Hon. Diane Bellemare: Honourable senators, I rise today to share my thoughts about Bill C-234.

I have given a lot of thought to the role of the Senate with respect to bills that come to us from the outside, to determine what lens we should use. I have always thought that it was important to respect what the other place passed and respect the problematic situation of the provinces in relation to that of the federal government.

In the context of one specific bill, we had a choice between promoting and respecting the concerns of the provinces, and defending the interests of the federal government. The Senate was actually created to defend the interests of the provinces against a federal government that could have been, or could be, centralizing.

In the context of Bill C-234, given all the political concerns that have been raised, I thought that the Senate should pass this bill.

As far as passing a bill from the other place is concerned, should we pass it just because it comes from the House of Commons and responds to provincial concerns, without really questioning the merits of all its clauses?

My answer to that question is no, because in fact, when we receive a government bill, generally speaking, it has been studied diligently by the Department of Justice or by the departments concerned, which is not always the case with a public bill.

In the case of Bill C-234, the proposed amendments are justified and may allow for debate in the other place once the amended bill has been sent back. That is why I think it is important to pass the bill once it’s amended.

However, my assessment of this bill changed when I read the November 28 press release from Quebec’s grain growers association, the Producteurs de grains du Québec. In that press release, the association voiced its concerns to the Quebec government, saying that economic considerations in Quebec’s agricultural sector would change if there were an additional exemption for propane and natural gas. It stated that Quebec farmers are currently being penalized due to the fact that gasoline and diesel are exempt in the rest of Canada.

The more we provide exemptions to the agricultural sector elsewhere, the more pressure we put on Quebec to weaken its GHG emissions pricing system. This got me thinking and I came to the conclusion that, in a Canadian context where the provinces and the federal government have a shared constitutional responsibility, dialogue is essential in the establishment of an effective — and, most of all, equitable — strategic framework for the fight against climate change and GHG emissions reductions. This led me to move the motion that you will find in your inbox and that we will have the opportunity to discuss.

When I compared Canada’s current situation to that of other OECD countries, I was surprised to find that Canada ranks fifth out of 71 countries where a percentage of GHG emissions are covered by a carbon pricing scheme. Canada covers roughly 84% of its GHG emissions through carbon pricing. It ranks fifth, behind Iceland, Korea, Luxembourg and Germany.

By contrast, the other OECD countries that also have a pricing scheme cover, on average, about 40% of their GHG emissions through carbon pricing. When you compare 84% to the 40% average in the other OECD countries, Canada’s strategy certainly seems quite broad.

However, that raises a number of questions. In Canada, the high percentage of GHG pricing largely comes from the carbon tax. Quebec uses a different system, known as cap and trade. Europe’s emissions trading system is very different and is widely used to set a price on carbon. The carbon tax is much simpler and allows the government to withdraw the proceeds of the tax and redistribute them as benefits.

In Quebec, we have a system that involves the sale of emissions permits. This system has been used since 2013, and every year, the Government of Quebec issues permits free of charge, but it also sells them.

Some allowances are free, and some are sold at auction. These auctions take place four times a year. The government has to sell the emission rights, and each year, the number or percentage of emission rights decreases. This means there will be fewer and fewer, and prices will go up.

By selling emission rights, the Quebec government has raised around $8 billion to date. This money is deposited in an electrification fund and will be used to subsidize solutions that promote net zero.

We therefore have two completely different systems.

We have a market, for example the agricultural sector, where prices are set internationally. This means that the impact of the system on competition is significant and is a major consideration for the future, especially since the carbon price will increase and the economic impact on our agricultural sector will increase too. The effect on Quebec will be completely different than the effect on the rest of Canada, hence the importance of having a dialogue between the provinces and the federal government to come up with a fair and effective carbon pricing strategy.

I’d also like to add, after reading up on the OECD, that although carbon pricing is widely used, it’s not the only measure. Even though carbon pricing is a necessary strategy, it in itself isn’t enough to reduce GHG emissions. It isn’t enough because it’s a price-based incentive, but the models do point to the efficacy of carbon pricing. However, it’s only effective when everything else is equal, and in life, things aren’t always equal, so price-based incentives can sometimes have the opposite effect to what we were hoping for.

I’d add that the economic situation we’ve had over the past few years — inflation, in particular — has caused many OECD countries to reduce their carbon taxes, because prices were on the rise, groceries were more expensive and people were complaining.

My point is that carbon pricing is a solid measure. Will it be a useful system going forward? Probably, but it’s a strategy that will need to be combined with other mechanisms, such as standards and, most of all, investment subsidies. We can’t expect that a pricing mechanism will magically transition our entire economy as quickly as we’d like.

In closing, Bill C-234 shows that people are dissatisfied with this system because it differs from province to province, or is different from the one in Quebec at least. The fact that the agricultural sector also differs from province to province creates issues that we will need to address, one way or another.

I agree that we should vote in favour of this bill, as amended, in hopes that it will start a conversation in the other place so that some compromises can be reached. Thank you.