Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 3 - Evidence - June 6, 2006
OTTAWA, Tuesday, June 6, 2006
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:40 p.m. to review the Canadian Environmental Protection Act (1999, c. 33) pursuant to Section 343(1) of the said act.
Senator Tommy Banks (Chairman) in the chair.
[English]
The Chairman: Over the next few months, this committee will be studying, as mandated by the act, the Canadian Environmental Protection Act, with a view to finding out its efficacy and how it is doing in general. The first meetings are for the purpose of better informing the committee on which aspects of CEPA we might wish to look at. CEPA is a broad and deep document and we are seeking instruction from all interested parties, including our guests today, to assist us in determining exactly where we will go with that study.
Appearing before the committee today is Ms. Nancy Coulas, Director of Environmental Policy for the Canadian Manufacturers and Exporters; and Mr. Brian Maynard, Vice-President, Stewardship and Public Affairs, from the Canadian Association of Petroleum Producers. Welcome back, Mr. Maynard; we have seen you before. There is also Shannon Coombs, Executive Director of the Canadian Consumer Specialty Products Association; and Mr. Gordon Lloyd, Vice-President, Technical Affairs, of the Canadian Chemical Producers' Association. We are inviting each of you ladies and gentlemen to let us know what you think about CEPA and what you think we ought to look at with respect to it.
Nancy Coulas, Director, Environmental Policy, Canadian Manufacturers and Exporters: First, thank you for the opportunity to appear before you today to provide the views of my organization on the review of the Canadian Environmental Protection Act.
Canadian Manufacturers and Exporters, or CME, has about 1,500 members across Canada, representing virtually every industrial sector: general manufacturing, automobile manufacturing, chemical producers, petroleum products, mining, forestry, steel, aluminum, as well as companies from the services sector.
CME has a National Environmental Quality Committee consisting of senior environmental professionals from about 300 companies across Canada. I am pleased today to present the views of the National Environmental Quality Committee and CME.
Before I begin to discuss the CEPA legislation, I would like to give you a brief update on the status of manufacturing in Canada. Manufacturing is the single largest business sector in Canada. It accounts directly for 18 per cent of Canada's GDP. About 2.1 million Canadians are employed in manufacturing, with wage levels 22 per cent above the national average. Another interesting statistic is that the manufacturing sector has reduced greenhouse gas emissions by 7.4 per cent below 1990 levels.
The manufacturing sector faces strategic challenges, including a high dollar, rising business costs and global competition, among many others. CME member companies have always believed that improved environmental performance goes hand in hand with improving competitiveness when it is done in a sustainable manner.
I would like to outline our concerns with the upcoming review of the Canadian Environmental Protection Act.
On the scope of the review, CME believes that the government should not undertake a full rewrite of the legislation as per the last review in 1999. Many of the provisions have not been in place long enough to determine how effective they are. For example, the Domestic Substances List categorization is not yet complete and changing the provisions during this exercise would be difficult. We would also not support looking at the European REACH proposal for a new CEPA, as has been proposed by some groups. That would require a full review of CEPA and we believe it would take years to implement this approach. I support my other colleagues here today who have done more research on the REACH program.
In addition, CME members are still ``learning'' CEPA 1999 and trying to use it to improve their environmental performance. Any major changes at this point would take CME members away from the work of CEPA and place their attention on the review. This would be counterproductive to environmental improvement. We do, however, believe that there are some specific areas of CEPA that could be improved. These are as follows.
The definition of ``substance'' under CEPA 1999 is extremely broad and, in particular for our sector, includes ``any manufactured item that is formed into a specific physical shape or design during manufacture and has, for its final use, a function or functions dependent in whole or in part in its shape or design.'' We believe that that definition needs to be re-examined because of the uncertainty it brings to Canadian manufacturers.
Next is the stigma of the toxics label. The labelling of substances as ``toxic'' when they meet the criteria as per section 64 of CEPA and placing them on Schedule 1 create an inappropriate stigma. The term ``toxic'' in everyday English rings alarm bells that a substance that is in use will harm our health and should be immediately banned.
The use of the word ``toxic'' under CEPA is scientific. It looks at toxicity and risks to organisms as well as humans. In fact, many substances on Schedule 1 are being managed and can be used safely and effectively. We believe there are ways to address this issue. CME would be happy to work with the government, environmental groups and other industry groups to examine these ways.
With respect to air issues, CME wrote to the government in 2005 expressing reservations about declaring carbon dioxide toxic under CEPA. We believe CEPA is not the place to deal with the issue of climate change. Climate change has far-reaching economic, energy, health and environmental considerations, not just in Canada but around the world. As we noted earlier in this submission, manufacturers have done a great deal to reduce greenhouse gas emissions.
We would also prefer not to see the issue of clean air legislated under CEPA until more information is generated on major air pollution sources. Clean air and smog are complex economic, energy, health and environmental issues that must be dealt with on a countrywide basis, including by all sectors of the economy and in conjunction with other jurisdictions, such as the provinces and the United States.
With respect to New Substances Notification Regulations, CME has heard several members describe the regulations as a barrier to competitiveness, with no environmental justification. For example, companies go through an intensive and expensive procedure to establish that a substance is safe to use in Canada when at the same time it is widely used in other countries, including the United States. We believe that CEPA should be amended to allow for the recognition of the assessment of substances by other jurisdictions, over and above the United States.
In addition, the issue of user fees under the New Substances Notification Regulations needs to be examined. The User Fees Act came into force in 2004 and states that a private benefit would justify cost recovery. This was deemed to be the case for NSN Regulations, which we believe is unfair. When a company goes through the NSN process to introduce a new substance in Canada, it must pay for the full cost of gathering data, doing scientific tests and providing information to the government. On top of that, the company pays a user fee for the government to do its work. While that may sound fair, all industries in Canada and other countries are then free to commercialize products that contain that new substance, not just the company going through and paying for the process. We believe that should not be considered a private benefit and that it is a hindrance to competitiveness for Canadian manufacturers. Environment Canada has made improvements to the NSN Regulations; however, we believe further improvements could be made.
With respect to State of Environment Reporting, CME has been a strong supporter of environmental reporting in Canada in the past and is currently. We must know exactly where we should be concentrating valuable resources in Canada to optimize our overall environmental performance as a country.
Thank you again for the opportunity to provide the views of CME members on the review of CEPA.
Brian Maynard, Vice-President, Stewardship and Public Affairs, Canadian Association of Petroleum Producers: I appreciate the opportunity today to appear before the committee as it begins a review of the Canadian Environmental Protection Act, 1999. I am appearing on behalf of the Canadian Association of Petroleum Producers, or CAPP, as it is known. CAPP represents 150 companies that explore for, develop and produce natural gas, natural gas liquids, crude oil, oil sands and elemental sulphur throughout Canada. CAPP member companies produce more than 95 per cent of Canada's natural gas and crude oil. CAPP also has 130 associate members who provide a wide range of services that support the upstream crude oil and natural gas industry. Together, these members and associate members are an important part of a $100-billion-a-year national industry that affects the livelihoods of more than half a million Canadians.
I understand that the main objective for the committee's initial meetings is to receive advice from government officials, industry and non-government organizations as to where the committee should focus its review of CEPA. We have also provided such advice through a written submission to the House Standing Committee on Environment and Sustainable Development, which has also undertaken a review of CEPA.
We advocate a focused as opposed to a fundamental review of CEPA. The act has only been functioning for a limited period since the extensive parliamentary review of the original act. CEPA 1999 has been operating for insufficient time for implementation and detailed testing of the previous review amendments.
We believe there is a general consensus that a focused — not comprehensive — review is required, and we also understand that Environment Canada and Health Canada support this view.
We support the consideration and review of the appropriateness of the use of the word ``toxic'' in the act. Labelling substances as toxic when they meet the section 64 criteria of CEPA and are placed on Schedule 1 creates, in some cases, an inappropriate stigma. The statutory definition of ``toxic'' and the public's understanding of that term are not always aligned. The public often associates ``toxic'' substances with those that are subject to bans and phase-outs under the act. For substances not subject to bans or phase-outs, the term ``toxic'' can lead to confusion. If changes are made, it is important that the term ``toxic'' be removed completely from Part V of CEPA and from all related operational provisions in the act.
One issue of concern for our industry is around capacity. CAPP supports additional monitoring and regular reporting of health and environmental trends; for example, the State of Environment and State of Health reports by Environment Canada and Health Canada respectively. To achieve this, it is critical that departments with CEPA responsibilities have reasonable and appropriate budgets for science-related activities to meet those responsibilities, now and into the future. That means adequate resources to undertake science, surveillance, monitoring and reporting.
CAPP encourages this committee and the House committee to ensure any revisions to CEPA in this review meet the objectives of the Smart Regulation Initiative and are in keeping with goals of increased federal department and provincial-territorial collaboration.
CAPP is also hopeful that concerns regarding the complexity of reporting for the National Pollutant Release Inventory, or NPRI, will be addressed in ongoing working group activities. If not, we would expect those concerns to be addressed in the CEPA review process. Our members do not object to reporting, but are frustrated by yearly changes to reporting rules and requirements.
CAPP supports a 10-year review period for the act to allow for implementation and appropriate testing of review amendments. The current cycle of five years does not provide adequate time for implementation and testing and is too demanding on the time and resources of all engaged stakeholders. We believe there is broad support for a longer review period.
I would like to thank the committee for the opportunity to share our perspectives, and at the appropriate time I will pleased to take any questions you may have, and, hopefully, answer them.
Shannon Coombs, Executive Director, Canadian Consumer Specialty Products Association: It is a pleasure to be here today to discuss two key issues for our industry sector pertaining to your review of the Canadian Environmental Protection Act. I am here today representing CCSPA, but also FPIC, the Formulated Products Industry Coalition. The reason is that we share the same two key issues that I will be discussing today.
FPIC is a unique group of 15 trade associations formed in 2001 due to the Food and Drugs Act being subject to CEPA. The association that I represent, CCSPA, is a national trade association of 40 member companies across Canada, collectively a $20-billion industry, and we directly employ 12,000 people.
Our companies manufacture, process, package and distribute consumer, industrial and institutional specialty products, such as soaps and detergents. I see everyone has a copy of our one-pager, our glossy, where we have a nice picture of all the products that we represent. For example, there are soaps and detergents like Tide and Sunlight; pest control products such as Raid, ant traps; aerosols, hard surface disinfectants such as Comet and Lysol; deodorizers and automotive chemicals.
FPIC member companies provide food, personal care products, household cleaners, cosmetics, medical devices and pharmaceuticals to Canadians. Collectively, this group represents over 750 member companies, comprising a $66- billion-a-year industry and employing 375,000 Canadians. A list of all the associations that belong to FPIC is included in our submission.
Why are we here today before you, and why are substances in the Food and Drugs Act captured under CEPA? CEPA is the legislation that governs new and existing chemical substances in Canada. In 1999, parliamentarians requested that CEPA be the safety net for all environmental assessments of substances. In section 81 of the act, there is a requirement for other acts that have pre-market assessments to meet or exceed CEPA. Other acts had two years to meet that requirement and, if they did, they were scheduled for exemption under CEPA. If they did not meet the requirements, then CEPA would be the act to govern environmental assessments. Other acts, such as the Seeds Act, Fertilizer Act and the Pest Control Products Act met CEPA's requirements and were scheduled for exemption. The Food and Drugs Act did not meet the requirements of CEPA, and therefore environmental assessments for substances in the Food and Drugs Act are subject to CEPA's regulations, the New Substance Notification Regulations.
We have been working under that regime for the past five years and are satisfied that CEPA is the most appropriate legislative authority for these substances. However, when Food and Drugs Act substances were captured under CEPA, it left a list of approximately 9,000 substances that have been used safely and effectively by Canadians for almost 20 years in limbo because they are considered new, not existing, under the act, and this needs to be remedied. I will refer to these 9,000-plus substances in the rest of my presentation as the In Commerce List.
Since most of our member companies have never been subject to anything other than the rigorous pre-market assessments and notifications under the Food and Drugs Act, being subject to CEPA was new and challenging. Despite a learning curve, CCSPA and FPIC have recognized that CEPA systems and regulations provide predictable and rigorous submissions reviews to member companies and protection to Canadians and their environment.
I know you will hear numerous issues about the act from other stakeholders, but CCSPA and FPIC are requesting the committee consider two key recommendations for improvements that would provide for legislative clarity, which only Parliament, including you senators, can provide.
They are as follows: We would like the In Commerce List to be acknowledged as a list of existing substances under the law by creating a provision in CEPA to recognize them as such.
You might be asking yourselves, what is on the In Commerce List? It is quite a range of different substances. There are pharmaceutical actives, cosmetic ingredients such as extracts, surfactants, food colourings, flavourings, lard, starch, kiwi essence, oil of lemon. Those are the types of substances. Why do we wish to have them treated as existing? The substances and the products have provided and continue to provide benefits to Canadians. They have been in commerce for almost 20 years, and clearly they are not new, but existing; it makes sense.
To ensure that there is a mechanism for the In Commerce List to be treated in the same way as existing substances on the Domestic Substances List, we are suggesting that the government categorize the In Commerce List and then, if needed, provide screening-level risk assessments. I believe that the officials provided a briefing about the categorization and screening of the Domestic Substances List to you a few weeks ago. Treating all existing substances the same also makes sense.
I would like to turn to the issue of the use and meaning of the term ``toxic'' in the legislation. CCSPA and FPIC request that the committee consider removing the word ``toxic'' from the legislation so that there is clarity and understanding with respect to how substances are assessed and managed under the act. If the risk assessment of a substance meets the definition, it is placed on Schedule 1, and then some type of management for its particular use will often be invoked.
As stated in our submission, the challenge is the misunderstanding of the term ``CEPA toxic.'' CEPA toxic substances are interpreted as being intrinsically toxic, that is, poisonous and/or lethal. I can give some examples of substances on Schedule 1 that cause confusion. CFCs are on Schedule 1. They destroy atmospheric ozone. They are toxic to the environment, but not to humans. For example, they are still used in asthma inhalers. Ammonia is on Schedule 1, but it is only CEPA toxic in the environment from ammonia traces found in wastewater effluent. This substance is used in numerous other applications such as fertilizer and glass cleaners, which have become targets because of the listing and the misinterpretation. Carbon dioxide is also on Schedule 1 so that greenhouse gases can be managed, but it is not intrinsically toxic, as we all rely on it to breathe.
Clearly, the challenge around the term ``CEPA toxic'' is the misunderstanding that prevails and the actions that stem from it. Groups target products that may contain the substance, apply the label of CEPA toxic to all uses of the substance, and alert Canadians to a risk that is not real. There have also been instances of provincial authorities making procurement statements regarding CEPA toxic substances that the products cannot be purchased if they contain Schedule 1 substances. If the term is removed, it will provide clarity in the act, and we believe it will also increase the act's credibility.
Is there anything that can be done better? Always. CEPA is a huge piece of legislation. Embedded in the act are the pillars of the precautionary approach: science-based decision making, sustainable development, risk management, and pollution prevention. Increasing communication about the successes of this act and how it provides protection for Canadians is in everyone's best interest. For example, the categorization and screening of the Domestic Substances List is a made-in-Canada program. While other OECD countries have their own programs in place, Canada is in the lead. This September, the categorization results will be completed and posted. This is a major achievement, and one that Canada should know about.
I will be happy to answer any questions.
The Chairman: I am sure there will be some.
Gordon Lloyd, Vice-President, Technical Affairs, Canadian Chemical Producers' Association: I would like to thank the committee for this early opportunity for the Canadian Chemical Producers' Association to present to you on the CEPA review. I will be talking about some specific issues that we have identified in a fairly detailed brief, of which you have a copy. It is the same brief we sent to the House of Commons committee that is looking at this.
From CCPA's perspective, we want to support our members' continuous improvement in environmental and health performance. That improvement is primarily driven by Responsible Care, which I think most of you have heard of, and I will talk about it in a moment, but we also need supportive and effective legislation. Responsible Care is a set of initiatives started by the Canadian Chemical Producers' Association in the 1980s to meet public concerns about chemicals and their impact. It has been a real Canadian success story, and one that has gone international. It has now spread to 52 countries.
In Canada, Responsible Care means that the 65 CCPA member companies operating across the country make safeguarding their employees, the environment and their neighbours a primary concern. An example of the success that we have had in Responsible Care is the charts that I believe have been distributed to you as part of my presentation. These show the progress that our members have made in reducing emissions overall, reducing emissions for greenhouse gases, for smog-producing volatile organic compounds, and for nitrous oxides. Overall, emissions per unit of output are down by 85 per cent since 1992.
The charts you have are but a fairly thin slice of a major report we produce every year entitled ``Reducing Emissions,'' which is available on our website.
We believe we have a good track record, but we do want to do better. We are looking for legislation that will be effective and supportive in helping us to move further in that direction. We raise a number of issues, 10 specifically, in the submission we provided, and we would like to see them included in the review of CEPA.
First, as others have said, we would like the review to be a focused one and not a fundamental revisit of the legislation. We do not think that the limited experience with CEPA 1999 justifies a major rewrite at this time and it would probably be counterproductive to moving on with implementation of the legislation. One specific example of this is the DSL categorization and screening initiative that Ms. Coombs talked to you about and, I believe, officials talked to you about earlier. This has been a massive, six-year effort by government.
The Chairman: For the benefit of everybody watching, please tell us what DSL is.
Mr. Lloyd: DSL is the Domestic Substances List, of some 23,000 substances that we have in commerce in Canada right now. That is being reviewed to see whether there are some that need some assessment work in categorization, and then there is a requirement to do that assessment work subsequently, which is referred to as screening.
The categorization, which is the first part of this, has been a massive, six-year effort by government and stakeholders. It is leading edge. It is the first phase, which will be completed in September. The second stage will then kick in, whereby risk assessments will be done to see if risk management is required for any of these substances.
We would urge the committee to see value in bringing both categorization and screening risk assessments to completion and not changing this initiative in midstream.
Our second point is that we believe there should be a review of the prior government's decision to use Part V, the toxics provisions of CEPA, to manage climate change. We believe there are other provision in CEPA — the international air pollution provisions, for example — that could be used, or climate change could be managed under clean air initiatives, such as a clean air act, as the government has announced. However, greenhouse gases are a staple of life and should not be on a list of toxic substances or managed under Part V.
An additional issue that we would like the CEPA review to look at is the new government's commitment to improving Canada's air quality, which CCPA supports. We think it is a fundamentally important initiative. We believe it could be done either under a clean air act or under CEPA provisions outside of Part V, and we could support either approach. The most straightforward approach might be to use CEPA, although this could require some amendments. This issue should be addressed in the review, particularly to ensure that there are no legislative overlaps. It would be problematic if the same issue could be dealt with both under the CEPA legislation and clean air legislation.
Also, a clean air act will require working more closely with the provinces, and the committee should look at whether the equivalency provisions currently in CEPA would hinder this. I do not believe there have been any equivalency provisions signed with the provinces under CEPA 1999 and that the one that exists with Alberta was in place before then. I also believe that the way the provisions are written stands in the way of the type of cooperative agreements that the federal government needs to have with the provinces. We hope that subject will be looked at.
Another issue we would like to raise, which others have raised, is the term ``toxics.'' We believe that term creates unnecessary stigma, in some instances, for substances that are regulated under Part V. There is a wide range of risk management options under Part V, aside from bans and phase-outs, with which stigmas are more normally and colloquially associated. One option would be to remove the word ``toxic'' from the act and leave a reference to substances that meet the criteria of section 64, which allows them to be put on Schedule 1 where they are regulated.
Another technical issue that CCPA would like to see addressed concerns so-called limits of quantification, LOQs. CEPA requires that limits of quantification be established for all substances that will be subject to virtual elimination. This is the case even if they are present only in irrelevant, trace-contaminant levels in products. We think that is impractical and something of a waste of resources. The requirement to establish these limits of quantification should be only in circumstances where there is an actual concern, not in all cases.
A similar problem arose when the international community agreed to the POPs convention in Stockholm, POPs being persistent organic pollutants. They came up with language that we believe could be incorporated into CEPA to address this.
This is perhaps something of an academic concern at the moment because there are no substances on the virtual elimination list, but I think that will change, and once it does, we should update the act as I described.
We also believe the administrative provisions of the act need to be strengthened so that Environment Canada and Health Canada actually stick to government rules and requirements. For example, we believe that the user fees under the New Substance Notification Regulations that Ms. Coulas talked about are clearly inconsistent with the User Fees Act passed by the last Parliament, which legislation originated as a private member's bill. Yet Environment Canada and Health Canada are basically ignoring that legislation.
We also believe that we need better information to make better environment and health decisions. The act should require that regular State of the Environment and State of Health reporting be provided by those departments. This will require additional resources that should be provided to the departments. In particular, we think that Health Canada should get resources to deal with bio-monitoring, population surveillance work and the communication of the results that that will involve.
Another issue we would like to see addressed is the time frame for CEPA review. Like others, we think five years is too short. Ten years would make more sense.
Another point is that the ability of the legislation to recognize assessments of other jurisdictions, particularly for new substances, should probably be built in. Environment Canada is fully aware, and has acknowledged, that Australia has such provisions. We hope that the legislative review will look at what Australia has done in this area and try to incorporate that modernization in CEPA. It is important to note that many of these issues are international. They require international cooperation and sharing and the review should consider providing that flexibility in CEPA.
Finally, we would like to recommend that the CEPA review be used as an opportunity to explore the issue of differentiating more efficiently and effectively between good and poor environmental performers and using the act to support the use of industry responsible programs and encourage companies that perform well more than is currently the case.
Those are the 10 areas that CCPA believes would be worth looking at in a focused review. I would be pleased to answer you questions. I thank you for the opportunity to present our views.
Senator Cochrane: Welcome. You have given us quite a lot of information. You all have the word ``toxic'' on your list, saying that we should eliminate that in so many areas. As of November 30, 2005, there were 79 toxic substances listed.
I would like you to give me a sense of the scope of the problem. Of the membership you represent, what percentage relies on one or more substances that appear on the list? Give us a sense of the number of substances that your members object to having on the list. If the term ``toxic'' is to remain in CEPA, how would you like to see that definition modified? Please be specific.
Ms. Coombs: With respect to changing the definition, we are trying to reduce the stigma attached to the designation. Once a substance is added to Schedule 1, it is referred to as being on the list of toxics substances. It does not relate to the risk identified through the risk assessment for that particular substance. For example, I mentioned ammonia. Ammonia is listed on Schedule 1. There is no context provided for the risk assessment that was done on a very particular use of that substance. As a result, it is being misinterpreted by various groups that post lists on their websites, for example, saying: ``Do not use these substances. Ammonia, found in glass cleaner, do not use.''
That is the issue we are trying to address.
We would be looking for something that was presented in Parliament in the last budget bill, changing the section in Part V to address not only the toxic issue, but also how greenhouse gases would be managed under CEPA. We are looking for assessment and management of substances, that is, calling Part V what it is.
It is an assessment of a substance and its management once it is placed on Schedule 1, so the intent of the act is clear.
Senator Cochrane: Should we change the Schedule 1?
Ms. Coombs: I believe we have to change the name. The substance is put on the list, but there is no context as to how that substance was assessed, the risk that was assessed, where it should be reduced and how it is being appropriately managed.
Mr. Lloyd: We put on seminars for industry people on CEPA, and the reaction of those in purchasing departments is, ``Oh, it is on Schedule 1 — toxic. We do not want to buy it any more.'' That is not why it has been put on the list. It has been put on the list so the government can manage it in whatever form is appropriate. Purchasing departments, for example, do not recognize that. If it is toxic it must be bad, so they do not want to buy it, whereas if it was referred to as a list of substances to be managed, we do not think it would have that same negative connotation. It is not an appropriate connotation in many cases.
Our members have no problem with the notion that the 79 substances on that schedule do have to be managed by the government, and regulations are fine by them. However, the scope of what those regulations are calling for is not a signal that a substance should not be bought — for example, ammonia in a cleaning solution, as Ms. Coombs said.
We think the label creates confusion. The departments have also come to that conclusion. The solution put forward in the budget bill of the last government was probably good language. Their lawyers obviously looked at it. One of the issues is whether changing this language threatens the constitutionality of the federal government's jurisdiction in environmental matters. A Quebec Hydro case decided on the validity of the federal government presence based on the current wording. You do not want to mess with that without thinking carefully. They did think about it and decided the simplest way was to make a reference to the actual provision in section 64 that deals with the risk assessment done to justify putting something on this list of substances to be regulated. That language is appropriate.
As Mr. Maynard said, it should be changed everywhere in Part V if they want to do it that way.
Senator Cochrane: You have all brought us good recommendations, for which we are gratefully appreciative.
This question is for Ms. Coulas of the Canadian Manufacturers & Exporters. You were talking about the cost. When a company goes through the NSN process to introduce a new substance to Canada, it must pay the full costs of gathering data, doing scientific tests and providing the information to the government. On top of that, you talked about the company paying a user fee for the government to do its work.
Can you tell me just how much it has cost? What you are talking about here has to do with competition, and it is not fair.
Ms. Coulas: It could be in the hundreds of thousands of dollars. A month or two ago, we had a case of a company that manufactures paints, and it was close to deciding not to produce the substance and close down one factory because of the expense and time this process takes. I believe it was something like six months. The substance that they were trying to get approval to use in Canada is widely used in the United States. I suppose their alternative would be to find a company in the United States to produce this particular product. The cost was in the hundreds of thousands of dollars.
Senator Cochrane: When going through these studies, do you look at other countries to see if they have done them? Do you share information of any kind?
Ms. Coulas: That is difficult to answer. My experience is that it has only been companies based in Canada, so they would not be able to talk about experiences with other countries. I do not have that knowledge.
The Chairman: It is a gamble when you are doing development of anything, but when the company achieves approval at whatever level, at the company's cost, one assumes that a patent would come into place. When you say that other companies are then free to use that development, is that the case?
Ms. Coulas: They are free to use that substance.
The Chairman: It is not free, is it? Does the proprietary interest not charge a cost to subsequent users?
Ms. Coulas: Not to my knowledge.
The Chairman: Do they not?
Ms. Coulas: After having done all that work, any other company could use that particular substance.
The Chairman: Do you not get a patent for it?
Senator Cochrane: Is it free?
Ms. Coulas: Yes.
The Chairman: That is interesting.
Mr. Lloyd: A company could choose to obtain a patent, I believe, but that is not the way things normally work in the chemical industry. Sometimes that applies. The substance goes on the Domestic Substances List, and once there, if you had a patent, you would have a certain protection. However, patents are completely outside of how CEPA works. Once it is on the Domestic Substances List, anybody can bring it in, use it and basically get a free ride on the testing you have done.
Canadian industry has not objected to that approach. It is a question of ``you win sometimes and I win sometimes,'' and it works.
The Chairman: You could also pre-empt the market if you get there first.
Mr. Lloyd: If you get there first, you will have a leg up on the market. You would not pre-empt it, in the sense that in some jurisdictions, you have exclusivity through being on a list. However, that is not how it works here. If you are my competitor and I get something on the Domestic Substances List, you can come along and piggyback on my approach, and we do not object to that. What we object to is that Environment Canada charges us a user fee for the work it does in looking at the information we provide. The user fee legislation makes it clear that you are supposed to get a private benefit if the government charges such a fee. In this case, because our system works so that you can get a free ride on my listing and I can get a free ride on yours, there is no such private benefit. Environment Canada at one point argued there was some kind of collective benefit to the entire chemical industry. Whether that is true or not, that concept is not recognized in the User Fees Act. They do not have a basis for continuing to charge one, in my view at least.
Senator Cochrane: What would you like to see?
Mr. Lloyd: We would like to see them stop charging user fees, but we also think their program is a good one. We would like to see reallocations within Environment Canada or additional funding so that their program does not suffer. However, we do not feel it is appropriate that there be user fees attached to that particular program.
Senator Cochrane: Mr. Lloyd, I am intrigued by your phrase ``Responsible Care initiative.'' The cuts in emissions that your members have made are significant, namely, 85 per cent since 1992. Could you give us the context and more detail on it?
Mr. Lloyd: Environment Canada has a mechanism for tracking releases called the National Pollutant Release Inventory. Our association thought this was a good idea even before Environment Canada imposed it. We actually came up with this model as a requirement of membership. Under Responsible Care, they have to report on what they emit. We have always had a longer list on NPRI. We use a public consultation process, both at the local plant level and at a national level, to look at what we should add. We have tracked, for example, our greenhouse gases since 1992, so we have a pretty good handle on what we are doing on climate change issues. We have made this information public. We have also had our members report not only on what they have emitted in the past, but also on what their projections are. If you are a neighbour of a chemical plant, you want to know more about what happens next year than what happened last year. We have reviewed this report through our national advisory committee that has environmental groups on it. We also have a national memorandum of understanding that has been around for over 10 years now, and is going into its third renewal, with the federal government, Ontario and Alberta. British Columbia is coming on board for the upcoming renewal and Quebec is an observer. Environmental groups are also participating in it.
We review these results there. Where people like what they see, they do not usually talk about it much. When there are upward blips, the companies are asked to explain them and what they are doing about them. That has created a dynamic to reduce emissions. That is consistent with what we want to do in continuous improvement under Responsible Care.
Senator Cochrane: How many companies are you talking about?
Mr. Lloyd: We currently have 65 member companies and it is normally in that range, give or take five.
Senator Cochrane: What motivated them, or what motivated all of you?
Mr. Lloyd: This started before I joined the association. This is speculation, but I think it was felt that the chemical industry needed to do a better job to keep its licence to operate. There were concerns about pollution and about communities not wanting chemical plants. There was a sense that we were secretive and would not tell people what we were doing and that that had to change if we were to continue to have our licence to operate. Some ground-breaking work by Canadian CEOs and the then president of our association, John Bélanger, who won a United Nations award for this, led to Responsible Care being developed here. As I said, it has now spread to over 50 countries. In recent international environmental discussions, there is a strategic approach to international chemicals management called SAICM that was agreed to globally. Responsible Care is recognized in that as part of the solution and something to be encouraged.
The Chairman: Before I go to the next questioner, would you refer to the graphs you have shown us, Mr. Lloyd, the one that says emissions from member organizations? Are those greenhouse gas emissions, essentially, carbon dioxide and the others?
Mr. Lloyd: On the one that refers to our emissions overall, figure 1.1, we have actually stripped out greenhouse gases because they would dwarf everything else; they are so huge in comparison. That is without our greenhouse gases.
The Chairman: These are emissions of what? Do they include effluent?
Mr. Lloyd: Yes. We track our emissions to water, which has basically disappeared; to air, which is still our largest source of emissions; and to waste and recoverables. It is everything. We have a list of about 500 chemicals now that we ask our members to report on.
The Chairman: The GHG, then, in the other graph, are the global warming potentials. As you said, they are stripped out of the first emissions graph and show up in the second?
Mr. Lloyd: Yes, because they would dwarf the first one. I think it is worth noting the global warming potential on the graph. You will see a significant drop, say, between 1996 and 1998, 1999. That was largely due to one company, DuPont, coming up with a new process for making nylon. It was a technical breakthrough that they applied to their nylon plants in Canada and around the world and it had a big impact. One of the points that industry has made on climate change is that we will move forward through technological improvements. Everyone would love to know when the next breakthrough will come; companies are always looking for those. Sometimes they come through, sometimes they do not.
However, when you do get one, you get an incredible bang for your buck. That almost drop-off-the-cliff slope on that chart is largely due to what DuPont did.
Senator Cochrane: What happened with the drop in the early 1990s? I notice there was a huge drop then.
The Chairman: Senator Cochrane is talking about the emissions, the first graph.
Mr. Lloyd: This is from memory, but I believe there were some sulphur dioxide emissions or water emissions from a couple of our plants in Quebec that were causing a problem and they found a way to get off the water system. They were significant volumes, and that resulted in that drop.
The Chairman: Senator Spivak has a temporary hearing problem, and is therefore reading your responses on her computer. There is a slight delay between your speaking and her hearing you, in effect.
Senator Spivak: The first thing I would like to ask — and this is not to be answered here — is if you could give us, in writing, a detailed picture of how you assess products before they are put on the market. Over the years, I have heard what the process is. Teflon and the flame retardants have been in use for years and only now are being seen as toxic.
Mr. Lloyd, did you say that only 65 companies are members of your association? How many chemical companies are there in Canada?
Mr. Lloyd: In the chemical industry our members represent about 90 per cent of the value of chemicals. We represent most of the chemical industry.
Senator Spivak: Thank you. I want to go back to the toxic issue. You referred to the Quebec Hydro case. I am sure you are aware that the majority opinion in that decision was that the word ``toxic'' was essential legally. That was about federal jurisdiction. That was a definitive decision on the part of the majority. First, what is your view of that decision?
Second, you talk about the stigmatization of the words ``CEPA toxic,'' but everyone in Canada uses chemicals and they understand that a lot of them are poisonous and have to be used in a certain way.
You are saying that some companies will not buy products if they are labelled ``CEPA toxic.'' Can you give us specific examples of those companies?
Mr. Lloyd: I will kick off and then Ms. Coombs may want to pick up on this.
On the Quebec Hydro case, I am not sure I would agree with your conclusion that the use of the term ``toxic'' was absolutely determinative in the decision that the court reached. However, my opinion on that is not the one you should be looking at. I think the opinion you should be looking at is that of federal lawyers.
As we have stated in our brief, we think that it is absolutely important that the federal government not lose its jurisdiction over this issue. We were reassured by what we heard from federal legal analysis last time on this issue: They did not think that would be a problem. However, I think that is a question you should ask them and you should see whether you are convinced by their argument.
I go back to my anecdotal comment about when I was doing a seminar presentation on CEPA and a number of people in the audience referred to Schedule 1 as the schedule of banned substances. They said ``We do not want to buy those.'' Well, it is not a schedule of banned substances. It is a schedule of substances that the government has determined need to be managed and regulated in some form.
Occasionally, banning is part of that management, but there is a wide range of risk management options. At the far end of the spectrum, the colloquial connotation that goes with banning, with the word ``toxic,'' is probably appropriate. However, there are many that are not intended to be banned; they are intended to be managed. We believe a less confusing label would make sense.
Senator Spivak: Yes, I get your point. However, I find it hard to believe that hard-boiled, tough-minded company executives would not know the difference between POPs and substances that need to be managed. I am sure they could figure it out. We need to have a balance.
You are suggesting that we should remove the word ``toxic'' and that would not affect the federal government's jurisdiction, despite the Supreme Court case. Is that a fair assessment of your position?
Mr. Lloyd: CCPA's position is that you should assure yourself that it would not affect the federal government's jurisdiction. We have reached that conclusion because federal lawyers reached that conclusion. We do not have the same opportunity to question federal lawyers that you probably do. That is something that you will need to reassure yourself on one way or the other.
If that does not stand in the way of making this change, then we think it would make sense. Like you, I found it puzzling that people who I would have thought should not have found this confusing did. It just happened. I noted this in a number of seminars, much to my surprise. I did not think it should have been an issue, but it was.
The Chairman: If you have specific examples of instances in which companies have said ``We will not buy ammonia because this list says that it is toxic,'' could you give us those?
Senator Spivak: I buy ammonia every day. I understand how it is to be used.
Ms. Coombs: I do not want you to misinterpret things. The companies are not buying the chemicals. It is the people who are outside the world that we live in, where we deal with CEPA every day. For example, one of the procurement guidelines that they had outlined in British Columbia said that you could not buy any products that contained any substances from Schedule 1. It did not say anything about which substances; it just said you cannot buy any products that contain substances from Schedule 1. It is quite clear.
The Chairman: The British Columbia government said that?
Ms. Coombs: I am not sure of the specifics, but I will send that to you.
Senator Spivak: Could we have a copy of that decision?
Ms. Coombs: Absolutely.
Senator Spivak: That would be important. Let me try once more. Your position is that we should not look at the Supreme Court decision without hearing the federal lawyers' arguments; is that right? Okay, I got that.
The second question I want to ask you concerns virtual elimination. My understanding is that of the POPs, there are 12 — the dirty dozen —
The Chairman: I know it has been mentioned before, but could you explain POPs for the benefit of people who are watching this?
Senator Spivak: I believe POPs stands for persistent organic pollutants. My understanding is that none has been banned as yet in Canada. Is that accurate?
Mr. Lloyd: I do not believe that is accurate. I believe that a number of those 12 are pesticides. I am not sure if it is seven or eight, but something like that. I believe they have been dealt with under the legislation that regulates pesticides in Canada. Our association does not represent pesticide issues, so I cannot be positive on the number. However, they have been dealt with under that legislation.
The ones that are probably more germane are the three that are dealt with in what is called the Stockholm convention. You will have to ask Environment Canada why they are not on the VE list. It is proposed to put one of them on the VE list, and two of them — the dioxins and furans — they have dealt with previously.
It is certainly not because industry has lobbied to keep them off the list. I participated as an industry representative in the global discussions on development. Industry accepted that these substances should be included in the POPs convention. We had no dispute with that.
The Chairman: Before you proceed, Senator Spivak, Ms. Coombs had a further answer to your previous question.
Ms. Coombs: It was in respect to who is confused by this.
One of the challenges we face is selling to retailers. For instance, section 71 under CEPA asks for data collection. Health Canada will send that out, and it is often sent to retailers. They will call my member companies and say: ``Are any of these substances that the government is asking for more information on in your products? If they are, get them off our shelves.'' There is that kind of misunderstanding.
Senator Spivak: We would just like to have specific examples. That is important.
I have a question about flame retardants and virtual elimination. As you know, as little as 1 in 1 trillion parts has been shown to cause damage, gender dysfunction, at a particular point in the development of an animal or human being. I would like to know your view on that.
More importantly, I congratulate you on the greenhouse gas emissions reduction. Why is Canada 30 per cent over its greenhouse gas emissions target when you have done such a marvellous job?
Mr. Lloyd: Others have not done the same job that we have. Perhaps Ms. Coulas could answer that from a manufacturing perspective. Overall, manufacturing has done a good job on greenhouse gas reductions. Our sector has probably done more than others.
Ms. Coulas: Manufacturers started making reductions before 1990, and many were made between 1990 and 2000. They are continuing to make reductions because they know it is a competitive advantage for them to reduce the amount of money used for energy. That was the first impetus, and now they believe that is the right thing to do. Currently they are at a difficult point because they have already utilized many advances, and technology will be the next step to further reductions. As Mr. Lloyd mentioned earlier, that can be difficult and unpredictable.
Senator Spivak: I have one short question on the change in the way DuPont produces nylon. Did they save money in that process? Some companies, like Kodak, changed their processes and saved a fortune.
Mr. Lloyd: What they did was win-win-win. Companies will pick up those things whenever they can, but the issue is that that is not done readily. A great deal of research and development went into that. It is likely that they tried 10 other approaches that did not pay off. However, the technological breakthroughs are absolutely critical and have a huge impact.
Senator Cochrane: They save money as well.
Mr. Lloyd: Yes.
Mr. Maynard: It is clear that in the oil and gas industry, in aggregate, emissions are up significantly. There is no doubt that while we may be making improvements on an emissions-intensity basis, the growth of the oil and gas industry, the significant increase in production over the last 15 to 20 years, and the fact that the kind of oil and gas we produce and where we produce it require far more energy to be consumed, have had an effect. I am not trying to duck or hide, and I assumed it was more of a rhetorical question because it includes not only the oil and gas industry, but also transportation and the amount of energy that we consume, et cetera.
Senator Spivak: Could you explain the intensity basis that you mentioned?
Mr. Maynard: In our operations, conventional oil and gas, for argument's sake, would be non-oil sands production of oil, and our intensity per barrel of production is reduced. It is one of the principles that we have been espousing in any climate change policy, because if you put an aggregate limit on industry, you will contain industry growth. Because the oil and gas industry is undergoing such significant growth, our emissions are expected to grow with the economic activity. We speak of our improvements in terms of emissions intensity, and we believe that any climate change policy should be focused on emissions intensity so that economic growth is not penalized.
Senator Spivak: How does it help when you calculate it differently to compensate for the increase in emissions? It makes no difference to the entire issue of climate change.
Mr. Maynard: I would like to correct that misconception because it absolutely does matter. The world is calling out for increased production of oil and gas. We are seeing record levels of production and record price levels. That is in response to unprecedented levels of demand. If Canada adopted a policy whereby the oil and gas industry had to reduce its emissions, not on a per-barrel basis but in aggregate, that would mean we would not produce oil and gas here and we would go to another country that did not have a similar policy to produce the oil and gas.
The world still requires our product and will require our product for 50 years into the future. Why penalize economic activity in Canada?
Senator Spivak: Mr. Maynard, I understand that problem. We have looked at the oil and gas industry and I know what the situation is. Canada depends on oil exports. I am asking what difference it makes to the global issue of climate change. The emissions are up, and they are up calculated in whatever way. If you change the calculation, it does not change the amount of emissions in the air. I quite understand the difficulty of the oil and gas industry and I am not suggesting that we should limit the industry at this point because that is impossible.
Mr. Maynard: My point is that it is the end use of our product that generates the greatest source of emissions as long as our product is being produced or consumed anywhere in the world. When I talk about our emissions intensity, it is because in order to produce a barrel, we need to be more energy efficient and to reduce emissions from that production. However, what comes out of the tailpipes of our cars generates the greatest source of emissions.
Senator Spivak: I understand.
The Chairman: I would ask Mr. Lloyd whether the graphs provided could also be characterized as graphs based upon emissions intensity. Am I correct? The graph portrays the proportion of emissions per unit of product, not on an overall basis.
Mr. Lloyd: The graphs provide the information on both bases. The bar lines are emissions intensity and the other lines are actual emissions.
The Chairman: They follow a similar trajectory. That means your production is not going up much, unfortunately.
Mr. Lloyd: Our production is not going up as much as that of the oil industry; we wish it were. We also support the need for an intensity-based approach. If a new chemical plant is to be built, we would rather it be built as efficiently as possible in Canada rather than somewhere else. The only way to accommodate that in a climate change plan is to focus on intensity. Our climate change, global warming, potential absolute emissions show such a dramatic downturn because of what DuPont did. Perhaps there will be have something else like that and we will have another dramatic downturn. However, we will not know about it until it is about to happen. Therefore, an intensity-based approach is important. We have tried to characterize these on both bases, in that we have done that for all of our emissions and for greenhouse gases.
The Chairman: Thank you for that answer.
Senator Adams: My question might be a little different from the ones that other senators posed. Maybe your industry is not responsible for climate change. Could you tell us about the chemicals involved in global warming? We live up in the Arctic and we have noticed many changes over the last few years, such as temperature increases and animal migration to the North. I know you are concerned about that. I heard Ms. Coulas speaking to the global warming policy, but there should be a different policy.
Were you saying it was because of the chemical companies? I was wondering if there is something missing, or is it the same policy? Maybe we in the Arctic are a little faster with climate change and global warming, especially in the last couple of years. In Coppermine, some people drowned about a week ago.
Elders try to teach their families to live with danger, with water and the land. Now we do not know what to do any more because it is so different, because of climate change, with ice in the sea and the lakes. We cannot tell any more. A week and a half ago I was up there. At this time of year I have never seen open water before. I ended up close to open water in a Ski-Doo out in Hudson Bay. I was concerned about a change of policy for Environment Canada.
Ms. Coulas: We certainly support reducing greenhouse gas emissions; there is no question there, but we do not support doing it under CEPA. I should not say we do not support it now; we think more research needs to be done on where it might fit under CEPA, but we do know that the issue of climate change also has economic implications, issues outside what CEPA would normally deal with. We feel there is another mechanism to deal with climate change. CEPA is not the right mechanism.
Mr. Maynard: Senator Adams, similarly, the petroleum industry believes we need to first figure out what the policy should be and then decide what legislative mechanism should be used. The policy may fit well with CEPA, it may not, but it is a question of not putting the cart before the horse here. Let us figure out what the policy should be first.
Senator Adams: Is the policy of the government the same right now, with the regulations for chemicals?
Mr. Maynard: We would characterize the subject to date as being focused on targets that could not be achieved by domestic action alone, by we in Canada working to get ourselves to 6 per cent below 1990 levels. There is too much focus on targets and not enough discussion of substantive policy issues and improving our record. Unfortunately, that debate has been going on for a significant amount of time. Now, we are into a situation with a new government. We would like to see certainty sooner. We would like to see clarity in a policy sooner rather than later; but it is a fairly complex issue. It is fair to say that the government does require some time to understand and appreciate that complexity and the challenge that we face.
Senator Adams: You appeared before the House of Commons committee. Is there anything else interesting that you were told over there? When policy is changed, it does not usually come from the Senate but the House of Commons. What was your reaction over there?
Mr. Maynard: We have not seen anybody tip their hand at this stage as to what the policy will look like. We have been engaged with the government, providing our perspective, certainly, but we do not know where the policy is going at this particular time.
Senator Sibbeston: My question is essentially for Mr. Maynard, who represents oil and gas producers. We from the North are concerned about global warming because of our pristine and undisturbed frozen environment. We feel the effects of global warming, which I think essentially comes from the South. As Senator Adams has said, we already see signs of global warming itself, the toxins that come from the heartland of Canada, make their way into the North and get into the lichen and the animals and into people. We in the North often ask ourselves is this global warming really so? We have come to the conclusion that yes, over the years, we have noticed a difference. It was in the national news several summers ago that a little Inuit community encountered a bumblebee and robins for the first time up in the Arctic. Also, the winters seem to be less severe. There is difficulty in making winter roads to haul material up to diamond mines north of Yellowknife. The oil and gas industry is just coming into the North. There has been much exploration over the last few years and there are prospects of a gas pipeline down the Mackenzie Valley.
Has technology increased in the last decade such that it is fine for the oil and gas industry to work in the North, recognizing that the North is a much more delicate environment? There is permafrost and other unusual geological features. Do you believe that the oil and gas industry is sufficiently advanced that they can do their work in the North properly and not adversely affect the environment? Can the people of the North be assured of this? Obviously, they are coming face to face with it.
Mr. Maynard: Senator, I personally am assured that the industry is capable of operating in fragile environments worldwide. I am a Newfoundlander and remember the discussion and debate that took place about oil and gas production in the middle of — at that time — a prolific fishing industry. We were able to adopt and adapt technology that provided protection of the environment and of the workers. This is a fairly harsh environment, 250 miles in the middle of the Atlantic. I have been on that sea when the waves were 50 and 60 feet high. We also operate worldwide in northern environments. We have learned a great deal about operating in that type of environment. You will probably be familiar with some of the operations of Devon, for instance, which this year safely drilled a well, minimizing environmental impact. We can never do it without any environmental impact, but we have become very good at addressing stakeholder concerns, environmental impacts, health and safety issues, and I believe we are a responsible industry.
Mr. Lloyd talked about Responsible Care. We have a similar initiative, which we call our stewardship initiative, whereby our members are committed to continuously improving our performance. You spoke of the role of technology. It is absolutely critical, as is engaging with the people who know the environment best. Many of our member companies are good at doing that.
The benefits generated by our industry certainly are far in excess of the minimal impacts that we bring when operating in the environment.
That is my long answer. My short answer would be, yes, we can do it and we can do it responsibly. We are willing and able to do it responsibly.
Senator Kenny: I am reminded of when we had a representative from Petro-Canada here talking about Hibernia. It was Mr. Hopper, and his comment was, if there was a blowout at Hibernia, he thought most of it would have dissipated by the time it reached Ireland.
Mr. Maynard: I remember Mr. Hopper well. I was a much younger man at that time, Senator Kenny.
The Chairman: It was not that long ago.
Senator Kenny: There is a series of significant problems when drilling in the Beaufort Sea. It is a shallow ocean, there is scouring by icebergs and the likelihood of a blowout preventer getting knocked over is fairly high. If you are faced with the problem of cleaning up an oil spill, nobody has the technology. It forms into totally unmanageable globules.
Particularly during a period of warming, all calculations for drilling a relief well get pretty complicated. It would be very difficult to get a drill ship in or be certain there will be firm ice for a temporary facility to drill a relief well on.
In light of that, could you readdress Senator Sibbeston's question?
Mr. Maynard: The industry is well regulated. Today we are in discussions with the regulators about the issue of same-season relief wells. There are redundancies built into the protections. I will not make a throw-away comment like Mr. Hopper, such that you do not have to worry about this issue. There is no question it is an issue.
The industry has progressed significantly in that regard within the last few years. We have experience in other jurisdictions worldwide, operating in northern environments where similar conditions exist. We are using those experiences as well as we are able to. I do not intend to convince you that we will ever bring the risk to zero, but we do take the challenge seriously.
As I said, we build redundancies, protections and overlays into all our operating procedures under a well- intentioned, well-established and well-regulated industry. The regulator looks at what we do. We have to go through extensive testing and provide extensive proof that we are operating in an environmentally responsible and safe manner.
Senator Kenny: One of the unique features of the Beaufort Sea is how shallow it is, and we all know icebergs scour the ocean bed. Your first and only line of protection against that is your blowout preventer. How do you protect that?
Mr. Maynard: We have drilled using steel caissons as protection that go the depth of the water. We take those types of measures.
I have to tell you, we experience ice scour on the Grand Banks of Newfoundland and Labrador as well, and we are still able to drill. We submerge our equipment. We excavate glory holes so iceberg scour does not damage the equipment, and there are redundancies under the blowout preventer.
Senator Kenny: You do not need a glory hole if you are drilling in a steel caisson.
Mr. Maynard: There are different technologies we can employ to provide the level of protection needed.
Senator Kenny: What is there below a blowout preventer?
Mr. Maynard: There is the ability to cut wells below blowout preventers. I am not a technician, but I will provide whatever information I can.
My understanding is that it is possible to get in below the blowout preventer with production equipment. We do a lot of things down holes today that we never had the ability to do before.
Senator Spivak: I intend to be the devil's advocate. Do you think there are some places you should not drill?
Mr. Maynard: Absolutely.
Senator Spivak: I am referring to the ANWR, for example. I understand there is a lot of gas up there. Would it be advisable to concentrate on the gas and leave the Beaufort Sea or the ANWR alone? I understand the North Slope of Alaska is being overrun with drilling projects.
The Chairman: I think that question is outside of Mr. Maynard's purview. Am I right, Mr. Maynard?
Mr. Maynard: I can answer the fundamental question. We fully understand there are areas that, for cultural, historical value and environmental protection reasons, need to be set aside. Our industry is not saying we want to drill every square inch of this country. We understand and appreciate there are other values to consider.
We ask that it be made clear and certain that before a decision is made to set aside an area where activity cannot take place, it undergoes a fairly rigorous assessment with respect to what we are protecting and what the potential is for other uses of the land.
We are asking for sensible land use policies that state: This is an area of cultural significance, or this is an area where a certain species of animal or plant resides; therefore, we should not drill or produce oil and gas here. That is in relation to ANWR or anywhere else.
All we are asking is that we take into account the cultural, historical and environmental significance and make an informed decision based on that data. Industry is fully prepared to work with all stakeholders in that regard and to respect those decisions.
Senator Sibbeston: There has been a lot of discussion about the North. Hearings have just begun at the NEB and the joint review panels dealing with this pipeline issue in the North. That process is ongoing. The people there will use that process to assure themselves that whatever activity oil and gas companies undertake, the environment will not be adversely affected.
I think that is the place for those questions to be answered. I was just throwing you a softball.
Mr. Maynard: Did I strike out?
Senator Sibbeston: No, you did well.
Senator Adams: I was on the board of directors of Pan-Arctic for a few years. Especially today, with natural gas prices going up, companies are interested in the future exploration of the High Arctic. I do not know how many cubic feet have been reserved up there since the 1980s.
I remember the committee being shown that one of the pressure gauges was up to over 2,000 pounds. When they lit up the gas, the flame went into the air over 200 feet high.
The people living up in the Arctic had to buy natural gas from down south. We did not have anything in the High Arctic. Everything suffered as a result.
With regard to the Mackenzie pipeline, will companies be able to connect to a line that goes up to the High Arctic in the future?
Mr. Maynard: Given the demand for natural gas, which is seen as a relatively clean-burning fuel in today's environmental context, our industry is pursuing how to make it cost-effective and efficient to create value out of otherwise stranded assets. As you said, without a pipeline to the area, without the ability to ship it and without a significant local market, the economics do not justify development today. However, technology is changing all the time. There is an ever-increasing demand for natural gas. Therefore, it is my firm belief that without a substitute fuel or source of energy, the resources will be developed, and sooner than we expect.
The Chairman: I will ask each of you to respond my next question, which is more just an introduction to a subject.
Mr. Lloyd has provided us with a copy of the submission he made to the House of Commons committee. It is fair to say that you have suggested in that submission, Mr. Lloyd, that climate change questions could probably most efficaciously be dealt with under CEPA, as opposed to some new act, and that we just need to do some tinkering with it to make it more effective. I understand you to say that.
In particular, you said that the flexibility of pollution-prevention planning requirements as set out in CEPA lend themselves to federal-provincial cooperation — and here is the matter on which I would appreciate your comments — and to setting objectives and letting the private sector figure out how to achieve them.
That seems sensible on its face, but this committee has issued a couple of reports on situations somewhat analogous to that. In those reports, we found that setting goals that did not have some kind of imperative at the end of them, a specific objective date, did not work with industry, or with government for that matter, or with consumers.
Would you expand on that? Let us assume that this or some future government sets an objective: Here is what we would like you to do, after consultation, and it is reasonable and achievable. Do you think it should have some kind of cliff at the end of it, some kind of trap, some kind of hammer, some kind of disincentive if those objectives are not reached, or should we just say that we give up?
I will ask Mr. Lloyd to answer first and comment on whether I misinterpreted what was said in his submission.
Mr. Lloyd: No, but I just want to clarify one point.
We have said in our brief that we could support either a clean-air-act approach or using parts of CEPA, particularly those outside of Part V, which deals with toxics and does not make sense for these kinds of issues. We believe the international air pollution provisions, perhaps amended, would make more sense if you intend to use CEPA.
We are agnostics on which approach is used, but we want to ensure that if a clean air act is used, something is done with the provisions in CEPA that we feel would also logically deal with clean air, such as the international air pollution provisions. Maybe they should be moved over into a clean air act, I am not sure. However, it does not make sense to us to have CEPA able to deal with an issue and another act also able to deal with the same issue, because probably, over time, both pieces of legislation will be used by different governments and we will end up tripping over each other. While we are agnostic on which tool is chosen, we would want to ensure that if a non-CEPA tool were used, what I have just described was addressed.
We do think that the kinds of provisions that you referred to, that we talk about in the brief, for pollution prevention planning and whatnot, are good approaches and they are available in CEPA. They are available under the international air pollution provisions. In fact, everything that is available under the Part V toxics provisions of CEPA would also be available under the international air pollution provisions; except they would require more cooperation with the provinces, which we see as a plus. This is an issue, as are most clean air issues, where the federal, provincial and territorial governments need to work together. If the option of a clean air act is to be used, it should look at utilizing those types of tools.
You asked whether once these objectives have been set for industry, should there be some kind of what is often referred to as backstop in case industry does not make it; and yes, there should. I do not think the backstop should be activated automatically, without some consideration. Maybe there is a reason that industry has not achieved the objectives. For example, our forecasts on what we will do with greenhouse gas emissions make certain assumptions about at what capacities our plants will operate. Those are dependent on the kind of feedstock that we get from, say, the oil industry, on market conditions and on many other things. Our plants operate best at maximum capacity.
If something happens such that they are not operating at maximum capacity, you have set a challenge that we have accepted under a pollution prevention plan, we do not meet it because the bottom has dropped out of the market and the plant capacities are at 50 per cent instead of 80 or 90 or pushing on 100 per cent, we feel there should be some discussion about what happens next. I think you used the phrase ``automatically drop off a cliff.''
I would agree with you, with those kinds of reservations or qualifiers. I believe that programs such as Responsible Care — and as Mr. Maynard has said, other industries are also adopting similar approaches — show that industry is able to move forward when they have agreed on an objective and achieve it efficiently. Those are much more publicly credible programs if the government maintains a backstop mechanism, and that is a necessary hand-in-glove complement to those kinds of programs.
Ms. Coombs: If CEPA will be the tool to manage the clean air agenda, whatever kind of government policy unfolds as to how they should proceed on that, then I believe it again underscores the need for changes to the current Part V, the management of toxic substances, to reflect that it is an assessment and management of substances. If it is intended to manage substances like greenhouse gas, it needs to reflect exactly the assessment and the management of that substance.
With respect to voluntary measures, our member companies have responded well to voluntary programs that the departments have been working with, as well as voluntary surveys that they have asked for on volatile organic compounds.
There is a high participation rate among our member companies in surveys and programs, so we see that as evidence that they are being good corporate stewards.
Mr. Maynard: Our membership has a fairly wide range of views on it, Mr. Chairman. We have experienced significant success in some areas on a voluntary basis. The Clean Air Strategic Alliance has brought together stakeholders in Alberta. We looked at flaring and venting numbers and were successful in reducing them. We have had other experiences where voluntary initiative was not sufficient to reach the desired objective.
It concerns the nature of the policy, and it is one of those questions on which you are speculating in the absence of any firm policy. However, that being said, a couple of things are important to our members. One of the important principles for us is that all industry sectors be treated equally, with one not being favoured over the other. That would mean that if one industry sector was provided with a voluntary approach, that is the approach that should be applied to all sectors.
We would not want to see discrimination in any policy on climate change. As I said, it is difficult for us to answer in the absence of knowing what the policy is. Some situations lend themselves to a voluntary approach. It is much like raising our children. Sometimes you can create incentives, sometimes they volunteer to be good, and sometimes they require a little discipline. It is unique to the circumstances. I know that is not helpful, but that is our experience.
The Chairman: Does anyone think, as I sometimes do, that there is a little public, and sometimes even government, confusion between clean air, on the one hand, and greenhouse gases on the other, that they are two separate issues? Does everyone understand that?
Mr. Maynard: We did some fairly extensive polling around climate change and Kyoto. We found that Kyoto is a brand for less pollution and cleaner air as opposed to reduced GHG emissions.
The Chairman: So the purpose of Kyoto was not clearly understood by the subjects of your polls?
Mr. Maynard: It was not. I am terrible with numbers, but a significant portion of people thought Kyoto meant clean air and less smog in downtown Toronto.
The Chairman: We all recognize here, I think, that that was not the point.
Mr. Maynard: That is not the point.
The Chairman: We have done a bad job of explaining what Kyoto is about.
Mr. Maynard: Yes. I do not know if that is through a lack of effort, senator, because I know there has been much discussion, debate, and public education and outreach programs to try to clarify it.
The Chairman: Regardless of how noble those were, they failed.
Mr. Maynard: It has not been effective. I absolutely take your point. People firmly believe that if you clean up the air, you will reduce GHGs. There are some co-benefits, but there are some significant trade-offs. We found that cleaning up some of the non-GHG emissions, such as sulphur dioxide and VOCs, was energy intensive. We had to use more energy to clean up those sources, which means we increased our GHG emissions. It is like everything in life. There is a trade-off involved. That has been our experience.
The Chairman: Thank you.
Senator Cochrane: What do you see as the primary barriers to the effective implementation of CEPA?
Ms. Coombs: The areas that we are specifically involved in, the categorization screening, the Domestic Substances List and the New Substance Notification Regulations, we see those as working quite well. From our standpoint, from a substance perspective, we do not see any barriers to implementation of the act being put up at the departments. The categorization process was mandated to be completed in seven years. The results of that process will be posted in September. I think that is a major achievement by the Canadian government. As I mentioned in my presentation, other OECD countries have similar programs, but Canada is in the lead.
With respect to New Substance Notification and the fact that the Food and Drugs Act is subject to CEPA, there have been unintended consequences because it was not scheduled for exemption. We have been subject to New Substance Notification for Food and Drugs Act products. We are working under two acts. The substance is being assessed under NSNs, New Substance Notification Regulations, and is also subject to a pre-market assessment and notification under the Food and Drugs Act. We think that they are working quite well. The act is not doing what it is intended to do, and that is to have an environmental assessment of substances in Food and Drugs Act products.
Mr. Lloyd: We identified three issues in our brief that are relevant to your question. One of the problems is that the departments need better information, and I think that is a big barrier. When we are looking at clean air issues, what are the sources of air pollution? The National Pollutant Release Inventory gives us a start, but how much of the air pollution is coming from the U.S.? How much of it is coming from sources that do not have any impact on major urban areas? Much more information is required, and that is one of the reasons that we think there should be mandatory State of Environment and State of Health reporting by the government.
If we are to have better implementation, we should look at what Australia has done and have provisions in our legislation that allow us to use assessments of others jurisdictions. There are provisions in the legislation that allow us to use assessments of other jurisdictions when they find a problem with a chemical and it is severely restricted. That was introduced in 1999 and is a good idea. However, there are no provisions to let us use the assessments of other jurisdictions when they have assessed a chemical as fine and okay to use.
The kind of provision Australia has is important and would support the international cooperation that we need to tackle the issues that we are looking at in the screening assessments of the Domestic Substances List that will follow categorization. We need to tap into what the Americans are doing, the Europeans, the Japanese.
In my view, the provisions in the legislation on equivalency are a problem. As I understand those provisions in section 9 or 10, they basically say that the federal government can enter into agreement with a provincial government if the provincial government is doing things exactly the way the federal government wants them done. It is ``my way or no way.'' There needs to be more flexibility. Different provinces will do things somewhat differently. In entering into an equivalency agreement, one is trying to achieve the same force and effect. We have urged the committee to look at this. The current provisions are too narrow.
Those are three areas that would, if resolved the way we have suggested, make implementation of the act easier, allow for greater federal-provincial cooperation, which is important, for working with other countries, which is also important, and for better information, which is also important.
The Chairman: I have a question about piggybacking. Let's talk about Australia, to use your example. When we are doing environmental protection assessments, we are making judgments as to the release of the toxic substance, because that is the question. If the substance is permanently permeated in this product, who cares? However, we have to follow it from cradle to grave. We have to take it to the end, when it is disintegrating into the environment. The answer that you get from Australia might be different when it comes to the length of time that it takes for this to happen, for example, than it would in Inuvik. Can we can say that when Australia, or anyone else whose system we trust, has arrived at the conclusion that this product is safe, we can say it is safe here too? The landscape and many other considerations are quite different, are they not? We are studying substances right through to what happens to them in a landfill: When does this piece of plastic begin to release things that we do not want released into the environment? That is part of the assessment we have to make under CEPA. The answer will be different when the temperature is hot than when it is cold.
Mr. Lloyd: I agree with you, and we have to take into account Canadian circumstances. The Australians call it a ``qualifactor.'' You have to take into account local conditions. Countries have moved forward on the chemicals agenda doing their own thing, without cooperating as much as they increasingly realize they need to. It is not that the legislation should say Australia will determine the conclusions in Canada, but it needs to support making better use of Australian science.
The provisions in CEPA I referred to that were introduced in 1999 say that we need to look at the assessments of other Organisation for Economic Co-operation and Development countries when they severely restrict a substance. That is not to say that if Sweden bans something, we automatically have to ban it, but we should look at it.
The Chairman: Cooperation is never bad.
Senator Spivak: I want to ask you about the precautionary principle. Before I do, I want to ensure that we do not lose sight of the fact that climate change makes smog much worse. Therefore, clean air and climate change are, in a sense, related.
I would like you to give us some written material about the processes of assessing products. I want to know how you view that and whether you are committed to it. I want your comments because you know what the precautionary principle means. It means that there are some things that you should not do even if you cannot definitively prove that they are not safe.
Mr. Lloyd: The precautionary principle or approach as CEPA has adopted it, which is the same as has been adopted globally, came out of Rio. It is in the Stockholm convention, and we have supported that. It has a number of factors. It talks about ``in the absence of full scientific certainty.'' That implies that you must have some level of scientific reason to believe that something will happen. It does not go all the way to full scientific certainty, but it does clear some bar. It is not just someone's conjecture.
It talks about using this approach when there are risks of serious or irreversible effects on the environment, and it has been clearly interpreted that ``environment'' is to be read in a broad sense to also include health. I believe that is fully understood. It is not for trivial issues. It is for important matters.
It also talks about taking cost-effective measures when applying the precautionary approach. That is important as well. It shows that even though you are being cautious —
Senator Spivak: That was disputed.
Mr. Lloyd: It is not disputed; it is in the definition in CEPA, the definition that came out of Rio, and in the Stockholm convention. It is referenced again in the Strategic Approach to International Chemicals Management that the global community agreed to in Dubai several months ago. It may be disputed by some, but it is about as universal as you can get, in my view.
It says that, despite the fact that you are being precautionary, you are not supposed to do so in a way that disregards the costs involved.
All of these things are important to understand when one is talking about the precautionary approach or principle, and they are built into CEPA. CEPA requires that the precautionary approach be used. In my view, both Health Canada and Environment Canada have used it. CEPA 1999 was not revolutionary in that context. They were already using it by then, and it basically codified what they were doing; and I think that has worked well.
I hope that answers your question.
Ms. Coombs: CCSPA and FPIC support the government's application of the precautionary principle as articulated in the framework. I believe it is called A Framework for the Application of Precaution in Science-based Decision Making about Risk. The Privy Council published that a few years ago.
We believe that the appropriate application of precaution does not mean the absence of risk, but rather its management, and that the implementation of the precautionary principle must continue to be on the basis of rigorous, reputable and sound scientific risk-based assessments.
The Chairman: Most of you have referred, at least obliquely, to the difference between a risk-based assessment and a hazard-based assessment. Will you speak about that so that we understand your concept of it? What is the significant difference between a risk-based assessment of a substance and a hazard-based assessment?
Ms. Coombs: I am not a scientist, but my understanding, in simple terms, is that a risk assessment looks not only at the hazard identified but also at the mode of action. You are looking at both components.
An example is spray-painting cars. There might be a substance in the paint that may pose a hazard, but that hazard is identified during the review. However, the labelling on the product clearly identifies that the user must wear a mask and work in a ventilated area so that risk and exposure are reduced.
The Chairman: I wish to thank our witnesses. You have been most forthcoming and cooperative. We will likely ask you to come back and testify before us in the fall when we resume this study and get down to brass tacks.
The committee adjourned.