RESEARCH AND POLICY ANALYSIS

Environment

During their public service careers, all four ENTRANS principals were centrally involved in environmental policy issues. Neil McIlveen and John Lawson were both prominent in the National Climate Change Process which led to Canada's ratification of the Kyoto Protocol: Neil was the Co-Chair of the Analysis and Modelling Group and John was the director of research for the Transportation Table. Bob Lyman directed some of the early work on carbon capture and storage while at Natural Resources Canada and was the Director General of Environmental Affairs at Transport Canada where he was responsible, among many other things, for management of programs to reduce emissions in the transportation sector. As Director of Resource Taxation at Finance Canada, Bill Toms was responsible for the introduction of a number of income tax provisions to encourage renewable energy investment. He also co-authored, with Neil McIlveen, the Level Playing Field study on the tax treatment of different energy investments. This study developed a practical methodology to compare the impact of taxes on various types of energy projects and was influential in motivating changes to the tax system in this area.

This involvement by the ENTRANS principals covered virtually all facets of the environmental file, from research, development of policy options, ministerial briefings, networking and interaction with stakeholder groups, public presentations, establishment and management of the regulatory process.

The ENTRANS team has applied its interest and expertise in environmental issues to its consulting work. As a selection of this work, we have:

• examined the role of accelerated capital stock turnover in environmental policy
• undertaken the research and developed the public consultation documents for new automotive fuel efficiency standards
• prepared discussion papers on cap and trade and carbon taxes
• suggested tax incentives to encourage the development of wind energy
• collaborated on development of a proposal for a "green" stimulus package

Members of the ENTRANS team have also carried their interest in environment to their community work. Bill Toms is a member of the City of Ottawa's Environmental Advisory Committee and Neil McIlveen was a member of the Expert Resource Group for the Community Foundation of Ottawa's Vital Signs report with responsibility for the environmental and transportation sections.

Energy

The ENTRANS principals have all been involved in analysis and policy development concerning issues related to energy supply and demand in Canada.

Their work on energy supply-related issues has included the analysis of economic and public policy issues concerning exploration and development of oil and natural gas, pipeline transportation and regulation, refining and marketing of petroleum products, international trade, the development of long-term energy forecasts and the microeconomic analysis and modeling of the Canadian energy economy. Further, it has included analysis and policy development related to the design and implementation of fiscal and incentive measures to encourage energy supply development, especially for petroleum, electrical energy and renewable energy.

This engagement has included extensive analysis, policy development and program management relating to energy demand, most recently in the context of the federal government's efforts to develop measures to reduce greenhouse gas emissions. Notably, during their public service careers and afterwards, ENTRANS principals have:

• Participated in federal-provincial consultations and negotiations on the development of an appropriate climate change response strategy, especially during the proceedings of the Climate Change Table process;
• Analyzed the viability of, and measures to support, carbon dioxide capture and geological storage;
• Analyzed the present and projected supply and demand for energy and the emissions of greenhouse gases in Canada from all sectors;
• " Analyzed in depth the options available to reduce greenhouse gas emissions from energy use by the transportation sector;
• Designed and administered programs to reduce transportation emissions through regulation, incentives and technology development;
• Examined the application of carbon taxes and cap-and-trade options to reduce energy-related emissions; and
• Advised Ministers of the results of this analysis.
• Participated in/reviewed programs to provide policy and technical advice to developing countries

Transportation

ENTRANS principals combine experience in all aspects of transport economics and policy analysis with unique expertise in transport energy use and emissions and in taxation of transport industries. John Lawson's extensive career at Transport Canada involved research and economic analysis in all modes of transport, including analyses of economic regulation of carrier markets, formal regulatory impact analyses of proposed regulations of safety, emissions and fuel consumption, evaluations of investments in infrastructure and service expansions, and assessments of impacts of subsidies, incentives and other government programs. Under secondment to the Canada Transportation Act Review he led most of the research and was prime contributor to the drafting of the report. During the development of the National Climate Change Policy he led the analytical work of the Transportation Table including producing its quantitative results for the Final Report, and generating its inputs to the cross-sectoral modelling by the Analysis and Modelling Group (AMG). That modelling, including the interface between the micro-economic results of emission mitigation measures and their macro-economic impacts, was directed by Neil McIlveen, in his capacity as Co-Chair of the AMG and manager of Natural Resources Canada's research activities on climate change . As Director-General of Environmental Affairs for Transport Canada, Bob Lyman was responsible for policies and programs in environmental management of federal transport facilities and activities, including delivery of Transport Canada's greenhouse gas mitigation programs. Bill Toms' experience at Finance Canada included all aspects of taxation of Canadian corporations, directly relevant to the tax treatment of Canadian transport carrier industries, in comparison to that of other industries, and other countries, and inter alia to the tax treatment of investments in transportation equipment, or environmental programs.

Consulting projects in transportation undertaken by ENTRANS principals include:

• Analytical advice to Transport Canada and Environment Canada on development of regulations of motor vehicle fuel consumption
• Assessment for Transport Canada of taxation of freight transport in Canada compared to the US.
• Assessment of options and resource needs for socio-economic research at Transport Canada:
• Investigation of the response of consumers to economic instruments to reduce motor vehicle fuel consumption
• Estimation and comparisons of greenhouse gas emissions by transport mode
• An examination of alternative routings for polar air cargo between cities in Asia and North America
• Advice to Natural Resources Canada on data sources and methodologies to model emissions from motor vehicles
• For the National Round Table on the Environment and Economy:
  • A Primer on Feebates
  • Interpretation of requirements for the assessment of options for a motor vehicle fuel efficiency feebate
• For Transportation Research Board, US National Academy of Sciences, Committee on the St Lawrence Seaway, TRB Special Report 291- Great Lakes Shipping, Trade, and Aquatic Invasive Species, a commissioned paper: "Environmental Footprint of Surface Freight Transportation,"
• Advice to a major rail carrier on economics of discriminatory pricing of rail freight
• For the World Bank: Invited participation in a policy workshop in Beijing for the National Development and Reform Commission China.

Taxation

The ENTRANS principals have all been involved in the analysis of taxation policy issues and the impact of these policies in the area of energy, transportation and the environment. As Director of Resource Taxation at Finance Canada, Bill Toms was responsible for the analysis and development of the income tax provisions affecting natural resource companies in the oil and gas and mining sectors as well as renewable energy. Having spent almost half of his public service career in this area at Finance Canada, he brings an extensive and unique historical perspective to the ENTRANS tax analysis team. While at Natural Resources Canada, Robert Lyman had an important role in the development of changes in the oil sands taxation regime. Neil McIlveen also had a major role in shaping policy changes for tax incentives for both renewable energy investments and research and development tax incentives in the natural resource industries. In addition to their detailed knowledge of the selected corporate income tax provisions affecting energy, transportation and the environment, the ENTRANS partners are also very knowledgeable about many other federal and provincial tax and program instruments including road taxes, sales and excise taxes applied in the energy, transportation sectors.

ENTRANS principals approach the analysis of tax policy options with a practical base of experience and subject matter expertise. They are skilled in carrying out networking and interaction with stakeholder groups.

The ENTRANS team has applied its expertise in taxation issues to its consulting work. As a selection of this work, we have:

• quantified for Transport Canada the impact of differences in federal, provincial and state income and sales tax provisions on the freight transportation sector
• examined the role of taxation as an instrument to increase capital stock turnover
• examined the application of carbon taxes and cap-and-trade options for the mining industry in Canada
• reviewed the income tax treatment of payments made under Impact and Benefit Agreements
• provided advice pertaining to the design of mineral exploration tax credits, flow through share incentives and the application of the income tax provisions for creation of Environmental Trusts
• reviewed policy options for NRCan to increase the use of the Scientific Research and Experimental Development (SR&ED) tax credits in resource sectors
• examined existing and potential tax incentive proposals for the wind industry in Canada and the US, suggesting possible tax and other fiscal incentives to encourage the development of wind energy

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