15/09/2005 - The Honourable
Stéphane Dion, Canada’s Environment
Minister, delivered a compelling address to
an audience of 150 corporate leaders and representatives
of business and non-governmental organizations
gathered at the Forum Tremblant to discuss
corporate social responsibility, demonstrating
the close relationship between environmental
sustainability, corporate prosperity and our
quality of life.
“To a certain extent, environmental protection
will always be a social cost imposed by governments
on often unwilling companies,” said Minister
Dion. “But it is expected that a growing number
of businesses will take a positive and proactive
approach to the environment, since there is
a risk that companies that are slow to act
will quickly be left behind.”
The Minister cited as an example last April’s
Climate Change Plan for Canada, which will
allow the Government of Canada to honour its
Kyoto commitments. The Minister demonstrated
how a well thought-out environmental approach
can be both a powerful lever and business
strategy for strengthening the competitiveness
of Canada’s economy.
It is estimated that Canada’s climate change-related
investments to date have already helped Canadian
industry save $3 billion a year on fuel costs
due to advanced energy management practices.
In closing, the Minister reminded the audience
that the federal government’s new plan to
move forward on climate change is a key component
of Prime Minister Martin’s Project Green,
a cohesive set of policies and initiatives
that contribute to the overall objective of
promoting environmental sustainability while
supporting Canada’s economic competitiveness
and prosperity.
Speaking notes for the Honourable Stephane
Dion, P.C., M.P. Minister of the Environment
Check against delivery
Few things make a Minister of the Environment
happier than meeting business people who take
responsibility for their impact on the environment
– not just to meet government regulations,
but out of conviction. Today, I won’t need
to spend a lot of time making the case for
the protection of our natural environment
because your presence at this conference is
proof that your companies understand the close
relationship between environmental sustainability,
business profits, and our quality of life.
I thank you for the invitation to join you
today.
To a certain extent, protecting the environment
will always be a societal obligation that
governments impose on businesses – and some
businesses may be more reluctant to recognize
that obligation than others. But we can expect
that the business community will increasingly
adopt the more positive and proactive approach
to the environment that is implied in the
title of this conference “Corporate Responsibility
and Sustainability”. At least, we hope this
is the case, for the sake of both the quality
of our environment and the competitiveness
of our economy.
This last point is the one I would like to
highlight: a well-designed approach to the
environment can be a powerful tool for economic
competitiveness. Let me give a concrete example:
our Plan for Honouring our Kyoto Commitment,
which the Government of Canada made public
last April. I would like to show the extent
to which this plan is in itself a business
strategy that is going to strengthen the competitiveness
of the Canadian economy. I would also like
to take this opportunity to invite you to
be part of the on-going process of consultation
on the Plan’s implementation, which is going
to revolutionize so many of our industrial
and environmental practices by 2012.
1. The economic foundation of our KyotoPlan
Our Plan for Honouring our Kyoto Commitment
aims to reduce our greenhouse gas emissions
by about 270 megatonnes per year in the period
from 2008 to 2012. This is, by far, the most
demanding target set by any Kyoto country.
In his most recent Speech from the Throne,
our Prime Minister, the Right Honourable Paul
Martin, committed to honouring our obligation
“in a way that produces long-term and enduring
results while maintaining a strong and growing
economy”.
Our plan was designed to reflect this commitment:
it includes initiatives in renewable energy
along with targetted programs and tax incentives
for environmental technologies and the transportation
sector; it creates legislated targets for
industry and a Fund to support intergovernmental
partnerships; the plan encourages energy saving
for residences, offersprocurement strategies
for a more environmentally-conscious government,
and strengthens communication strategies to
get Canadians involved. Above all, it creates
a carbon market. I will come back to that
later.
The associated federal investment is in the
order of ten billion dollars, to be spread
over eight budgets from now until 2012. This
fiscal commitment will be as beneficial for
the environment as it will be for the economy.
A good deal of this investment would have
been necessary anyway. Our Kyoto Plan essentially
gives us another means of achieving the best
possible return on the investment, a return
that is both environmental and economic.
Let us take the energy sector, for example.
By 2020, 56% of our fossil fired electricity
generating capacity is scheduled to be retired
or have major retrofits. And 38% of our hydro
capacity is scheduled for major refurbishment.
Meanwhile, by 2025, the demand for electricity
is projected to increase by 34% in our country.
This means some $150 billion will be invested
in the Canadian electricity sector in the
next 20 years.
Our Kyoto Plan will help us to invest in the
best technologies, and the best, cleanest,
and most energy-efficient practices.
A coal-fired plant, for example, has a life
of 40 years. In Canada, almost 70% of such
plants will reach the end of that life-span
by 2020. If we miss this window of opportunity,
these plants will simply be replaced by plants
that are not necessarily as clean and efficient
as the best available technology could make
them. So we would have 40 more years of less
than optimal efficiency, resulting in more
pollution in the air that we, our children,
and our grand-children will breathe. But with
the Kyoto Plan, we have an extra incentive
to choose and develop cleaner technologies
which could reduce CO2 emissions by up to
90 per cent while other emissions such as
sulphur oxides,nitrogen oxides, particulate
matter and mercury, would be virtually eliminated.
At the global level, the increase in world
energy supply projected in the International
Energy Agency Outlook will call for a cumulative
infrastructure investment of $16 trillion
U.S. between now and 2030.
This huge market is going to emerge at the
very time when issues linked to climate change
and the reduction of greenhouse gas emissions
will be at the heart of the forces shaping
the global economy. It is imperative that
our Canadian industry be ready to capture
a good share of this market. Our Kyoto Plan
will help it to do so.
Take an issue we currently face: the dramatic
rise in the price of oil. In part, it is linked
to current events. But let’s look at the bigger
picture: the energy future facing humankind.
Production of traditionally cheap and easily
accessible supplies of oil is on the decline
while demand is rapidly increasing. So, present
circumstances aside, high or unstable energy
costs are the future. It therefore becomes
more and more crucial for countries and industry
alike, to continually improve their energy
efficiency. Economic foresight also demands
that we diversify our sources of energy and
improve our management practices.
Business and industry must now strive for
world class performance in their energy efficiency
just as they do in terms of productivity,
skills, and research and development.
The challenge is two-fold: We must help all
sectors of our economy to be more energy-efficient
while accelerating the growth of our companies
specializing in environmental services and
technologies. These companies will see a huge
market opening up for them. In the words of
the Canada West Foundation, “whoever can find
a way to reduce the world’s insatiable appetite
for petroleum is going to get very rich” (Toronto
Star, 24 August 2004, p.A17).
In a word, by doing away with megatonnes of
greenhouse gases, we can make megaprofits.
We’ve already proven it: Canada’s climate
change investments have helped Canadian industry
to switch to cutting-edge methods of energy
management, thereby saving three billion dollars
in fuel costs annually.
There is no lack of examples of companies
that have discovered new profits by drastically
cutting their greenhouse gas emissions. In
January 2005, a study done by the Climate
Group, entitled “Carbon down, profits up”,
found that five companies - IBM, DuPont, NorskeCanada,
Alcan and British Telecom – had jointly reduced
their emissions by 60% since 11000, for a
saving of $5.5 billion US. (http://www.theclimategroup.org/assets/TCG_Emissions_Charts_25_01.pdf)
I could quote many similar examples of Canadian
companies of all sizes, but, to avoid jealousy,
I won’t! But when you study them, you see
that there is no magic solution: most measures
to counter climate change, safeguard our environment
and build our prosperity, depend on our energy
choices in areas such as transportation, the
heating and cooling of buildings, efficient
processes and operations, and the use of renewable
energy, including hydro-electricity. Our Kyoto
Plan will provide support and assistance in
all these areas.
And companies that are slow to act run the
risk of being left behind. Business is already
starting to operate in a carbon-constrained
economy, and there is little doubt that this
trend will intensify. International markets
are recognizing both the risks and opportunities
associated with how companies address and
capitalize on these changes.
The Carbon Disclosure Project, the Investor
Network on Climate Risk in the US and similar
initiatives in Europe and Australia, collectively
managing tens of trillions of dollars in assets,
are relevant examples. Increasingly, investors
are calling on companies and securities regulators
to provide enhanced disclosure about the financial
risks related to climate change and how firms
plan to address those risks.
2. Implementing the Plan
The Government of Canada is currently implementing
a number of major initiatives to get the Plan
up and running on the ground. For example,
consultations have begun with the provinces
and territories to identify strategic new
technologies and infrastructure projects for
cost sharing through the Partnership Fund.
The first projects under the Fund are expected
to be announced before the end of 2005.
And let me point out the consultations on
the establishment of two systems that will
significantly affect businesses , and whose
effect in Canada will be to create a true
emissions credit trading market. These are
the Large Final Emitters System, and the Offset
Credit System.
The Large Final Emitter System sets a reduction
target of 45 megatonnes for the approximately
700 industries that produce most of Canada’s
emissions. Through regulation, it will set
emissions intensity improvement targets for
facilities in the oil and gas, thermal power,
mining and manufacturing sectors.
As you may know, a Notice of Intent to Regulate
Greenhouse Gas Emissions by Large Final Emitters
was published in the Canada Gazette, Part
I on July 16, indicating the Government of
Canada’s intention to regulate greenhouse
emissions from large industry and clearly
describing the proposed system. On September
3, the proposed addition of the six greenhouse
gases to Schedule 1 of the Canadian Environmental
Protection Act was published in the Canada
Gazette Part 1.
My officials are engaged with all sectors
in discussions on translating the broad targets
set out in the April 2005 Climate Change Plan
into detailed emission intensity standards
for various production activities. Draft regulations
setting out the key elements of this system
are planned before the end of this year.
I invite you to participate actively in this
process of consultation. It is important for
the system to be well-designed so that companies
can meet their targets in a way that is as
efficient for them as it is for society.
Let us now take a look at the Offset Credit
System.
In August, we released a proposed set of rules
for this system. It will award credits to
large and small industries, technology companies,
municipalities, farmers, foresters, and individual
Canadians who achieve emission reductions
in sectors and activities that are not covered
by the regulatory requirements of the Large
Final Emitters system. This offset credit
system will also create a market allowing
these individuals, industries and organizations
to sell their credits, which is an efficient
way to get the maximum emissions reduction
at the least cost.
Who will buy these credits? The Large Final
Emitters, who could use them to meet their
targets,, the Government, or anyone who wishes
to acquire them to benefit the environment.
A key player in this market will be the Climate
Fund created by our Kyoto Plan.
The Government of Canada is doing everything
possible to ensure that this Climate Fund
will start operations beginning next year.
Acting as a sort of investment bank, it will
be a big purchaser of reductions in greenhouse
gas emissions resulting from tangible projects
in the offset system.
Face-to-face consultation sessions across
Canada on this recently released Offset System
consultation paper have now started. My officials
will be in Montreal next week to meet with
all interested business and industry representatives.
In addition, we are inviting written comments.
On a parallel track, my officials are working
in partnership with the provinces and territories
and with the private sector on the development
of quantification protocols for a number of
key project types that will facilitate the
efficient implementation of the system.
Among the protocols presently being worked
out, we can mention the capture and elimination
of landfill gases, the reduction of agricultural
methane emissions, soil management, and afforestation.
Other protocols are beginning to be worked
out, including intermodal transportation,
bio-fuels, geological sequestration, and non-emitting
energy.
We welcome your input as we develop these
protocols. Please participate in these consultations
and let us benefit from your expertise and
your experience, because creating a new market
is an enormous task and we need to get it
right.
For Canadians, this market will provide opportunities
in all sectors of the economy. Potential examples
of those who could benefit from this market
include, of course, businesses that develop
innovative ways to reduce emissions through
recycling and energy efficiency, but also
farmers who adopt low-till practices; forestry
companies that engage in state-of-the-art
forest management practices; property developers
who include district heating and renewable
energy elements in their plans for new sub-divisions;
municipalities that capture landfill gas and
use it to generate electricity; companies
that implement programs to encourage their
employees to use public transit or telework;or
courier companies that retrofit their fleets.
I am convinced that this market-based approach
will play a crucial role: by integrating climate
change considerations into the day-to-day
decisions of Canada’s citizens and businesses,
and by unleashing the power of innovation
for the good of our environment and our economy.
This approach will firstly, stimulate and
reward innovation that reduces carbon dependency
in all sectors of the economy; and secondly,
move away from a "government knows best
through programs" design, switching instead
to market- or economy-driven solutions. This
is a fundamentally different concept and a
new approach to promoting and supporting the
transition to a more sustainable way of doing
business.
This market-based approach will also help
position Canada's environmental industries
on the global scene. Our businesses will develop
their expertise in the fields of environmental
technologies and services and deploy them
around the world. They will seize the opportunity
to win new market shares in emerging economies
and economies in transition. These reductions
of greenhouse gas emissions that Canada will
make abroad will help us to honour our Kyoto
commitments.
But to facilitate this export of our environmental
and technological expertise, we must improve
the operation of the Kyoto mechanisms. At
the moment, they are somewhat cumbersome.
Immediate adjustments are needed. We must
also give investors long-term guarantees.
All the countries on this planet must find
a way to work together more effectively to
combat climate change, which knows no borders.
It will be no easy task to convince 189 nations
to begin a dialogue on the subject. They differ
widely in their approach. But if any country
can begin to bring everyone together, that
country is Canada.
Inspired by the leadership of our Prime minister,
we have spared no effort in preparing for
the United Nations Climate Change Conference
in Montreal, November 28-December 9, 2005.
Almost ten thousand people are expected to
attend: ministers, officials, scientists,
journalists, business people, NGO representatives.
At the Montreal Conference, the Government
of Canada will promote a comprehensive approach
that provides the incentives for all industry
to get engaged, addresses growth and competitiveness
issues, and recognizes the basic fact that
a global Climate Change agreement is an agreement
on global economic transformation.
The Montreal Conference will result in a more
aware, engaged and committed public, will
generate business opportunities in environmental
technologies and carbon trading, and will
provide support for investments in science
and adaptation. It will also strengthen networks
for the sharing of best practices among stakeholders,
both domestic and international.
I hope that many of you will attend this vital
conference, particularly since there will
be parallel events specially designed to engage
individuals and groups - including the business
community - outside of the negotiations.
To name a few: a climate leaders conference
will bring together world business leaders,
premiers and US governors; a “solutions fair”
will present 1,000 square meters of innovative
solutions, new environmental technologies,
interactive exhibits, energy conservation
programmes, virtually everything dealing with
our fight against climate change. Technology
workshops, networking sessions, a carbon trading
day, all this will allow the participants
to learn from the experiences of others through
the sharing of ideas, state-of-the-art practices
and leading edge solutions.
Conclusion
Our new Climate Change Plan is a key part
of our Prime Minister’s great Project Green,
a coherent set of policies and initiatives
with the overall goal of fosteringenvironmental
sustainability and ensuring the competitiveness
and prosperity of our economy.
Project Green encompasses all the environmental
challenges we have to face: water and air
quality, resource conservation, the protection
of natural spaces, the maintenance of biodiversity,
the rehabilitation of contaminated sites,
and climate change.
I hope I was able to demonstrate the extent
to which our Climate Change Plan became part
of the economic strategy that is necessary
to win in the new industrial revolution, that
of the sustainable economy, in which the environment
is a vital force for creativity, innovation
and competitiveness around the world. I could
have made the same demonstration for each
element of our Project Green.
I truly believe that our Kyoto Plan will bring
about a deep and positive transformation of
our economy. At the end of the Kyoto years
in 2013, we will measure the extent to which
our economy and our society have become more
efficient and less wasteful.
Yes, we will get there, by working together
to carry out a reasonable and effective Plan.
We will prosper while helping humankind respect
the real capacity of our planet.
Thank you.
