Thank you, members of the committee. It is a great privilege to be here.

I'm going to avoid the technical details of CBAM and focus on the bigger political picture.

I want to suggest that there has been a series of global shifts that help explain the emergence and significance of CBAM. These shifts suggest not only that CBAM is here to stay but also that we will see more carbon tariffs in the future. This matters for Canada, because it points to a high level of political and economic risk. What do I mean by that? The day may come when it becomes good politics to punish climate laggards like Canada. CBAM represents one step closer to that day. This committee and other Canadian political leaders need to have a serious conversation about how to prevent that from happening.

What are these global shifts?

The first is the normalization of protectionism. In the 1990s, 2000s and part of the 2010s, the orthodoxy was that we liberalize trade. Now that orthodoxy is on the back foot. Trump's tariffs are a good example of this. When he said he was going to put a 25% tariff on Canadian goods, what surprised many of us was the 25% part. It was not that he was using tariffs, because these have become normalized as part of Canadian trade policy.

The second shift is that concern about climate change is growing around the world. I discussed some of the polling data in my written statement, but the summary is this: Other countries increasingly see climate change as a major problem and want their governments to do more.

The third shift is that other countries are increasingly suffering extreme climate events, and these countries are often our trading partners and allies. Whether it is the United States, Spain, Germany or anyone else, what we are seeing are a rising number of mass casualty events that can cause billions of dollars, if not tens of billions of dollars, in damage.

The fourth and final shift I'd point to is an uncomfortable truth: Canada is a climate laggard. I'm not saying we should dismiss Canada's climate successes. There have been many successes. However, when you compare Canada to other countries, in particular our G7 peers, we are not doing well, and the gap is growing.

What do these changes add up to? My concern is that they add up to a scenario where other countries look at us and ask why Canada, a rich and prosperous country, is not doing more. There is a very real risk that other countries that are making sacrifices to fight climate change and suffering extreme climate events are going to be angry and resentful towards those who freeride on their efforts. This anger and resentment are going to create strong political incentives to punish freeriders. At that point, the rhetoric around Canada's climate leadership will matter little when the prevailing sentiment is, “Make the bastards pay.” This is the scenario that concerns me.

How do we avoid this? We avoid it by taking credible action on climate change that closes the gap between us and our peers. We can talk about what that looks like today, but I would suggest doing something soon, because, right now, CBAM is designed to gently push countries towards climate action. In the future, it may not be so gentle.

Thank you for your time.

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