel about something like that? Mr. Goodale: Senator Kenny, I believe that is already in place within the funding agreement - disclosure of expenditures from the $100 million. It is required that every penny be accounted for - where you have provided money to projects, what they have done with it, and what results were obtained. Senator Kenny: Are the expenditures announced when the project manager receives the money? Mr. Goodale: Yes, for the public projects, they are announced. The Chairman: It may well be that we will have more questions when we have the Auditor General here on June 29. Senator Finnerty: Actually, Senator Kenny touched on a portion of my question: are you accountable for this foundation to the Auditor General? Mr. Goodale: The departments that disburse the money to the foundation are obviously accountable to the Auditor General. In this case, it is the Department of the Environment and the Department of Natural Resources. There will be $50 million from the A-base of NRCan and $50 million from the A-base of Environment Canada. Those departments are responsible to the Auditor General. The auditing of the foundation will be done by a private sector auditor. I presume that it will be one of the well-known national firms that would bring their own professional expertise to the process. Senator Banks: Many foundations and crown corporations are subject to sections 1 to 5 of the Financial Administration Act, and they require a special examination by the Auditor General every five years. Is this foundation susceptible to that, or has it been excluded for a reason? Mr. Goodale: Those sections would not apply in this case. The Chairman: Is nuclear energy considered sustainable development? Mr. Goodale: In the broadest sense, Senator Taylor, it would be. It is not covered by this bill. With every fully functioning CANDU reactor in Canada today, or anywhere in the word, and assuming that CANDU is replacing coal, the saving in terms of greenhouse gas emissions is five megatons per year. The fully-up-and-running fleet in Ontario is 20, under Ontario Power Generation. Not all of them are functioning at the moment. That is one of reasons why there has been an uptick in the emissions in Ontario over the last three to four years. However, if they were all fully functioning, those CANDUs would save over 100 megatons of carbon dioxide from release into the air. The Chairman: Thank you, Mr. Goodale, for appearing before us today. Mr. Goodale: Thank you, senators, for the opportunity. The committee adjourned.